Today, we are lucky to have Heritage Cannabis CEO David Schwede with us. During the last year, the company has reported impressive growth and we are bullish on the direction the company is heading. We believe Heritage Cannabis is flying under the radar and hope this interview can help answer the questions that our readers have.
- During the last year, Heritage Cannabis has recorded impressive growth and has entered several new markets. Can you please tell our readers about the business and the markets it is focused on?
- At this stage we are multi-pronged, as we are solidifying our position in the Canadian recreational space (currently a top 20 player), establishing ourselves on the largest 3rd party medical platforms in the country and selectively selecting US states to establish our brand equity while leveraging our core product creation/innovation expertise
- When compared to other cannabis operators, Heritage Cannabis seems to have figured out how to be more profitable. How has the company been able to grow the business so efficiently?
- I’m not sure if we consider it being “figured out”, we haven’t had access to the significant sums of capital that our competitors have had, so we focused on building a business that operates in the cannabis sector vs building a cannabis company. Building a sound business should be the goal of every company.
- Our scarce resource has been capital, as such we treat every dollar with a lot of scrutiny to ensure we can maximize the benefit of the capital outlay.
- The marketplace is tough given the price compression, inability to effectively market like other CPG product and the tax environment – as result we focus on producing products that consumers want and at a ROI that ties into our overall strategy.
- The other piece that we focus on is headcount and cost control – we have historically done more with less and our people are core to our success. We continue to focus on this mantra.
- Heritage Cannabis offers a large suite of products in Canada and has taken a unique approach to capturing market share. Can you please explain the company’s strategy to capture a significant amount of market share in the provinces it enters?
- Without giving away our overall strategy – we are now in every province and every product vertical except beverages. We have an overall brand strategy and product roadmap that allows us to make sure all consumers can target and get the product that makes the most sense for them.
- Product innovation and quality is at our core, that is what we focus in each province
- Growing premium cannabis at scale is a much more challenging process than many operators expected. How has Heritage Cannabis been able to avoid such challenges and how has this benefited the business?
- While we don’t grow internally, we are continually focused on either ensuring our methodology is applied with our growers or we are very strategic in sourcing the right material for a specific product. We can accomplish this because of our people and the internal production models we have created for our products.
- Growing and extracting good cannabis to make great products is very difficult. Many industry players failed to recognize how hard it is to create products, there are a few of us in the industry that I look to as peers and as the market refines its taste and cannabis perceptions I believe there will be even less but we are well positioned for it when the market matures.
- Heritage Cannabis is highly focused on the North American market. Can you tell us some of the most significant potential catalysts for growth?
- Moving into strategic markets in the US to create brand equity on an asset light basis will be a core strategy in the near future, this will add strong growth potential given the overall size of the market.
- Continued refinement and penetration in the Canadian market will continue. We continue to find white space and believe the quality of our products will stand out in the market
- The last year has been a significant growth phase for the company. Where do you see the business going from here?
- We are continually looking ahead. Our growth and history suggests we have been nimble and quick to be able to move in line or in some instances ahead of the market with limited resources. Given we have positioned the company to be financially stable, we are looking at a number of options to diversify and grow the business further.
- At current levels, Heritage Cannabis is trading at a huge discount to its peers, and we find the valuation to be attractive. Are there any parts of the business that are completely misunderstood by the market?
- We agree on the valuation piece. To be honest, those that have attracted significant sums of capital and investor attention in the past simply haven’t performed well either because of bloated businesses or product quality or ill-timed strategic moves and as a result many investors paint all cannabis companies with the same brush.
- We continue to reach out and tell our story. Generally, most if not all our conversations end with “wow, why haven’t I heard about you before”. While that is a great comment, we believe investors will have to look at the space and find the good companies in the space not the largest or those that have a sound platform and strategy. We believe the tide will turn as investors always want exposure to good companies that are growing.
- We remain early days in the cannabis sector, we believe in the plant both medically and recreationally. A lot of headwinds have been regulatory in nature which we all know about…taxes, inability to market, product limitations and our hope is many of those will be fixed soon with the current government review. That said, once those are fixed we believe we will have even more growth while the companies that are “broken” will simply remain slightly less “broken”.
- Overall the cannabis sector remains a growth market and will be for a while. It’s a matter of finding the companies that can capitalize on that without continually eroding significant amounts of capital. We believe we have demonstrated that we are one of those companies.
If you are interested in learning more about Heritage Cannabis, please send an email to firstname.lastname@example.org the subject “Heritage Cannabis” to be added to our distribution list.
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