Cannabis valuation worked examples

How to read these examples

Every business below is invented. The point is the arithmetic, so you can see which inputs move the answer. Two multiples appear, both labeled:

• Public anchor. Viridian Capital reported a median 5.1x enterprise value to 2026 EBITDA for 11 larger U.S. multi-state operators in November 2025. Private single-license businesses usually price below public companies.
• Trade commentary. Collateral Base put single-store dispensaries at roughly 3x to 6x normalized EBITDA as of February 2026. That is commentary, not a survey of closed sales.

Nothing here is an appraisal, and no range on this page predicts what any business will sell for. Taxes are simplified: C corporation, 21% federal rate, state tax and depreciation deductions ignored.

Example 1: single adult-use dispensary

Step 1. Normalize earnings

Line	Amount
Revenue	$4,200,000
Cost of goods sold (60%)	$2,520,000
Gross profit	$1,680,000
Reported operating expenses, including $60,000 depreciation	$1,270,000
Reported pre-tax profit	$410,000
Add back depreciation	plus $60,000
Add back one-time legal fees for a zoning appeal	plus $45,000
Add back owner’s personal vehicle and insurance	plus $25,000
Owner pays herself $130,000; a market general manager costs $110,000	plus $20,000
Owner’s affiliate charges rent of $8,000 a month; market rent is $12,000	minus $48,000
Normalized EBITDA	$512,000
Add market manager cost to get SDE	plus $110,000
Seller’s discretionary earnings	$622,000

The rent adjustment goes against the seller. Buyers make it whether or not the seller does, so it is better to show it. If the building is being sold too, it is valued separately; see how real estate control affects value.

Step 2. Apply a range and cross-check on after-tax cash

Under 280E, federal tax is 21% of gross profit: $1,680,000 x 21% = $352,800. After-tax cash is $512,000 minus $352,800 = $159,200.

Multiple of EBITDA (trade commentary range)	Enterprise value	Multiple of SDE	Multiple of after-tax cash
3.0x	$1,536,000	2.5x	9.6x
4.0x	$2,048,000	3.3x	12.9x
5.0x	$2,560,000	4.1x	16.1x

A buyer funding the purchase with a seller note looks at the right-hand column. At 4.0x EBITDA it would take almost 13 years of after-tax cash to repay the price, before interest. That is why adult-use-only stores in uncapped markets tend toward the low end, and why scarcity has to justify anything higher.

Step 3. Add a medical share

Suppose 30% of sales are under a state medical license. Medical marijuana has been Schedule III since 28 April 2026, and Treasury has said guidance on apportioning expenses is coming. Assume, for illustration only, apportionment by revenue. Cash operating expenses are $1,168,000; 30% is $350,400, now deductible. Taxable income is $1,680,000 minus $350,400 = $1,329,600. Tax is $279,216. After-tax cash rises to $232,784, a 46% increase on identical EBITDA. At $2,048,000 the price falls from 12.9x to 8.8x after-tax cash. More on this under how 280E affects valuation.

Example 2: indoor cultivator when prices are falling

A grower sells 6,000 pounds a year at an all-in cash cost of $590 per pound. Over the trailing twelve months its average realized price was $780. Last quarter it was $700. State price series, such as Colorado’s official average market rate of $607 per pound for April to June 2026, show why buyers insist on current prices.

Basis	Price per pound	Margin per pound	EBITDA	Value at an illustrative 3.0x
Trailing twelve months as reported	$780	$190	$1,140,000	$3,420,000
Restated at current price	$700	$110	$660,000	$1,980,000
Downside: a further 10% decline	$630	$40	$240,000	$720,000

The 3.0x is a placeholder, not a market quote. There is no verified public multiple for private cultivators.

Now the asset floor. The building is leased. Equipment would fetch an estimated $450,000 in an orderly sale, and 400 pounds of saleable inventory at $700 is $280,000. Floor: $730,000.

Read together: the seller sees $3.4 million, the buyer sees $2.0 million, and in the downside case the earnings value is no higher than the asset floor. A deal in this gap usually needs a seller note or an earn-out tied to realized prices. The method is covered on cultivation valuation per square foot and per pound.

Example 3: a bare retail license, capped city vs open state

A license with no revenue is valued against the buyer’s alternative.

Capped city. A buyer believes an open, stabilized store at this address would be worth $2,000,000. No other licenses are available locally.

Line	Amount
Value of the store once open and stabilized	$2,000,000
Less build-out, security, and opening inventory	minus $850,000
Less losses during ramp-up	minus $200,000
Surplus created by the license and lease	$950,000
Share the buyer keeps for risk, time, and capital (assumed 40%)	minus $380,000
Most the buyer can pay for the license and lease	$570,000

Open-licensing state. The buyer can apply directly. Assume an application, legal, and local permitting cost of $120,000 and nine months. The most a rational buyer pays for an existing license is about that $120,000 plus something for the nine months saved, and only if the site is one it wants. Often the answer is less than the seller has spent.

A fuller model with a discount rate and a probability of failure is on valuing a pre-revenue license, and reported license prices are on license value in capped vs uncapped states.

Example 4: from headline price to cash at closing

Take the dispensary from example one at 4.0x, a $2,048,000 enterprise value, sold as an asset sale. All terms below are assumptions for illustration, not norms.

Line	Amount
Enterprise value	$2,048,000
Plus saleable inventory counted at closing	plus $180,000
Total consideration	$2,228,000
Less equipment loan and vendor debt paid at closing	minus $300,000
Less seller note, 30% of enterprise value, paid over five years	minus $614,400
Less tax and compliance holdback, 10% of enterprise value, 18 months	minus $204,800
Less transaction costs (legal, accounting, advisory; assumed)	minus $150,000
Cash to seller at closing	$958,800
Deferred, if the note is paid and no claims hit the holdback	$819,200

Less than half of the headline arrives in cash on day one, and the seller still owes income tax on the gain. The deferred $819,200 depends on the buyer’s performance and on a clean post-closing period. Sellers comparing offers should compare this table, not the top line. Related reading: seller financing in cannabis deals, tax liabilities and holdbacks in a sale, and purchase-price allocation.

What the four examples have in common

1. Earnings must be normalized and current. Old prices and unadjusted rent produce numbers no buyer will pay.
2. After-tax cash, not EBITDA, repays the purchase. 280E makes the difference large for adult-use retail.
3. Without earnings, value is assets and scarcity.
4. Structure decides what the seller collects and when.

To run your own inputs, use the cannabis business valuation calculator. For the framework behind these examples, see cannabis business valuation. If you want a confidential conversation about a range for your own business, you can book one at /book/. This page is educational and illustrative. It is not an appraisal, tax advice, or legal advice.