In the middle of the chaos created by the outbreak of the COVID-19 in most stock markets, cannabis companies are working on new measures to improve their numbers. That is the case of KushCo Holdings, Inc., which has just announced a new strategic plan that includes drastic measures to achieve a positive adjusted EBITDA. The most significant change is the appointment of a new leadership position within the company and a stark plan for cutting down operational costs.
“After more than doubling sales in each of the last five years, we entered fiscal 2020 embarking on a new strategy to rationalize all aspects of our operations, align ourselves deeper with the best and promising cannabis and CBD operators, and pave an achievable pathway toward near-term profitability,” said Nick Kovacevich, KushCo’s Co-founder, Chairman and CEO.
The company has developed a comprehensive plan with four main aspects to focus on, starting with Christopher Tedford stepping down as the Chief Financial Officer – Stephen Christoffersen will now occupy the position. Also, part of the company’s strategy is to redirect their focus to larger companies, which means that KushCo is planning to work with a more financially stable brand and multistate operators, instead of going for smaller regional operators. Cost reduction is something that becomes necessary for a company that grew more than needed in the past. Another change coming to the company is the reduction of costs in aspects like customer service. It will now be a cash-only agreement with no customer projects and without a dedicated agent to each customer. Instead, there will be an equally efficient customer support line.
To continue with cost reduction, the company decided to lay off 49 employees so the company could adjust the number of collaborators to its correct size. This totals a 50% reduction in the workforce since September 2019. This should bring KushCo annual savings for nearly $4 million. More details about its strategy will be revealed by April 2020 when the second-quarter results are presented.