Harborside CEO talks dispensaries, competitive edge, challenges and more
In this edition of "Rising High," The Fly conducted an exclusive interview with Andrew Berman, chief executive officer of Harborside (HSDEF), a California-focused cannabis company with retail, production and cultivation built around brands. Here are some of the highlights:
CANNABIS RETAIL: Harborside is a cannabis retailer founded in 2006 and was one of the first licensed dispensaries in California. “Since then, it has blossomed into one of the largest and most prominent dispensaries in the state,” Berman said. “Our formula for success comes from three things: Trust, Choice and Value. Consumers can trust that Harborside only sells tested, clean products.” The CEO said the company provides a wide array of product offerings and believes that every product should be a good value to its consumers. “We have stayed true to our co-founder’s vision of utilizing the cannabis plant as part of one’s overall health and well-being,” he said. “Harborside was a pioneer in offering holistic services as part of its offerings, consultations at all of our locations and educated budtenders to help customers find the best product to meet their specific needs.” Berman added that Harborside recently listed on the Canadian Securities Exchange this June and also expanded its farms in Salinas, California, where the company cultivates cannabis for its in-house brand, KEY. Harborside, which also has two dispensaries in Oregon, will open a store in Desert Hot Springs in the coming months, according to Berman.
COMPETITIVE EDGE: The CEO highlighted the company’s retail experience and cannabis cultivation when asked about Harborside’s key differentiators. “Harborside believes that we’re never finished improving on retail and product experience,” Berman said, noting the company updated its Oakland in-store retail model by doing away with behind-the-counter service in favor of an open floor plan. “We also launched an event space/tasting room and will operate one of California’s only two drive-thru windows,” he said, adding, “We continue to cultivate great cannabis from our farm at accessible price points and are always eyeing opportunities to develop new brands.” The CEO said Harborside has also differentiated itself through its concentration on California and its 13-year history of “strong” sales and “deep retail expertise." “We set ourselves apart from the competition by focusing on building our presence in California, which is the world’s largest cannabis market, larger than the combined market of some other ‘multi state operators’ outside the state In the San Francisco Bay Area, where we call home, the industry is expected to be valued at around $2B over the next few years,” he said.
LEGALIZATION: When asked about which country may be the next to legalize cannabis on a federal level, Berman said it hard to predict the future, but Harborside hopes the U.S. will take a leadership position on important foundational issues for legalization over the next few years. “These issues include banking, taxation and scheduling. Politicians on both sides of the aisle are showing a willingness to address these issues,” he said. “In addition to creating more tax revenue and jobs, federal legalization will bolster safety and compliance regulations, ultimately keeping cannabis consumers safer.”
EXPANSION: The CEO said Harborside will intentionally maintain its focus on California for the time being as the company has an established presence in the region and understands the regulations well. “We have recently expanded locally and now have two stores in Oregon,” he said. “We have also taken our first steps outside of the Bay Area with the opening of our Desert Hot Springs location, right off the heavily-traveled I-10 and complete with a drive-thru window.”
CHALLENGES AND OPPORTUNITIES: When asked about the challenges facing the company and the industry, Berman noted the need for greater infrastructure in the legal market as well as misinformation from the black market. “Harborside has been continually advocating for better infrastructure in the regulated market, including safe banking and fair taxation at both the federal and local level,” he said, adding, “Like every compliant dispensary in the country, we are still fighting against misinformation and dangerous products that come from the illicit market.” The CEO said when looking at opportunities, Harborside is excited about building in-house brands, curating new products and continuing its retail expansion. “In addition to new locations and new states going recreational, we want to make sure we are appealing to every market demographic,” he said. “Our KEY brand aims to welcome the canna-curious consumer, making cannabis approachable and affordable while maintaining quality and experience.” Berman added the Harborside is also currently developing a new line geared toward the female consumer.
BANKING BILL: On Wednesday, the U.S. House of Representatives voted in favor of the Secure and Fair Enforcement Banking Act, a bill that would provide safe harbor and guidance to financial institutions that work with legal cannabis businesses. “We are extremely uplifted by the House vote on the SAFE Banking Act, but there is still work to be done,” said Berman. “The Senate needs to swiftly act to adopt similar banking protections. In addition, Congress needs to approve the Marijuana Opportunity Reinvestment and Expungement Act that would start to repair the damage done by the decades of prohibition.”
FLOWER VS. DERIVATIVES: When asked about how he expects the use of flower versus derivatives to shift, the CEO noted that in recent years Harborside has seen a marginal decrease in flower sale percentages. “New consumers generally find us online, and we’ve noticed a rise in oil-based products, edibles and wellness-oriented products, such as capsules and tinctures,” he said.
INVESTOR INTEREST: As investor interest increases in the space, Berman said those interested should pay attention to companies that have sound business models and real operating experience. “I think the reason why Harborside was able to grow so naturally was because we focused so much on consumer experience at the earlier stages of our business,” he said. “We don’t take shortcuts in the cultivation, manufacturing or product curation stages of our business, which I believe shines through in the quality of our inventory.”
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Aurora Cannabis (ACB), Aphria (APHA), Canopy Growth (CGC), CV Sciences (CVSI), CannTrust Holdings (CTST), Cronos Group (CRON), General Cannabis (CANN), Greenlane (GNLN), India Globalization Capital (IGC), Innovative Industrial Properties (IIPR), ICC International Cannabis (KNHBF), Biome Grow (BIOIF), MediPharm Labs (MEDIF), Indiva (NDVAF), KushCo (KSHB), MedMen Enterprises (MMNFF), Elixinol Global (ELLXF), Planet 13 Holdings (PLNHF), Wayland Group (MRRCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), Organigram (OGI), Origin House (ORHOF), Sunniva (SNNVF), Sproutly (SRUTF), Tilray (TLRY), Trulieve (TCNNF), DionyMed Brands (HMDEF), GrowGeneration (GRWG), Harvest Health & Recreation (HRVSF), Zynerba (ZYNE), Delta 9 (VRNDF), Canopy Rivers (CNPOF), Westleaf (WSLFF),Tetra Bio Pharma (TBPMF) and Real Brands (RLDB).