The Top Questions Serious Buyers Will Ask You

The days of fetching millions of dollars for a pending application and pro forma projections are gone.  When serious buyers step into the room today, they are no longer buying potential, they are buying certainty. In 2025, capital is cautious, buyers are disciplined, and every deal is measured against risk.

If you are preparing to sell, you must be ready to prove that your facility can operate quickly and efficiently under a new owner without many surprises. The quality of your answers and the clarity of your documentation will determine whether your deal closes at your target valuation or falls apart after due diligence begins.

I’ve watched deals collapse because a seller failed to renew a CUP or could not reconcile their financial statements against METRC reports. I’ve also seen sellers command premiums because they came prepared with a clean compliance packet and a 90-day closing roadmap. The difference comes down to preparation.

Below are the questions buyers always ask, the reasons they matter, and how you can prepare so you stay in control of a complex deal process.

1. Can the license transfer and what is the entitlement risk?

The first test is whether the license actually survives the sale. Some states allow licenses to be transferred like assets, while others require a new owner to take possession of the existing licensed entity. In most cases, any change of control will trigger background checks and new owner compliance requirements, which can result in long closing timelines.

If you cannot explain how the license moves from you to them, buyers will immediately see risk. Risk lowers value.

Example: A dispensary owner wanted to sell their licensed retail property. After spending substantial time and resources negotiating documents, the deal fell apart because the seller was unaware of an ordinance mandating all dispensary owners be city residents for at least three years.

Preparation that builds confidence:

• Current license certificate and renewal receipts
• Zoning or CUP verification letters from the jurisdiction
• Buffer map confirming compliance with sensitive-use distances
• A one-page roadmap showing relevant agencies, closing steps, and estimated timeline
• Ownership requirements including any background, financial, and residency restrictions

2. Is the facility equipped to perform under its intended use?

Buyers underwrite performance, not promises. They ask whether the site can operate at the projected capacity without expensive upgrades or substantial investment.

For cultivation, that means power at the meter, HVAC capacity, and water access sufficient for forecasted production. For manufacturing, it’s ensuring ceiling height, power access, and safety measures (blast rooms, hoods, etc) are suitable for the required equipment. For retail, it’s visibility, parking ratios, and POS station count.

Example: A cultivator marketed their indoor cultivation facility as “underutilized and expansion ready”. During diligence, the buyer uncovered that the electrical system was maxed out and could never support additional canopy without substantial investment in power upgrades, including equipment with long lead times. The buyer deducted these estimated costs from the purchase price.

Preparation that builds confidence:

• Past 12 months of utility bills
• Utility reliance letters for water and power
• As-builts with all mechanical and electrical diagrams
• Inspection records and compliance logs

3. Will the lease survive the transaction?

The property lease is one agreement that can make or break the deal. Buyers know that a license is likely worthless if the new owner can’t operate at the existing location. They ask three things:

1. Is landlord’s consent required for a change of control, or to assign the lease?
2. What are the current lease terms and are there options to renew?
3. Is the lease market and aligned with sales, or does it squeeze margins unsustainably?

Example: A dispensary showed strong sales, but the landlord demanded a 30% rent increase in exchange for consenting to the lease assignment. The buyer refused, and the transaction collapsed.

To avoid these pitfalls you should prepare:

• The full executed lease and all amendments
• Annual NNN expenses with CAM reconciliations
• Landlord consent and estoppel template
• If rent is above market, a brief memo explaining why

4. Is compliance provable?

Every seller claims compliance, but serious buyers want documentation. They will request METRC logs, POS records, inspection reports, security protocols, and license fee payment and compliance history.

Example: A distribution company described their operation as clean and compliant. Upon checking inspection records, the buyer found three unresolved violations related to delivery manifests. The offer price fell sharply, and a holdback was placed in escrow to cover potential penalties.

The strongest sellers prepare a compliance packet that includes:

• Two years of inspection results with explanations and cures for any recorded violations
• A file containing all correspondence with regulators dating from application through present day
• POS reports that match the company’s depository account bank statements
• A transcript of all license fees, excise taxes paid, sales taxes paid, and any compliance fines paid to-date
• SOPs for security, waste disposal, employee training, and other compliance matters

5. Do the financials check out?

Financial statements are where credibility is won or lost. Serious buyers don’t just take your P&L at face value; they connect the dots from POS reports to METRC data, and then from METRC to the general ledger and bank statements. When those systems don’t line up, buyers assume one of two things: weak financial controls or hidden problems.

The key to building trust is preparation. Before listing, make sure your profit and loss statements are fully reconciled and supported by a current balance sheet, tax returns, and recent bank statements. Include a clear EBITDA add-back schedule that details normalization adjustments like owner compensation, non-recurring expenses, or rent paid to related entities.

Go a step further by adding a short financial narrative that explains any seasonality, margin compression, or recent revenue shifts. Buyers are more comfortable (and confident) when you demonstrate that you understand your numbers and have the data to back them up.

6. What is the tax posture under 280E?

Section 280E remains federal law. It disallows ordinary business deductions for any trade engaged in trafficking controlled substances, which includes cannabis. The primary offset is Cost of Goods Sold. Buyers always underwrite assuming 280E is in effect. Strong sellers even prepare a sensitivity analysis showing EBITDA with and without 280E impact. It’s an extra step, but that transparency removes uncertainty.

Buyers want to know:

1. Have returns been filed consistently at state and federal levels?
2. Are there outstanding balances, liens, or payment plans in place?
3. How is inventory capitalized and has the method been consistent?

Example: A multi-site operator disclosed outstanding tax balances but provided payment plans and proof of compliance. Because the seller was transparent, the buyer accepted the risk with appropriate indemnification provisions in place.

7. What risks transfer with the business?

Beyond assets, buyers also underwrite obligations. Vendor contracts, equipment liens, and employee retention all matter.

Example: A cultivation deal slowed down when a lien on lighting equipment appeared late in diligence. The buyer then insisted on an escrow holdback for any other unknown liabilities. If the seller had disclosed the lien earlier, trust would not have eroded and the seller might have received more money at closing.

Preparation signals professionalism:

• Provide a matrix of contracts and obligations
• Prepare lien search results for interested buyers
• Include a transition plan for key employees

8. How will inventory and working capital be handled?

Inventory disputes are one of the most common reasons closings get delayed. Serious buyers want clarity on:

• Which products are included in the sale
• How those products will be valued
• How the “cut-off” timing is defined between seller and buyer ownership.

To avoid friction, sellers should have clear inventory records tied to Certificates of Analysis (COAs) and a written counting protocol that defines what’s considered sellable, expired, or pending destruction. If working capital is part of the transaction, outline whether it includes cash, prepaid expenses, or accounts receivable, and how those will be reconciled at closing.

Establishing a shared reference, like an aging report and inventory reconciliation process, prevents last-minute valuation fights and keeps everyone focused on closing.

9. How was the price determined?

Buyers immediately test whether your price makes sense. They don’t want to hear “that’s what others are asking”, they want to see how your number was derived.

Credible sellers can point to recently closed transactions, not just current listings. They support pricing with key metrics like revenue per square foot and license density within the same trade area. They provide property appraisals from reputable and experienced firms. Many will also blend valuation methods, like a discounted cash flow analysis, market multiples, and replacement-cost logic, to triangulate fair value.

A concise, one-page valuation memo that summarizes your assumptions and methods shows buyers you’ve done your homework and positions you as a credible and professional seller.

10. What is the roadmap to closing?

Even when diligence checks out, deals can still fall apart without a clear path to the finish line. Buyers want to know how long regulatory approvals will take, when landlord consents will be executed, and how escrow, holdbacks, and working-capital true-ups will be managed.

The best sellers create a transaction roadmap, a milestone calendar with specific dates, responsible parties, and dependencies. This not only keeps both sides aligned but also demonstrates organization and credibility.

For example, one retail deal closed on time because the seller circulated a 120-day milestone calendar that mapped every step from LOI to license transfer. Every task had an owner and a due date. The result: no surprises, no lost confidence, and a smooth closing.

Bottom Line

Sophisticated buyers aren’t afraid of cannabis, they’re afraid of uncertainty. Every missing document, unverified number, or unclear answer becomes leverage against your price.

When you show up with clean entitlements, reconciled books, credible comps, and a clear path to closing, you’re not just selling a business, you’re also defending your valuation. You project competence, reduce perceived risk, and attract stronger buyers who move faster and negotiate less.

In today’s market, preparation is the real seller’s advantage. Contact a CannaMLS PRO if you need help preparing for your sale.