•Vertical integration can add significant value to enterprise, as well as improve cash flow and control over your supply. So many of our clients struggle with this concept. For example, we have delivery and retail clients in California who have created significant market awareness of a particular strain/product to their customer base and then they lose their supplier, either to more successful clients that have control of their supply chains and are not subject to other market conditions or business issues. Now these same “educated” customers go to the competition as you're unable to meet the demand requirements.
•Have a world-class team which means not just CEO/COO, but also QUALIFIED cannabis CFO and Accounting department, as well as compliance function (CCO), that can monitor and report on state, county, OSHA, FDA, rules.If you have revenues less than $15M,you’ll definitely want to outsource these needs. They are too highly focused and specialized and having a team of consultants provides additional access to best practices.
•Focus less on “beating 280e” and MORE on building your brand, growing market share, and location (if dispensary). Exits are happening right now based on these metrics, and NOT EBITDA or Net Income. These multiples will rise significantly when federal legalization happens.
•Have rock solid Accounting (perpetual data room, auditable books including correct cost accounting, Accounting Policies & Procedures, and internal controls) and someone trained in cannabis accounting.
CannaCFO Magazine: What best practices do CEO and Investors need to look for within their respective Accounting Departments that other companies are doing?
Mr. Remis: Many companies are dealing with very thin profit margins or even losses on a month over month basis. With razor-thin profit margins and many tax and capital issues to deal with, accounting operations for cannabis companies are more tricky than normal.
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