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Restructuring for Stability
How Opus Guided The Source Through Receivership
The Source, a prominent vertically-integrated cannabis operator in Nevada, had built a strong presence with five retail stores, two cultivation sites, and a production facility across Las Vegas, Reno, and Pahrump. Founded in 2015, the company quickly became a leader in the state’s cannabis market. But with increasing competition, internal leadership challenges, and a heavily leveraged balance sheet, financial pressure mounted. By mid-2023, the company was in distress and entered a court-appointed receivership.
Opus Consulting was appointed as Receiver, approved by both the Eighth Judicial District Court of Nevada and the Nevada Cannabis Compliance Board (CCB), to stabilize operations, protect creditor interests, and prepare the business for a strategic asset sale. The objective was not just to maintain continuity, but to preserve as much value as possible while securing a long-term future for the assets and employees.
The Challenge:
Managing Distress Without a Bankruptcy Safety Net
As a cannabis business, The Source could not pursue federal bankruptcy due to cannabis’s schedule 1 classification. The company was experiencing declining profitability, inefficient operations, and a mounting debt burden that made repayment through operations unfeasible. With liabilities outpacing cashflow and limited options for traditional refinancing, receivership became the most viable path forward.
The challenge Opus faced once appointed receiver was multifaceted: keep the company running, address financial missteps, communicate transparently with creditors, and position the business for sale under court oversight, all without disrupting service or shedding the workforce.
Opus Consulting’s Solution:
Receivership Leadership with Operational Precision
Opus implemented a multi-pronged business transformation strategy tailored to the cannabis industry’s regulatory and financial constraints, and acted as both interim operator and strategic advisor throughout the engagement.
1.
Operational Stabilization and Oversight
Opus assumed full operational control, managing retail, cultivation, and production sites to ensure uninterrupted operations. Staffing, compliance, and vendor relations were stabilized, while licensing and regulatory filings were maintained without lapse, preserving the company’s value throughout the process.
2.
Performance Restructuring and Cost Controls
The team initiated immediate cost-cutting measures, optimized cash flow management, and implemented weekly financial reporting to create transparency and track performance. Staffing efficiency and inventory management were improved across all locations.
3.
Financial Restructuring and Tax Recasting
Opus reviewed and recast historical statements and IRS 280E tax filings to more accurately reflect the company’s position, setting a cleaner foundation for buyer diligence and creditor clarity.
4.
Creditor Communications and Legal Coordination
Working alongside legal counsel, Opus ensured transparent and timely updates to creditors. This approach helped maintain cooperation and reduced the risk of legal delays during the asset sale process.
5.
Asset Marketing and Strategic Sale
Recognizing that an asset sale was the best path for recovery, Opus partnered with legal and investment banking advisors to market and sell the company.
In 2024, with approval from the Court and the CCB, The Source’s assets were sold: the Reno store was acquired by High Sierra Holistics in July, and the remaining operations were purchased by Deep Roots Harvest, now one of the largest vertically-integrated cannabis operators in Nevada. Additional assets in Ohio and Massachusetts were also successfully sold.
The Outcome:
Preserved Operations, Protected Value
Thanks to Opus’s leadership, The Source’s operations remained fully functional, all stores stayed open during and after the receivership, and approximately 90% of the employees were retained. The sale of assets generated funds to settle claims, reduce liabilities, and maintain continuity in a highly competitive cannabis market.
By approaching the situation with operational rigor, financial restructuring expertise, and regulatory fluency, Opus helped avoid collapse and preserved long-term value for creditors, employees, and the Nevada cannabis industry at large.
Opus Consulting
Experts in Complexity and Turnarounds
Whether you’re navigating financial distress, preparing for an asset sale, or in need of interim management during a complex transition, Opus provides strategic guidance that protects stakeholders and unlocks long-term value.
Contact us to discuss how we can support your business through transformation, growth, or transition.
