Growth planning by a CFO in the cannabis industry involves strategic financial leadership to help cannabis businesses expand and thrive in a highly regulated, constantly changing, and competitive market. CFOs can bring value in many areas:

  • Conduct a thorough market analysis to identify growth opportunities, target markets, and potential areas for expansion. This includes understanding consumer demographics and preferences.
  • Determine how to allocate capital for expansion, whether it’s through opening new dispensaries, launching new product lines, or entering new geographic markets.
  • Develop a strategy for navigating the legal landscape, including licensing and compliance.
  • Identify funding sources and assist in fundraising efforts, including seeking investors, securing loans, or accessing government grants for cannabis businesses.
  • Evaluate potential merger and acquisition (M&A) opportunities and assist in negotiations to acquire complementary businesses or assets that can expedite growth. Assess and mitigate risks associated with expansion, such as regulatory changes, market competition, and operational challenges.
  • Identify areas for operational improvement to streamline processes and reduce costs, enabling the business to scale efficiently.
  • Develop a marketing and branding strategy to reach and engage the target audience in new markets effectively. This may involve establishing partnerships.
  • Implement programs to retain and reward existing customers while attracting new ones. Customer loyalty is often a key driver of growth in the cannabis industry.
  • Ensure that the supply chain can support growth by optimizing procurement, distribution, and inventory management.
  • Leverage technology and innovation to enhance operational efficiency, improve product quality, and offer new products or services.
  • Explore sustainability practices and initiatives that align with consumer values and regulations, as sustainability can be a significant factor in the cannabis industry.

BTA – By Example: Retail

Growth planning is a topic that many of my clients have top of mind. In this current unstable economic environment, growth must be built with more caution than other industries.

We met a cannabis group a few years ago that enjoyed the retail side of the canna business. In our original discussions with them, they stated that they wanted to grow to have a half dozen dispensaries in their portfolio. They started with one location and constantly grew for over two years. We introduced them to some new budgeting techniques. We made sure there was a good team of managers who were given proper authority to perform their jobs.

We worked with the owners to develop a forecasting model incorporating a central management team to handle back-office activities such as inventory and personnel management. The accounting and finance functions were also consolidated to reduce redundances as they acquired additional stores.

At the two-year mark, they were ready to operate two more dispensaries. But these two dispensaries took over eighteen months to bring online at a cost of sixty percent higher than planned. We had to adjust for canna-specific factors, incorporating milestones with very long timetables and larger budgets.

The takeaway for all of us was that patience has to be added to industry expertise and proper capital as the key elements for successful growth.

Staying agile and adaptable to changing market trends and consumer preferences to remain competitive and meet evolving demands gives even more reasons to have a CFO On Call.

If you need the expertise of a CFO, let’s talk. I can be reached at Bruce@CannabisCPA.Tax or 818-225-8022.

CFO Services

Why BTA Cannabis CPA Tax?

  • Subject Matter Expert sought nationwide
  • 30+ Years of CPA Experience
  • Cannabis-specific experience since 2018
  • Multi-state service area: 20 of the 24 legalized states (plus Washington, D.C.) as of 4/24/24

Tap the image to enlarge.

The striped overlay shows the 19 states (plus Washington D.C.) that BTA serves as of 11/12/23.

Map source: DISA’s Marijuana Legality by State showing legalization, medical use, and recreational use as of 10/31/23. https://disa.com/marijuana-legality-by-state