In this edition of "Rising High," The Fly conducted an exclusive interview with Edward Fields, chief executive officer of DionyMed Brands (HMDEF), a multi-state cannabis brands platform. Here are some of the highlights:
CANNABIS BRANDS AND DISTRIBUTION: DionyMed is a cannabis brands company which aims to support the design, development, distribution and marketing of brands at scale in the medical and adult-use market. “From the beginning we’ve asked the question how does a brands company in an emerging industry like this control its own destiny?” Fields said. “Our answer to that question was basically to make sure we own the two most important channels for getting these products to the shelves.” The CEO said DionyMed owns the distribution company that currently delivers product into over 800 dispensaries throughout California and Oregon. He noted that of the roughly 470 California dispensaries that are active and currently serving customers, the company is in about 430 doors. “We also own the largest direct-to-consumer fulfillment platform,” he said. “We have over a quarter of a million users registered on our platform ordering cannabis products to be delivered to their door.” Fields added the DionyMed has 300 drivers serving customers in the Bay Area and the company is now aggressively pursuing Southern California amid expanded direct-to-consumer laws. “We own distribution in 90% of the retail storefronts and we’re the largest direct-to-consumer fulfillment provider in California today,” he said.
DIFFERENTIATION: The CEO said he believes DionyMed’s key differentiators including scale and data make the company well-positioned as competition ramps up. “We’re operating at a meaningful level of scale and it’s our belief that scale in and of itself particularly for the California market is a strategic imperative and a long-term advantage,” he said. Fields said the second piece of the puzzle is the data. “We have data across the 5.56M units that we’ve delivered through both distribution and direct-to-consumer and we think that data represents a trove of insight for enhancing efficiencies, driving brand equity and scaling our relationships with consumers,” he said.
BRAND RELATIONSHIP: The CEO said DionyMed currently has its hands full with the cannabis market in California but the company is excited about reaching everybody as cannabis becomes more mainstream globally. “We think the long-term opportunity is to own the brands and the brand relationship with the customers worldwide,” he said. “Our long-term vision is that very thing, we want to bring safe, trusted cannabis brands to consumers everywhere.”
LEGALIZATION: When asked which country could be the next to legalize cannabis on a federal level, the CEO said he would like to say the U.S., but the amount of dysfunction in Washington gives him pause. “I wonder about a place like Germany, which is selling cannabis now like hotcakes in pharmacies all over the place,” he said. “They apparently love cannabis, they want more of it and could potentially get there before us.” Fields said he expects to see banking in the U.S. to be sorted out by the end of this year and federal prohibition to go away some time next year. “I think that it’s malpractice and negligent that Congress is preventing people who are suffering from opiate addictions to have access to these medical products and I think it’s idiotic that the feds are standing in the way of an industry that the people want,” he said.
CHANGING LANDSCAPE: Fields said he believes the space is no different than any other consumer packaged goods market and that big players will emerge for the cannabis world as it evolves and progresses. “We’re headed towards a massive consolidation and I think it’s good for the industry and better for the consumers,” he said. “There will be some boutique vineyard wine-like attributes to some of the cultivation and small growers but I think the next wave, in order to support the demand, is going to really be about two or three companies getting to massive scale and having the resources to solve supply chain problems.”
CHALLENGES AND OPPORTUNITIES: When asked about the challenges the industry is facing, Fields said the biggest hurdle currently is regulatory uncertainty and turbulence in the markets. “In California for instance, you have heavy metals testing, which is a good thing, come on line in July,” he said. “It has negatively affected the supply chain in a significant way. We’re starting to see that show up in the availability of product and flower and that’s challenging.” The CEO noted supply chain disruptions are rare in the hops industry as the regulations are sorted out. “At some point, we’d like to see that normalize in cannabis and until it does the regulators of the supply chain can be a challenge to deal with,” he said. When looking at opportunities in the space, Fields said he sees promise in getting cannabis to the new consumer. “The opportunity is in bringing cannabis to people who have abandoned it decades ago or are new to cannabis and expanding the market through things like direct-to-consumer,” he said. “It’s not necessarily the enthusiasts or the medical patients that pioneered this industry ten years ago, it really is the new consumer that is the massive growth opportunity.”
OTHER CANNABIS STOCKS: Publicly-traded companies in the space include Aurora Cannabis (ACB), Aphria (APHA), CV Sciences (CVSI), CannTrust Holdings (CNTTF), Cronos Group (CRON), General Cannabis (CANN), Canopy Growth (CGC), Tilray (TLRY), Innovative Industrial Properties (IIPR), India Globalization Capital (IGC), ICC International Cannabis (KNHBF), Biome Grow (ORTFD), MediPharm Labs (MLCPF), Indiva (NDVAF), OrganiGram (OGRMF), KushCo (KSHB), MedMen Enterprises (MMNFF), Elixinol Global (ELLXF), Planet 13 Holdings (PLNHF), Wayland Group (MRRCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), Origin House (ORHOF), Sunniva (SNNVF) and Sproutly (SRUTF).
Keywords: cannabis, weed, stocks, marijuana, cultivation, legalization, CBD, THC, hemp