As legal marijuana markets have matured in Washington, Oregon, California and elsewhere, so too have the kinds of legal disputes involving marijuana businesses. Increasingly common are legal disputes between owners of a marijuana business that involve allegations of financial malfeasance, breach of fiduciary duty, freeze-outs, fraud, and other claims common to business litigation outside of the marijuana context. In litigation between members of a limited liability company, expulsion of the member alleged of wrongdoing is a common remedy.
A common question in such cases is how much the member’s interest in the company is worth? In other scenarios, the litigation realities may lead the members to decide that selling the company is the best move, and so a critical question is what is the business worth?
Back in 2014, we wrote about the speculative nature of valuing marijuana businesses because of the lack of market data, Marijuana Business Valuations: Still Mostly an Art, not a Science. A couple of years later, Vince Sliwoski wrote about valuation in the context of purchasing or investing in a marijuana business, Your Marijuana Business: What’s it Worth? At that time, we were aware of just one accounting firm (actually just one accountant) who