Selling for MSO stock

Why MSOs pay in stock

Because they lack cheap cash. Plant-touching companies cannot borrow from ordinary banks, their debt is expensive, and their share prices are well below 2021 levels. Viridian Capital data reported by Forbes in January 2026 put cash at under 2% of disclosed cannabis deal consideration in 2025. If a public multi-state operator makes you an offer, expect shares to be a large part of it. How MSO offers compare with private ones overall is covered in selling to an MSO vs a private buyer.

What do real stock deals look like?

Terms in public filings give you a benchmark for your own negotiation.

Deal	Consideration	Lock-up and other terms
Curaleaf / Deseret Wellness, Utah (closed April 2023)	About $20 million: $5 million cash and about $15 million in subordinate voting shares (CSE Form 9)	50% of shares released 6 months after closing, 50% at 12 months. Working-capital adjustment settled in shares.
Vireo Growth / four operators in Missouri, Nevada, Utah, Florida (announced December 2024)	About $397 million, all stock, at a $0.52 reference price; 4.175x to about 5.4x reference EBITDA (New Cannabis Ventures)	33-month lock-up: 7.5% at 12 months, 10% at 18 and 21, 17.5% at 24, 15% at 27, 20% at 30 and 33. Earn-outs on 2026 results. Clawback of shares if EBITDA falls short.
Vireo Growth / Planet 13 (announced 27 July 2026)	Share exchange at 0.015383618 Vireo shares per Planet 13 share, a 16.6% premium to the 20-day VWAP (Form 8-K exhibit)	Conditional on stockholder vote, an effective Form S-4, CSE approval, and state cannabis approvals.

Two lessons. Lock-ups vary from one year to nearly three, so the term is negotiable. And stock deals now often carry clawbacks, which means the share count itself is not final at closing.

Where MSO shares trade and how liquid they are

Most U.S. MSOs trade on the Canadian Securities Exchange (CSE) and on U.S. OTC markets. The NYSE and Nasdaq will not list a company whose activities violate federal law, a point Akerman summarised in May 2026. The April 2026 order moved state-licensed medical marijuana to Schedule III but left adult-use in Schedule I, so operators with material adult-use revenue remain shut out. Trulieve began trading on the NYSE on 10 June 2026 only after separating its adult-use business. Even where an exchange is willing, Venable notes that underwriters, custodians, and clearing firms must each decide to support the stock. The wider legal position is on the rescheduling status page.

For a seller, the practical checks are:

• Average daily dollar volume. Divide your stock consideration by it. If your position equals 40 days of total trading, you cannot exit quickly without moving the price.
• Your brokerage. Some U.S. brokers restrict deposits of OTC or CSE cannabis shares. Confirm before closing that your broker will accept and sell them.
• Share class. Many MSOs have subordinate, multiple, and super voting shares. Know which you receive and how conversion works.

Lock-ups, Rule 144, and when you can actually sell

Two separate limits apply.

1. Contractual lock-up. Set by the purchase agreement, as in the table above.
2. Securities-law holding period. If the shares are issued without registration, they are restricted. Under SEC Rule 144, restricted shares of a reporting company must be held at least six months, and at least one year if the issuer is not a reporting company. If you become an affiliate of the MSO, volume limits of 1% of outstanding shares per quarter and Form 144 filings also apply. Canadian resale rules can add a separate hold period.

Ask whether the buyer will register the shares, as in an S-4 merger, or grant registration rights. Registered shares remove the Rule 144 wait but not the contractual lock-up.

How is stock consideration taxed?

Usually at closing, on full value. In a taxable sale, the IRS says property other than money received from a buyer is “generally considered a payment in the year received”. That means $2 million of locked-up shares can produce a tax bill in the year of sale that you must pay from other funds. If the shares then fall before release, you have a capital loss later, which does not refund the earlier tax in any simple way.

Three points to raise with a tax adviser early:

• Valuation discount. A lock-up and thin trading may support valuing the shares below the quoted price for tax purposes. This needs a defensible appraisal.
• Tax-deferred reorganization. If your company is a corporation, a merger or stock-for-stock exchange meeting section 368 can defer gain on the stock portion. LLCs taxed as partnerships generally cannot use it. Any cash received is still taxed.
• Cash to cover tax. Negotiate enough cash at close to pay the tax on the whole deal.

The wider tax picture of a sale is in taxes when selling a cannabis business.

Terms to negotiate in a stock deal

Term	What to ask for
Pricing date	VWAP measured near closing, not signing, or a collar that adjusts the share count if the price moves more than a set percentage
Lock-up	Shorter term, earlier first release, and release on a change of control of the buyer
Price protection	Top-up in cash, not shares, if the price at release is below a floor
Clawback	A cap on shares at risk, clear EBITDA definitions, and protection from buyer decisions that depress your results
Registration	Registered shares or demand and piggyback registration rights
Cash minimum	Enough to cover taxes, debts, and deal costs with a margin
Information	Reps from the buyer about its filings, debt maturities, and tax liabilities

Clawbacks and earn-outs share the same weakness: the buyer controls the business after closing. The drafting points in earn-outs in cannabis deals apply equally here.

Do your own diligence on the buyer

When you take stock, you are investing in the acquirer. Read its latest annual and quarterly filings. Look at debt maturities over the next 24 months, accrued and uncertain tax liabilities (many MSOs carry large unpaid 280E balances), cash against quarterly burn, and the states that produce its profit. A company that must refinance during your lock-up can dilute you heavily. Background on the sector’s balance sheets is in MSOs and consolidation.

An illustrative example

Illustrative only. You accept $1.0 million cash and $3.0 million of shares at a $1.00 reference price, released evenly at 12, 18, and 24 months.

	Amount
Taxable proceeds at closing (before any discount)	$4.0 million
Tax at an assumed 25% combined rate on a $3.0 million gain (assumes $1.0 million basis)	$750,000
Cash left after tax	$250,000
Share price at each release, assumed	$0.70, $0.55, $0.60
Proceeds from 3.0 million shares	$700,000 + $550,000 + $600,000 = $1.85 million
Total realised	$2.1 million after tax, against a $4.0 million headline

The assumed prices are not a forecast. Shares can rise, and sellers who took stock before a rally have done well. The example shows why the cash portion must at least cover the tax, and why a stock offer should be compared with alternatives in cash vs stock vs seller note before you sign. This page is educational and is not tax, legal, or investment advice.