In this edition of "Rising High," The Fly conducted an exclusive interview with Jason Black, chief executive officer of Cann American Corp. (CNNA), a holding company focused on developing assets within the legal cannabis and hemp industries. Here are some of the highlights:
STRATEGIC INVESTMENTS: Cann American is a holding company formed in 2015 with an initial focus on developing legal cannabis infrastructure projects in Northern California. The company has two wholly owned subsidiaries Cannequipt, its research and development division, and Seed Fund, which acts as an incubator and funding vehicle for early stage companies. “As a holding company we seek to hold investments and help develop operating and start-up companies in the cannabis and hemp industries,” Black said. “Operating a public company is a job unto itself. Many companies either end up delinquent in their reporting or their model fails because they’re spread too thin. By executing strategic investments in other people’s operations and trusting their competency to handle their development and operations, I’m able to focus on my obligations of keeping the public company in good standing.”
COMPETITIVE EDGE: When asked about the company’s key differentiators, Black said Cann American was operating as private company before going public giving him a more “real world” pulse on the industry. “A lot of public companies are simply looking to tell a story and they honestly tend to recycle the same story,” he said, noting cannabis companies focused on white-labeled CBD tinctures, vapes, etc. “We’re looking for real market disruptors and to be ahead of market trends.” Black said when evaluating candidates for investment, he doesn’t rely on a specific set of factors. “It can be a combination of statistical metrics, market data, trends, but a lot of times it really just comes down to the people,” he said. “Do I like this guy, do I believe they have the competency and integrity to see it through? There’s greater currency to me than just dollars, cents and margins.”
MOBILE DISPENSARY STAKE: On June 29, Cann American announced it had executed a definitive agreement to acquire up to 30% ownership in a licensed mobile cannabis dispensary. Under the terms of the Agreement Cann American will jointly own the company, its assets and share in all revenue generated from the company's operations. The mobile dispensary, operating out of an office and warehouse facility in Sacramento, California, will offer curated monthly cannabis subscription boxes as well as traditional on-demand delivery. “I’ve been very bullish on cannabis delivery for a long time, often to the disapproval of my colleagues,” Black said. “But I’ve always believed it’s under served and will ultimately overtake brick and mortar dispensaries. In California only about 3% of all applications are for delivery. That leaves a lot more room to be competitive and capture market share, in my opinion.”
CANNABIS FACILITY LOI: On July 16, Cann American announced a letter of intent to invest in up to 25% ownership stake in an Oklahoma cannabis production facility. The facility, located in Comanche County, Oklahoma, sits on two acres of land. The property contains multiple hoop houses for cultivation and a 5000 sq. ft. building housing a cloning room and CO2 extraction system. Under Oklahoma law 75% ownership must be retained by Oklahoma residents. Cann American is seeking to maximize the 25% non-resident stake allowable. “Oklahoma is one of the fastest growing cannabis markets in the U.S., outpacing most states,” Black said. “Having traveled through the state and really researched their market, I’ve found it to be one of the most impressive in the nation. The regulations are very manageable and the margins are there.” The CEO added that the state’s market is still under the radar. “Most people think of California and Colorado and a lot of bigger companies have recently been moving in on the east coast,” he said. “I’m not aware of any Canadian public company coming in and grabbing up all the licenses yet like they have in other markets. There’s opportunity for Cann American as an early mover which allows me to expand the company footprint beyond California.”
CHALLENGES: When asked about the biggest challenges facing the industry, the CEO he believes the largest hurdle is the stigma remaining around the space. “Everyone outside the industry assumes its run by a bunch of pot heads,” he said. “I personally don’t even use any cannabis at all.” Black said he passes no judgment about anyone else’s use, but it is a choice he has made in his approach to the industry. “I often use the analogy that you don’t have to be a raging drunk to head up Anheuser-Busch (BUD),” he said. “We still need to overcome the optics of the industry and show that this is an industry run by Masters in finance and PhD’s in agriculture. It’s not just a big party.”
OPPORTUNITIES: As the cannabis space develops, Black said he believes the opportunities are going to be in new states coming online and those positioned to adapt to their legislative initiatives. “The industry is rapidly advancing,” he said. “I was just watching the movie Pineapple Express the other day, which came out about 2008. In that movie there’s reference to a joint that is the future of smoking technology and the grow op featured in the end was portrayed as state of the art for the time. By today’s standards both of those are already archaic. Keeping up with technology and trends in a rapidly evolving industry and capitalizing on them will always be key.”
CORONAVIRUS: When asked about the impact the coronavirus outbreak has had on Cann American, the CEO said he always looks for an opportunity in any situation. He added the outbreak has been proving his cannabis delivery outlook is on the right track. “Ultimately all essential goods like groceries are seeing delivery services expanding exponentially,” he said. “In the cannabis industry, some states have had to deploy new laws specifically allowing for cannabis delivery due to the pandemic. A lot of colleagues that frowned on my delivery outlook are singing.”
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Akerna (KERN), Aleafia (ALEAF), Aphria (APHA), Aurora Cannabis (ACB), Auxly (CBWTF), 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), FluroTech (FLURF), General Cannabis (CANN), Green Thumb Industries (GTBIF), Greenlane (GNLN), GrowGeneration (GRWG), Harborside (HSDEF), HEXO (HEXO), Hemp Inc. (HEMP), India Globalization Capital (IGC), Indiva (NDVAF), Indus Holdings (INDXF), Innovative Industrial Properties (IIPR), ICC International Cannabis (WLDCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm (MEDIF), MedMen (MMNFF), Mjardin (MJARF), Neptune Wellness (NEPT), Organigram (OGI), Origin House (ORHOF), Planet 13 (PLNHF), Real Brands (RLBD), Sproutly (SRUTF), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Tetra Bio-Pharma (TBPMF), Valens (VLNCF), Tilray (TLRY), Trulieve (TCNNF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Westleaf (WSLFF), Wildflower Brands (WLDFF), YSS Corp. (YSSCF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).
Cann American Corp.
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APHA
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Aurora Cannabis
-0.35 (-3.13%)
CV Sciences
+ (+0.00%)
CannTrust
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Canopy Growth
-0.385 (-2.22%)
Cronos Group
-0.145 (-2.18%)
Trees Corporation
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IGC Pharma
-0.01 (-1.79%)
Tilray
-0.03 (-0.41%)
Trulieve Cannabis
+ (+0.00%)
ZYNE
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