Although 2022 was a rough year for the cannabis industry, we expect the sector to bounce back and have been focused on identifying operators that have been executing on a strategy to create a brand that resonates with consumers.
We recently started to conduct due diligence on cannabis brands in Canada and are working to determine which are positioned to capture significant market share in that country. During the last year, Canadian cannabis companies have been under enormous pressure and we believe there are pockets of value after the decline.
The BC Bud Corporation (CSE: BCBC) (OTCQB: BCBCF) owns several Canadian cannabis brands and meets the criteria we look for in operators and want our readers to be aware of it. The company is led by a management team that is comprised of executives who have a proven track record in highly regulated industries, diverse expertise, and decades of experience in the United States (US) and Canada.
3 Core Reasons For Our Bullish Outlook
One of the primary reasons for our bullish outlook on The BC Bud Co. is related to the amount of stock that is owned by company executives. Based on our conversation with the company, more than 70% of The BC Bud Co. is owned by its executives. We consider this statistic to be significant when analyzing the business and want our readers to be aware of this.
Another factor that impacted our view of the company is related to the strength of the management team. The company is led by executives who have a proven track record of success in the cannabis sector. We consider this to be an important trait for any cannabis business but believe this is an area where The BC Bud Co. excels.
Although it has recently been hard for cannabis companies to access capital markets, The BC Bud Co. has been able to raise capital from what we consider to be smart money. We are of the opinion that the company has the traits that many investors look for in successful businesses and believe this has allowed them to raise money from strategic investors.
An Efficient Growth Story
The BC Bud Co. is executing on an efficient growth strategy and has been capturing market share in provinces across Canada. Currently, the company is selling products in 6 provinces and we expect this number to increase by the end of the year.
By utilizing a contract manufacturing strategy, The BC Bud Co. has been able to keep costs low and we are bullish on this approach. By operating this way, the company has not needed to build or buy facilities for millions of dollars. Due to this strategy, The BC Bud Co. has no debt on the books and we consider this to be one of the most important aspects of the story.
Most of The BC Bud Co’s competitors have a significant amount of debt outstanding, a condition that is crippling to the growth of such a business. The interest rate on the debt that its peers have is extremely high and we expect this to put pressure on the businesses over the long-term.
An Execution and Growth Story in the Making
We believe The BC Bud Co. is well positioned to benefit from the growth of Canada’s recreational cannabis industry. The management team is executing on a multi-faceted growth strategy that is centered around capturing market share and we are of the opinion that the market has not taken this into account when valuing the business.
Going forward, The BC Bud Co. plans to capture additional market share in Canada by focusing on the following:
- Brand Awareness – The company is focused on two core goals: building trust and delivering top-notch consumer value
- Product Development – The BC Bud Co. has a large product portfolio and has formed strategic relationships to enhance its offerings. Some of the products that are sold to consumers are solventless extracts, gourmet edibles, and infused pre-rolls.
- Partnerships and Licensing –Part of The BC Bud Co’s growth strategy is the formation of strategic partners and craft cultivators. The company’s licensing model allows the company to focus on providing the best products and the best customer experience.
- Value and Customer Care – The BC Bud Co. is committed to providing the best consumer experience and we consider customer retention to be a key factor in the growth trajectory
The BC Bud Co. is Trading at a Considerable Discount to its Peers
Although The BC Bud Co. has reported several positive developments so far this year, the stock price has fallen by more than 45% from its high in January 2022. When compared to high-profile Canadian cannabis retailers, the decline is much lower than its peers (as of February 8th) and we have highlighted two large-scale Canadian retailers below:
- High Tide (Nasdaq: HITI) (TSX Venture: HITI) – down more than 70% from its 2022 high
- Fire and Flower (OTC: FFLWF) (TSX: FAF) – down more than 75% from its 2022 high
On a comparative basis, we believe The BC Bud Co. has more upside potential than High Tide and Fire & Flower (based on the difference between market capitalizations). At current levels, The BC Bud Co. is trading at a considerable discount to High Tide and Fire & Flower and we want our readers to be aware of the disconnect in valuations.
High Tide and Fire & Flower are valued at approx. C$157 million and C$66 million, respectively (based on market capitalization). The BC Bud Co. is valued at less than C$6 million (based on market capitalization) and we find the disparity between the valuation of The BC Bud Co., High Tide and Fire & Flower, to be compelling.
A Company with Catalysts for Growth
While large-scale Canadian cannabis retailers like High Tide or Fire & Flower are facing significant headwinds from expanding too fast, The BC Bud Co’s management team has been executing on a calculated growth strategy. We believe the patient approach to growth could create acquisition opportunities for The BC Bud Co. and expect the brand to take market share from retailers like High Tide and Fire & Flower.
When comparing the growth strategy of The BC Bud Co. to High Tide and Fire & Flower, our readers should be aware of several key differences. While High Tide and Fire & Flower having been buying revenue (by making acquisitions), The BC Bud Co. has been growing organically and we find this to be significant. The strategy for High Tide and Fire & Flower has resulted in each company having a significant amount of debt on the books and we believe our readers should be aware of this.
The BC Bud Co’s patient growth strategy has played an important role in the formation of value-added strategic partnerships. We believe the company has substantial growth prospects and are of the opinion that the market is not assigning much value to this. We think the disconnect with the market has created an opportunity for our readers to learn about a growth story that is flying under the radar and will monitor how the story advances from here.
Led by a Management Team With a Proven Track Record
When analyzing a cannabis company, the management team is one of the first elements we investigate. We believe a company needs to be led by a management team who deeply understands the sector and are favorable on the team at The BC Bud Co.
The BC Bud Co. is led by a management team that has a proven track record of success in the cannabis industry and we consider this to be one of the most important aspects of the story. From the executive team to the advisory board, the company has attracted strategic human capital and we want our readers to be aware of this.
At the helm of The BC Bud Co. is CEO Brayden Sutton who has a proven track record of success in the North American cannabis industry. We consider Mr. Sutton to be an industry leader and believe he is executing on a multi-faceted growth strategy. From managing companies to raising capital, he adds important expertise to the team and we are favorable on the direction he is bringing the business.
Another significant member of the team is Marc Lustig. During the last decade, Mr. Lustig has successfully managed several cannabis companies. In 2020, he sold Orgin House to Cresco Labs for more than $1 billion and we are favorable on the experience that he brings to The BC Bud Co. Mr. Lustig is one of the largest shareholders of The BC Bud Co. as well as an insider and a member of the Advisory Board. We are favorable on his involvement with the company and our readers should be aware of this.
Josh Taylor is the President of The BC Bud Co. and is a key member of the team. With more than 15 years of practical experience in the cannabis industry along with CPG and pharmaceutical brands like Red Bull, we consider Mr. Taylor to be an important part of the team. He has a proven track record of success in the cannabis industry and will play an important role in the success of The BC Bud Co.
Forms Relationship With The Higher Peaks Agency
In late December, The BC Bud Co. entered into a 12-month sales and marketing services agreement with Higher Peaks Agency Inc. According to the agreement, the agency will serve as an exclusive national sales and distribution partner for the company’s premium product portfolio.
Through the agreement, The BC Bud Co is focused on building on its sales and distribution relationships with provincial boards, retail procurement managers, budtenders, and the end consumers. We consider Higher Peaks to be a strategy partner and expect the relationship to serve as a key revenue growth driver for business in 2023 and beyond.
As The BC Bud Co’s representative, Higher Peaks has already started to promote in-market products to its extensive network of retailers across Canada and is simultaneously working on pre-sales of soon-to-be-released products, building brand awareness, providing unique value propositions of Company products, and supplying trade marketing materials to retailers will be key in order rapidly accelerate consumer visibility and consumption of its product line.
We consider the exclusive nature of the agreement to be significant due to the amount of positive recognition that Higher Peaks has received. Over the next year, we expect the agency to help The BC Bud Co. capture market share in provinces across Canada. We are favorable on the company’s plan to invest in an educational product sampling and budtender education collateral program. We expect these initiatives to support Higher Peaks’ strategy for the company and will monitor how the relationship benefits the business.
Over the past twelve months, The BC Bud Co has significantly expanded its product portfolio and national market share organically. We consider the relationship to be a pivotal step in the company’s sales and distribution strategy and expect Higher Peaks’ extensive rolodex and relationships to be a key growth driver for the business.
We believe that with Higher Peak’s proven track record and The BC Bud Co’s portfolio of branded products, the business is well positioned for this next wave of growth in the cannabis industry. We believe the business is focused on building valuable brands and expect Higher Peaks to support this aspect of the company.
An Undervalued Cannabis Growth Story
By executing on a series of organic and inorganic growth initiatives, The BC Bud Co. has improved its growth prospects and we consider this to be a core pillar of the opportunity. We are of the opinion that the management team has its finger on the pulse of the market and understands how to satisfy consumers.
During the last few years, the amount of unsold cannabis being destroyed by Canadian Licensed Producers (LPs) has significantly increased. Some analysts have attributed the trend to a lack of quality product on the market and we believe The BC Bud Co’s focus on selling premium products has protected the business from the cannabis destruction trend in Canada.
We believe The BC Bud Co. possesses the traits needed to be successful in Canada’s cannabis industry and are bullish on the direction the management team is bringing the business. At current levels, we believe the Canadian cannabis brand has a compelling valuation and a favorable risk-reward profile.
If you are interested in learning more about The BC Bud Co., please send an email to firstname.lastname@example.org with the subject “The BC Bud Co” to be added to our distribution list.
Company Relationship Disclosure
T420 is responsible for the T420 opinions provided in this disclosure except all sources or information provided by other parties were not verified or authenticated and T420 does not undertake to confirm or substantiate or be responsible for such information provided by other parties.
Any Content posted regarding a Profiled Issuer is not a solicitation or recommendation to buy, sell or hold securities. We cannot and do not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. All information should be independently verified. We are not responsible for errors or omissions in our publications, and any opinions expressed are subject to change, without notice. We do not, nor are we under any obligation to undertake due diligence or investigation or authenticate and verify whatsoever regarding Profiled Issuers or any Content posted in relation thereto and we do not receive any verification from the Profiled Issuer regarding the Content we disseminate. Similarly, while we endeavor to facilitate the provision of quality information, we are not responsible for any loss or damages caused or alleged to have been caused by its use nor verify or authenticate or update such information.
Pursuant to an agreement between Spotlight Media Corp. and The BC Bud Co. we have been hired for a period of 180 days beginning February 15, 2023 and ending August 15, 2023 to publicly disseminate information about The BC Bud Co. including on the Website and other media including Facebook and Twitter. We are being paid $2,200 per month The BC Bud Co. and were paid “ZERO” shares common shares. We hold “ZERO” shares common shares. We will not sell or purchase shares during the Term. We reserve the right to buy or sell shares after the Term in accordance with State and Federal securities laws. See “Disclosures” below which is to be read in conjunction with this release.
This article contains forward-looking statements within the meaning of applicable securities laws. All statements that are not historical facts, including without limitation, statements regarding future estimates, plans, programs, forecasts, projections, objectives, assumptions, expectations or beliefs regarding future performance are “forward-looking statements”. Forward-looking statements can be identified by the use of words such as “expects”, “does not expect”, “is expected”, “believes”, “intends”, “anticipates”, “does not anticipate”, “believes” or variations of these words, expressions or statements, that certain actions, events or results “may”, “could”, “would”, “might” or “will be” taken, will occur or will be realized. Such forward-looking statements involve risks, uncertainties and other known and unknown factors that could cause actual results, events or developments to differ materially from the results, events or developments expected and expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, dependence on obtaining and maintaining regulatory approvals, including the acquisition and renewal of federal, provincial, state, municipal, local or other licenses, and any inability to obtain all necessary government authorizations, licenses and permits to operate and expand the Company’s facilities; regulatory or policy changes such as changes in applicable laws and regulations, including federal, state and provincial legalization, due to fluctuations in public opinion, industry perception of integrative mental health, including the use of psychedelic-assisted therapy, delays or inefficiencies or any other reason; any other factor or development likely to hamper the growth of the market; the Company’s limited operating and profitability track record; dependence on management; the Company’s need for additional financing and the effects of financial market conditions and other factors on the availability of capital; competition, including that of more established and better funded competitors; the impact of the Russia-Ukraine conflict on the global economy; the continued impact of the COVID-19 pandemic; and the need to build and maintain alliances and partnerships, including with research and development companies, customers and suppliers. These factors should be carefully considered, and readers are cautioned not to place undue reliance on forward-looking statements. Despite the Company’s efforts to identify the main risk factors that could cause actual measures, events or results to differ materially from those described in forward-looking statements, other risk factors may cause measures, events or developments to materially differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in forward-looking statements. The Company does not undertake to revise forward-looking statements, even if new information becomes available as a result of future events, new facts or any other reason, except as required by applicable laws