Manage episode 275575608 series 2370566
It’s been a busy and productive last few months for the cannabis industry’s only true super-state operator. And as reported by Stockhouse back in August, this Company continues to make big waves in some of North America’s biggest markets.
Cannabis company Red White & Bloom Brands Inc. (RWB) (CSE.RWB, OTC:TDRYD, Forum) went public on the CSE in June 2020 and has struck several deals since then, including acquiring licensing rights to the iconic High Times brand in Michigan, Illinois, and Florida, in June.
A month later, RWB exercised out an option to acquire Pharma Co – a deal which would give the Company ten dispensaries in Michigan and eight more in various stages of development, as well multiple grow facilities.
Then last month, Red White & Bloom closed the acquisition of the Platinum Vape Group of California-based companies, whose products are sold at more 700 retailers in Michigan, California, and Oklahoma. When combined with RWB’s 3.6 million square foot Illinois greenhouse that’s licensed to grow hemp, you have a healthy set of assets.
In this lively and informative podcast, Stockhouse Media’s Dave Jackson was joined by Red White and Bloom’s Chairman and CEO Brad Rogers to talk all things Red White & Bloom.
SH: First off, let’s talk about the difference between super-state operations and multi-state operations. What’s the distinction and how does being ‘SUPER’ play into your expansion plans?
BR: Well, super is better than multi. I would think just because of what we saw was you know, it was a land grab across multiple States and there was a premium on, in the markets for the most States with the most stakes in the ground. And really that made no sense to us in terms of how to run a business. And so, you know, critical mass is where it's at for us. And, you know, with critical mass, you become a, you become super, you know, I mean, that, that was we, we needed to redefine what the value there, what in the definition of superstate operator versus multi-state operator, and really set ourselves apart and say, you know what, we're going deep, wherever we go, we're going critical. Wherever we go. You know, one store in 19 States does not make for a great business because you have to manage them all.
You have to work with compliance your governance, et cetera. You know, one whim of a regulatory framework change in any state can really put you out of business if you're not on top of it. And so where we wanted to be was really owning a state and really owning the business and, and being able to help shape that business within that state that we're in and our beachhead was Michigan. And so we started there and went critical mass. And so that was one of the starting of what we saw is really redefining MSO into SSL superstate operator. And then of course, as you, as you succinctly said, we went into Illinois with a real strategy there with respect to seeing you know, the hemp bill came through and now, you know, CBD is now a national potential for the United States.
And we started there because we were a little bit late to the game in the, in the Illinois market to get a license there for THC, however, we're actively pursuing one right now. And, and being very, very look looking like we're got some traction there as well. So I won't get ahead of myself there. But I think that that's effectively what we wanted to do and it's 3.6 million square feet. So a massive, massive operation. And you know, when that TAC license comes in a 200,000 square foot canopy, we'll do, you know, a very, very nice piece of business. We estimate somewhere around 200 plus million dollars of revenue just in that one facility with no stores and satiate that market and have the ability to do that with really no cap ex out because we've got the infrastructure already. So, you know, a very strategic play in a very critical mass way in Illinois. So we've got a very nice big chunk of business, as you said in Michigan and a very, very high potential business within Illinois and Florida, we're actively working on.
Very interesting situation there, which is very exciting for us on top of that as well. So and of course, as you mentioned as well, you know, we get to leverage the high times brand, which is effectively, as far as I'm concerned, the only brand in cannabis around for 46 years, and really has the mind share of the, of, of the, of, of the U S market. And so you know, that's exciting for me. And so I, I hope I answered your question on the superstate. I went deep on it, went long on it, as long as they do a very short question, but that's how we see our business going real critical mass and wherever we go.
SH: Red White and Bloom just closed a deal to launch Platinum Vape products in Arizona later this quarter. What more can you tell us about that?
BR: Well, it was funny that that deal was in the works prior to us taking buying that company. And so that's with another MSO I would call them or maybe they're, you know, retracting into or scaling up into a refining themselves into an SSL as I understand. But that that's is, is a deal with somebody else. That's in that state utilizing their facilities to be able to actually produce platinum material and use their facilities as a license and distribution channel. So really, really exciting for us to get into that market because as you know rec (recreational-use cannabis) is on the ballot for November, for Arizona and, and man, that's, that's another market that is really insatiable right now. And so, you know, taking platinum into that that market and, and negotiating a high times piece on it on top of it right now, as well, we'll be in we'll be in four plus States with High Times and Platinum Vapes and using their formulations and, and getting, getting you know, distribution within those channels is going to be really, really exciting and, and, and, and, you know, paying out for shareholders for sure.
SH: Last month, RWB closed on a 25-million-dollar bought-deal to finance M-and-A activity and operations. What does financing like this mean in terms of support for your company?
BR: Oh, look, I mean, there's, there's so many opportunities right now in terms of what's available in the States. I mean, there's a lot of predatory opportunities right now for us. But you know, the 25 million was actually a $15 million race. There was 40 million in the book way over subscribed and we took 25. And so that was the result of the, of the high demand oversubscription and, and, and real, real, clearly some, some demand for the, for the name and the stock and of course where the value was for the people that got into it. You know, you're, you really understand what's going on when you, when you really have a look at the markets that we're in and, and see what the potential is there for those markets. And so that money obviously will go a very, very long way in getting us you know, that much more fortified in in the States that we're in and super gets super rare.
So yeah, so that's effectively the 25 million was a very successful race. You know, you can always go out and get more, but we're, we run our companies very, very lean. We spend it like it's ours, we're very judicious with our capital. And clearly when you look at the PV deal it's a very big win for both of us, and it's a very, very good deal for red, white and bloom. And we're very, very excited about that. And that was effectively what that raise was to be able to get that over the line and really solidify the business there.
SH: The Company has solid revenue in the bank. How do you feel your financial performance stacks up to initial forecasts, as well as when compared to how other companies are doing in the market as a whole?
BR: Yeah, so, so the way the deal was structured, and Michigan was unique. And that's why you don't see other big players in that space right now. What we did was RWB was an investment co that invested in a license down there. And so that's the way we structured it. And so we have a put call on that, and unfortunately we can't report those revenues to date right now with, with our investee, but they're significant because when you look at you know, what's going on in the market down there, we have we, we have our infrastructure really generating a lot of business down there. And so you know, for, for us to be releasing the results that we had I would call that a speck of sand on the beach to what is really going on.
And there's a lot more there. And once we close the foot call, which it's I've, I've, I've done the foot call, so that's been exercised. So we're just going through the final stages of that now to pull our investee under our wing and be able to re post those results. So we've got platinum vapes now and then we'll have our investee and then and then we've got the Illinois facility that's doing a very big chunk of business right now on the CBD hemp side. So you know, those three assets really are, are, are, are performing and growing like a week old pun intended.
SH: There’s an upcoming catalyst for your business around your core asset in Michigan that’s been in the works for the past six months, and you expect to be closing this transaction soon. Can you offer an update on this?
BR: Yeah, so, like I said, the put, the foot call has been exercise. And right now we're just going through the compliance pieces to be good corporate citizens and show that we're, you know, the people that are coming in to this operation, to the regulator that we're, we're, we're good corporate citizens, and we're able to run a good business and be compliant to their regulations. And so all that information is in now and, and they've got it. And we're just going through the process right now of final stages. What's called a pre-qualification. And once we're pre-qualified, then we're able to actually fully exercise the foot call and bring our best D under, under our wing and start reporting all their revenues on our books. So that's from, from what I understand a very, very short time away a couple of weeks as a matter of fact. So you know, from, from what I get and so really looking forward to pulling that in and being able to report. So that's effectively the, the update on that on that situation. So it's been a long time coming. We fortified the business up until this point and we put the call in and now, now we're just, it's a waiting game with the regulator to get approved and should be very short period of time.
SH: Can you run us through the company’s plan with rebranding your stores as ‘High Times’ stores and the exclusive licensing agreement to use that same name for branded products and delivery?
BR: Sure. Yeah. So look, I mean, as I said before, I mean, High Times is just such a, such a real house, Mindshare a winner in the market. And, you know, my litmus test for, for a brand awareness is, you know, you shake somebody's awake in the middle of the night and you say tide, they say detergent. They say Snickers, they say chocolate bar, and you say high times they say weed. And so, you know, that to me is, is really where high time sits in the markets. Very captive audience, very aware market in Michigan, specifically where the biggest cannabis cup is as a matter of fact it's bigger than any other state, they hold cannabis cups in. So you know, that is, is, is well into the works. We're, we're assessing that out right now. We're also doing products as well.
So we're doing, we'll, we'll be doing high times vapes, high times, flower, high times you know, all those pieces. And so that, you know, complimentary is just more of a compliment to you know, what the high times brand is beyond that, of what our brick and mortar stores can be. So we'll have distribution with high times products as well. So that's one more piece that we're able to drill down that much further in, beyond out of Michigan. We've got it in Illinois, and we've also got it in in Florida. So we don't have to open stores, nor do we have to do you know, anything to that nature or that degree in terms of cap ex out in Illinois and or Florida for the moment we can go in with products. So that's one more piece of the strategy that we're executing on right now as well with the high tens brand
SH: Looking ahead six months to a year down the road, what do you see for the future of Red White and Bloom Brands?
BR: Oh, man. I mean, this is embryonic, this is the end of prohibition. I mean, what did, what did Daniels look like before Jack Daniels was Jack Daniels? I mean, you know, that's the exciting part for me and I, couldn't be more excited about, you know, what the potential of this business holds, especially in the United States where there's, there's real fundamentals, there's massive commerce, there's so much to be done and so much to be had down there in terms of taking advantage of opportunities and, you know, market share. No one is there, there's a couple of dominant players, but there's so much room to become you know, top three it's, it's, it's crazy. And so, you know, we've had a far shorter run in the States than, than our peers but you know, effectively a year and a half. And when our results come out, it'll be very, very pleasantly surprising most of the market, including our shareholders. And so you know, and, and the upside to that is, you know, being public and having that currency to be able to go and do more MNA, more acquisitions, just grow to the degree we can and take advantage of this market. It's just so darn exciting. I hope, I hope I succinctly articulated myself over my exuberance.
SH: Finally, Brad, how can people get in touch with the company to find out more?
BR: So, yeah, so look, I mean, we've got on our website red, white bloom dot com. We've got an investor section. We've got our, our current deck up there for people to go and look at. We also have you know, a very friendly IRR team that is more than happy to answer any questions anybody has. So you know, I, I implore everybody to go there, check out the website, look at what we're doing, get updated see what's going on with the, you know, the platinum vapes brand and the high time situation. And what's going on in Michigan, Illinois, and, you know, subsequently Florida and all the other markets that we're in. So please go check it out.