Forty Minutes Into the First Diligence Call, I Know How This Closes

The kickoff call is always scheduled for an hour. It almost never runs an hour. Forty minutes in, the buyer's people have asked for five things, and how the seller answers those five questions tells me more about whether this deal closes than the P&L ever will.

What follows is a composite, with names, towns and numbers removed. The questions are real and they arrive in roughly this order. If you expect to sell a New Jersey cannabis business in the next two years, this is the call you are preparing for — and cannabis business due diligence in New Jersey starts with paper, not price.

Minute four: "Send us the license file. Not the license — the file."

Buyer's counsel: "We have the license number. What we want is everything around it. Original award, every renewal, every conversion, every notice of violation, every waiver you asked for, every administrative extension you were granted, and any correspondence with the Commission that is not a form letter."

My note: Sellers hear this as suspicion. It is not. The buyer is assembling their own CRC filing, and the Entity Disclosure Form is unforgiving: every investor, lender, board member and trustee by name, address, occupation and date of birth; certificates of good standing from every state; current-year federal and New Jersey returns; every bond, loan, mortgage and note; and copies of every contract that annually exceeds $50,000. They are not fishing. They are filling in blanks.

Assume they also read the Commission's public minutes, which are a ledger of their own. An unresolved violation is one of the few things that reliably takes 20 to 30 percent off a price.

Minute eleven: "We want the exports, not the reports."

Buyer's finance lead: "Twenty-four months. The raw Metrc export and the item-level POS transaction file. Discounts, voids and returns included as their own fields. Not a dashboard, not a PDF summary."

My note: This is the request sellers resist hardest and should resist least. A summary is your arithmetic. An export is theirs. With the average item price near $29.74 and flower down around $8.09 a gram, the buyer is not checking whether you had a good year — they are checking whether your basket and your margin survive when they re-price the shelf. Get those files to agree with each other before anyone else reads them.

Minute nineteen: "Who else has to say yes?"

Buyer's counsel: "Operating agreement, shareholder and joinder agreements, anything that touches equity or control. Then the lease and the landlord consent trail. Then the municipality."

My note: In a two-partner shop this takes ninety seconds. In a business with a silent investor and a consultant who was paid in points, it takes a month. Add the CRC's own constraint — N.J.A.C. 17:30-9.3 limits changes of more than fifty percent of ownership for a defined period after operations begin — and the list of people who can stall your closing is longer than you think. The landlord is usually the one who does it.

Minute twenty-six: "What does your labor file look like?"

Buyer's counsel: "Labor peace agreement, any collective bargaining agreement, any pending charge. And tell us where you think that stands today."

My note: This one moved this summer and every seller should know it moved. On August 10, 2026, Judge Michael A. Shipp of the U.S. District Court for the District of New Jersey held in Curaleaf Holdings Inc. v. New Jersey Cannabis Regulatory Commission, No. 3:25-cv-16397, that CREAMMA's labor peace agreement requirement is preempted by the National Labor Relations Act, under both the Garmon and Machinists doctrines. Curaleaf had been facing a $610,000 civil penalty tied to operating 122 days without an agreement. Law360 reported in August that the State is taking the question to the Third Circuit.

None of that is settled, and I am not the person to tell you what it means for your renewal — ask your cannabis attorney. What I will say is that organized shops are not going anywhere: cultivation technicians at one departing operator work under a UFCW Local 152 agreement, and manufacturing workers at another company voted this month to join UFCW Local 360. The buyer asks because the answer may change between signing and closing.

Minute thirty-four: "Who is filing the bulk sale notice?"

Buyer's counsel: "That is ours, but we need your tax history now, because the escrow number is not ours to set."

My note: This is where cannabis sellers get surprised, because the rule has nothing to do with cannabis. Under New Jersey's Bulk Sale Act the purchaser files Form C-9600 — not the seller, not a third party — and it must reach the Division of Taxation at least ten business days before closing, by registered or certified mail or overnight delivery. No fax, no hand delivery. The Division then sets an escrow off established obligations, audit findings and unfiled returns, and that escrow can exceed the purchase price. A purchaser who skips it can be held responsible for the seller's State tax obligations.

Two wrinkles matter here. Sales of stock or membership interests by individuals, estates or trusts are not bulk sales — one more reason the asset-versus-equity question is never only about taxes. And formal foreclosures by sheriff's or marshal's deed are exempt, worth knowing if you are circling a distressed asset. Both points belong to your CPA and your attorney, not your broker.