In this edition of "Rising High," The Fly conducted an exclusive interview with Thom Brodeur, chief executive officer of N2 Packaging Systems, a sustainable packaging company that serves the legal cannabis industry. Here are some highlights:
SUSTAINABLE FOCUS: N2 Packaging is an Arizona-based company offering packaging solutions for various industries, including the legal cannabis space. The company’s proprietary process using nitrogen is key to its mission of collaborating with licensed reputable businesses to provide a packaging solution that delivers quality product in a compliant and sustainable manner. “We built the company with sustainability at the core of how we operate,” Brodeur said. “Literally from day one, our belief was that not only should the green rush of the cannabis industry promise economic growth, but that we truly had a lean-in opportunity as an industry to establish green, sustainable and eco-friendly practices at the foundation.” N2 has taken several measures to deliver packaging while keeping the environment in mind, he said. “All of our products are made from recycled, reclaimed or recyclable materials,” the CEO said. “We also moved our manufacturing operations back to North America to reduce our reliance on production in China, which has reduced our carbon footprint by almost 75%.” He added the benefits of N2’s premium sustainable packaging go beyond its eco-friendly nature and the product preservation purposes it was created for. “It’s good for the customers’ bottom line as they commit to ways to serve what we would describe as a socially good-focused consumer group,” Brodeur said, noting a recent study by the National Retail Federation and IBM which found that nearly 70% of Americans said they preferred buying from eco-friendly brands.
COMPETITIVE EDGE: When asked about N2’s key differentiators and plans for growth, the CEO pointed to the company’s patents for its nitrogen-infused, 2Can packaging solution in 11 countries, with patents pending in a half a dozen others. “We believe our IP protection as well as our 2Can with N2 Nitro Inside consumer-facing branding helps differentiate our position and protect our innovation,” he said.
“As far as growing market share, there’s a couple of primary objectives we have.” N2 is looking to continue to acquire new brand, single-site and MSO customers across North America as one leg of the market expansion strategy, Brodeur said, as well as strategically expand into markets in the Middle East, Africa and Asia. “We just started doing that over the last six months in terms of customer acquisition,” he said. “Then the longer-range plan is looking outside of cannabis where our proprietary nitrogen-infused packaging technology has the potential to disrupt other long-standing categories that haven’t seen significant packaging innovation in some time. For example, packaged foods, loose-leaf spices, teas and things of that nature.” There are couple of stages to N2’s growth strategy, the CEO said, but the company’s priority is on North America.
PACKAGING PROCESS: The cornerstone of N2 is the company’s patented packaging process which uses nitrogen to eliminate light and oxygen when sealing cannabis in a food grade container. The company provides equipment including a seamer, doser and lid applicator to customers, who then can buy cans, pull-tabs, nitrogen fill tanks and child-resistant, senior-friendly lids from N2. “What happens in a process with us is the can comes down the line, the cannabis flower/product is popped into the can, it’s shot with an infusion of nitrogen, the pull-tab is layered over and then of course, the child-resistant, senior-accessible lid is adhered to the product,” Brodeur said. “This process can apply to pre-labeled cans, or can be done after the fact as well.” The process benefits both the end consumer as well as the MSO, grow, or cannabis brand, he said, as nitrogen seals in the native moisture of the plant and extracts the ambient oxygen out of the can. Additionally, removing the ambient oxygen in the can removes the opportunity for microbial and bacterial growth to take place, Brodeur said. “There is a second layer of preservation,” he said. “When you’re the end consumer that receives a 2Can with N2 Nitro Inside with your favorite flower, when you pop the pull tab, there’s this remarkable waft of the flavor and fragrance of the product that you experience right away, and you are actually getting the full amount out of the product that you’ve purchased.”
SAFETY, COMPLIANCE: Safety and compliance are two important facets of N2’s process and the company works with customers to design unique and creative labels that adhere to state requirements. “Regulation and standardization are big jobs, no matter what the industry,” the CEO said. “We belong to all the organizations in North America that govern the standards that are being set for packaging in the cannabis industry.” He pointed to the American Society for Testing and Materials leading the charge, in addition to the Active and Intelligent Packaging Industry Association and the Sustainable Packaging Coalition. Brodeur said that “We are involved and engaged in all of those.” He added N2 believes its important for all companies within the industry to be involved in these discussions. “With more of us carrying the torch around of what should be standardized and appropriately dispensed in the market, all of us are able to create that change that’s important for the end consumer and for the industry at large,” the CEO said.
N2 also offers a patented child-safe lid option to meet Federal safety standard regulations, he said. “Child resistance and child safety, are table stakes requirements,” Brodeur said. “They should never be ‘optional.’ Making sure that children and minors are protected against accidental uses, misuse, or misappropriation of the product is really critical.” What is unique about N2’s lid however is its senior-friendly nature, he said. “Oftentimes what you find is when you make packaging child-proof you simultaneously make it hard for aging adults to access,” Brodeur said. “We’ve been very thoughtful in the design and engineering process around our lids to make certain that there are certain pulls, pushes and stops in our packaging that make it difficult for a child’s hands to maneuver, but easy for senior hands, or those dealing with compromised dexterity caused by arthritis or other joint maladies.”
EXPANSION: N2 currently only operates in North America with corporate headquarters in the U.S., manufacturing in Mexico and sales operations and partnerships in Canada, Brodeur said. “These regions have been our focus largely because where we’re headquartered and also because of the aggressive adoption of legalization both on the medical and recreational sides of the industry,” he said. “To us, being first to market or at least early to market and in some cases, hopefully better to market, in our own backyard is really important.” The company does work with customers in Israel and Australia currently and is making slow but steady moves into new markets opportunistically, the CEO said. “Regulation through foreign entities in foreign countries is a little bit tougher,” he said. “We’re taking our time to do it right and position ourselves appropriately, but North America is our primary focus.”
LEGALIZATION: When asked about the impact the Biden-Harris Administration may have on the U.S. cannabis industry, the CEO noted the administration believes in the decriminalization of the space, but hasn’t done much to move specific policy through Congress. “My personal view is they could at least be pushing harder on the points that can be addressed through policy that has already been passed,” he said. “You have the MORE Act and the SAFE Act that address different legs of the stool relative to the industry. Honestly if just the banking part of the equation was addressed through the SAFE Act, I think miles of ground could be covered in very little time.” Brodeur added he believes legalization doesn’t have to be the standard everywhere to better enable commerce where legalization already is in place. “Baby steps in my opinion lead to leaps if they’re taken right,” he said. When asked about potential federal legalization, the CEO said if he had to hedge a bet, he would expect legalization sometime in 2023 or early 2024. “I do think we’ll get there,” he said. “I think what we’re seeing is as more and more state legislatures get clarity around their position on the legalization of recreational cannabis, it naturally is going to bubble up if 75%-80% of the states are legal medical and then ultimately legal recreational. It will make very little sense for the federal government not to put a stake in the ground.”
CHALLENGES: When looking at the largest hurdles facing the cannabis space, Brodeur pointed to banking as a top priority, closely followed by digital marketing restrictions. “When you make commerce easy, it tends to help industries be able to show up in responsible ways,” he said. “When you make commerce hard is when you create black markets and gray markets, where bad things happen to good people.” The CEO said if the government stays focused on banking and gets the commerce piece of the industry nailed down, a little bit would go a long way. “And I really do wish we’d get our act together around digital marketing,” he said. “There are so many limitations and restrictions on how we talk about cannabis-related anything.” The restrictions with marketing on social media platforms make it really difficult to be able to convey important messages and to educate consumers, Brodeur said, and yet those are the platforms where most of the influence sits relative to the industry. “If we could get the commerce piece and the digital marketing piece of it handled, those two in my mind would make enormous progress for the industry,” he said.
OPPORTUNITIES: As the cannabis industry develops and matures, Brodeur said the biggest opportunities in the space lie in continuing to institutionalize and professionalize. “There is an inevitability coming in this industry where the more it behaves like a more traditional CPG industry that produces goods and services that we all consume and are used to consuming on a regular basis,” he said. “The more we professionalize and institutionalize the industry, the more opportunity comes to the market.” For N2, the company’s priority is continuing to lean into its evolution position, the CEO said. “Let’s continue making better packaging so that product can be distributed in responsible ways to the end consumer with the customer experience, cannabis brand and the good of the planet in mind,” he said.
OTHER CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage (ACRHF), Akerna (KERN), Aleafia (ALEAF), Atai Life Sciences (ATAI), Awakn Life Sciences (AWKNF), Audacious (AUSAF), Aurora Cannabis (ACB), AYR Wellness (AYRWF), BC Craft (CRFTF), Body and Mind (BMMJ), CanaFarma (CNFHF), Cannara Biotech (LOVFF), Canopy Growth (CGC), RIV Capital (CNPOF), Chicago Atlantic (REFI), Clever Leaves (CLVR), Columbia Care (CCHWF), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), Compass Pathways (CMPS), CV Sciences (CVSI), Curaleaf (CURLF), CURE Pharmaceutical (CURR), Delic Holdings (DELCF), Delta 9 (DLTNF), Fire & Flower (FFLWF), Flora Growth (FLGC), FluroTech (FLURF), Gage Growth (GAEGF), General Cannabis (CANN), Goodness Growth (GDNSF), Greenlane (GNLN), Green Thumb (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), IM Cannabis (IMCC), India Globalization Capital (IGC), Indiva (NDVAF), Innovative Industrial Properties (IIPR), InterCure (INCR), Ketamine One (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm (MEDIF) MedMen Enterprises (MMNFF), MJardin Group (MJARF), Neptune Wellness (NEPT), NewLake Capital (NLCP), Thermic Science (ENDO), Organigram (OGI), Planet 13 (PLNHF), Relmada (RLMD), RYAH Group (RYAHF), Skye Bioscience (SKYE), Sproutly (SRUTF), Stem Holdings (STMH), Small Pharma (DMTTF), Sundial Growers (SNDL), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Valens (VLNCF), Verano Holdings,(VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Entourage Health (ETRGF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).