When you talk to business owners who are proud of where their businesses are at, they often talk  about the market, helping their customers achieve their goals, and their employees. They point to the people, their actions, and how they rise above during crucial moments. Sometimes  they’ll refer to this as having a great culture where everyone is willing to go above and beyond (i.e. giving 110%), fill in for others who are out of the office for various reasons (being team players), and having fun doing what they do best.

The question for everyone else is, how did they get there?

Here’s the reality – it wasn’t blind luck. These companies did many things the right way to get here. Some may have even been in a situation where things were bad, but they didn’t give up; they pivoted, planned, executed, and stayed true to the path they needed to be on to improve. 

Why? Somewhere along the line, they realized the issues weren’t because:

• People didn’t want to work
• There weren’t good candidates out there
• They were the greatest things since sliced bread (can you imagine the days
   when there WASN’T sliced bread? – oh, the horror)

Instead, they figured out that for every finger they were pointing, there were three fingers pointing back at themselves.

RECOGNIZE

Building (or rebuilding) company culture is a lot like planning a vacation or a trip. First you have to recognize you need one. Frankly, who doesn’t need a great vacation? 

Understanding that you may have some challenges in fixing a problem (sales, service, quality manufacturing, engineering, process, etc.) within your work environment has to come first. Without identifying a challenge, how can you fix or improve it?  

That’s not to say that there’s a glaring problem in every organization. Rather, it’s pointing out that your organization has room to grow and improve – to get better than you were yesterday. 

MEASURE

Once the challenge is identified and acknowledged, you need to determine where you’re at – your benchmark.  Like traveling from your closest airport, you need to know where you’re starting in order to figure out where you can go. This identification includes measuring and evaluating – not just “trusting your instincts.”  Ask any seasoned sales leader and they’ll tell you that if you’re not going to measure it, there’s no point in doing it at all. Determining where you’re at will help you have a compass – where you start, where you’re heading, and how you’ll know you’ve been successful. 

PLAN

Next comes the itinerary. On your journey, you need to plan for stops along the way. What things will you entertain or visit? What elements do you want to include to achieve those lofty goals? Are they tied
to your company values? 

INVITE

Who’s coming on the journey? Some will challenge, some will oppose, but ultimately you’ve made the decision as the leader of the ‘family,’ that this trip is happening. Now, decide who are your strongest focus group participants. It’s not the people who are burying their heads in the sand – pretending issues will magically go away, or that potential problems don’t exist. It’s the people who see that a positive culture creates greater engagement and inclusivity. Culture helps people know how to act, especially when things are tough. When your engagement is on the rise, so are productivity and employee retention rates. Higher rates here make the business more profitable – less time retraining new people, less people taking on additional workload due to turnover, etc.

ACT

Now it’s time to get on the bus. Start executing the things your focus group planned on. Pivot, when necessary, but stay on the path – even if not everything goes as planned. You’re sure to have a ‘flat tire’ or delays. Remain calm and vigilant about staying on track to achieve those goals you set forth. 

OBSERVE

Enjoy the ride. If you’ve planned well, this should be a great journey for you, your leaders, and your employees. Building an inclusive culture tied to your company values can be awe inspiring to watch. Learn from missteps, take notes, gather intel from the front lines, and continue to tweak and massage.

REPEAT

You’re not done. As with strategic planning, budgeting, goal setting, project management etc., you have to continue to plan for tomorrow. What’s the next trip you’re going on? How could you have made
this one better? 

It takes some imagination of what’s possible. Sometimes, it takes some external perspective to help you see what you’ve accomplished, what opportunities you might be overlooking, and how you can continually improve this ongoing trip.  

Building a sustainable culture is a challenge, you can’t win by playing the lottery or entering a contest. You have to invest the time, energy, and consistency in all phases.  Company culture has a life of its own, and with each new employee you add something – their interests, ideas, perspectives, and connection to your mission, vision, and values. 

How you and your leadership team carry these things out, especially when no one is looking, will determine how good your compass is on your journey to building a better culture. To learn more about how to strengthen your company’s culture visit: https://buildbetterculture.com/.

Cannabis companies can be valued differently for a variety of reasons, similar to companies in any other industry. 

Here are some factors that can influence the valuation of cannabis companies:

1. Market Position & Branding

Companies with a strong market position and well-established brands tend to have higher valuations. Brand recognition, customer loyalty, and a positive reputation can contribute significantly to a company’s value.

2. Revenue & Earnings 

Financial performance is a crucial factor in determining a company’s value. Cannabis companies that demonstrate consistent revenue growth,
profitability, and strong financial management are often valued more highly.

3. Regulatory Environment 

The regulatory landscape for cannabis varies widely across regions and countries. Companies operating in areas with favorable and stable regulations may be more highly valued due to reduced risks and obstacles.

4. Product Diversity & Innovation 

Companies with a diverse product portfolio and a focus on innovation may be valued higher. The ability to adapt to changing consumer preferences and introduce new and unique products can set a company apart in the competitive cannabis market.

5. Geographic Presence 

The geographic scope of operations can impact valuation. Companies with a widespread presence
in markets with high demand for cannabis products may be valued more than those confined to smaller
or less lucrative regions.

6. Production Capacity & Supply Chain Management 

Companies with efficient production capabilities and a well-managed supply chain may be valued higher.
This is especially important in the cannabis industry, where cultivation, processing, and distribution efficiency can significantly affect costs and profits.

7. Partnerships & Mergers:

Strategic partnerships, collaborations, or mergers can influence a company’s valuation. Aligning with established industry players, securing distribution agreements, or engaging in mergers and acquisitions can boost a company’s perceived value.

8. Market Sentiment

Public perception and investor sentiment play a role in the valuation of cannabis companies. Positive media coverage, public support, and a favorable industry outlook can contribute to higher valuations.

9. Legal & Compliance Factors

Companies that adhere to legal and regulatory requirements are likely to be more valued. A strong commitment to compliance and risk management can reduce legal uncertainties and contribute to a positive valuation.

10. Management Team 

The expertise and experience of a company’s management team can influence its valuation. A strong leadership team with a successful track record can instill confidence in investors and stakeholders.

It’s important to note that the cannabis industry is still evolving, and factors influencing valuations can change rapidly as the regulatory environment, consumer preferences, and market dynamics evolve. Additionally, investor perceptions and market trends can also impact how cannabis companies are valued.

Section 280E is a provision in the United States Internal Revenue Code that specifically deals with the taxation of income derived from the trafficking of controlled substances. It was added to the tax code in 1982 as a response to a case involving a drug dealer who attempted to deduct ordinary business expenses on their federal income tax return.

Under Section 280E, businesses engaged in the illegal trafficking of controlled substances, as defined by the Controlled Substances Act, are not allowed to deduct normal business expenses, except for the cost of goods sold (COGS), when calculating their federal taxable income. This means that such businesses cannot take deductions for expenses like rent, utilities, wages, and other typical operating costs that are deductible for legal businesses.

While the provision was initially intended for illegal drug trafficking, it has had a significant impact on state-legalized marijuana businesses in recent years. Even though marijuana is legal for recreational or medicinal use in some states, it remains illegal at the federal level. 

As a result, marijuana businesses are subject to Section 280E, facing limitations on the deductions they can claim, which can significantly impact their overall tax liability.

David is a Certified Public Accountant and Partner at Ferraro, Amodio and Zarecki, CPAs. David has an Accreditation in Business Valuation and is a Certified Divorce Financial Analyst. David practices a philosophy built around providing clients with outstanding creative and personalized quality services. 

David’s experience and expertise help him provide clients with the tools and resources they need to understand the valuation of closely-held businesses, especially when it comes to divorce. His strengths in communicating the results of his valuation conclusion to clients are qualities that make him
a leader in the industry.