S1 Enterprises has successfully closed on its sale to an Employee Stock Ownership Plan (ESOP), a milestone for employee ownership in the regulated cannabis industry.
This transaction represents the largest ESOP completed in the cannabis sector to date, reflecting both the scale of the company and growing institutional confidence in best-in-class operators.This pioneering move not only solidifies the company's commitment to its workforce but also strategically addresses one of the cannabis industry's most significant financial hurdles: the federal tax burden imposed by Internal Revenue Code Section 280E.
"Transitioning to an ESOP is a deeply meaningful way to honor their dedication and ensure that the people who build this company every day are the ones who benefit most from its success. This is about securing our shared future and fostering an even stronger sense of purpose and teamwork," says Carolyn Richmond, Executive Vice President of S1 Enterprises.
"The only change is that every team member now has a vested interest in the company's long-term stability and growth in which every employee's daily efforts directly contribute to the company's annual valuation and their own long-term wealth accumulation, at no out-of-pocket cost to them. They are no longer just employees; they are owners, and their success is tied directly to the company's profitability," says Adam Diltz, S1 Enterprises President.
"We are transforming major industry pitfalls and regulatory challenges into a monumental opportunity. Instead of relying on an over-leveraged industry crippled by debt with cash flow issues choke-holding companies, we have created our own opportunity. By mitigating the crushing impact of 280E, we can invest in our people and operations like never before. Our employees have always been our greatest asset and the driving force behind our success," said Nate Ruby, CEO of S1 Enterprises.
"The Illicit ESOP, the first for Sharp Capital and its ESOP advisory partner, Verit, demonstrates the power of an ESOP as a vehicle for monetization in what remains a very "thin" market for cannabis exits. Because of Illicit's exceptional management team, best-in-class operations, industry-leading financial performance, and balance sheet strength, we were able to arrange a sizeable institutional financing package to fund a cash distribution to S1 shareholders at close, which we believe to be the first of its kind in the cannabis sector," said Steve Miles, CEO of Sharp.
For more information:
Illicit Brands
illicitbrand.com/
