Evaluation, Scoring, and Monitoring (ESM)
Over the past few years, we have witnessed substantial and growing demand for objective, quantifiable, verifiable, systematic, and ultimately trusted visibility into cannabis businesses to:
- Help cannabis businesses gain better access to capital
- Allow investors and debt holders to more effectively price capital and manage market exposure
Thanks to CTrust’s proprietary formula and rigorous approach to evaluation, scoring, and monitoring of cannabis businesses, investors no longer need to extend blind trust, businesses have better access to capital, and lenders can better manage exposure and risk.
Evaluation & Scoring
Our rigorous evaluation process includes over 1,764 touch points across 42 business categories including, but not limited to, its:
- Operations & Processes
- Accounting & Financials
- Products & Services
- Management & Culture
- Branding & Public Relations
Through our evaluation process, we generate a quantitative investment risk indicator known as the Cannabis Trust Score (CTS). This score, derived from CTrust’s proprietary algorithm, is dynamic, with up to 18 updates annually (17 automatic and 1 physical audit). The CTS serves as a valuable tool for lenders and borrowers, aiding them in risk assessment and debt structuring with variable interest rates. This approach aligns the risk taken by both lenders and borrowers with the associated cost of capital. Updates to the CTS evaluation process are implemented periodically at the discretion of CTrust.
Monitoring
By leveraging CTrust’s exclusive monitoring system, “CFP + Exigence,” which enables the comprehensive and systematic performance monitoring across a cannabis company’s operations, financials, and compliance key performance indicators (KPIs), CTrust can provide a roadmap to operational and financial improvement as well as better access to capital.
Receivership Support
Compliance
CTrust Services’ team has extensive experience in navigating the specialized licensing and regulatory compliance requirements for the development and operation of cannabis establishments. We represent many enterprises in the cannabis industry and use our government relations to assist those businesses in obtaining the necessary regulatory approvals, and state and local licenses to legally operate cannabis establishments. Our reputation within the cannabis industry provides excellent relationships with regulators and other state and local agencies with cannabis related responsibilities.
Some of our compliance services include but are not limited to:
- Collaboration with the operation team for planning, execution, and oversight of the regulatory and internal compliance.
- Performing establishment audits and inspections.
- Management of compliance inspections, investigations and audits with regulators.
- Assigned as Marijuana Enforcement Tracking Reporting & Compliance (METRC) Key Administrator to ensure seed to sale tracking for all cultivation, production, dispensary and distribution business operations.
CTrust reduces the chaos of federal prohibition for cannabis businesses, investors and debt holders and has already saved cannabis businesses from entering into receivership. We built this organization to bring trust back into the cannabis space.
Management
CTrust Services’ management team helps bridge the gaps in all the important business areas that existing entities may be facing. We are positioned to assist with:
- Staffing and Human Resources (Administrative, Recruitment, Evaluation of Existing Staff)
- Operations (SOPs)
- Health and Safety (State & Local Health and OSHA)
- Cash Management & Reporting
- Operational technology, POS,Security, ERP Inventory Management
- Vendor Relationships
- Inventory
- Property Assessment
- E-commerce & Customer Relationship Management
We’ve tested and proven management protocols and procedures that provide transparency, accuracy and accountability.
Monitoring
Leveraging CTrust’s proprietary technology, we provide monitoring services through an interactive dashboard and a SAAS technology platform. We can assist lenders and investors by acting as their Special Servicer. Due to the increased scrutiny by government regulators, customers and media, cannabis businesses know that a strong, values-based ethics program and an ethical corporate culture can reduce the risk of costly mistakes. We provide objective, third-party perspectives on ethics and compliance programs, ethical cultures, internal processes, controls and best practice to companies and government agencies. Our proprietary technology allows us to monitor key performance indicators (“KPI”) and critical incidents (“CI”) in the most efficient cost-effective way available.
Receiver Certificate Funding
Court appointed receivers frequently “inherit” an estate with no funds. Furthermore, the process of liquidating assets in the cannabis industry under receivership can be long and complicated, and may not generate sufficient funds to the estate. Moreover, borrowing funds from insiders/creditors could present serious challenges to the receiver’s objectivity and fiduciary duty to ALL creditors. Consequently, CTrust Services developed a comprehensive process to assess risk and fund receivership estates with objective capital, secured by court approved receiver’s certificates.
Federal prohibition wreaks havoc on cannabis businesses that could thrive in other industries but get sentenced to an early death because Chapter 11 and other federal resources are unavailable. Today cannabis businesses and investors face asset liquidation and full entity dissolution via receiverships at unprecedented rates. In my 25 years in business and as a receiver, I’ve never seen anything like this.
Auction Platform
Cobra is a proven auction platform developed by a cannabis receiver for cannabis receivers. This platform is a single page application used for providing live feedback for the Auction of Cannabis Assets from within a receivership. Bidders must pre-qualify to be allowed access to the system. All bids are submitted online during the auction process. The auction admin team reviews the bids and updates the ticker of the highest bid and provides on-going messages and feedback in the Admin Message section.
The Auction Platform has evolved since its inception to allow running scheduled timed auction sales. Each event or auction sale contains a catalog of lots that share information such as scheduled start date and organized ending times.
Platform’s Highlights:
- Court Approved Workflow
- Run and organize multiple auction sales at the same time
- Create Auction Events as drafts and build your catalog of lots before publishing
- Tools to control lot order and stagger ending times
- Auto extend lots when bids are placed during the final moments
Consulting
Operators – Helping operators navigate a complex financial landscape
Cannabis operators face uniquely complex challenges while managing growing, processing and/or selling a federally illegal product within or across state lines. The level of resources and undivided attention to detail required in this unprecedented new and diverse space are often overseen. A simple mistake can set a company back up to 12 months, which under current market conditions could result in a significant loss of revenue or even the potential demise of the business. Juggling the complexity of Cannabusiness, in the midst of the growing pain of the ever-changing regulatory environment, the tightening capital market, and an increasingly expensive lending space, can be overwhelming if not detrimental to Operators who are in need of capital.
CTrust was created to bridge that gap, bringing trust to all stakeholders so that they may connect as free markets intended to. CTrust Services provide quantifiable visibility into a company’s KPI’s (Key Performance Indicators) and CI’s (Critical Incidents) in order to provide measurable tools aligning operators’ needs with lenders and Investors’ expectations – creating a healthy and mature environment aligned based on trusted metrics. By a way of comparison, CTrust’s business model can be looked at as treating patients in the medical field, which consists of three main steps:
For the first time since the industry’s birth, we are seeing signs of potential market contraction – a decrease in consumption, misalignment between supply and demand, lack of access to capital, and consequent increasing number of businesses failure. While we await potential regulatory improvements supporting continued industry maturation, the only thing that will truly have a positive and immediate market impact is more equitable and cost-effective capital flow; and the only way that will happen is via quantifiable, verifiable, systematic, and ultimately trusted visibility into cannabis businesses performance. The time for true transparency is now and today is the day we must embrace sophisticated business credit scoring allowing mature access to capital.
- Evaluation (testing) – initial bill of health of the operator’s business
- Scoring (results) – quantitative scoring representing the evaluation of current operational and financial risk as well as the confidence level of said scoring
- Monitoring Services (remedies) – summary of measures and required action items to address performance issues relative to best practices models specific to that operator’s environment.
Such an objectively produced business bill of health aligns with a quantitative indicator, a risk score (Cannabis Trust Score – CTS) that will then help more effectively and equitably impact an operator cost of capital, whether equity or debt.
To begin the trust re-building process between operators and lenders/investors, one must provide transparency, better communication, reliable and objective reports – CTrust provides an on-demand credit report, and an interactive dashboard for operators, their lenders and their investors.
CTrust – Trust you can C.
Regulators – Supporting regulators in the cannabis industry
Cannabis regulators are responsible for providing transparency and compliance within the cannabis industry to ensure the health and safety of the public are a top priority. They use the powers of oversight, rule-making, and enforcement to ensure the legal cannabis industry in their state is operating by the rules. They may also partner with the industry, working with licensees and regulatory affairs professionals to identify challenges and create solutions that will improve the marketplace for businesses, investors, and consumers.
Debt financing is the predominant source of funding for the cannabis industry to expand and improve on operations. From the regulator’s perspective, there are two key challenges that exist in the debt financing model:
- Lack of transparency into the capital funding the industry, as most agencies do not have the resources or capacity to take a deep dive into the creditor’s financing the industry.
- Inability for creditors to legally collateralize licenses without the appropriate suitability investigations required by regulators, creating a higher cost of capital for licensees and potentially leading to legal challenges that can end up in receiverships and court battles.
CTrust’s solution for regulators creates a framework they can trust by expanding oversight and transparency into capital and the health of the industry in their jurisdiction, while reducing the time and resources required to evaluate and monitor the activities of licensees borrowing the capital.
Creditors – CTrust is a “Special Servicer” for the Cannabis Industry Lenders
Access to capital markets has become challenging due to various factors within and outside the cannabis industry. This situation presents numerous difficulties for both licensees and creditors. Debt financing has emerged as the primary source of funding for cannabis industry growth and enhancement. However, a significant obstacle lies in the lack of transparency and impartial, objective analysis of these businesses. This deficiency has restricted access to capital and driven up its cost.
Investors and debt holders need quantifiable, verifiable, systematic, and trusted visibility into the cannabis businesses they support to better protect current and future investments and once again get capital flowing. CTrust Services expertise increases operational and financial transparency to reduce investment risk and allow investors and debt holders to more effectively price capital and manage market exposure.