From Black Markets to Pink Sheets: What are Marijuana Companies Worth?

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Abstract

With the legalization of marijuana for recreational use in Colorado and Washington there are now at least three tiers of legality surrounding the plant. At the federal level marijuana is still classified as a schedule 1 drug i.e. highly illegal. However, besides Colorado and Washington where marijuana is fully legal there are 18 other states where marijuana is somewhat legal. This paper investigates firms operating within this market and (1) attempts to clarify rules regarding the release of audited financial statement (2) examine considerations when attempting to value publicly traded companies that derive most of their income from the sale of a good that is illegal at the federal level and that have difficulty banking because of the goods illegality and (3) reports on the growing demand for Certified Public Accountants from the proprietors of marijuana dispensaries.

Author

• Russell Engel, Sacred Heart University