CannabisNewsVideos

VIDEO: International Cannabrands Inc (CNSX:JUJU) $5 Million Financing Round

By |

Watch

Midas Letter

The Digital Businesss Channel for Cannabis, Crypto and Technology Stocks.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

International Cannabrands Inc (CNSX:JUJU) (OTCMKTS:GEATF) (FRA:31G) CEO Steve Gormley is full of enthusiasm for Canaccord Genuity’s US Cannabis Symposium and the opportunity to share the company’s turnaround story with potential investors. International Cannabrands is currently undertaking a financing round for $5 million and Gormley anticipates that the company will oversubscribe. International Cannabrands aims to acquire existing profitable companies and makes these acquisitions scalable. He explains that the company’s recent La Vida Verde makes JUJU a $50 million company overnight and provides valuable California assets. Gormley shares details of the company’s recent deal with Washington State-based Solstice to create sleek, branded products targeting millennial men.

 

Transcript

James West:   International Cannabrands trades under the symbol JUJU, J-U-J-U, on the CSE. Steve, welcome back.

Steve Gormley: Thank you. It’s a pleasure to be here with you both again.

James West:   Now, the Canaccord US cannabis opportunity conference is on right now; that’s not what they call it, that’s what I call it, because most of these are privates that are up here. You’re one of the few publicly traded ones that people can participate in. how has been the response to your company?

Steve Gormley: It’s been amazing. We’ve had an incredible week. We got here and started our, we kicked of our road show which you saw we announced last week. We’re going out with Gravitas and Canaccord, and with the support of both of those teams, we’ve had an unbelievably aggressive schedule. I mean, well, let me tell you: I had a German mother; she had nothing on these guys. They’ve been pushing us through a death march, I mean, 7, 8 meetings a day, it’s been going like gangbusters. People love the story. They love the fact that we’ve turned this ship around, but what they love really the most is that we’re going after a market no one else is addressing. We’re doing that middle market.

James West:   Sure, right. So you’re doing a raise up to $10 million at $0.20 a share, correct?

Steve Gormley: We were going out for 5 million; the book looks fantastic. We suspect we’ll likely oversubscribe. We will complete the transaction; we, as you now, signed the definitive agreement with La Vida Verde. We’ve already deployed two tranches of capital against that acquisition so that they could expand into manufacturing and effectuate the business plan. We expect this round to close on or about November 1st, and by that point, Ed, we’ll be done with that acquisition. And we expect the market to react really well to that.

We’ll also have enough fuel in the tank to go after other acquisition that are in our pipeline, and we’re really excited about that.

James West:   Yeah, I’ve actually got a couple to show you after the segment.

Steve Gormley: That’s great.

James West:   Yeah, so tell me: What does the La Vida Verde transaction relationship do for the long-term sort of prospects of the balance sheet of JUJU?

Steve Gormley: It turns us into a $5o million company overnight. When you look at the projects for 2019 –

James West:   Not too forward-looking a statement, there.

Steve Gormley: No, we’re talking a year, and it’s based on what we know about the actuals of the business and what we know about pre-orders and everything else that we’re up to n the market. So you now, the dust is settling in California; we had a lot of change with products coming off the shelves because they had to be re-packaged, you know, they had to do labels and child-proof cannisters and the like, so there was a disruption of the market there. But the licensed, credible players in the space like La Vida Verde, who are now going to be the only lawfully operating players in the space, are just simply gong to dominate. And our strategy to bring in this emerging regional brand to conquer northern California, we think, is a winning proposition.

James West:   Hmm. So from where you guys sit, it sounds like the really fragmented California market is going to be consolidated by a few large players?

Steve Gormley: I – what we’re going after is really – and I’ve said this before when I’ve come on – like, imagine a rollup of regional beers, right? You’ve got these brands that do really well, they’re specialty brands, they have loyal and developed followings in the markets they serve, they have a well developed constituency, but they’ve built profitable business that have the potential of being national and international brand, and thereby being franchise-able at some point. Those are the targets we’re looking for.

We look at what the fundamentals are: is this a profitable business? That’s our first criteria. Secondly, what’s the management team like? Do we know them? Is there a pre-existing relationship, have we done transactions with them before? Are they within the network, the family?

And then lastly, how does it fit in with the rest of the strategy? So for example, La Vida Verde helps us in Northern California, but we’re certainly going to distribute in Southern California, where JUJU Royalty dominates.

James West:   Right.

Steve Gormley: Um and so, when we look to continue building the platform, building this aggregation platform, we have a view on consolidating emerging brands, bringing them in. And you know, the leaders will be the leaders, as is the case in regional beer brands, right? The specialty beers, sometimes they go national and they do well. Some of them are home runs, and some of them are base hits. And again, we’re after that middle market. You know, you see the likes of MedMen; they’re bagging elephants, right? And those elephants are coming in at a premium. And then you got a lot of people putting money in the startups and I don’t have to tell you how long it takes and the probability of the startups succeeding.

James West:   Right.

Steve Gormley: Our fundamental strategy is to acquire assets that are already profitable, that just need to scale, with management teams that want to stick around and ride the wave with us, so that when we build this platform, they get to participate in a public vehicle, which for these entrepreneurs is new right? We’re not looking at guys who have this kind of Wall Street and Bay Street experience.

James West:   Okay. Back on the 25th of September you announced a distribution agreement with Solstice Holdings, and remind me again, what is the real significance of that as it pertains to the JUJU-Marley brand?

Steve Gormley: Well, that brings us into the very lucrative and important Washington State market. Solstice is based in Seattle; its one of the largest producers and distributors in the state, and that Solstice footprint will provide JUJU royal with a whole audience that it has yet to enjoy. So we’ll be able to bring high quality, beautifully packaged, sexy, sleek products for Millennial males that come in, at a mid-market price point. And we’ll be able to now come in and now do that in Washington State. So that’s the significance of that deal.

Ed Milewski:  What’s the population of Washington State?

S.G. that’s a good question.

Ed Milewski:  It’s around 40 million in California, right?

Steve Gormley: Let’s see, what is it? It’s around 36 million in Canada; it’s 38 million in California, right, so there’s two million more people in California.

Ed Milewski:  And I remember seeing Oregon’s was –

Steve Gormley: It’s small.

Ed Milewski:  It’s very small. I watch –

Steve Gormley: I want to say it somewhere, 10 million? Around 7 and a half million would be my guess.

James West:   What? That’s Washington DC. So Washington state, here we go: 13th largest state, and there’s –

Ed Milewski:  Thirteenth largest., wow.

Steve Gormley: I’m going to say about seven and a half million.

James West:   It’s the thirteenth most populous; 7.4 million people.

Steve Gormley: So I was close.

James West:   That’s a big market.

Steve Gormley: That is a big market, and it’s also like California – it’s a diversified market, right? It has a really affluent constituency, it’s also got that traditional kind of old-school pot smoker. You know, it has a working-class constituency, so there’s really a broad market there.

James West:   Sure, right.

Steve Gormley: Not unlike California, but more of a microcosm.

James West:   Yeah. So how important is it to International Cannabrands success that the Federal prohibition move forward or otherwise disappear? Is that a limiting factor in any way, shape or form?

Steve Gormley: I think the only place it presents an issue, and it’s not a real issue, is in banking, right? That’s the one place where it’s still kind of tricky. But the reality is for us, at International Cannabrands, we’re happy that we’re prohibition hasn’t been repealed yet. And we’re also happy that the drug hasn’t been rescheduled.

We think that’ll be the next step, right? It’ll go from Schedule 1, a Class A narcotic, and it’ll be Schedule 2, on a par with Oxycodone. So what that means is, the banks will come off the sidelines, right?

But while we’re in this period of what I’ll call unrest, we have the opportunity to secure assets at a discount, because once the drug is rescheduled, or once prohibition is repealed, the majors are going to come in. And for those of us who have acquired critical mass, who have put together a platform of businesses whose announcements are predicated on announcing acquisitions, EBITA, earnings, EBITA, earnings, that’s my mantra, EBITA, earnings, that’s really going to distinguish us from the pack. And the majors will want to come in.

But right now, with prohibition in place, I’ve got the opportunity to come in and actually secure these assets, at a discount that I won’t be able to do after prohibition is repealed.

James West:   All right, Steve, you’ve got probably – by the way you’re talking, you’ve got a whole bunch of things that you can’t actually talk about now because they haven’t been completed, but there’s more meat coming to this bone, isn’t there?

Steve Gormley: I’ll tell you, my partner Neil, who you know, calls it the sort of referential roll0-up strategy that ‘ve never seen before, right? As is the case with La Vida Verde. You find these excellent assets, and they’re management teams that you’ve known for a long time, in our case, right? There’s a personal relationship there, it’s a deep network from being a member of the community, having rolled up my sleeves and worked alongside these guys.

And what happens is, they get really excited. They’ve got the stock play, they get a piece of cash, there’s the earn-out piece, once they understand it, all of a sudden they come to you and they say hey, you know what? I’ve always wanted to put some money in my buddy’s company, and I distribute some of his brands, he distributes some of mine, we work really well together. And the next thing you know, you’re talking two, three, four other companies. And that level of trust coming in from working with players who have permittable brands in the space, who only work with other qualified players, that’s second to none. That’s something that we, as a company, bring to the table, that I don’t see elsewhere.

James West:   Fascinating. All right, well, Steve, we’re going to leave it there for now; we’re going to come back to you again in due course and continue the conversation. Sounds like you’re doing a great job.

Steve Gormley: Thank you!

James West:   And thanks for joining us today.

Steve Gormley: Thank you for having me. I love coming in, guys.

Midas Letter is provided as a source of information only, and is in no way to be construed as investment advice. James West, the author and publisher of the Midas Letter, is not authorized to provide investor advice, and provides this information only to readers who are interested in knowing what he is investing in and how he reaches such decisions.

Investing in emerging public companies involves a high degree of risk and investors in such companies could lose all their money. Always consult a duly accredited investment professional in your jurisdiction prior to making any investment decision.

Midas Letter occasionally accepts fees for advertising and sponsorship from public companies featured on this site. James West and/or Midas Letter may also receive compensation from companies affiliated with companies featured on this site. James West and/or Midas Letter also invests in companies on this site and so readers should view all information on this site as biased.

Free Newsletter,
Priceless Content.

Get more of Midas Letter delivered right to your inbox.

Special Offer

Sign-up today and receive free and immediate access to three recently published special reports!