VIDEO: Emblem Corp CEO Nick Dean Talks About Their Cannabis Game Plan for 2018

MidasLetter Live

Emblem Corp (CVE:EMC) (OTCMKTS:EMMBF) (FRA:E0M) CEO Nick Dean talks to James about the company’s cannabis cultivation strategy. Nick also talks about their new greenhouse build in Paris Ontario which will produce 15,000kg of dried flower cannabis on an annual basis. He also talks about their perception of all the consumer ‘types’ they have identified including recreational users.


James West:    Nick, thanks for joining me today.

Nick Dean: James, my pleasure.

James West:    Nick, tell me what’s new with Emblem.

Nick Dean: Well, lots is new. So I’m new; I joined the company eight weeks ago.

James West:    Congratulations.

Nick Dean: Yeah, it’s been fantastic. It’s been a wonderful 8 weeks with the company.

James West:    Sure. What’s your background?

Nick Dean: I come from a marketing and advertising background. So the last four years as CEO of KBS, one of Canada’s largest advertising and marketing agencies. Some time with one of the Big Five banks, and also some non-profit work.

James West:    Okay. So what’s Emblem’s game plan for 2018?

Nick Dean: Emblem’s game plan is to continue our cultivation. So as you know, we’ve got our Woodsley facility right now, which is our closed-box strategy. Some construction to finish up there, end-of-the-year capacity of 2,000 kilograms. We’re also starting construction of our greenhouse on Paris Road in Paris, Ontario, where we plan to be able to cultivate about 15,000 kilograms of product out of there by early Q1, 2019.

In addition to that, we’re launching some new products, mostly focused on the pharmaceutical side of the business at this point. Through our partnership with Dosecan, we’ll be launching a oral spray product in Q3, we’ll be launching some oil-based capsules as well in Q3, and then through our partnership with CanTab, we’re looking at the sustained release tablets that we’ll be launching likely in Q1, 2019. Now, that’s on the pharmaceutical side of the business.

James West:    Okay.

Nick Dean: We’re also focused on launching some brands in advance of the recreational market in July. So, a strong focus on building those three brands; right now, the strategy is focused on three consumer segments, your premium user – let’s sort of focus on the people that are active users of cannabis currently, they really want that Grade A product. Your casual user, which is someone that perhaps tried it back when they were in university but is now considering trying it again and may be an active user; and then more of your casual user, which might be someone that wants a lower-priced product that they can take on the weekends.

So it’s going to be a multi-segment strategy with a few brands that come out to support those products.

James West:    Okay. Currently, what’s your registered patient base?

Nick Dean: We currently have 3,000.

James West:    Oh, okay, that’s good to know.

Nick Dean: And growing at a decent pace month-over-month.

James West:    So the additional greenhouse sounds like it’s about 150,000 square feet?

Nick Dean: It’s going to be about 170,000 square feet. So, 135,000 of cultivation and then 35,000 of head house, where we’ll be able to do, obviously, the administrative services and then some manufacturing within there as well.

James West:    Okay, so looking at your strategy as you’ve just described it, I would think that you’re taking a conservative approach as opposed to some of the other guys who are taking very much a shotgun, run as fast as you can, buy as much as you can approach.

Nick Dean: I think that is fair to say. I think our focus right now is, we believe we’re going to have 17,000 kilograms by the end of the year; we are going to be looking for additional opportunities for acquisition to increase that capacity; but our focus is really going to be on product development and brand development. We believe that’s where the future of this market is: is in that value-added segment. So, focusing on building consumer demand first, and then supply that through the cultivation.

I think we can probably – we are going to be able to service our own needs, based on what we’re cultivating ourselves, for that market demand, and if demand exceeds what we’re able to produce ourselves, we will establish wholesale strategies with partners.

James West:    And what’s your take on the current volatility in the cannabis sector generally? I mean, you’re down basically 20 percent again.

Nick Dean: We are. I think, frankly, we’re dealing with a speculative investment community right now, and I think that the fundamentals of traditional business are going to come into play more and more as we see this market mature and as we see it develop. So I think we’re seeing probably a slight recession in the value of the shares right now, across the board; I think that is going to appreciate back up. But I believe that the market is also going to mature and going to be looking for, again, those traditional business fundamentals that a lot of our outside-category competitors would be facing as well.

James West:    Right. Do you worry at all about the ability of the Liberal government to meet the July 1st deadline?

Nick Dean: I think there is a strong desire from all parties involved to meet that deadline. Certainly we’re hearing the same things that everybody else is hearing right now: you know, are we going to miss that deadline? Is it going to slip, is it going to slide? I think that there is a strong mandate from the Feds down that that July deadline is something that we all want to meet, collectively. So, am I worried about it? No. Am I aware of it? Yes.

James West:    Okay. What’s the market cap of Emblem now, roughly?

Nick Dean: It’s roughly around, as of today’s share price, it’s roughly around $170 million.

James West:    Okay. So I’m just trying to look at it from the category of, you’ve seen these things run from a $100 million range to over 1 billion, so Emblem certainly has that potential, being at only 170 million. What steps are you going to take to drive it into unicorn territory?

Nick Dean: Well, I think it’s exactly what I just mentioned. We believe that the future of this business is going to be based, and the value of this business in the future is going to be based on brands, products, and value add. So right now the market is basing the value of cannabis companies, I believe, on how much you’re able to cultivate. I think that’s very quickly going to shift in terms of what brands are consumers demanding in the future. It’s going to be more of your traditional CPG-based approach, and/or pharmaceutical-based approach.

James West:    CPG?

Nick Dean: Consumer packaged goods.

James West:    Okay.

Nick Dean: So I think, you know, our focus right now is on building consumer demand; building those brands; building that product strategy, and that’s where future value is going to come from. Building unique formulations, building our patient acquisition strategies, and getting consumers excited about the adult-use products we’re going to bring to market. I think that is the future, and the market will shift towards valuing our companies based on the value of those brands versus how much we are able to cultivate.

James West:    Okay. Great. Let’s leave it there for now; that’s a great update, and we’ll come back to you in a couple quarters’ time and see how you’re doing. Thanks for coming in today.

Nick Dean: Thanks for having me. It was a pleasure.


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