Due Diligence: Operating model leverage

For investors, it is critical to know the details of how a cannabis company in this hypergrowth industry plans to bridge the gap between its current money-losing reality and the vision of a profitable future.

The “lose money now, make money in the future” operating model is not unusual for a relatively new industry. Companies are spending tremendous amounts of money to establish first- or early mover advantage, win market share, establish brands and expand geography.

The journey to profit will require operating model leverage (profit margin expansion), and investors need to know where that leverage will come from.

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