Cannabis Case Studies | Steinberg Advisory

INDEPENDENT ADVISORY AND RESTRUCTURING FIRM

Tel: 123.456.7890

MYM (2018 - 2020)

Operational Restructuring of a Global Cannabis Company

Publicly traded cannabis company with assets in Australia, US, Colombia, Mexico, Canada
Involved in the cultivation of hemp and cannabis and the production of consumer-packaged goods
Problematic transactions and underperforming assets (Australia, US, Colombia, Canada)
Troubled balance sheet with significant cash burn Legacy deals included hostile shareholders and partners
Cleaned balance sheet
Focused senior management
Restructured the business to focus on its core competencies and acquisition strategy
Acquired cash generating asset for $12.9M

Sold the entity for $87M

Assessment on Behalf of Major Shareholders of Multi-State Cannabis Operator

Publicly traded hemp and cannabis producer with operations in Nevada, Washington, Oklahoma, and California
Complete disconnect between US operating partner and senior management
Significant cash burn
Limited industry understanding and experience
Onsite assessment of operating entities
Engaged directly with US operating partner
Reported findings to major shareholders and senior creditors

Uncovered serious misrepresentation by the US operating partner

Out of Court Operational Restructuring of East Coast Cannabis Company

Distressed publicly traded Canadian cannabis company
Cultivation projects in ON, NL, and NS
Lack of funds to fulfil contractual obligations
Significant cash burn
Hostile partners on various projects
In default of senior facility
Exited the non-performing projects
Refocused the business on its core facility
Achieved positive operating cash flow by building a top selling premium brand

Sold for $12.9M in 2020

CRO of First Successful CCAA Exit in Cannabis

Trichome Financial was a specialty lender in the cannabis space and senior secured lender of James E. Wagner
James E. Wagner was an industrial scale indoor cannabis facility with cultivation and processing capabilities
Defaulted on Trichome senior credit facility
Reliant on proprietary unreliable aeroponic growing technologies
Limited genetic selection, producing poor quality cannabis
Set up special committee and initiated lender led CCAA process
Appointed as CRO and overhauled the organizational chart
Engaged with Health Canada to ensure the seamless transition of licenses from one entity to another
Structured CCAA exit to allow the intake of fresh genetics vital to the turnaround of the business

First successful exit from CCAA via an asset purchase in the cannabis industry

Restructuring and Sale of Large-Scale Cannabis Producer
and Exporter

Industrial scale indoor cannabis facility
Limited Canadian distribution channels given the large-scale operation
Yields and quality significantly below industry standards
Assumed CEO and Director roles
Achieved certifications required for international export
Overhauled cultivation systems and methodology
Achieved national distribution of multiple newly created brands

Sold to multi-country operator for $84M

CCAA of Canadian Entity of Internationally Based Cannabis Operator

Multi-country operator with facilities in Israel, Germany, and Canada
Western Ontario cultivation and processing facility with multiple brands in market
Changing international landscape led to the abandonment of Canadian assets
Asset based lending facility in default
Failure of SISP process and stalking horse bid abandoned
Stabilized the business through the CCAA process
Obtained DIP financing from the ABL
Negotiated successful sale of brands and business

Limited the loss of the asset-based lender

Advisor to Creditors During Contentious CCAA

Multi-country cannabis operator with assets in Canada, Malta, South Africa, and Thailand
Involved in cultivation and processing in medical cannabis
Creditors had no previous cannabis exposure or experience
Mistrust between management and lender
Engaged to assess the viability of the different business units and the capability of senior management
Assessed the valuation of inventory

Identified and recommended a strategic refocus on the company’s core assets in Europe and Canada, resulting in the company being cash flow positive

Commercial Assessment of Top Canadian Extraction Facility

Large-scale hydrocarbon and ethanol cannabis processor
Top concentrate brands nationally
Lack of organizational oversight
Lack of clear commercial strategy or planning
Poor cash management
Assessed the processing equipment and capabilities
Evaluation of the senior management team
Independent review of commercial data to assess their retail strategy

Provided in-depth recommendations to senior management and major shareholder

Operational Restructuring of Bridging Finance Cannabis Asset

Multi-site cannabis producer with over $200M of Bridging Finance Capital invested
Failed receivership SISP
Significant cash flow burn (~$9M 2022)
Ineffective and expensive senior management
Complete lack of commercial strategy
Engaged to perform and assessment and recommended CCAA
Replaced entire senior management team
Complete overhaul of organization, cultivation processes, and commercialization strategy

Currently generating millions of dollars of free cash flow

Represented Secured Creditors Interests in Multi-Entity CCAA

Multi-site cannabis cultivator and exporter
Tens of millions of dollars of secured credit
Multiple secured creditors across different entities with conflicting interests
Unrealistic corporate strategy and management forecasts
In the event of a liquidation senior creditors would face significant losses
Engaged as information officer on behalf of secured creditors
Performed technical analysis of provincial sales data and RTV risk
Review and tested management cash flow forecasts
Role evolved to CRO on the recommendation of the secured creditors
Negotiated with multiple buyers and stakeholders to conclude a successful going concern transaction

Full recovery achieved for secured creditors