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CannAmerica Brands Corp (CNSX:CANA) CEO on IP Licensing Revenue Model

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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.

CannAmerica Brands Corp (CNSX:CANA) (OTCMKTS:CNNXF) is an intellectual property company licensing its brands to cannabis operators. CEO Dan Anglin, a USMC veteran and member of the High Times Top 100, discusses the company’s expansion plans. Anglin explains that the Colorado-based CannAmerica transitioned into an intellectual property licensing company as a way of expanding into other jurisdictions while securing high margins. CannAmerica’s revenue model is royalty-based while providing a turnkey solution for cannabis operators. While CannAmerica’s products are currently available in Colorado, Maryland, and Nevada, the company is performing due diligence on an LOI to enter the Oklahoma market and has plans to expand to Massachusetts. The company is also working with Sericea Labs S.A. de C.V. on large scale hemp extraction in Baja, California. CannAmerica has agreed to an LOI with a UK based company for hemp product licensing and has also formed a JV with Invictus MD Strategies (CVE:GENE). CannAmerica is a small cap player in the space, but Anglin notes that the company’s early expansion into the Nevada market ensured its brands have been exposed to the high volume Las Vegas tourism industry.

Transcript:

Dan Anglin:    You can say Denver – it’s fine.

Ricky Gurwitz:Denver – okay. Oh, we are rolling? Okay, so I’m going to start in one second, I’m just going to introduce you, and then we’ll start chatting, okay, Dan?

Dan Anglin:    Okay, perfect.

Ricky Gurwitz:I’m joined now via Skype from Denver by Dan Anglin. He’s the CEO of CannAmerica Brands. One second, one more time.

Dan Anglin:    Thank you.

Ricky Gurwitz:I’m joined now via Skype by – I’m joined now via Skype – oh, sorry, I’m being told to hold. And again, if you need to pause at any time, this isn’t live, so that’s okay.

Dan Anglin:    Okay.

Ricky Gurwitz:I’m joined now via Skype by Dan Anglin. He’s the CEO of CannAmerica Brands, and he joins us from Denver, Colorado. Thank you so much for being with us.

Dan Anglin:    Thank you for having me on Midas Letter, I’m excited to be here.

Ricky Gurwitz:So I understand you’re a former Marine. So tell us a little bit about how you find yourself in the cannabis space now.

Dan Anglin:    I served in the Marine Corps from 1988 to 1992, Desert Shield, Desert Storm. You know, I got into the cannabis space in 2011; in fact, I was part of the team that got the very first cannabis license in the world. Our license was 00001, and it was the first to be issued. So I’ve been involved in the industry from the beginning of the regulated space, and CannAmerica Brands is, you know, where we’ve gone in the last nine years, from operating in cultivation and manufacturing and retail to what we’ve done now, which is intellectual property company that licenses our brand to operators for a royalty.

Ricky Gurwitz:Okay. So before we go any further, we just need to centre you better, so can you move a little bit to your right? You should be in the centre – yeah, that’s better, and tilt your camera down a bit, and turn your volume down a bit, because we’re getting a lot of background noise.

Dan Anglin:    Yeah, I had it way up –

Ricky Gurwitz:I know, because you were trying to get your volume up for us to listen. Now it’s having an adverse sort of effect. Okay, so, are we good, guys? Frame A? Okay. So Dan, tell us a little bit about CannAmerica Brands and what you do.

Dan Anglin:    CannAmerica Brands was formed out of Americanna, which is a brand that started in 2015 in Colorado in gummies and other types of concentrate-based products in the regulated cannabis market in Colorado. When we decided to expand outside of Colorado, it became very clear that we needed something a little bit outside of the box, so we created an intellectual property company that allows operators in other markets to be able to license our intellectual property, our techniques, our equipment, our supply chain, and our packaging.

So we take a royalty fee with our partners in the three states that we’re in right now, for every unit that is sold in that market. It’s a very turnkey situation for operators, and it’s worked out very well for us. Our focus in the cannabis space is to expand into every market, whether or not it’s a confection-allowable market, meaning edibles. We’ve got products that fall into every category.

Ricky Gurwitz:Okay, and I understand you’re in Maryland, Colorado and Nevada, is that correct?

Dan Anglin:    That is correct, yes.

Ricky Gurwitz:Yeah, and are you expanding to any other states at this point?

Dan Anglin:    Yeah. We are actively engaged in a discussion for a deal in Massachusetts, which is a recreational state with limited licensing, so we’re very excited about that. Our brand is based on, you know, my experience as a veteran, and really kind of capturing that feeling of the freedom of expanding the legality of marijuana across North America and the world. And it’s very well-received by consumers; we expect great things to happen in Massachusetts. We also have a LOI, we’re doing the due diligence, in the state of Oklahoma, and we’ve targeted Michigan, Illinois, California, Washington, and Oregon as potential states for 2019 into 2020.

Ricky Gurwitz:Okay, and I understand you also have an LOI with                                               Mexico? Can you tell us a little bit about that?

Dan Anglin:    Yeah, that’s the other side of our business. So we’ve created another division called Hemp America, and information, you know, is coming out slowly as we build this, but Hemp America has developed a beverage line that we expect to begin distributing this quarter, hopefully as soon as the end of May, into major retailers across North America. What we’re also doing is working with Sarasea (phon)in Mexico, which is a group that is expected to get a hemp processing license, as well as potentially a cannabis license, to work with them in Baha, California, on large-scale extraction of raw material of hemp into crude oil, distillate, and isolate.

Additionally, we’ve done an LOI with a company in the United Kingdom for distribution of finished product brands, and that deal looks really similar to our cannabis licensing deals. We’re going to provide them with products and packaging and marketing for hemp-based products into Europe.

Finally, in the hemp space, we’ve also signed a deal and formed a JV with Invictus MD, which is on the CSE as GENE. That’s a company that Gene Simmons is involved in, and they recently made an announcement on Gene’s brand of sodas, Rockstar sodas. So we think it’s very important for us to continue to create these types of relationships and, although these LOIs have just all been extended, it’s primarily due to reviewing regulation and ensuring that the business model that we’ve created will be allowable in those countries and states that we’re working on with hemp.

Ricky Gurwitz:Okay, so you really have your hand in a lot of different cannabis products, from what I understand, right? You have flower, dried flower; you have edibles; CBD; hemp; oils; am I missing anything?

Dan Anglin:    So I used to do flower many years ago, but when we created CannAmerica Brands, this is all oil-based products, finished products. Yeah, in the US, flower was not really something that could be branded, right? There’s a lot of complexities to it, there’s a lot of ownership concerns of the creation of the strain, and so we basically focused our energy back in 2013 on perfecting the oil extraction process and creating products that consumers would like. And then in 2015, we launched Americanna, which became CannAmerica in 2017.

So we’ve got a long history of this, and I think what’s really important for investors to understand is, you know, our position in the industry is one of consumer confidence because we’ve been doing this for so long. And I think the industry has also responded very well to our brand. Earlier this year, I was named as High Times Top 100 influencers in the industry; I’ve also, besides been developing products, been involved in legislation. Prior to getting involved in the cannabis industry, I was a legislative analyst and a lobbyist for the State’s Chamber of Commerce here in Colorado on other issues like firearms and, you know, manufacturing in general.

So our understanding of the legislative landscape, the way that the plants create products, creating products and creating brands that consumers can really connect with and trust and have that confidence in the brand, has been successful. I think our first foray into licensing outside of Colorado was Nevada, and we chose Nevada because of the high tourism numbers. You know, currently, it’s got 45 million a year that visit Las Vegas, and with the NFL building an arena in the city of Las Vegas, that’s going to reach somewhere around 60 million annually.

So we know that those visitors enjoy  many different activities, including consuming cannabis, so what it’s done is, it has exposed the brand to the world, and I think, you know, what’s important about being on Midas Letter – in fact, I’ve had many investors and shareholders tell me that I needed to come and talk to you, because they watch your program so much – I think the concern that we have is that the company is not that well known in the market. And so we’ve been doing road shows in Toronto, we’ve been doing road shows in New York, because we’re also listed on the OTC as CNNXF, so it’s very important for us to connect with the investor community, explain the business model, have them meet management, understand what we’re doing, and then of course, on our website, cannamericabrands.com, they can learn more about the company. And then at cannamericaco.com, they can learn more about our product line.

Ricky Gurwitz:Okay. And for investors that are interested in investing in your company, how many shares are currently outstanding?

Dan Anglin:    So we have 52 million total shares; I think the float on that is somewhere around 16 million. You know, at any given time, we have excellent volume happening some weeks and slow volume other weeks, and I think those slow volume days are just based on the fact that we’re, you know, a micro-cap, small-cap company, and people are just now learning about us.

We went on the CSE the day before legalization in Canada, so October 17thwas when we went live, and we’re now six months into being a publicly traded company. Our end of year just ended March 31stand our financials will be out sometime in June for review, and we anticipate that as people learn about the fact that our overhead is low, because we’re not an operator, we don’t touch the plant, and our margins are high. We have right now a margin of 67 percent because we really don’t have the operational costs as a typical cannabis company – we’re a cannabis brand, not a cannabis operator.

So we don’t handle the cannabis taxes, we don’t have all the cannabis fees and the enormous salaries, you know – this is managed very lean, basically because we’re a supply chain company that manages the marketing.

Ricky Gurwitz:Okay, well, thank you so much for joining us, and we look forward to hearing more about your company, and good luck.

Dan Anglin:    Thank you. I’m really pleased to be on Midas Letter, and just know that folks are watching you all the item, and I really got a lot of requests for me to get onto this show. So thank you for having me.

Ricky Gurwitz:Pleasure. Thanks a lot. Dan Anglin.

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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