Wildflower Marijuana Inc. (CNSX:SUN) (OTCMKTS:WLDFF) (FRA:RSP) is a cannabis company that sets itself apart with unique branding that isn’t “pigeonholed into a brand that reflected where cannabis came from, but more where cannabis was going,” says CEO William McLean. He talks to James about brand strategy, partnering with King Extracts, products, and more.
James West: William, thanks for joining us today.
William McLean: Thanks for having me.
James West: William, let’s start with an overview: tell me all about what Wildflower does.
William McLean: Wildflower manufactures and develops products in the cannabis sector. We do it for both the regulated cannabis markets and the CBD/hemp based markets, mainly in the United States. We’re in over 100 stores in Washington and we’re in a handful of other stores throughout the US.
James West: Oh, interesting. And so tell me about how you founded the company and how you got started in that segment.
William McLean: Well, really what brought me to the industry was the opportunity of a new industry that didn’t have any brands that the consumers could connect with. We have a multi-billion-dollar industry here, and I come from a sales and marketing background, and quite early on I recognized the power of a brand and how people connected with it. And so with this new burgeoning industry upon us now, you see a real need for consumers wanting cannabis-based products and not really knowing where to go for them, and what companies to use, or to pick from.
So that was really our mandate, was to create a brand that was far-reaching. I didn’t want to be pigeonholed into a brand that really reflected where cannabis came from, but more where cannabis was going.
James West: Typically your brands seem to be predominantly associated with the healthful benefits of CBDs as opposed to the psychoactive effects of THC, and is that something that is going to persist, or do you plan to become more of a sort of recreational brand line as well?
William McLean: Well, I feel like – at the centre of our wheel, the hub of our wheel is cannabis and cannabis based products. So really CBD is one of the spokes in our wheel. It is, in my opinion, one of the biggest spokes; obviously, the recreational market is one of them as well. But if you look really at the size of the markets and how they’re developing, to begin with, you look at the nutraceutical industry – it last year did $265 billion in sales. And really, CBD-based products are that natural health based product and fits under the nutraceutical umbrella.
If you look at the cannabis space and arguably the numbers are just emerging, but you can say globally it’s somewhere between $50 billion and $100 billion industry. So I think it would really be a bad thing to ignore the health benefits of this plant, and how consumers are now looking for a more holistic approach to their health, and really looking at more of taking preventative measures and more natural things to ensure that they’re staying away from those more pharmaceutical, chemical-based products.
James West: Okay. Interesting. I see that you have partnered with a company called King Extracts earlier this year, and what is the driving sort of logic behind that partnership?
William McLean: Well, that acquisition was really for us to get an early hold into the California market. What we learned very early on going into the Washington State market was that it was a lot more difficult trying to steal shelf space than have it right from the beginning, and what you saw with regulations early on is that the retailers were looking for companies that were ready and conforming with the regulations that were out there, and there was a shortage of them. So they pretty much took on as many companies that could fit that criteria, and then, once they had these established products, it was – we came along, say, about a year later – it was very difficult to take that market shelf and to show and prove that a quality product, a quality brand, was more desirable.
Now a lot of the companies did us a favour and didn’t give the quality of the product and the quality of customer support, so that allowed us to really go in that market, but that lesson we really took, and now we want to make sure that as the new regulations are emerging and playing out in the California market that were there right from the beginning. And essentially just, it makes it a lot easier to get market share.
James West: Yeah, you bet. Are you planning to stay predominantly in US markets, or will you move more into Canada as the industry matures?
William McLean: Our model has always been to get market share and to expand into new markets, and that’s going to continue. So whether that’s Canada, whether that’s other countries, we are always actively looking to expand our distribution and to get into new markets. So that will continue.
James West: Okay. And do you have any strategy or desire, even, to get into growing the product?
William McLean: You know, that’s really going to depend on the developing markets and how they play out, and how the licensing works. Some markets, that’s going to make sense; there are other markets where it won’t make sense to do that, and again, it’s going to be different for every market that opens up. So we’re open to it; I really feel like our brand is very strong for a cannabis company that sells flower. Obviously, we’re very excited about our brand and our name, and I think that it’s what will give us the edge as we break into new markets.
James West: What is your top-selling product?
William McLean: The top-selling product right now is our Cool Stick, which is a topical.
James West: Okay.
William McLean: It’s been easily the best-received product. We actually were surprised by that, we thought it would be our other product would sell better, but by far it’s been the Cool Stick, and then behind that we have our capsules and our ACHES Vaporizer as close second and third.
James West: Okay. And I see that you make reference to Amazon coming into the space in your Power Point presentation. Do you envision a partnership with Amazon?
William McLean: We’ll be selling through Amazon. I think Amazon, as you can see, they’re expanding their reach substantially, and it only makes sense for them to be a part of this new emerging market as well. So definitely we’ll be there, and we’ll be in other affiliate markets online as well. So just stay tuned and you’ll see some news coming down the pipeline.
James West: Sure, okay. From an investor perspective, do you envision that Wildflower Marijuana could be a takeout target, or do you see it possibly acting as a consolidator in the consumer brands space?
William McLean: It’s going to be a consolidator.
James West: It is?
William McLean: Yep.
James West: Okay, so it sounds like you’ve got some firm targets in mind there! You say that with a degree of confidence that leaves no room for speculation.
William McLean: A high degree of confidence.
James West: Yeah.
William McLean: Well, to begin with, it’s a tightly held stock, so it makes Wildflower a very difficult acquisition target right now. We have strong control of it. But what we’re seeing right now – early on, the companies that were involved and the analysts and specialists in the industry, they didn’t see the value as much in the branding side of things; it was what we first did with our company, and we feel like we have the strongest brand in the space. And we’re seeing the dividends of that right now, with multiple companies coming to us wanting all sorts of things – you know, working together in partnerships, joint ventures, acquisitions.
So there’s lots of opportunities presenting themselves, and I think it’s because we’re a little bit unique in what we did. There’s now over 70 licensed producers in Canada; you know, you want to partner up with one of them, it’s not hard to start calling them up and trying to work with that with them. But how many companies took our route to get here, and started to develop products years ago and a brand years ago? And now we feel we’re ahead of the game compared to most of the other LPs and other public companies.
James West: Yeah, you bet. I’m looking at your packaging and products online right now and I’ve got to say, I like the simplicity and the, it’s sort of an elegant design, I really like that.
What kind of margins do you target? What kinds of margins are you realizing on your product in terms of gross margin, and what does your financial outlook look like going out in the next twelve months?
William McLean: Well, you know, we really spent the last three years developing products, getting our supply line in place, our production staff, fleet, manufacturing, all those sorts of things, and it’s only recently that we’ve turned our focus on driving revenue. The first thing to make sure when you’re going for revenues is to make sure you’ve got your foundation set. You only get a chance to go to market once, and if you have all sorts of other issues from quality control or supply problems, that’s really going to affect your plan.
So we’ve just recently turned that corner where now we’re all focused on revenues and different streams of distribution. So you’re going to see growth over the next few quarters here, quite easily. We’re already seeing signs of that; we’ve had a quarter-over-quarter growth for the last two or three quarters I think, now that we’ve reported earnings, or revenue, let’s just say.
So I think that’s definitely going to continue as we start to realize the revenues in the California market, and we’ve also got about four or five other products that we’re going to be launching. So with our new product launching, the new markets that we’re entering into, you’re definitely going to see continued growth from a revenue standpoint.
On top of that, we’re starting to look at, as you mentioned, our online and e-commerce revenues, and we’re working closely with a bunch of affiliates that you’re going to start to see, we’ll make public as we start getting up and running on those sites.
James West: Sure, okay.
William McLean: In terms of revenues, all blue sky so far.
James West: Great. All right, William, that’s a great introductory interview. We’re going to leave it there for now; we’ll come back to you in a quarter’s time and see how you’re making out. Thank you so much for joining us today.
William McLean: Not a problem. Thanks for having me, James.
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