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Case Study - Cannabis Practice

Turnaround for a recreational cannabis business

The Situation

A California-based recreational cannabis company with healthy gross margins was struggling after changes in pricing and reduced level of investment resulted in a liquidity crisis and negative operating income

The business had limited visibility into day-to-day financials and an out of sync cost structure which made it very difficult for management to operate efficiently and effectively. Reacting buying practices resulted in a suboptimal product mix, while lack of a structure approach to collect and use customer data drove miss-allocation of marketing dollars

Our Approach

We applied our RBAR playbook in a 6-week engagement, working with management to identify drivers of underperformance and prepare a turnaround plan

The plan included four major components:

  • Adjustments to labor hour schedules to increase customer service and reduce cost

  • Implementation of a merchandise planning approach

  • Reduction of indirect spend

  • Implementation of best practices to prepare and manage financials and budgets

The Results

Company is currently executing parts of the merchandising recommendations. Its overall turnaround plan is being utilized by management to raise additional funding to support ongoing operations, and budget and financials are being prepared following best practices recommendations

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