Transition Management Part I- Initial Stage

This is Part 1 in a 4-part series on Transition Management, focusing on the transition of a company’s finance operation and team. Sean and Michael, co-owners of GreenLeaf Ventures—a holding company with multiple cannabis operations in California—faced the daunting task of dissolving their partnership and transitioning the finance department from seller to buyer. In the transition of a growing cannabis business, a handshake deal among friends evolved into the need for a neutral and professional team to be hired in order to facilitate.

Backstory: Sean & Michael co-owned Greenleaf Ventures*, a vertically integrated cannabis company in California. The partners decided it was time to go their separate ways by transferring the licenses to Sean and Michael being compensated based on an agreed-upon price based on certain successful transition objectives- namely, the license, know-how, contacts, operations, and the finance department.

When assets are being transitioned, it is key to focus on their movement as seamlessly and as professionally as possible.

Examples of assets that need to be transferred may include- 

Intangible- licenses, customer lists, know-how, brand IP. 

Tangible- equipment, real estate, key staff, and inventory. 

The Hazards of Business Transitions: Splitting a business partnership can reveal tensions and lead to significant disputes over asset division. It also usually reveals that initial shareholder agreements and buy-sell agreements either do not exist or are stale. 

In all cases, a level head is needed so that the terms of a deal and any obstacles that arise are resolved in a fair and impartial manner. Rachel Wright and her team have the ability and experience to help parties cut through emotions and stay focused on the outcome of transitioning the financial operations as seamlessly as possible.

Initial Analysis: Verdant Strategies, led by Rachel Wright, had long been Sean’s accountant and now stepped in to provide financial transition management services, which Michael contested initially, reflecting the emotional weight these negotiations often carry. Once the objectivity of the Verdant Strategies team was established, Michael agreed to work with them and his organization followed suit. 

It is key that the transition management team sticks to the facts and the outcome. 

Here, the goal was to:

1. Establish a transition management project plan. 
2. Understand the current financial operations and key members.
3. Receive training from the transitioning finance department. 
4. Gather the SOPs, software, passwords, key documents, and backup of all data files pertaining to the finance department.

Commitment to Proper Planning & Communication: The Verdant team’s expertise in working in high-conflict situations was vital. They helped by being a calm and professional presence when disputes arose, likening the process to a marital divorce, and emphasizing clear, open communication to forge a path to transition

To effectuate the transition, establishing and sticking to a project plan as well as regular meetings to touch base throughout the process with leadership and key staff members (incoming and outgoing), are important. 

This foundation enabled a comprehensive knowledge transfer, setting the stage for the next phase—building infrastructure- including processes, systems, recruiting, staffing, and training the new team.

Outcome of Phase I:

Phase one of the transfer of financial knowledge, processes, software, and documents to the Verdant transition team took a few months to facilitate. Emotions were calmed and Phase I objectives were accomplished. It was now time to move to Phase II. 

Advantage of a Specialist in Transition Management: One of the advantages of hiring a cannabis consulting firm such as Verdant Strategies with a specialty in Transition Management is that they have a professional and results-driven method for accomplishing the outcome, as well as a deep understanding and track record within the industry. Verdant Strategies focus on proactive communication, mutual respect, and objective resolution methods so that the client feels comfort, knowing that their outcome will be achieved with as little disruption as possible.

Transition Management Article 2: The First Three Months

Our case study will continue with an examination of Greenleaf Ventures’ first three months. We will discuss setting up the new infrastructure- including processes, systems, recruiting, staffing, and training the new team

Note: Names and details have been changed to maintain confidentiality while preserving the essence of the transition's challenges.