Client Focus – Ermont Inc.

Feb 22, 2024 | Client Focus

Opus was appointed Receiver for Ermont Inc. of Massachusetts in November 2021 by the Court after having been pre-approved by the Cannabis Control Commission. Jacques Santucci and the Opus team effectively stood in for the Board of Directors. Opus’s primary objectives as Receiver was to develop a business strategy that would ensure the company stay operational through the length of the dispute, to audit the company’s current and historical cash flow budget, to identify and catalog assets, and to identify and notify any potential creditors as well as to market the company and its assets for sale.

Approach

Opus started by meeting with managers of Ermont, observing operations, and analyzing financials to gather a comprehensive understanding of the business’s existing processes. Opus then assumed oversight and took control of cash management and operational decision-making. A weekly cash flow budget was created and enforced. As a result, expenses were reduced, and redundancies were eliminated wherever possible.

Findings

Despite a surplus of unsold inventory, a grow room expansion project was in progress. It was found that Ermont was unable to adapt and make effective changes within the market once the adult use market went live, competing with the medical facilities. Ineffective operating procedures were producing undesirable  products and surpluses of desirable products, so Opus set up an inventory management system and wholesale channels in addition to other solutions to increase sales and reduce overhead. After analyzing past tax returns, it was found that the treatment of IRS 280E was not effective, and tax returns were recast. Ermont was unable to repay its debts through cash from operations, therefore an asset sale was the best response. Opus looked for candidates and after approval by Court and MA-CCC, the assets were sold in Q1 2023.

At Opus, we help clients navigate the complex and evolving challenges of starting and operating a cannabis business. Our management team includes seasoned business leaders with experience within and outside of the cannabis industry. Together, we provide the knowledge and resources you need to reach your business goals and stay in compliance with state laws, so you can avoid situations like this in the first place.

We keep your project on track, leverage our business network, and do the heavy lifting while you focus on your products and your goals.

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