Plus Products Inc (CNSX: PLUS) Partnering with John Legend and Casper Sleep
Plus Products Inc (CNSX: PLUS) (OTCMKTS: PLPRF) CEO Jake Heimark joins Midas Letter to discuss the company’s partnership announcements with John Legend and Casper Sleep. The singer, songwriter, producer, actor and philanthropist’s role in the partnership is to promote the company’s new hemp CBD product offering. Casper Sleep will introduce its melatonin and CBD-infused SLEEP product. Plus Products offers a variety of edible products in the California market. The CEO discusses the company’s future plans for California, the US and worldwide.
James West: I’m joined now by Plus Products CEO Jake Heimark. Jake, how are you doing today?
Jake Heimark: I’m good. Thanks for having me.
James West: Jake, I mean, among the obvious things that have changed since we last chatted in Los Angeles – I guess that was several months ago – you’ve got a partnership with John Legend, which is, to me, astounding. I mean, the guy is a legend in every way, shape and form. Tell me about that partnership: how did it come about, what’s the significance for a shareholder in Plus Products?
Jake Heimark: Sure. So last week, we announced a partnership with John Legend and Casper, the sleep company, in bringing a CBD product nationally. So at Plus, we’ve been focused for a long time in doing what we call bringing balance to people’s lives, and we’ve done that with THC products. And now we have a CBD product that we can ship to 43 states across the US directly to consumers, from our website. And John’s joined as a really great advocate for us. I think he has a lot of credibility, sort of this being in the 30 and things that are good for you, and that’s a really important piece to a company in a crowded marketplace.
James West: Sure, you bet! So your bestselling product is still your gummies?
Jake Heimark: It is. And that’s the products that we brought in CBD as well, nationally. It’s still the Number One and Number Two sellers in California.
James West: Wow, so that’s pretty significant, then.
Jake Heimark: It is. People like our products – more than 50 percent of them come back and buy them again. We’re really focused on delivering products that you can use every day. There’s been a lot of noise lately around vaping, and the potential dangers of it; we think if you’re going to use something every day, having a food product is a really safe way to actually enjoy it. We’re proud that people are agreeing with us, and are buying our products.
James West: Yeah, and it seems the shareholders love what you’re doing, because your stock certainly hasn’t suffered the slings and arrows that the whole sector has. Is that largely a function of your financial position, your financial reporting?
Jake Heimark: I think we have a good balance sheet, and we have a very clear identity. I think there are a lot of companies that are trying to do a lot of different things, and it is very difficult to do one thing very well. And at Plus, we make really good foods, and we’re a really strong brand, and I think that’s resonating with some of our shareholders.
It is a tough market right now for a lot of companies, but we’re proud that we’ve weathered the storm.
James West: Yeah, you bet. How soon until we see Plus Products in every state where cannabis is legal?
Jake Heimark: So our first strategy going to every state was having a CBD product where we could actually get our brand there, today. I think it’s really important that as of last week, we’re now able to market and deliver products directly to people’s homes. We’ve announced that in Q3, you’ll see us in Nevada, and we’re not changing that guidance, even though we are coming up shortly at the end of Q3. So that’s why I’m in Nevada today.
James West: Oh, perfect. CBD products – now, you can ship those into any state right now, can’t you?
Jake Heimark: 43 states, we can ship them in. you can’t do it in certain ones like North Dakota or Iowa.
James West: Oh, really? So those states have opted not to participate in the legalized sort of framework that’s been evolved as a result of, I guess that was the Farm Act?
Jake Heimark: Yeah. There’s a Farm Bill that was passed last year that clarified some of the rules on hemp. The FDA was supposed to give guidance this summer; they’re likely to come out with it sometime this Fall. And there are a few states that aren’t participating, yet. I think that as people learn more and more about CBD, there are going to be more and more states that legalize it, especially on the edibles side, given all the dangers that we’re learning about vaping.
James West: Right. Okay, so now, what about the significance of this Safe Banking Act? Has that had any benefit, any – does that add any improvement to the cannabis sector in California or Nevada?
Jake Heimark: I think it is a huge sign for the whole industry, and one that helps companies like ours, especially ones that are smaller or starting out, and the largest ones, get access to banks that previously wouldn’t even talk to us. There’s quite a few investment banks, for example, here in the US, who wouldn’t even have a discussion because retail banks weren’t even allowed to bank us even if they wanted to do business with us. They wouldn’t know where to put the money. And I think that’s going to start to change now that this has passed. I think in the long history of cannabis, a few years from now, we’re going to look back on the Safe Banking Act as the first Federal Bill that actually started to change things, and it’s really exciting.
James West: Oh, wow. So it’s more significant than some people recognize?
Jake Heimark: I think when you’re as close to the forest, as some people are sometimes, all they see is the trees. And I think this is a huge change. It is a Federal Bill that allows people to bank.
James West: Right. So, interestingly, it’s been suggested to me that that is also going to cause problems for some legal market participants who augment their supply chain with elements of the unregulated market, because the absence of banking has sort of permitted an ability to operate that way. Is that something that you concur with, or is that not such a big deal?
Jake Heimark: I don’t know, but I certainly hope so. Shame on them. [laughter] I think at Plus, what we’ve focused on is building a company our grandmas can be proud of, and at the end of the day, in the illegal market, you’re not competing on brand, you’re just moving things, you know, to the only customers who are there. We’re huge fans of regulation; we think that it drives stronger brands and it’s better for customers, and it’s safer. So I hope that none of the companies change their revenues much, because it would mean they were up to some unsavoury stuff.
James West: Right. Okay, so the House is anticipated to back the Safe Banking Act, but they still think that there could be some resistance in the Republican-controlled Senate. Is the general consensus there that this thing is going to fly, or is it going to run into terminal resistance in the Senate?
Jake Heimark: If I could predict this government, I would be able to do a lot more than just run Plus, that’s for sure. This thing is crazy. I think we’ll know when Trump’s Twitter feed tells us what happened.
James West: [laughter] Wow, okay. Well, that’s enough discussion about you as politics, I think. Okay, what are the next big moves for Plus Products in the industry? What’s going to really drive you guys into the next sort of revenue zone?
Jake Heimark: So our strategy at Plus has always been, win California, win the US, and then win the world. And we’ve now taken our products, which are the Number One and Number Two in California; we’re able to introduce them nationally with CBD, and we’ll use that in what we call forward marketing to open up new THC markets. And then, with our brand already there, and then we’ll look to go international. And I think Canada is an interesting place, but actually, European CBD is a place that I think often gets overlooked, and it is a huge market.
James West: Right. Yeah, actually, I was in London 10 days ago, and I actually made a point of going to visit all of the stores that were – not all of them, but a good swath of the stores that were selling CBD products. And I found it interesting that you couldn’t find any product on the shelf in the UK that contained anything more than, like, 2.5 mg of CBD per dose. And 2.5 milligrams of CBD is not nothing, but it’s not significant, at least in terms of some of the more reliable effects of CBD like mental clarity, ability to sleep, improved gastrointestinal sort of stability.
So I think there’s a huge opportunity in the UK and in Europe; if that’s what they’re putting out there as products now, I can’t wait to see your products there. What has to happen for that to occur?
Jake Heimark: The regulatory regimes are pretty clear. I think what someone like Plus has to do is open up a plant and start making it. At the end of the day, products that are efficacious, meaning the ones that work, are going to be what people buy. In the United Kingdom right now, you can buy, for £150, you can buy about 10 milligrams of CBD at Harrod’s. When you can charge that much for so little CBD, I understand why they’re not putting in more, but if you want to build a brand in the long run, I think that if you don’t include enough to actually do something, you’re not going to have customers coming back and buying your product again.
James West: Right. I was implying that you’re not limited by any regulation in the United States, as a US company, from setting up a plant, as you say, and selling product into the UK at this point?
Jake Heimark: We are not. Because we’re a Canadian company listed on the CSE, we can, you know, do things with the UK. I think that it’s hard to import to the UK from the US right now, which means you have to manufacture locally, but that’s what we have to do in the United States; you have to manufacture separately in each state for THC, so that’s part of our bread and butter here at Plus.
James West: You bet. Okay, Jake, so what else have you guys got on the product horizon? You’ve got this new CBD product, you’re focused on foods. Well, how do you expand that out into the next generation of products?
Jake Heimark: At plus, we’re always going to be focused on products that you don’t have to heat up and inhale. We believe that it’s really important for brands to have an identity, and ours is about not hurting you, and we think if you’re going to use it every single day, that things that you don’t inhale – whether that’s tinctures, we actually sell mints already, gummies, chocolates, other foods, beverages – are going to be the way that it makes sense to build a brand around.
And I don’t think it’s one brand; I think there are different brands to be built under an umbrella that will help people, not only in the case of Plus, take the edge off of their days, but maybe get some relief, as well. There’s also one for some escapism, you know, when you want to watch a football game. And we think that we’re going to have products in all of the above, but one thing that we’re going to stay, or core is really around things that you don’t smoke.
James West: Right. I can’t say, as I am more onboard with that than ever before, having just gone through about 10 days since I got back from London of a really bad throat infection associated with, you know, vaping. I’ve got to admit, it was, I started vaping heavily because I get a lot of people want me to try their products. So I vaped quite heavily throughout the summer, and I found that it actually had an ongoing detrimental effect to my respiratory capacities, which I could tell every time I went for my longer distance bike rides.
And then the throat infection – that was the final straw. I’ve stopped vaping everything, and I don’t think I’m going to smoke anything ever again. But all right, Jake, let’s leave it there for now. We’re going to come back to you in due course. Wish you the best of luck, and I can’t wait to see your products one day on the shelves in Canada and Europe.
Jake Heimark: Thanks so much. Have a good one, and thanks for having me.
James West: Thank you. You too, Jake. Bye for now.
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