Namaste Technologies Inc (CVE:N) CEO on E-Commerce Advantage in Cannabis Space
Namaste Technologies Inc (CVE:N) (OTCMKTS:NXTTF) (FRA:M5BQ) CEO Sean Dollinger explains why the LP has bypassed cultivation in favour of focusing on e-commerce. According to Dollinger, as an online retailer and distributor Namaste will be “the Airbnb of cannabis” because it will sell products without actually carrying inventory. Dollinger emphasizes that medical cannabis remains crucial to the Canadian market because it allows Canadian patients to access products across provincial boundaries, which is prohibited for recreational users. The company is working with Cannabis Compliance to use Namaste’s e-commerce network to distribute the products of micro-cultivators. Namaste uses its existing infrastructure to adapt to changes in the cannabis landscape. The company is the largest B2C vape company in the world and will start using those distribution channels in the UK to sell medical cannabis.
James West: Welcome back! My guest in this segment, returning for the, I don’t know, 10th time, maybe? Sean Dollinger is the CEO of Namaste Holdings Inc., trading under the TSX Venture under the symbol N. One letter: N. Sean, welcome back.
Sean Dollinger: Hey, thanks for having us on.
James West: Sean, you are one of the most dynamic companies, I must say, in the LP universe, but you’re not an LP. Correct?
Sean Dollinger: Kind of. We are an LP –
James West: Okay, so it is really interesting.
Sean Dollinger: We’ve just decided not to go for our cultivation license. So we’re a licensed producer; there’s no difference between us, Canopy, Aurora, Aphria, except we don’t cultivate.
James West: And right – why don’t you cultivate?
Sean Dollinger: We decided to leave it up to the experts. For example, Canopy has been around for 1o years, 8 years going at it, and we still see them having trouble with it, right? And here are we, we’re new to the game, just a few years ago. What we’re really great at is e-commerce, so that’s where our focus goes, and we leave it up to the experts to cultivate, and then we take that product and sell it on our platform.
James West: Right. So you’re going to sell the product of all the LPs at some point, online?
Sean Dollinger: That’s right. So right now, if is aid to you, and your experienced in the cannabis market, which LPs are number 20 to number 40 right now, I think even you’d have a tough time naming 40 licensed producers out there. What happens when that becomes 100, 200, 300, how does that person who’s coming out in a few years from now still develop a product name for themselves?
On our platform with our relationships, we’re able to bring that product to life through our distribution.
James West: Okay, so this is going to be like the Amazon.com marketplace of cannabis?
Sean Dollinger: Pretty much, except we’re the platform. So Amazon’s done an amazing job; as we know, one of the most valuable technology companies in the world, but we’re taking it a step further: were looking at, for example, companies like Airbnb, Uber, that are the platforms that drive traffic, but they don’t actually own inventory. For example, Airbnb, they don’t’ own real estate, but they’re they number one real estate company in the world. If we look at Ali Baba, they’re a fantastic platform, very similar to Amazon, but they don’t actually carry the inventory.
So over time, we’re hoping on the cannabis side of things that we could connect into the different licensed producers’ inventory across Canada, and then we could go ahead and sell those products.
James West: Sure. Okay, so how has Namaste been evolving over the last three, six months? You guys have made some really splashy moves, you kind of got the attention of regulators, but I mean it’s all good obviously, because you’re driving forth and you have nothing stopping you.
Sean Dollinger: Yeah, listen: we have lawyers, and legal teams, they look at everything, right? We’re one of the larger publicly traded companies out there; earlier this year we went through a $1 billion market cap in just a couple of years of being public, and obviously we make sure to do everything great.
But at the same time, you need to think outside the box, and one of the latest thing that we did was working with an online dispensary called Buds2Go, and after the legalization of cannabis, where Health Canada and the Canadian government said that they would come out and go after Canadian companies that were, you know, still operating illegally, they would be shut down.
Well, through our telemedicine app, it’s allowing us to use technology to help these people who were purchasing illegally, to come over to eh medical side if they really do need an medical license, but at least gives people the ability to go the route they were going previously, to actually come over to the legal side.
James West: Right. So there are a great number of users of cannabis in Canada who have medical licenses, who are kind of recreational in origin, but if one that a recreational regular exposure to cannabis is a way to self-modulate mental health, then really, what’s the difference? Where’s the line between medical and recreational?
Sean Dollinger: That’s a great question, and we believe, why not take the responsible approach, as I’m sure you know, sometimes you could have a product and it gives you a feeling that you weren’t after. And perhaps you experimented, and it ends up hurting you as a customer going for many years into the future, and you’re hesitant, right? And we believe on the medical side of things, if we could take you through a process, an educational process where we could actually get you the product that you actually need, and remove the borders – what happens if there’s a product that you absolutely love in BC right now, and you live in Ontario? How are you getting that product on the rec side, legally? You can’t just ask your buddy to ship it; that’s technically illegal.
With medical, we could now ship that product across Canada and get you the product that you really need.
James West: Interesting. So you don’t need any rules to change, per se, you just need, your customers to become patients.
Sean Dollinger: Correct. Exactly.
James West: Interesting. Okay. Well, I’m going to log on and become a patient today.
Sean Dollinger: That would be awesome. Please let me know how that goes.
James West: Sure will. So then now, you’ve also got, you know, your eyes on other jurisdictions. Give me an overview on what your international scope and planning is and what your thinking is right now.
Sean Dollinger: Yeah, that’s, you know, it’s funny you go there. So you know I’m here in Toronto this week, and speaking to many different people, and you see a shift always, right: oh, now it’s hot to be international, so people start talking about that. If you look at Namaste, we actually started our business in the UK, and Australia, we’re the largest business to vaporizer company in the world, to B2C, and to give you an idea, in Australia and the UK, we have over 1.5 million customers. So now we’re able to go ahead and use our UK distribution to start selling cannabis, hopefully, in the next few months.
James West: To medical patients in the UK?
Sean Dollinger: Correct.
James West: Interesting. So again, you’re not planning to get a license to grow cannabis; you’re planning to sell the cannabis that licensed producers are growing, within the medical framework
Sean Dollinger: Exactly. So you know, we’re not looking to reinvent the wheel. Canada has given us an unbelievable opportunity to prove our model, to build it out. I remember a couple of weeks ago when we started selling, because we just got our sales only license just about a month and a half ago, and it takes time to get product and do it properly, right? This industry is here to stay. And I remember people saying Oh, they only have a few products on their website, and now we have six products, and think this morning I actually woke up and we have 16 products today, and we’re going to see this acceleration keep going. Then we’ll be able to take – that’s what the Canadian government’s allowed us to do: really experiment, explore, make sure that we can prove that we can follow all the guildeines land regulations, and then that gives other government around the world, comfort.
James West: So do you get the sense that Canada is aggressively cultivating, to use the pun, your participation because it satisfies their objective of excluding the black market sources of cannabis from being supplying Canadians?
Sean Dollinger: So, we’re always trying to help, and that’s what Namaste is all about, and sometimes we’re taken the wrong way. You know, everybody is our partner. So I’ve said this before: if somebody buys from Aurora, and doesn’t buy from Canopy, Canopy actually loses out, or if somebody doesn’t actually like Canopy products, Canopy loses out, if people like Aurora. On our platform, no matter who buys from us, we’re happy that they’re coming and trusting and putting their trust in us. We plan on being the largest ecommerce country across Canada as far as anything cannabis-related: vaporizers, growing equipment, anything.
But then we’re working with micro-cultivators, which for example, when rules and regulations have changed, it’s really hurt them. Kory Zelickson, who co-founded the company with me, we’re working extremely close with Cannabis Compliance, arguably the number one compliance company in the whole cannabis space globally. We have an extremely great relationship with them, and in Nelson, BC, two weeks ago, we went ahead and held a conference and over 50 micro-cultivators showed up. We’ve already signed up a whole bunch of them, tons more interest int here, where we’ve actually went ahead and guaranteed buying all of their product, and then using our distribution and e-commerce network.
So last year people were like, Oh, how is Namaste even going to have product? How are they going to go if they’re not growing? I don’t understand, where do they plan on getting it? And it’s through strategies like this that not only are we helping our fellow Canadians, but at the same time, we’re allowing other canadines who love those micro-cultivation products to be able to be sold on our platform.
James West: Interesting. So Namaste is side-stepping the high cost, low margin commodifies side of the business in preference for the consumer packaged good, high-margin retail side of the business?
Sean Dollinger: You’ve hit it bang on. That’s exactly what we’re after.
James West: Wow. So I would think that would be extremely resonating very well with investors. In mean, it strikes me that, you know, all equity prices have been beaten up alongside the general malaise in the global sort of marketplace, so when they all bounce back, I mean, with the proliferation of growers, this kind of a model seems to make a lot of sense.
Sean Dollinger: I would really hope that people really understand. So even though I go out and tell the story that we’re you’re everything cannabis store’, so whether you’re looking for vaporizers, cannabis, CBD, growing, anything, we want to be your one-stop-shop. And, we’re in 20 countries around the world; it’s not like we’re just in Canada, if the regulations change a little.
So I really hope that people take the time to understand, we’ve been encouraging our own investors, I have my weekly show at 4:20 on Wednesdays, and now I start each show, not to take it for granted that everybody knows what we do, but really to jump in and explain what we do so people can really understand and then spread that word. Because if people don’t understand, how are they able to invest and really have confidence in the company?
James West: Wow, you bet. Well, that’s awesome. I love the pivot you guys have done – it’s just amazing. So we’re going to follow along with interest, and I’m going to become a client shortly. So thanks very much for joining me.
Sean Dollinger: Thank you very much for having us on.
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.