A CFO’s Winning Game Plan for a Cannabis Dispensary in Transition

Are your cannabis company’s growth goals tenable? When this becomes a constant question, it may be time to bring in the expertise of an outsourced CFO. On a part-time or outsourced basis, depending on your needs, CFOs like me can shed light on how the company is truly performing today, develop a viable strategic outlook, strengthen the financial operations and finance team, and get the company moving forward again.

Here’s how, through my role as a CFO and with the support of others on the Kukuza team, we recently helped one of our clients through the following steps:

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Planning the CFO role. Early on, as the outsourced CFO for this Northern California midsize dispensary, I became a part of the management team. I brought a fresh strategic view to the company as I built a plan for creating a solid financial foundation, including a potential work plan for the annual budget and a monthly reporting process; setting key metrics; creating practical financial models; and mentoring the team.

Developing a monthly reporting discipline. This step involved streamlining processes and leveling up the financial discipline of the company while the on-staff controller continued to cover the day-to-day accounting. New templates were prepared to ease the transition as well as a useful requirement to build on each month: Now each monthly report includes a narrative summary citing high level analyses of the results and outlook for the near future.

Opening up visibility. There was even more information to be had that the cannabis company was not accessing. We identified a new set of key metrics that could be pulled from the POS system on an ongoing, easy basis. Using a third-party data analytics application specifically designed for the cannabis industry, we extracted information from the POS system for a range of customer data, to explore, for example, the effects of the pandemic, customer demand by geography, and the impacts of supply chain changes to customer orders. Month-to-month comparisons gave us useful nonfinancial information that was telling about customer loyalty and average order size.

We also pulled information across all areas of the business to create, for the first time, a bottom-up approach to this company’s budget process. This revealed the company’s profitability levers and continued potential for growth. A revamped financial planning and analysis model led to a workable budget, with targeted key results.

The Next Phase: The CFO as Ongoing Advisor, Mentor

Our hands-on experience with a range of cannabis companies mean our CFO consultants can quickly identify both short- and long-term improvements that will impact the bottom line. Companies can access this level of flexibility and expertise, on their terms, without the commitment of an on-staff, full-time CFO.

In fact, that’s why companies like this dispensary benefit from the expertise of an outsourced CFO: The role of the outsourced CFO is completely flexible—this consultant could have a heavier presence in the beginning, to help lay a solid financial foundation and upskill the current finance team, and pull back as financial operations improve and strategic plans are finalized. At a later point, some companies find that they need the CFO role to expand, and the outsourced CFO will be there to help transition a full-time person into the position.

For this cannabis company, the transformation of the financial operations took less than 90 days, with a cost-efficient team effort from Kukuza. Now, my role as CFO consultant is as an ongoing advisor and mentor, ready to help the controller who has taken the reins of the improved financial reporting process, and I will facilitate the strategic review and budget framework for the second year. I’m ready to be a sounding board and mentor, as needed.

With up-to-date financials and key metrics at its disposal, there is nothing stopping this company from making fully informed decisions and chasing after its growth plans.

Ready to take your cannabis company to the next level? Find out more about our CFO and other strategic advisory services by contacting Kukuza Associates today.

As a consulting CFO for Kukuza Associates, Gary Potts knows the CFO role inside and out. He’s helped dispensaries, growers, and many other small and midsize companies power through their growth challenges and move forward. He previously worked at Service Champions, Satmetrix Systems and PwC.