Vertically integrated cannabis producer and retailer Item 9 Labs Corp. has initiated a restructuring plan that includes cutting expenses by $3.5 million and an executive shake-up.
Along with the reduction in operating costs, the Arizona-based company on Tuesday announced the resignations of CEO Michael Weinberger, who took the top job in December, as well as Chief Legal Officer Michael Keskey and board director Lawrence Taylor.
The resignations and restructuring plan prompted several management changes, including:
- Weinberger taking a role as strategic adviser, focusing on the company’s retail franchise Unity Rd.
- Chair Doug Bowden, who has invested more than $15 million in the company, is now interim CEO.
- Chief Operating Officer Chris Wolven is now overseeing operations and leading the company.
- Director Jeffrey Rassas was appointed as strategic adviser, primarily driving investor and public relations as well as capital needs.
The company, according to a news release, is also in discussions with current and prospective lenders to restructure outstanding debt in an effort to clean up the balance sheet and reduce interest expenses.
“We expect the combination of refined systems at our cultivation and manufacturing facility and reductions in the cost of outsourced materials will result in higher gross profit margins,” Wolven said.
“As we continue to decrease our cost of goods sold, we are driving increased volumes of our most popular products.
“Securing our first positive adjusted EBITDA in months demonstrates the productive shifts we’ve made to bolster our entities for growth.”
Item 9 will continue its domestic expansion, as it nears the closing of its proposed $12.8 million acquisition of Sessions Cannabis, one of the largest franchise marijuana companies in Canada.
Bowden noted in the release that the company might “have to source other capital to close the transaction.”
The restructuring is Item 9’s second significant cost-cutting measure since December, when it announced it was streamlining operations by cutting 20% of its staff.
The company said at the time the staff reductions eliminated “many redundancies” and better positioned the company for profitability and scale.
The operator also said in December that it implemented other cost-saving measures to reduce overhead expenses by at least 15%.