Maximizing Cash Flow in the Cannabis Equity and Debt Market: Strategies for Success

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In today’s challenging equity and debt market, operators must maximize cash flow through operational efficiency, tax strategy, and effective reporting. At the recent Benzinga Cannabis Capital Conference, speakers and attendees talked extensively about the constantly changing market landscape and emphasized that staying ahead demands strategic planning and execution.

Cannabis Capital Raises
According to the Viridian Deal Tracker:

  • Cannabis Capital Raises are up 14.7% year-to-date (YTD) compared to 2023, with significant growth in Canadian Equity Issuance (up 259%) and U.S. Debt Issuance (up 98.3%).
  • The Cultivation and Retail sector has seen capital raises increase by 226% YTD, with debt issuance accounting for 97.3% of these raises.
  • Worldwide capital raises are up 14.7% YTD from 2023, with notable gains in Ag Tech and Investment/M&A sectors.

These statistics provide a strong foundation for discussing the current trends and successes in the cannabis equity and debt market, as well as highlight the importance of strategic planning and execution in maximizing cash flow.

Maximizing Cash Flow and Optimizing Your Tax Strategy

Operational efficiency is crucial in ensuring that businesses can maintain and grow their cash flow. This involves optimizing processes, reducing waste, and improving productivity. Additionally, having a robust tax strategy can significantly impact financial health. Utilizing tax strategies such as inventory methods under Section 471© for small business taxpayers optimizing, optimizing allocations, and structuring the right entity may lead to substantial savings and improved cash flow.

The Importance of Financial Processes and Reporting

With a noticeable shift in the debt market towards a focus on credit risk, it is vitally important for businesses to maintain good financial processes and clean financial statements. Transparent and accurate reporting not only builds trust with investors and lenders but also enhances the ability to secure financing and manage debt effectively.

As the market anticipates significant changes in the coming years, including potential rescheduling that could impact financial flexibility, it is more important than ever for businesses to be prepared with solid financial strategies and reporting mechanisms. For more information and to get assistance in maximizing your cash flow, understanding credit risk, and optimizing your tax strategy, contact Janice O’Reilly, CPA, CGMA, CEO of CannCount, LLC, an affiliate of AAFCPAs, at 774.512.9046 or joreilly@nullcanncount.com


About the Author

Janice O'Reilly

Janice O’Reilly, CPA, CGMA

Janice is a Partner in the Consulting Division of AAFCPAs and advisor and former leader of the Outsourced Accounting & Fractional CFO practice, which provides “right-size” outsourced accounting solutions, from cloud-based bookkeeping to CFO deliverables, designed to optimize the effectiveness of the modern finance function.  Public, privately-held, and nonprofit organizations value the pragmatic assessment, infrastructure set-up, and flawless execution of their accounting & finance deliverables—all completed with the resources and technical expertise of AAFCPAs’ full-service …