High Hampton Holdings Corp (CNSX:HC) LOI with 2083 Group, SpeedWeed Delivery Platform Developer
High Hampton Holdings Corp (CNSX:HC) (OTCMKTS:HHPHF) (FRA:0HCN) CEO Gary Latham discusses the company’s shift to developing products and brands. Latham notes that with the price for dried flower dropping, High Hampton is pivoting away from developing cultivation space and prioritizing products and brands with higher margins. High Hampton is already shipping products from wholly owned subsidiaries CaliGold and Mojave Jane, with additional products in the pipeline. Latham explains how the company’s distribution license in Cudahy, California gives High Hampton the opportunity to deliver medical and recreational products anywhere in the state. Realizing the significance of distribution in California, High Hampton recently announced a binding LOI for a strategic minority investment in the 2083 Group, Inc. 2083 Group is the developer of SpeedWeed, California’s original cannabis delivery service.
Narrator: High Hampton Holdings Corp. is a Canadian-based cannabis brand and distribution company serving California’s legal recreational and wellness markets.
High Hampton has established a foothold in the distribution market through the acquisition of 420 Realty, a company developing a vertically integrated model in the outskirts of Los Angeles. The company has also acquired Coachellagro Corp., a full-service production facility for licensed medicinal cannabis cultivators, and entered the edibles space through the acquisition of the CaliGold brand.
High Hampton recently completed the acquisition of a licensed cannabis manufacturing company, Mojave Jane, LLC.
High Hampton Holdings Corp. is listed on the CSE under the ticker symbol HC.
James West: And now CEO Gary Latham is with us via Skype. Gary, how are you?
Gary Latham: I’m doing great, how are you?
James West: I’m well as well, thank you. You’ve been making some moves since we last chatted; you’ve got your manufacturing/distribution centre in Cudahy, is it? How do you pronounce that?
Gary Latham: Cudahy, it’s a city that’s in East Los Angeles.
James West: Oh, okay. Very cool. So what’s the progress there? What’s going to happen there when it’s done?
Gary Latham: It’s good. So Cudahy is a great facility for us. It’s about ballpark of 15,000 square feet, and it’s a footprint for the business. We have six licenses, I believe, there from the State of California, so we’re able to, when it’s all built out and operational, we will be operating a nursery there, distribution, what we call non-storefront retail, which is really delivery, and then manufacturing in a kitchen to produce edibles. So we were very happy to put the small bit of demolition behind us that we had to get done, and move on to the actual build-out.
James West: Sure. Now, delivery in California is quite a hot business because when you have a delivery license, you can deliver anywhere in California, isn’t that right?
Gary Latham: Yeah, you really nailed that right. So this has been a hot button here in the state for a while, and one of the really cool things about delivery is, as you said, you can deliver anywhere in the State. So even if there’s a municipality, as an example, that has decided they don’t want to have a retail operation in the city, or have cannabis manufacturing or cultivation or anything like that, you’re still allowed to deliver it into that city. Which is great – it allows you to service medical and recreational consumers as well.
James West: Okay, so, and one of the products that I’ve actually had the pleasure of making an acquaintance of is your CaliGold chocolate, and let’s just say that it’s a good thing I didn’t have to fly my private jet that day because I’d have been doing the loop-de-loops if I had a private jet.
Gary Latham: Did it sneak up on you?
James West: It sure did. Now I’ve got to think that this is probably one of the more popular items in the candy stores of California these days.
Gary Latham: Well, it’s cool. You know, CaliGold is a product that decided to really, the guy who’s making that, decided to really focus on cannabis and chocolate, not just the chocolate. So he’s developed a strain-specific chocolate bars and drinkable chocolates and a variety of other products, and we get great response to them. They’re a lot of fun, obviously.
James West: Sure. How much does one chocolate bar cost? I can’t remember.
Gary Latham: I think retail on them is in the $12 or $14 ballpark, as I recall, but I think that’s about right.
James West: Sure. What’s the most popular dosage? Like, how much do people eat of these things?
Gary Latham: Well, it’s, you know, you’ve really got to watch it with edibles, of course, as you just described. You have to be very aware of how much of an edible that you consume, because the effect of it can be delayed a little bit. So we tend to encourage people to break off one little square of a piece of chocolate and see how that goes over a couple hours.
James West: Great. So you’ve got a whole bunch of different things going on, there. What is the sort of development initiative that you’ve got happening in High Hampton that excites you the most, that is going to generate the most hoopla in terms of the balance sheet over time?
Gary Latham: Yeah, that’s a cool question, because we’re having a lot of fun kind of re-shaping the business a little bit right now. You know, and to put it in context, you guys have seen the pricing and what have you for flower products sort of continue to slide down the scale a bit, so we really wanted to shift our focus to be all about making products and creating brands to take out to the consumer marketplace.
And to do that, the real key for us was to be able to get our eyes on consumers and be able to understand them. And you know, in California right now, if I get the number right, I think there are a total of about 800 dispensaries – so 800 dispensaries touch a small part of the consumer base. Delivery has the opportunity to touch a really large part of that consumer base. So we recently made a strategic investment in a group called 2083; they operate a state-wide delivery service called SpeedWeed, and SpeedWeed is a bit of an icon in the business, and has a lot of good reputation and goodwill in the business.
And they are up to about 250,000 consumers today. They’re operating out of about 10 dispensaries and delivering mostly in the Los Angeles area, and growing quickly to San Diego and up around the Ventura, Santa Barbara area. So with that investment, what really excites me is that we get to put our eyes on what consumers are really doing: what they’re buying, what they’re looking at, even what they spend time looking at without buying it, on the delivery platform. And the engine that we built at High Hampton allows us to go and produce products and brands to go and very precisely match what those consumers are looking for and interested in.
So that marrying up of data with the engine we’ve built, plus the ability to deliver to consumers, I think, is a home run for us.
James West: Yeah, you bet. So earlier in the evolution of High Hampton, there was a focus on developing growing capacity on a sort of farm-out basis to other brands who wanted to expand their production footprint, and that was mostly happening in Coachella. I haven’t heard any mention of that; is that something that you’ve sort of moved away from, or is that still in development in the background?
Gary Latham: Yeah, so the original plan was, we have 11 acres out in Coachella, and the original plan was to develop about 250,000 square feet of cultivation space and production space, and be able to lease out a little bit of that to other companies, licensed companies, that were looking to put a stake in the ground. There’s a lot of that kind of model being repeated in California, a lot of it around the Coachella Valley and what have you. And as we watched the sort of race down – the downhill race on the flower production side on pricing, we got it in our heads that maybe the right thing to do was to wait out the evolution of the cultivation business a little bit and contract for the product that we need, as opposed to growing it ourselves, and really try not to be in the real estate business.
So we have a good asset sitting there; it’s fully licensed and ready to go and ready to build out. Should the market change to a place where we want to do it, we’re ready to go.
James West: Hmm, okay, good answer. Awesome! So then what, beside the SpeedWeed transaction, what are some other catalysts that we can look for in 2019 that are going to drive the bus forward, here?
Gary Latham: Yeah. So you know, the right way to think of us is this sort of engine we’ve assembled. Distribution capacity, the delivery capacity, the kitchen and manufacturing capacity – all of those parts of the engine are kind of ready to go. So what you ought to see now is that engine starting to run. So we have begun to shift products from CaliGold and also from Mojave Jane, and what you will see next is additional brands coming out of both Mojave Jane and the CaliGold side, and some very specific products that will hit the market both through our distribution channel and through our delivery partner.
James West: All right, Gary, that’s an awesome update. Sounds like things are really progressing well for you. Thanks very much for the update, and we’ll come back to you soon.
Gary Latham: Good. Thanks a lot, I appreciate being 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.