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Next Green Wave Holdings (CNSX:NGW) Premium Angle on Californian Cannabis Market

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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.

Next Green Wave Holding Inc (CSE: NGW) (OTCQX: NXGWF) is a California-based extractor and Consumer Packaged Goods producer. The company’s CEO, Leigh Hughes, joins James to give me an overview of how the company operates in the California market and details Next Green Wave’s premium angle on almost every aspect of that business. Next Green Wave has eight cannabis brands, with 45 different product SKU’s, encompassing a wide-array of cultures that exist in cannabis within California. The company is also using using premium influences coupled with its differentiated product catalogue, which plays a significant role in the company’s premium marketplace strategy.

Transcript

James West: Leigh Hughes joins me now. He’s the CEO and Executive Chairman of Next Green Wave Holdings, trading on the CSE under the symbol NGW. Leigh, welcome.

Leigh Hughes: Thank you.

James West: Leigh, you’re a California-based extractor and Consumer Packaged Goods producer. From all I’ve seen, you’ve got a bit of a premium angle on almost every aspect of that business. Give me an overview of how the company operates in the California market.

Leigh Hughes: Sure. So we are, we’re fully vertically integrated, is the phrase that everyone likes to use, on the medical and the rec side, meaning that we have every license, from seed to consumer. But of course, our value proposition, as I’ve explained to you before, is to run that sort of Proctor & Gamble or Unilever model; when it comes to consumer packaged goods, we want to be the, you know, the Adidas or the Nike when someone thinks of buying a shoe, in cannabis.

We’ve got eight of those brands, with 45 different product skus across those eight brands, so we’re trying to really capture the different cultures that exist in cannabis in California, which has obviously been ingrained over a very long time.

James West: Right.

Leigh Hughes: And, of course, you know, although those brands are aligned with, you know, premium influences, that we like to call them, and we think it’s very important, because we believe that that premium end of the marketplace in California is a really big market, a big piece of the triangle. 

James West: Right.

Leigh Hughes: And you know, we’ve got to also be able to control everything from that nursery environment right all the way through to, you know, extraction and manufacturing, which we believe we’ve got the right model for.

James West: Sure. So how much cannabis will you be able to produce? How are you going to divide that up into your different products?

Leigh Hughes: Yeah, interesting. So our first facility, which is a 35,000 square foot indoor facility, we’ll start harvesting in August, actually, so we’re just around the corner from that. We’ve built that from scratch; we put $12 million USD into that building over an 18-month period of building it, which is important. So, we’ve been waiting a long time.

We’ll put out about 8,000 pounds of premium flower out of that building. We have a footprint in Coalinga, which I was asked to actually grow 10 times our capacity if we choose to, on our own. But because we don’t have a fragmented licensing structure – we have all the licenses we can actually toll for other cultivators out there that may not have an extraction license – in our extraction facility, which is a purpose-built, 3,240 square foot building – we see that as a really good opportunity for us to give upside to our products, because we believe that we’re not going to have enough product to sell. It’s not a bad problem to have.

James West: Sure. You mentioned that you were anticipating selling your cannabis at a great premium relative to what the average cost is on a wholesale basis in California. How do you defend that position?

Leigh Hughes: Well, so, I think, you know, a lot of people probably just don’t understand the California market as it stands right now. Yes, the black market equates for a lot of the product that they say is out there, and we believe a lot crosses the state border there. All we need to do is go into a dispensary – go into a dispensary and have a look at the premium flower, or the flower section. A lot of the time you go in there, there’s empty jars.

And so there is a pressure on the dispensary model when it comes to putting in high-quality flower. Of course, the cross points will probably ebb and flow as people start to work out cultivating and making sure that they’re aligned with the right regulatory framework that says you’ve got to be testing it at these levels; that’s going to happen.

James West: Sure.

Leigh Hughes: But right now, we believe that there’s still a big opportunity to really put pressure on that ceiling end of the cross points.

James West: And you’ve got a big emphasis on genetics, and particularly plants’ propagation, which was intriguing and differentiates you quite a bit. Tell me about that.

Leigh Hughes: So, another one of our value props is to be a world-class nursery. To be a world-class nursery, you know, it’s no secret: you’ve got to have high-quality breeders with breeding experience, but you’ve also got to have the good quality cultivars. In January this year, we acquired our Chief Operating Officer’s genetic library, 120 of them: connoisseur cultivars. Won a number of awards; you know, you’re talking about the Top 40 Seedbanks of all Time, you know, Seedbank Hall of Fame, etcetera. Validating that world-class nursery statement for us was doing that partnership with Intrexon, a NASDAQ-listed company, you know, a few billion market cap. And you know, utilizing their Botticelli technology to look at how we can create a plantlet or clone technology that says that that clone or plantlet will be consistent all the way through in terms of its genetic profile, but also disease/pathogen/pesticide-free.

We get that right, any cultivating environment, then, gives yourself a better chance of being successful. We all know it’s no secret that a lot of companies have started to realize that growing cannabis isn’t as easy as growing a tomato farm.

James West: Sure. 

Leigh Hughes: So, you know, that gives us a really good potential plantlet, you know, product to sell to other LPs.

James West: Right. How do you see your revenues scaling 12 months, 24 months out?

Leigh Hughes: So August to August is really what we’re looking at from a revenue standpoint. Right now, we’re looking at about $30 million USD in the first August to August period, which is, you know, we’re going to be aggressive on, for sure. You know, things can go wrong in this business, as we’ve all learned over the last four or five years; we’re not oblivious to that, but because we have that brand product recognition in what we’re rolling out right now – the eight brands, 45 products – and the demand of what these dispensaries are asking for, we’re bullish on that number.

James West: Cool. All right, Leigh, that’s a great introduction. We’ll leave it there for you now, we’ll come back to you soon. Thanks for joining me today.

Leigh Hughes: Thanks 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.