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VIDEO: Newstrike Brands Ltd (CVE:HIP) CEO on Advertising Recreational Brands

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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.

Newstrike Brands Ltd (CVE:HIP) (OTCMKTS:NWKRF) (FRA:0N8) CEO Jay Wilgar emphasizes that Newstrike is one of the few cannabis companies exclusively playing in the recreational market. Wilgar highlights the company’s work building cannabis brands and its relationship with marquee names like the Tragically Hip. Wilgar believes Canada is the biggest and best market in the world right now and asserts Newstrike’s goal is to deliver in the Canadian market before setting its sights on the international space. Wilgar acknowledges the importance of advertising for a strictly recreational cannabis company and notes that Up brand’s association with music helps create brand recognition. As more recreational products are legalized, Newstrike plans to roll out additional items, such as recreational vapes.

 

 

Transcript

James West:   Jay Wilgar, he’s the CEO of Newstrike Brands, trading on the TSXV under the symbol HIP. HIP! Jay, welcome back.

Jay Wilgar:   Yeah, thank you, thank you!

James West:   So Jay, let’s start with an overview: how has today’s legalization changed the universe for HIP?

Jay Wilgar:   Well you know, I think the one thing we’ve been sticking to, and we continue to talk about, is we are really the one company that has been very focused on recreational cannabis. We have not taken on patients; from the get-go, we’ve been focused on building brands, certainly with our relationship with the Tragically Hip and other musical groups. So yesterday and today and the lead-up for us has been enormous, and you can imagine we’re very excited we’re finally here, continuously getting numbers rolling in on sales already. Actually already been contacted by one of the provinces asking if we can ship more, this morning.

James West:   Really?

Jay Wilgar:   Oh yeah, I mean, it’s going.

James West:   They’re running out of weed already!

Jay Wilgar:   Well, I ordered this morning just for the first time because I had to; I was on the phone, my dad and I ordered, and at 8:00 a.m. this morning, and I was ordering 36,8- something or other at OCS. So there is no question that this is moving well.

James West:   36,000?

Jay Wilgar:   Yeah, 36,000 something or other, and so it’s, yeah, it’s moving! I think Canada is very excited about it. And for us, it’s a huge day, because this is what we’ve been waiting for. You know, from an investor point of view, we haven’t been able to put out numbers, because we didn’t have numbers, so we’ve been stockpiling for several months, and now we’re actually able to sell. So, really excited about that, yeah.

James West:   So this should have a really strong impact on your share price, because I mean, as a recreational, this was the day you needed to happen.

Jay Wilgar:   This was the day for us, yeah. And you know, that’s the thing, if you look at it, people say, you know, why haven’t we got a lot of coverage and research and whatnot; part of that is really the build up to this. You know, we’ve been sticking to the story of, let’s execute really, really well on what we’re doing here in Canada. You know, the opportunity is enormous here. We’re not focused right now on running off into every country in the world and trying to, you know, trying to be everything to everyone. Our focus is, we have the biggest, best market in the world right now; let’s make sure we can deliver on what we’re doing, and that remains our focus right now.

James West:   Interesting. Do you think that the representations made by certain elected officials that there’s going to be a privatized, physical market in terms of physical stores, do you think that that is – like, I’m just curious, is because your involvement in the market. Are you hearing anything? Is that moving forward? Because it seems like it’s a little bit uncertain as to how that’s going to happen.

Jay Wilgar:   It certainly is moving forward. As you can imagine, because our distribution channels are, you know, dependent on these policy changes and what’s happening, we’re every up to speed on where we see distribution moving and how it’s moving. Certainly Alberta, I think, is moving quickly right now. We know Ontario, the spring is when it’s going to be really ready; we don’t know exactly when in the spring.

But you know, as I said I think last time, I think the one thing for everybody is, today is a really exciting day, there’s no question; but today is just the start, and this process is going to take all of us some time. It’s going to take governments time, you know, municipalities, police, schools, everybody is going to learn as we go through. And quite frankly, I think we’re all having a lot of fun as we go through it, too.

And you know, the whole world is watching. I saw the New York Times Tokyo edition yesterday said “How high can Canada get?” and so you see, you know, this is the world. And you know, our review is, let’s make sure that we execute as well as we can in this market, because you know, if you think of what it took for us to get here as a country, and this took years. I mean, we started this company six years ago, so today is obviously a pretty exciting day for us, but for the whole industry, and I think for Canadians too, it’s going to be a process, no question.

James West:   You bet. So in that you’re strictly focused on recreational, how are you going to deal with the limitations on advertising and promotion that are obviously somewhat dependent on the success of a recreational brand?

Jay Wilgar:   Sure. So I mean first of all, we expected that that was going to be the case. When you look at, again, Health Canada rolling this out for the very first time, I think the decision – and it probably makes sense – is to go, call it as far to the right conservative as you possibly can as far as advertising promotion is concerned.

But that being said, a brand is more than that. You know, when we talk about our UP brand and we look at the association that we’ve got with music and some of the things that we’ve done over the last several months to have our customers associate with our brand, we’ll continue to do that, we’ll continue to message the way we can through the regulations that Health Canada has put forth. And quite frankly, I think we’ll work with the government, I think most of us, to see over time, how much we can, you know, change those regulations to allow for more brand identity.

Because ultimately, if you think of any consumer good, at the end of the day the brand really wins the day, and the consumer wants to know what that brand is. And that’s certainly our intention, is to be a very, very major and recognized brand in this market.

James West:   Sure, and I guess especially in the context of, I mean, the LPs will be ultimately, their success will be determined by their balance sheet; the government’s success will be determined by how able they are to eliminate the black market. And so by denying the ability to advertise and promote the alternative to the black market, how are they going to compete? I think that sort of awareness is going to penetrate the government’s sort of understanding as time goes on. I mean, we’ve had six years to get to this point and understand the importance of branding; they’re just getting started.

Jay Wilgar:   They’re just getting started. And you know what, I’ve said it all the way along: they’re doing a great job, and they really are. You know, dealing with all of the provinces and federally, it’s not easy for anybody, it really isn’t, and that’s why I think there certainly needs to be a level of patience that people have. And again, you know, I think Canadians generally take things quite well. There are certainly going to be bumps in the road; we know that, and we’ve seen it already, and I can tell you in the last month our staff has been working tirelessly on things like excise stamps and, you know, all these little issues. The exciting thing I think for us, though, is we’re at this point now with dried bud and with, you know, pre-rolled joints and a little bit of oil; when we look at the future an what products we plan on rolling out, an the brands that we’re able to roll out, I think for us that’s really the excitement right now. Certainly the products that we’ve got now are, I think Canadians consume a lot of dried bud, but we also know that from a margin point of view, certainly for investors, but also from a choice point of view, a lot of people are certainly looking to vape pens, shatters, a lot of these other things that I think we certainly intend on playing a very major role in those markets, as well.

James West:   Great. All right, Jay, well, we’re going to leave it there for now. We’ll come back to you in a quarter’s time or so and see how you’re doing. Thanks very much for joining us today.

Jay Wilgar:   Thank you very much for having me.

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.

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