48North Cannabis Corp (CVE:NRTH) (OTCMKTS:NCNNF) CEO Alison Gordon talks about the company’s new extraction license and its female-focused product branding. 48North is focused on the future of consumer packaged goods in the cannabis industry focusing on four verticals: food, beverage, cosmetics, and skin care. The company is a leader in the emerging CBD skin care product space and has recently launched a cannabis lifestyle and education publication, Latitude magazine. In addition, Latitude is a brand with related cannabis products, such as vape pens, which allows 48North to build its brand within the space restrictions mandated by Health Canada. Gordon addresses possible partnerships between the company and established consumer packaged goods companies outside the cannabis space.
Ed Milewski: Hey, everybody, we’re back, and we’re with Alison Gordon, CEO.
Alison Gordon: Yes.
Ed Milewski: So, how are you doing?
Alison Gordon: I’m good, how are you?
Ed Milewski: Last time I saw you, you were off to Italy.
Alison Gordon: You’re not supposed to say that! I work 24/7. Maybe I was there for work.
Ed Milewski: Yeah, maybe.
Alison Gordon: Stay tuned.
Ed Milewski: Yeah. So what’s new in your company?
Alison Gordon: Well, there’s lots going on at 48North. Actually, we just announced that we received our extraction license; I think we released that early Monday morning. So we’re super excited. You know, we’re a company that’s very much focused on future products, and creating brands around those products, because I started my career in Canada, but midway through, I was working in the US. And while in the US, I could see the sales went really quickly in 2014 from, like 30 percent on the extracted products like edibles, extracts, vape, to 50 percent and upwards. And I knew back then, although everyone thought I was crazy here, that this is a consumer packaged goods industry.
So a big milestone for us was receiving our extraction license, because that puts us towards being able to do the development on products and be able to formulate to start to get those products ready for when the government says that we can bring them to market.
Ed Milewski: So, how many products are you looking at, here?
Alison Gordon: Well I’m really – right now, we’re looking at them in terms of verticals. So food, beverage, cosmetic and skin care is a very big one for us. For us, the strategy – oh, sorry, go ahead.
Ed Milewski: Yeah, what’s the – when you say cosmetics, like what? And I don’t know that much about it, so I’m going to ask you, like, is it CBD or is it THC or is it -?
Alison Gordon: It’s really both, and we expect that we will discover more about the other cannabinoids and the terpenes and how it all works together. But in the US, the CBD skincare products are some of the fastest-growing in the cannabis space, and in the skin care space the cannabis products are one of the fastest-growing.
Ed Milewski: Yeah. And so you’re a wellness company?
Alison Gordon: We are. We’re a health and wellness company, really focused on the female market, which we think is a huge opportunity because women make up 48 percent of the cannabis market, and now you have companies, once we’ve come out and we’ve gotten a lot of media attention for being focused on the female market, to see other licensed producers saying Okay, we’re going to create female-oriented brands. But to me, brands, true brands, authentic brands, live in that authenticity. Meaning the fact that I am the only female CEO of a publicly traded cannabis company in the world, gives us a really unique place to be able to – I know, take that in! Like, it’s the first ever!
Ed Milewski: So you’re the only one?
Alison Gordon: Of a publicly traded cannabis company, yeah.
Ed Milewski: Wow.
Alison Gordon: Because in the US, obviously, you cannot be a public cannabis company. So this gives me a unique position to really be able to create products, formulate and engage.
Ed Milewski: This is your magazine, too, isn’t it?
Alison Gordon: Yeah. So we launched this brand, Latitude, in the summer, and it’s really a platform for women to share their stories about using cannabis. We find through our market research that women feel that they want more information, but they don’t really relate to a lot that’s out there in terms of the Cheech and Chong side of the cannabis industry.
So for us, we said, Okay, you know what? Why don’t we look at our company differently than maybe some of the other licensed producers. You know, there’s this sort of vertical: we grow, we extract, we sell, maybe there’s retail, distribution…for us we’re going, okay, as a health and wellness company that has this really exclusive, valuable cannabis license, it gives us the freedom to think outside the box in terms of how we’re going to engage consumers and create our brands. Because everyone’s out there saying now it’s about brands, it’s about brands, which I’ve been saying since 2013.
But the reality is, we’re very restricted by Health Canada in terms of how we market and brand, so for me, it’s really interesting for us to be able to launch lifestyle brands and content brands and media brands and be able to engage people in what we’re doing, so when we’re ready, we can say, Oh, you know Latitude? You loved our book, you love our gorgeous type – it’s really cute, eh? Just totally different.
Ed Milewski: Funky.
Alison Gordon: So now we go, Latitude is a vape pen, and we already have that trust and relationship with the consumer.
Ed Milewski: Yeah. And you went public about six months ago, is that right?
Alison Gordon: In June, yes.
Ed Milewski: Okay. So not that long ago.
Alison Gordon: Not that long ago.
Ed Milewski: And how much money did you raise back then?
Alison Gordon: So we didn’t raise anything on the RTO; we had raised 16 million in January, and then we went public in June.
Ed Milewski: Okay. And you’re sitting on a good chunk of cash?
Alison Gordon: Yes, we are.
Ed Milewski: Which is very importantly, obviously.
Alison Gordon: Yes. So you know, I think for us, again, I come from a marketing and branding background, and this really is, you know, the public company world is different in the sense of, there’s a lot going on, and I heard you guys talking about this earlier – what’s real, what’s not real, announcements, acquisitions – like, people are running in a million directions. That doesn’t work for me; I’m really looking and saying –
Ed Milewski: No, I get the sense that you’re very grounded, and you know, and very, I get the sense that some of the nuttiness that I’ve seen in the industry, I don’t see that with you. I see it very –
Alison Gordon: Thank you, this is a compliment, yes.
Ed Milewski: So you’re, you have this calmness about you, and I think you know where you’re going and you sort of know how to get there, and you’re going to do it.
Alison Gordon: Well, that’s the thing: I am also a cannabis user, and I have many friends who use cannabis as well. So I approach everything I’ve ever done in my career really from an intuitive place as well. We do a ton of market research, but I understand where this industry will go, both because I was working California in 2014, so I was working in a much more mature market.
Ed Milewski: Are you American?
Alison Gordon: No, I’m not, I’m Canadian, but I was working with another licensed producer back then who was delayed in licensing, and we purchased a dispensary in Los Angeles, which we ultimately sold to MedMen. So it was the big MedMen store there on Santa Monica Boulevard. So that experience –
Ed Milewski: Yeah, right, I kind of remember you might have talked about that, and I remember I was not on the set with you but I was watching you with James.
Alison Gordon: Yeah. So that experience and my own experience says this is a huge industry, and I know there are people out there watching this going, the game is done, you know, you’ve got six big players, that’s the end of the story. And it’s really not true. I mean, this industry is going to evolve –
Ed Milewski: And you’ve carved a nice niche for yourself, and for your vision.
Alison Gordon: Right. And for me, it is the female market, and in terms of health and wellness, if you look at companies like Goop, Gwyneth Paltrow’s company, she is doing extremely well, and without a doubt, they started as a content, you know, website with content, and ultimately realized that’s where people were going to get their information, and then it was like, well, wait, we can sell them things! You know, and be an e-commerce. And then it became, wait, we can actually own these things that we sell them.
And I think that’s in the categories of travel, food, health, wellness, I mean, across the board. If you go to the Goop store in Brentwood, in California, you can buy earrings, you can buy vitamins, and it’s all got their stamp of approval.
Ed Milewski: Who’s the actress that has the children’s clothing line? My memory is terrible.
Alison Gordon: I’m not sure who you’re talking about, but for sure celebrities are doing that. But I think Goop lives much beyond –
Ed Milewski: She was in the Fantastic Four. She was the woman that –
Alison Gordon: Oh, you’re talking about The Honest Company, which is Jessica Alba, which is another great example. So there you have everything from diapers –
Ed Milewski: It’s a billion-dollar company, isn’t it?
Alison Gordon: – To clothing…
Ed Milewski: Yeah, she’s got young children, right?
Alison Gordon: Right. And I think that that’s a really great example. We actually talk about The Honest Company a lot, because it used to be if you were a food company, you were a food company. And for us, as I said, we’re a health and wellness company. We have this exclusive license, we’re focused in cannabis, but that doesn’t mean all the acquisitions that we’re doing or products that we develop will necessarily live there; we can be in the accessories space, we can be in the, you know, other forms of health and wellness space.
Ed Milewski: Yeah, there’s a real, I get a sense of a real sincerity in you.
Alison Gordon: Totally. I love what I do.
Ed Milewski: No, I can say, I think a lot of people are in this space right now because it’s a way to make quick money, but I don’t see that with you at all.
Alison Gordon: No, and I have utter respect for those – I mean, I’ve been in the space since, as I said, 2013, so there was really like six licenses at that time. So I really do know everybody, and everybody was just starting up; I sometimes think back to, we were raising money at a $15 million valuation for the company that I was with back then, and Bruce Linton was also raising money at a $15 million valuation.
So we were all just running around together and learning and growing, and the thing is, is that yes, some were really smart and had that first mover advantage of going public and raising the capital needed to be able to, you know, be vertical and be in all these spaces. But I’ve always believed that staying focused and carving out your niche is really a winning strategy. And ultimately, yes, you might be acquired by somebody else who really wants to have that female market that you’ve dominated, but right now, women in particular look around at the, you know licensed companies, they don’t know most of them, they don’t understand what’s going on, and we’re here to hold their hand and say, This is the cannabis industry and you’re part of it with us.
Ed Milewski: Good.
Alison Gordon: Yeah, so it’s like a very interesting time, while still running a public company and dealing with the market.
Ed Milewski: So I mean, look, you are where you are. what do you, I mean, where do you want to take this? Like…
Alison Gordon: Well, a big part of our strategy is really partnering with consumer packaged goods companies that are not in the cannabis space. So we’ve been spending the last six months really working with a few that we will be, you know, talking about very soon in these partnerships, and when you spend time with someone who’s been doing food manufacturing for 50 years, and you go into their facilities, you’re like, Okay, you know what? You know how to do this in a way that us as a cannabis company could never touch.
They’ve made the mistakes over the years, they understand manufacturing, they understand packaging, they understand distribution. I mean, when you buy a package of Oreos, it looks and tastes exactly the same every time, and there’s a science and art to all of that. So for us, it’s not about saying We’re going to do cosmetics and we’re going to do food and we’re going to do vape pens, on our own; it’s saying, We have this valuable license that’s not easy to get; I think there’s only 58 sales licenses right now, since, you know, 2013.
Ed Milewski: Yes.
Alison Gordon: Here is a company that’s a large consumer packaged goods company that wants to be able to manufacture with cannabinoids; we have a license, we have cannabis know-how, we have unique cultivars. So we just announced today that we’ve phenotyped six of our 17 cultivars, which are things that not everybody has. We have that knowledge, you have this knowledge, let’s come together and create a facility that will be licensed to utilize their IP and knowledge and know-how, and ours. And not just to create our own products and brands, but to be able to contract manufacture for the industry.
I don’t think a lot of people realize that the really, really big food companies, the ones that pop into your head as, like, the biggest CPG food companies, most of them do not make their own food. I mean, it’s being contract manufactured.
Ed Milewski: Sure. They have a brand.
Alison Gordon: They have a brand – they’re brand companies, they’re content companies. So, you know, on the one hand, we are a brand and content company, 48North, but we also, with this license, are leveraging that to be able to be partners with some of the best in class in those verticals to allow them to do what they do well, and take the value and revenue that comes from being a partner in that.
So you know, those types of relationships take a long time, and with big CPG companies like Johnson & Johnson, Proctor & Gamble don’t come and just go ‘Yeah, yeah, let’s do Ju, let’s LOI, let’s announce it.’ So that’s what I’ve been doing over the past six months.
Ed Milewski: In a year ago, how many employees did you have, and how many employees do you have now?
Alison Gordon: So a year ago, we probably had about 20 employees. Now we are probably at about 50.
Ed Milewski: Really? Wow, congratulations.
Alison Gordon: Human capital is one of the biggest challenges for all LPs, whether you’re Canopy, Aurora or us; this is a new industry.
Ed Milewski: It’s all about people, isn’t it?
Alison Gordon: it’s all about people, and you don’t –
Ed Milewski: And what’s the mix of men to women on your company? Just had to ask that question.
Alison Gordon: I don’t – I should have those top of mind, I don’t. But we have a strong female executive level at our company, and that’s really important to us, and it’s not just gender diversity; we really believe in overall diversity. I think this industry is not very diverse; it only takes going to a few conferences and looking around and, like, generally I’m the only woman in the room. But you know, there’s not a lot of colour of any kind, and you know, it is really homogeneous. I think a lot of people that got into this industry came from, you know, the stock market world.
Ed Milewski: And your ticker is NRTH?
Alison Gordon: It’s NRTH.
Ed Milewski: And there’s roughly, I think, 80 million shares? Or fully diluted, about 100 million?
Alison Gordon: Something more than that, but yeah.
Ed Milewski: Okay. And so then your market cap is –
Alison Gordon: Is about 60 million.
Ed Milewski: Yeah, so not insane. It’s not insane.
Alison Gordon: Not fully diluted. It’s really not insane, and as I said, part of that is because I’m not running and scrambling and announcing and announcing, much to the chagrin, probably, of some people. But at the same time, we’ve been doing the work over the last six months to be able to announce some really serious, solid things in the coming months, and to me, it has to be a win-win. I’m always looking at what is the market going to react to, but is this going to really build our business? It’s an interesting thing, investing in or being part of a smaller LP with a smaller market cap, because we’re not able to just spend money anywhere.
Ed Milewski: Your office is here in Toronto?
Alison Gordon: We are in Toronto, yeah.
Ed Milewski: Downtown somewhere?
Alison Gordon: Yeah, we’re just like two blocks away from you.
Ed Milewski: Well, listen, Alison. That was a great interview. Thanks for coming back.
Alison Gordon: Thank you.
Ed Milewski: And you know, you’re going to be back soon, I know.
Alison Gordon: James and I have a loving relationship.
Ed Milewski: I know, I know you guys have a great, great, yeah, that’s wonderful. Okay, so you’ll come back soon.
Alison Gordon: Thank you. I will be back.
Ed Milewski: Okay. Listen –
Alison Gordon: Have a good day.
Ed Milewski: Thank you very much.
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