Private equity has been trying to invest in the cannabis industry for some time, but has found some difficulties doing so. In particular because of the structure of private equity. most equity is structured with a handful of general partners. Then dozens if not hundreds of limited partners who hand over their investment to a general partner in exchange for not having to be disclosed and with respect to their investment.
Unfortunately in the cannabis industry, particularly with licensed cannabis businesses, regulators often require all owners including limited partners to disclose their ownership stakes in a licensed cannabis business. This can be very difficult for limited partners of private equity because of the disclosure rules. However, there are ways to deal with these particular issues both with the regulators and in ways of structuring transactions involving private equity.
At McAllister Garfield, we’ve handled a number of private equity transactions and we can assist with yours as well.