Virtually any time that there are transactions involving cannabis company mergers, cannabis company acquisitions, or cannabis real estate sales, and in many cases involving the sale of assets of a cannabis company, the parties are likely to encounter a concept called “closing” in their purchase agreements. Closing isn’t necessarily unique to purchase and sale situations and can be happen in other types of contracts as well, but for the purposes of this post, I’ll focus on cannabis mergers and acquisitions (M&A), as well as real estate transactions.

“Closing” under a contract is essentially the process where the main purpose of the contract is carried out. In most M&A and real estate transactions, the contract is executed before closing – and in some cases long before it. For example, parties to a company acquisition may sign the papers on June 1, but the actual transfer of shares and the purchase price may not happen until September 1.

You may be asking, “why not just sign the contract on the same day as the asset is purchased?” The answer is that having a future closing gives the parties to the contract time to carry out certain pre-closing conditions. For example, if in

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