Mergers and acquisitions can be tough to wrangle in any industry, but the new legal cannabis industry has its own complexities, according to experts speaking at the third annual North Coast Cannabis Industry Conference on May 21.

And a panel of entrepreneurs in the pot business spoke about their challenges in working through the uncertainties of the new regulations.

“Cannabis requires an awful lot more reverse due diligence,” said Erik Ott, a partner at KO Acquisitions, and a specialist in cannabis mergers and acquisitions. “You have to figure out who is acquiring you,” he added, noting that it is essential to understand what a purchasing company is and what its financial prospects might be.

Joel Milton’s former company, Baker Technologies, was acquired by Colorado-based TILT Holdings, where he works now providing infrastructure and technology services to cannabis companies.

Milton noted at the conference how much the acquisition space had changed since he started his former company. “Three years, ago during fundraising, no one would talk to us,” because of his company’s involvement in the cannabis industry.

Part of the struggle of gaining access to capital for cannabis companies in the U.S. is the inability to go public because of ongoing federal prohibition. (The federal government classifies cannabis as a schedule 1 drug.)

“The only way to get access to real capital is with paper, and the way to do that is go public,” Milton said.

Keeping in mind where your company lacks expertise is also essential when considering a sale, according to Tim Condor, who sold his Blackbird Logistics Corporation to TILT Holdings as well.

“It became apparent we would need to raise capital in order to be able to scale,” Condor said, noting he faced the decision to struggle to raise money or be bought out by a well-capitalized and, in this case, public Canadian company. He chose the latter.

During a panel moderated by CannaCraft’s vice president of production, Cheriene Griffith, women business owners spoke about the future of the business.

“I see more professionals entering the space,” said Annie Holman, co-founder of The Galley Cannabis Manufacturing. “In the next two years, I see more strategic partnerships happening,” she added, noting state regulations “are challenging and suffocating sometimes and it’s crucial we support each other.”

Garden Society co-founder and Chief Marketing Officer Karli Warner agreed.

“We are reliant upon partners to accomplish the goal of putting products on the shelf,” she said. “Finding high-quality, supply-chain partners has been a real challenge.”

Alexa Rae Wall, who co-founded Moonflower Delivery, said she has been struggling to get a cultivation permit in Sonoma County for two years. She decried seeing craft farmers go out of business because of regulatory barriers to entry.

Rachel Hazlett, CEO of Lucky 420, said a lot of cannabis businesses have shuttered over the last year because of regulatory issues.

“Looking forward, I see a lot of consolidation,” Hazlett said.

Touching on the legalization of hemp in the 2018 farm bill, High Tide Distribution and Fiddler’s Greens co-founder and CEO Shannon Hattan noted a potential future challenge could be illegal growers hiding marijuana within identical hemp stands.