In the ever-evolving landscape of the cannabis industry, finding the right path to growth and success can be a challenging endeavor. In this article, we engage in a thought-provoking Q&A session with Alex Wilson, a trusted advisor in cannabis advisory, tax, and accounting solutions. Through his valuable insights and experiences, he sheds light on various aspects of the cannabis business. From strategies for achieving growth to preparing for inevitable setbacks and the impact of vertical integration, Alex provides guidance that can benefit both established and aspiring cannabis businesses. Join us as we explore the intricate world of cannabis through the eyes of an industry advisor.
1. WHAT DO OWNERS NEED TO CONSIDER WHEN LOOKING AT GROWTH AND THE DRIVERS OF SUCCESS?
Owners who experience the most success embrace big-picture thinking as the driver of growth. In this respect, there are five steps to drive growth and, ultimately, allow owners to live the life they desire: 1. Know the value of your business and identify the drivers that affect the value. 2. Know the key performance indicators that enable you to operate your business more efficiently and effectively. 3. Have a handle on your plan and prepare yourself for setbacks. 4. Understand how your business and personal wealth support each other. 5. Have a clear vision for your business with specific, measurable objectives.
2. HOW CAN CANNABIS BUSINESSES PREPARE FOR SETBACKS?
A setback at some point is inevitable throughout the life of a business, which is why preparation is critical. Currently, we are experiencing a massive oversaturation of the market. Flower prices are dropping substantially, to the point that the product is selling at an unsustainable loss. While some businesses saw this coming and prepared, others are struggling. Having a plan for cash flow preservation, expense cuts, and pivots in operation is essential. Having a broad frame of mind is important — always considering how decisions affect your overall cash flow.
3. HOW CAN VERTICAL INTEGRATION IMPACT HOW COMPANIES EXPERIENCE THE CURRENT OVERSUPPLY ISSUE?
Vertically integrated operations, where the company can be both buyer and seller while controlling all aspects of the product, are better positioned to have a cost cushion. Those that are already vertically integrated have this advantage. If vertical integration is on the horizon for your business, the time to prepare is now. Start considering your access to capital and take stock of your trusted advisers and the resources available to you. If expanding or adding locations leads to multistate operations, it is imperative that you understand the many state requirements so you can remain compliant and adjust your business model appropriately.
4. WITH AN ABUNDANCE OF CANNABIS COMPANIES IN MICHIGAN NOW, WHAT DOES IT TAKE TO STAY AT THE FOREFRONT?
Forging new relationships and improving brand recognition can give companies the edge they need to survive. Customers will recognize a premium product and are willing to pay more, ultimately reducing the loss on the grower side. You may also find benefit in pursuing an increase in marketing efforts so your business can be in a place to earn market share and set a price that is not only sustainable but provides for growth.
5. WHAT APPROACH DOES YEO & YEO TAKE TO ADVISING CANNABIS CLIENTS?
First and foremost, we are our clients’ partners in success. We work with them to build customized, right-sized relationships that help our clients remain compliant, organized, and growing. Our clients’ goals vary, but whatever their goals are — vertical integration, preparing for M&A, adding licenses, or opening a new location — we ensure they have the information they need to make data-driven decisions and we are there to support them every step of the way.