Bhang Inc (CNSX: BHNG) Focusing on Becoming Dominant Brand in Consumer Packaged Goods Category
Bhang Inc (CNSX:BHNG) (OTCMKTS:BHNGF) CEO Scott Van Rixel discusses the company’s business and licensing model across THC, hemp-derived CBD and terpene product markets. Bhang is a collection of brands and portfolio of over 100 cannabis products including an array of edible, derivatives, vape, and pre-roll offerings. The company is concentrating primarily on distinguishing their branded products apart from the competition and creating high-quality products.
James West: Scott Van Rixel joins me now. He’s the Chief Executive Officer of Bhang, Inc., CSE-traded under the symbol BHNG. Scott, welcome.
Scott Van Rixel: Well thank you for having me.
James West: Scott, quickly: What is the business model of Bhang?
Scott Van Rixel: Well, first, it’s to promote the quality of cannabis and hemp in the marketplace, but we have three separate silos. One is our oldest silo, which is our functional THC silo we’ve operating through licensing agreements where we license our branding, our copyrights, trademarks, to manufacturers in each individual state. And then they pay Bhang a royalty for the right to do that. So that’s our first silo.
Second silo is our hemp and terpene products. Those, Bhang either manufactures or has manufactured for itself, and then distributes that through online distributors and retail outlets.
Last is the brokerage. Because of our position and our history in the hemp and CBD space, we have created enough relationships that we’re able to have a conduit of CBD isolate, full-spectrum, broad-spectrum products that we buy and then, in turn, sell. And that does two things: it lets us keep good relationships with those farmers, those manufacturers, but it also lets us buy in a larger volume than we would necessarily need for our own goods, and provide those products into the marketplace at a margin, and while still maintaining that, again, relationship with those distributors or manufacturers.
James West: Right, okay. So, how does your – where does the bulk of your revenue come from?
Scott Van Rixel: In the past, I would say the bulk had come from our licensing model, because that was our principal revenue source. Now, as we move forward, transitions away from that into the direct sales of CBD and hemp products and terpene products, as well as the brokerage itself is supportive of that.
James West: Okay. Interesting. So, how have you found it? I mean, you’re relatively recent to the market; and is it your sort of experience that the market is still very receptive to new stories in the cannabis space?
Scott Van Rixel: I think when you say ‘new stories’, I think there’s lots of companies, you know, obviously, you can look at the amount of listings that have occurred over the last 24 months, and it’s exhaustive. What sets Bhang apart is, our model really always has been, and will continue to be, focused on brand, and I think that there’s very few companies that have come into the marketplace that their value as a company and their value proposition to shareholders is brand-focused. That’s something that we have never wavered from; it’s something that we’ve always had as our focus of the company, focus of our products, and what our long-term goal was was to have our brand be the most recognized brand in cannabis, which ultimately equates into a value for shareholders as the next round of those large-scale investors and acquisition parties come to the table.
They’re going to be looking for who’s the dominant brand that we can bring under our portfolio and move forward with, and that’s always been our focus.
James West: Sure, okay. That’s probably – I mean, one of the things that I hear more often than anything else is that, you know, we’re a consumer packaged goods company focusing on the quality of our brands, and we are going to dominate. And one of the things as a market participant who’s in the market, you know, it’s like, I can’t really get a handle on who’s winning this race. So, how do I know which brands are the most popular? Where do I get that information?
Scott Van Rixel: You know, there’s lots of good – I think BBS Analytics is a good source, but one of the telltale signs of a Bhang success in the marketplace is, you’d be hard pressed to go anywhere on this planet and find someone that’s knowledgeable about cannabis, and ask them, Do you know about Bhang chocolate, or have you ever heard of Bhang chocolate, and them not say yes. And that’s, that has been our cornerstone of success, is brand recognition, and that’s something I think we’ve accomplished very, very well. We’re one of the winningest, if not the winningest, cannabis consumer packaged goods winners, from whether it’s High Times, you know, the Emerald Cup…I mean, there’s a lot of events, but Bhang has continued, and will continue to dominate that. And that’s a judgement of our peers, which is a good indication of our success.
And then the last part that I think is the most important is, you take a company like Indiva, Origin House, which was formerly Cannaroyalty, Trulieve in Florida – those are successful cannabis companies in their own right, and they don’t necessarily need a brand like Bhang to do well in the marketplace, but they sought us out. They chose us to bring us into their portfolio of branded products that they manufactured, and that’s, I think, probably the greatest reflection of our success in the marketplace is a company like Trulieve or Origin House, who is very capable of building a brand on their own and being successful with it, they instead chose to be a licensee of the Bhangs because they felt that we dominated it in that product category, unlike any other product in that category. And that’s, I believe, the greatest reflection of our success, is, our successful peers want to be part of the Bhang story and a licensee of Bhang’s.
James West: Right. Okay. So, interesting. So you can make anybody’s product, any grower’s product, into Bhang products as a licensee? And that’s the model?
Scott Van Rixel: There’s confines within that. You know, I may see they’re maintaining quality. We certainly discourage all of our licensees from using skunk strains or diesel strains, because it’s just an off-putting flavour in the chocolate bar. But the formula that I developed really is a universally blend-able flavour profile, same as the really strong petro or a really strong skunk smells, which, you know, those aren’t things you want to eat anyway. But having that ability to take the brand and make those small tweaks with it in a formula, bending them with what that particular grower is growing…and in many cases, if the states aren’t vertically integrated, that manufacturer is buying product off the market that meets our quality specifications and having it converted into oil, and then that oil finding its way into the chocolate – again, by our SOPs. And that’s how we maintain the consistency and quality.
James West: Sure. Do you feel at all concerned about the eventual Federal de-prohibition and legalization of cannabis in the US, opening the door for major confectioners’ brands like Hershey and Nestle, to come in and sort of run rampant in your marketplace and potentially dislodge some of your market share?
Scott Van Rixel: I think history shows us that those companies very rarely take their successful product lines and change them. You know, if you take Hershey and say, Okay, are they going to do a Hershey Green? I find that unlikely, based on the fact that they’ve got all these other developed brands under Hershey’s. I mean, their Hershey bar is their mainstay chocolate bar; but all of their other confections are Hershey little name, and – I don’t know, KitKat is Mars, but there’s a different product line.
So what I see them doing is saying, Who’s the dominant brand in the marketplace for the product category that we would like to move forward with? And, let’s acquire that brand. I mean, look at Coca-Cola Vitamin Water. Coca-Cola certainly has the means, the know-how and the expertise to develop a vitamin water, or, you know, Gatorade, or a [inaudible]. But that’s not what they chose to do. They looked at who was successful in the marketplace, and acquired them, which is, I’ve said from the beginning, I think every single interview, I’ll keep repeating it because it’s the absolute truth: there is two outcomes for cannabis companies.
You either are going to get bought out, or bullied. And no cannabis company is going to get big enough to make a play on the Coca-Cola or Miller or Hershey or any of these titans of industry. So what a sensible cannabis company is going to do is develop products and develop brands that are going to be actable targets for those gorillas to buy, and that’s what Bhang’s focus is. We have, you know, 16-plus brands in a myriad of different categories, and each of those has been developed to have a relationship with a particular consumer type, and when Hershey shows up – I mean, chocolate’s probably an anomaly for us, because that is our cornerstone product. But if Hershey was going to get in the cannabis space, I really don’t see them doing a Hershey Green. Maybe; not likely.
What I more likely see them doing is saying, Let’s bring a brand into our portfolio, into our manufacturing process, that’s already established, is already well-recognized, and is considered to be the premier product in the marketplace. And that would be Bhang.
James West: Wow. All right, Scott, that’s a great introductory conversation with you. I’ve not tried Bhang chocolate, but I’m certainly going to hunt it out the next time I’m in the States. Thanks very much for joining us; we’ll come back to you soon.
Scott Van Rixel: I had to throw my little cup… [laughter] Always gotta be marketing. And again, I appreciate what you do, I appreciate the [inaudible] and I look forward to speaking to you and your listeners again. Thank you for your time.
James West: You bet. Sounds great. Thanks, Scott.
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