In this edition of "Rising High," The Fly conducted an exclusive interview with Ethan Rudin, Chief Financial Officer of Greenlane (GNLN), a distributor of premium vaporization products and consumption accessories. Here are some of the highlights:
INDUSTRY INNOVATORS: Greenlane is a distributor of vaporization products and consumption accessories in the U.S. with a growing presence in Canada and plans for international expansion. Greenlane’s customers include over 7,000 independent smoke shops and regional retail chain stores, which collectively operate approximately 11,000 retail locations, and hundreds of licensed cannabis cultivators, processors and dispensaries. “We’re pioneers in the industry, transcenders and innovators with our finger directly on the pulse of rapidly growing cannabis, CBD and liquid nicotine markets,” Rudin said. “We’re really excited for how we’re positioned and we’re excited for the opportunity to capitalize on the large growing market for cannabis.”
DIFFERENTIATION: The CFO said he believes Greenlane has been able to differentiate itself from competitors through partnerships with brands to co-develop products and bring them to market. “We were very early identifiers of PAX, Juul, Storz & Bickel, Davinci, Grenco and if you’re a cannabis consumer, these are household names. These are the most premium, sought-after brands in the space,” he said. “Our advantage is the fact we’ve been early to create exclusive partnerships with most of the brands that we do business with. And we never rest on our laurels and consider our work done. We’re always looking at new products to bring on line.”
Rudin added the company looks to identify strong entrepreneurs who need help in creating a product life-cycle and bringing their vision to market. “We take our role in market leadership very seriously and we conduct our business with the spirit of positive connectivity,” he said. When deciding whether to partner with a brand, the CFO said Greenlane looks for management teams that have a similar ethos and perspective, that are excited about their product and are interested in feedback and the product life-cycle. “We’re looking for people who are long-term thinkers and planners and who are looking around corners for innovation,” he said. “We like to work with really nice, creative, talented people.”
When evaluating products and opportunities, Rudin said the company views those opportunities through two lenses: commercial viability and regulation. “Is this a product that’s got long legs? Is it going to sell well? Will there be sales velocity? And is something we’d be proud to feature as a part of our portfolio?,” he said, “And then we also have the regulatory lens, where we think are we too early on this? For example, it took us quite some time to get comfortable on selling CBD.” In addition, the CFO said Greenlane’s other differentiator is that, unlike other distributors, it has an entire suite of house brands. He noted the company’s free-standing retail stores in Chelsea market and Ponce City market called Higher Standards and said Greenlane’s rolling papers brand Vibes recently hit the shelves. “We’ve got a similar set up with some pop-up shops with some dispensaries on the West Coast and so we really view ourselves less as a distributor and more as a house of brands.”
EXPANSION: When asked about which country might be next to legalize cannabis on a federal level, Rudin said that’s a really big question and Greenlane has chosen to think about its financial plan based on product innovation and life-cycle. He said in preparation for whatever country comes next, the company is spending a lot of time focusing on continental Europe. “We are contemplating international expansion and we’ve got our first couple of new hires in Europe. While our home base there so far appears like it’s going to be the Netherlands, Amsterdam, we’re very excited about the opportunities available in Spain and very optimistic about Germany and France,” Rudin said. “Now we don’t have a position on whether they’re going to be legal next or any time, but we view Europe as kind of the next shoe to drop in terms of where we’re going to bring our brands.” The CFO said the company is also excited about Latin America, where it is already conducting some business, and has also been focused on Australia. “Given how far flung some of these regions are, one of the reasons we went public was to go get dry powder for acquisitions,” he said.
CHALLENGES: Rudin said one challenge facing Greenlane is selecting the right opportunities as the company receives a lot of interest from people wanting to work together given Greenlane’s leadership position. “If I had to characterize the biggest challenge right now, it’s being cautious and careful enough to select the opportunities that we think are real winners and that are really going to carry the company into the next chapter,” he said. Looking at the broader industry, the CFO said he believes the real challenge is the need for more education. “The industry needs a better way to educate consumers about the various types of products available to them and educate consumers on the fact that this is a real business with real employees who are talented and smart and coming from other industries now at a rapid pace,” he said. “That would better inform the ability to have a functioning banking system and it would afford politicians to make more informed decisions about what’s right for their constituencies in cannabis.” Rudin said he hopes people can become more focused on the facts rather than on an exuberance around a ‘green rush.’ “We’re excited and we participate in it, but this is a real business with a real future,” he said.
OPPORTUNITIES: When looking at the opportunities in the space moving forward, Rudin said the transition from traditional flower into more liquid oil and vape has been exciting. Obviously the more people talk about legalization and the more markets come on line, each market and each country has its own cannabis culture and dynamic that needs to be addressed very gingerly,” he said. “I think about it almost from the perspective of if you were a Starbucks (SBUX) or a McDonald's (MCD) and you’re moving into a new country, you’d have to be mindful and respectful of those countries’ taste preferences and customs. We’re very, very sensitive to figuring out how to preserve the integrity of our brands but do so in a way that is sensitive to consumers in the region.”
The CFO added that he doesn’t think there is one consumption method that will become predominant in the future due to culture and taste preference. “We really enjoy that diversity in consumption methodologies and our entire business is grounded on the fact that we want to be able to serve everybody’s needs as they consume,” he said.
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), Sproutly (SRUTF), DionyMed Brands (HMDEF), GrowGeneration (GRWG), and Harvest Health & Recreation (HRVSF).
Keywords: cannabis, weed, stocks, marijuana, cultivation, legalization, CBD, THC, hemp