In this edition of "Rising High," The Fly conducted an exclusive interview with Stephen Pearce, chief financial officer of Wildflower Brands (WLDFF), a Vancouver-based company that develops and designs brands focused on plant-based wellness products. Here are some of the highlights:
PLANT-BASED WELLNESS: Wildflower Brands is an integrated health and wellness company focused on developing branded products in the cannabis sector. Pearce said he wanted to get into the cannabis space because he saw a business opportunity, however he did not have much experience in the area. “The first thing I did is try to find a business partner to work with,” he said. “When I found that partner in William MacLean as the CEO of the company, I stayed on the CFO.” “Lots of people liked to talk about it but nobody wanted to invest in it and then over the last few years we’ve seen a shift,” he said. The CFO added that he got passionate about the business when he met cannabis consumers. “When I got into the industry that’s when I started to learn and appreciate the health benefits and how cannabis could really shape people and change people’s lives in a good way,” he said.
COMPETITIVE EDGE: When asked about Wildflower’s key differentiators in the space, the CFO said the company’s history of five years in the industry sets it apart from competitors. “Our initial focus was going to be on cannabis generally and then we began focusing specifically on CBD,” he said. Pearce said the company began working with scientists and doctors four years ago and they advised Wildflower on how to make products. “The consumers would give us their feedback and we not only looked for the efficacy but the whole customer experience.” For example, Wildflower inserted its topical into a deodorant-like stick after consumers said they didn’t like putting the product on their hands, the CFO said. “The fact that we have been doing this for four years, the fact that we are in some of the leading retailers that are now currently selling CBD and the consumer testimonials that we’ve had makes us stand out from a lot of the other players out there,” he said. Within the last year, Wildflower products have launched in Free People and Dillard’s department stores and Pearce said “Right now we’re in discussions with one of the other major chains." “As CBD becomes more acceptable and more common, I think that Wildflower will be able to lead because of its place on the shelves of these other companies that have a high degree of respectability.”
EXPANSION: Pearce said the company will look to expand as more regions and countries mull forms of legalization. “All the CBD sales pretty much two years ago were mainly in North America,” he said, “What you’re seeing is the rest of the world starting to discover it.” He noted that South Africa, in which the company has a distribution agreement, implemented CBD legislation providing for a one-year trial. “We haven’t seen much growth in South Africa ourselves, where we do see a lot of growth more in is Europe,” he said. “There’s still certain countries in Europe where the legality is questionable, however the UK, it’s very much accepted there and we see a lot of potential in the UK right now.”
CHALLENGES: When asked about the biggest challenges facing the industry, the CFO cited access to capital, banking and regulations. Pearce said he believes access to capital will be a hurdle for companies in the coming year. “There’s been a lot of companies that have started,” he said. “Those with real revenues I think will be able to sustain themselves, but I think access to capital is going to be a big issue for a lot of CBD companies.” The CFO added that banking has always been an issue and he expects it is still going to be a problem for a short time. “While it’s very clear in the United States that CBD is acceptable and legal, banks are slow to catch on,” Pearce said. Regulations will also create a challenge, he said, as states are just beginning to come out with their rules. “Each jurisdiction is going to be different and so we’re going to have to evolve as the regulations come out,” the CFO said.
OPPORTUNITIES: As the cannabis space develops, Pearce said he sees global opportunities as people discover the benefits of CBD and as more research is produced. “Even within the markets where it’s very common I think there’s still a lot of misconception and apprehension about using CBD and the health benefits,” he said. “Scientists have only started researching CBD in the last couple of years…As more and more research comes down and it better defines some of the benefits, I think there’s going to be huge opportunities.” The CFO added Wildflower started the business several years ago by finding products that were on the market in Vancouver and bringing them to scientists and doctors to help to better improve the efficacy. “When we started marketing these products, we did them through a lot of sampling because we can’t make medical claims,” he said. “Through this sampling we developed a following and as more and more people get to sample them or appreciate and understand the true science, I think that’s going to be a huge opportunity in the existing market.”
FLOWER VS. DERIVATIVES: When asked about how he expects the use of flower and derivatives to shift over time, the CFO said he sees the focus on flower when markets initially open but a move to derivatives as they become more mature. “In Canada for instance the derivatives have just become legalized in the last month and so you see a shift from flower to derivatives,” he said. Pearce noted the pushback on vaporizers due to health issues with faulty products that have been in the market. “We have seen a shift more to the capsules and the tinctures and I think that each consumer will be different depending on their personal preferences,” he said, adding, “What we found, New York for instance is huge into the vaporizer, our number one selling market by far, whereas the West Coast is far more into the tinctures.”
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Aleafia (ALEAF), Aphria (APHA), Aurora Cannabis (ACB), Biome Grow (BIOIF), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), Delta 9 (VRNDF), DionyMed Brands (DYMEF), Elixinol Global (ELLXF), General Cannabis (CANN), Greenlane (GNLN), GrowGeneration (GRWG), Harborside (HSDEF), Hemp Inc. (HEMP), Hexo (HEXO), India Globalization Capital (IGC), Indiva (NDVAF), ICC International Cannabis (WLDCF), Innovative Industrial Properties (IIPR), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen Enterprises (MMNFF), MJardin (MJARF), Organigram (OGI), Origin House (ORHOF), Planet 13 Holdings (PLNHF), Real Brands (RLBD), Sproutly (SRUTF), Sunniva (SNNVF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Westleaf (WSLFF) and Zynerba (ZYNE).
Keywords: cannabis, weed, stocks, marijuana, cultivation, legalization, CBD, THC, hemp