When Maryland Gov. Wes Moore signed a law on April 22 exempting employee stock ownership plans (ESOPs) from the state’s strict five-year license-hold requirement for cannabis businesses, he opened up an exit strategy for founders.
He also created a strategy that enables marijuana companies to bypass Section 280e of the Internal Revenue Code.
ESOPs are a tool that cannabis businesses in other states have been taking advantage of since about 2023, when Massachusetts-based Theory Wellness put its program into place. Another Massachusetts cannabis company, The Vault, followed a few days later.
“An ESOP is just another way to sell your company,” said Darren Gleeman, managing partner of New York-headquartered ESOP investment bank MBO Ventures, who worked with both companies on their deals. You can sell to a private equity firm, a strategic buyer or to employees via an ESOP.”
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