Cannabis Industry's Real Success Formula: Profits, Reputation, And Scalability, Says Expert

As the cannabis industry continues to expand across the United States, investors are shifting their focus towards traditional business metrics, such as financial stability, reputation, and scalability. Sahar Ayinehsazian, partner at Vicente LLP and speaker at the upcoming Benzinga Cannabis Capital Conference, shared her insights on the qualities that capture investors' attention as the cannabis market matures.

Financial Stability and Scalability
Investors are becoming more selective, treating cannabis companies like established businesses. Ayinehsazian explained that investors seek success benchmarks, such as solid financial performance and a proven track record. "When an investor is looking at a business that is operational and has been for a couple of years, they are looking at the business's profits and losses, how the business has conducted itself, what the business's reputation might be, any tax issues or other liabilities that may hinder the business's future success, and the scalability of the business," she said.

For investors, it's not just about short-term gains, but also the potential for long-term success. Scalability—the ability of a business to grow efficiently and profitably—is vital for those looking to make a substantial investment. As the cannabis market continues to grow and mature, investors are increasingly focusing on businesses that can scale effectively.


Regulatory Compliance Matters
Given the unique challenges the cannabis industry faces, particularly regarding regulatory hurdles, investors are also looking closely at how well companies navigate these complexities. Ayinehsazian noted, "Investors will look at the license and make sure it's valid, whether any unresolved or pending regulatory issues remain, and if so, whether those issues would be transferred to an investor upon making an investment."

The regulatory framework varies significantly across states and local jurisdictions, adding another layer of complexity for potential investors. They are keen to know whether the business holds a valuable and limited license in a highly competitive state or operates in a market where licenses are more accessible.


Types of Investments
Ayinehsazian highlighted a clear split in investor priorities. "Overall, I think what investors are looking for can be split into two general camps—one being investors looking for distressed assets and the other being investors seeking healthy businesses that they can grow and take to the next level," she said.

As the cannabis industry continues to evolve, investors will pay close attention to how these developments unfold. By focusing on financial stability, reputation, and scalability, investors can make informed decisions that drive long-term success in the cannabis market.