Industries

Cannabis

Over the past several years, the deregulation of cannabis and the passage of new legislation has created a plethora of business opportunities in the sector. Though certain state laws have permitted consumers to legally purchase cannabis products, there has yet to be any sweeping federal action. This has created a treacherous landscape and uncertainty for many firms with operations and investments in the sector.

SCP can leverage our team’s deep expertise in navigating difficult situations to avoid possible disruptions and legal hurdles. Our professionals can work closely with you to devise tailored solutions and long-term operational strategies that can put your business on the path to success in this emerging industry. We look forward to helping you.

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Case Studies

Cannabis Industry Team Members

Timothy Bossidy

Managing Director

Ben Smith

Senior Director

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Timothy Bossidy

Managing Director

BiographyNotable Assignments

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Industry Expertise

Tim Bossidy is a Managing Director at SierraConstellation Partners with a significant track record of financial and operational consulting services to companies in transition. His advisory experience extends across turnaround management, mergers and acquisitions, capital raising and conducting financial modeling and forecasting across a variety of industries including: cannabis, consumer/retail, agriculture, media/entertainment, oil and gas, healthcare tech and healthcare services.

Prior to joining SCP, Tim worked as an investment banker at Goldman Sachs. There he focused on mergers and acquisitions, alongside initial public offerings, other equity transactions and debt financing. Prior to Goldman Sachs, Tim worked as a credit analyst at The Travelers Companies, where he covered high yield and investment grade bonds across the oil and gas and municipal sectors.

In 2020, Tim received the M&A Advisor’s Emerging Leader Award, which recognizes leading M&A, financial and turnaround professionals who have reached a significant level of success while still under the age of 40.

Tim holds a bachelor’s degree in economics and English from the University of Notre Dame and an MBA from Kellogg School of Management. He is originally from Connecticut and currently lives in Los Angeles.

  • Interim management, advisory and financial modeling services to a cannabis company to organize and re-build finance and accounting departments, forecast cash flows for retail and cultivation entities, implement financial controls and prepare company for a capital raise.
  • Financial advisory to a cannabis company to implement cash management tools, oversee significant cost improvements, improve working capital and borrowing base management and repair lender relationship through improved forecasting.
  • Interim CFO role as part of CRO team for $500mm+ discount retail chain with international supply chain. Constructed operating model and turnaround plan to spearhead successful 363 sale of 85 stores out of bankruptcy. Led finance department, including cash management, in addition to daily operations across departments and over 5,000 employees to ensure maximum stakeholder recovery.
  • Interim CFO role for $40mm+ women’s fashion company. Oversaw restructuring, lender negotiations and Company-wide cost-cutting efforts to drive Company from significant losses towards profitability. Also led process for PO financing and additional rescue financing to give Company operational runway through a sales process. Implemented forecasting model and improved budgeting and financial controls to repair lender relationship and guide Company and lender through over-advance situation. Helped hire full-time CFO to lead Company upon SCP exit.
  • Advisor to a healthcare services company where executed a successful sale to a financial sponsor. Worked with company management to structure a deal to work around potential overhanging liabilities and identify synergies across potential buyers. Led diligence and valuation efforts ahead of transaction close.
  • Advisor to a retail company in financing and executing a management-led take private transaction. Led diligence and financial modeling efforts.
  • Informal advisor to several start-ups and lenders within cannabis landscape.
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Ben Smith

Senior Director

BiographyNotable Assignments

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Industry Expertise

Ben Smith, a Senior Director out of Chicago at SierraConstellation Partners, has over 20 years of experience providing financial advisory, restructuring and turnaround, and operational improvement services to companies across the transformation spectrum from those significantly distressed, to those stressed in specific segments of finance/operations, to those with targeted performance improvement initiatives.

He has experience with complex restructurings (both in and out of court), operational improvement initiatives, financial planning and analysis, budgeting and forecasting, cash flow management and modeling, business plan development and strategy.

Ben has experience in a variety of industries, including: airlines; automotive; distribution; healthcare; industrial and manufacturing; restaurants; and transportation and logistics.

Prior to joining SCP, Mr. Smith was most recently a Senior Director at Huron leading and supporting turnaround, restructuring and performance improvement engagements for companies of varying sizes in multiple industries.

Mr. Smith holds a bachelor’s degree in Government from Cornell University and earned his MBA from the University of Florida. He is also a Certified Insolvency and Restructuring Advisor (CIRA) and Certified Turnaround Professional (CTP).

  • Served as a financial advisor to a $300 million transportation and logistics company during their multi-year financial and operational restructuring.
  • Served as a financial advisor providing due diligence services for a merger between two regional trucking companies.
  • Served as a financial advisor for a $200 million distributor during its asset divesture and reorganization process.
  • Served as a financial advisor to a $100 million manufacturer during their winddown and eventual sale of remaining assets.
  • Served as financial advisor to several clients in the healthcare industry during their turnaround and restructuring processes.
  • Served as a financial advisor to a producer of storage systems from their pre-bankruptcy planning to their 363 sale.
  • Served as a financial advisor for a CBD producer from their pre-bankruptcy planning through their in-court restructuring.
  • Served as financial advisor to an airline during their bankruptcy process supporting sales of their main line operations, commuter assets and loyalty program.
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Medmen

SITUATION

  • From its mid-2018 RTO, MedMen was unable to match its unique brand proposition in the cannabis space to operational or financial sustainability. From its 12/28/2019 financials, the Company had an accumulated deficit of over $480 million, an AP balance of over $80 million (resulting in key vendors no longer shipping), minimal liquidity, several near-term secured debt maturities and an annualized EBITDA loss (less inventory add-backs) of approximately $180 million. Without the ability to enter Chapter 11 and without an experienced management team, the Company lacked options.

SCP'S SOLUTION

  • Focus on day-to-day operations and cash flow as Chief Executive Officer, Chief Operating Officer, and later in the case Chief Financial Officer leading to:
    • Rebuilding vendor relationships, fixing store staffing model allocating tax and finance charges appropriately for a Retail EBITDA margin improvement from (8)% to 20%+ (~$40 million impact).
    • $60 million+ in corporate SG&A savings from right-sizing headcount and eliminating excess spend.
    • Eliminated cash burn at cultivation facilities and doubled yield in FL with same footprint (~$40 million impact).
    • Rebuilt relationships and trust with key stakeholders and communities, as well as overhauled corporate governance.

RESULT

  • ~$140 million annualized adjusted EBITDA improvement over six quarters.
  • ~$170 million in total new financing alongside restructuring of primary senior debt facility.
  • The remaining senior debt was eliminated through M&A transactions and working capital issues transformed.
  • Reduction in cash rent impact of $12 million+.
  • Eliminated all existential legal overhang.
  • Revitalized brand and repositioned MedMen for future growth and execution on existing license pipeline.
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Confidential Cannabis Lending Situation

SITUATION

  • Through an acquisition, the lender acquired a significant commercial real estate position with cannabis tenants. Within several months of acquisition, the loan was in default, and SCP was engaged to evaluate the underlying collateral, the true financial position, and a potential exit strategy.

SCP'S SOLUTION

  • SCP established immediate trust with the borrower and discovered it was also in default with the city. Failure to pay taxes within the cure period will remove cannabis-specific zoning, meaning the current tenants would lose their leases and the valuable green overlay would be destroyed. Armed with this information, SCP worked alongside borrower management to extend the cure period and put together a capital raise.

RESULTs

  • SCP demonstrated significant value in uncovering a previously unknown default, and swiftly implemented a plan of action to preserve lender collateral.
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Confidential Cannabis Supply Company

SITUATION

  • The Company had sustained significant operating losses and faced an uncertain fundraising environment given current cannabis valuations and a tentative lender.
  • The Company needed a more constructive lender relationship, more accurate and transparent forecasting, and a clear timeline while pursuing a path to profitability.

SCP'S SOLUTION

  • SCP built a robust 13-week cash flow to give Company management a real-time look into the business and repair the lender relationship.
  • Through this process, SCP highlighted paths for cost-cutting, operational improvement, and improved operational and financial controls.
  • SCP also completed an extensive borrowing base analysis for the lender and Company in order to create a transparent and constructive conversation around the value of the lender’s underlying collateral.

RESULTs

  • The management and finance team adopted changes in processes from SCP’s feedback that allowed better real-time visibility into the cash-burn rate of the business.
  • Further, based on SCP’s direction, tools were constructed that allowed more accurate procurement forecasts and therefore more accurate disbursement forecasts and more streamlined purchasing, improving the lender relationship.
  • The Company shifted to a longer-term partnership with SCP as it continues to benefit from demonstrated expertise in improving controls and operations.
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Confidential Vertically-Integrated Cannabis Company

SITUATION

  • Over the past few years, the Company experienced significant revenue growth, outpacing the capabilities of the existing financing and accounting team. 
  • The Company needed to raise capital for several new ventures without having a clear view of financials or cash flow and missing key financial and operational controls. As such, the Company needed to build out the finance team, get a handle on cash management and look to raise capital.

SCP'S SOLUTION

  • SCP built robust 13-week cash flows at the four main operating entities (a management entity, a retail entity, and two cultivation entities) to give a view into the size of the capital needs and to highlight deficiencies in financial controls and bookkeeping. SCP then assisted Company leadership in building out a finance and accounting team.
  • SCP also oversaw and managed FP&A duties ahead of hiring and training a full-time position and preparing the Company for and overseeing a capital raise.

RESULT

  • The Company requested an extension of SCP’s partnership, and the Company and SCP were able to highlight and execute operational improvements with an accurate view of the business.
  • SCP and the Company hired a controller and three senior accountants, and SCP then hired an FP&A lead while also implementing best practices in finance and accounting and finalizing toward institutional-investor quality financial reporting.
  • Further, SCP’s financial models were used as the base for the beginning stages of their capital raise.