Superior Infusions, Superior Branding Strategy
Nutritional High is taking a broad-spectrum approach to the market, covering everything from multi-strain high-grade oils, solid concentrates and vaporizer pen cartridges under the “Breaking Bud” brand, to gummies, hard candies, drinks/drink additives, and sweetener packets under the “Heisenberg Blue” brand; even doing chocolates, chews, sauces, and natural food items such as energy bars. This is a product portfolio strategy similar to companies like Cannabis Sativa, Inc. (OTC:CBDS), which is developing a wide variety of edibles, formulas, topicals and delivery systems via their Kush subsidiary, or outfits like Earth Science Tech, Inc. (ETST) and Abattis Bioceuticals Corp. (OTC:ATTBF), who are more focused on the extracts and nutraceuticals end of the space.
The company’s frontline candidates, consisting of drinks, infused chocolates, gummies and hard candies, will also feature licensing under key brand identities like that of legendary musician and marijuana aficionado Jimi Hendrix. The Hendrix-themed branding has been accessed via a recently executed agreement with Purple Haze Properties LLC, which grants the company exclusive rights to manufacture and distribute both marijuana and hemp oil-infused edibles in the U.S. and Canada bearing his likeness.
This five-year agreement with option to renew for an additional five years is a prime example of how advanced Nutritional High’s branding approach is. And beyond pushing branded products like its THC-based “Purple Haze” and “Stone Free” CBD-based products, the company also has acquired non-exclusive rights to manufacture and distribute related apparel so that fans can get the full “edibles experience.”
The wholesale price for the flowers, or marijuana “buds,” generally ranges around $7.00 a gram, and leftover parts of the plant which are sold to MIP manufacturers get turned into oil extracts that cost up to $20 a gram on average. The fact that the retail price for infused products containing around only 100 milligrams of THC ranges from $20 to $30 per unit, means that the edibles/MIP category has the highest profit margin of them all. Moreover, the attractiveness of this category to consumers for health, discreetness, convenience and pure enjoyment reasons has made it a high growth segment.
MIP Should Perform Well Across Burgeoning North American Cannabis Market
ArcView Market Research put the size of the U.S. legal marijuana market last year at $2.7 billion and estimated a 300 percent uptick by 2019 alone to $10.8 billion as more and more states move to legalize medical and even recreational use the way that Colorado has. At least one legalization proposal is on the ballot in California for 2016 and state residents can currently have up to an ounce on them without facing anything more severe than a $100 maximum fine that is the functional equivalent of a traffic violation. With total current adult use estimated by California NORML to be around 2 million pounds a year, even at only $7.00 per gram, we are looking at a potential retail market in the neighborhood of $6.35 billion. In Colorado alone, where the legal cannabis market brought in some $700 million last year, the sector is on track to hit $1 billion by 2016, according to a recent projection by the Washington Post, based on the Colorado Department of Revenue’s own report.
That same report revealed in early 2015 that just shy of 150,000 pounds of marijuana flowers were sold last year, alongside a whopping 4.8 million plus units of medical and retail edibles (PDF), and that there was roughly a 110 percent increase in the number of retail business licenses during 2014. By all accounts, it was a banner year for retail marijuana in Colorado and the state is on track to outperform 2014 this year, even though only around 21 percent of the 321 total local jurisdictions currently allow medical and retail licenses.
According to data from Health Canada, the roughly $410 million Canadian MMJ space is on track to hit $1.3 billion by 2024, growing from around 50,000 registered patients today to over 450,000, achieving a CAGR of 27.4 percent. However, this projection seems to be based on patients consuming only one gram per day. At around an average prescription of 3 grams per day, based on the typical price suggested by Health Canada and offered by MMPR (Marijuana for Medical Purposes Regulation) Authorized Licensed Producers like Bedrocan Cannabis Corp. (BNRDF) and OrganiGram Holdings Inc. (OTCQB:OGRMF) of $7.50 per gram, we are potentially looking at a market size closer to $3.7 billion.
Colorado As A Launching Platform
This is why Nutritional High is so bullish about Colorado and is steaming ahead at full speed to establish their initial operational footprint there, with key agreements already signed between the company and Palo Verde LLC, an MIP manufacturing and marijuana cultivation-licensed private company in the state. Having already closed on a superb location near West Pueblo in Coloradothat has room for additional future expansion, Nutritional High is working with Palo Verde and its selected contractors to ready an 11k square foot commercial kitchen for manufacturing MIPs, featuring the first semi-automated production equipment setup in the industry as far as the company is aware of. In addition to the initial six to eight chocolate and candy product lines, as well as three to four lines for chews and tinctures, Nutritional High is currently mapping out the final design, packaging, recipes, branding royalty agreement and other IP provisions with Palo Verde.
Primarily engaged in producing marijuana extract that acts as the base of all of its products, Nutritional High has put together a winning team to achieve its objective of satisfying the lack of long shelf-life products currently available in the edibles space, and is targeting products with a four to six month shelf life that will have precise infusion qualities. With Debra Zwiefelhofer on the company’s advisory board, a 17-year veteran from Nestle (OTC:NSRGY) HealthCare Nutrition – which was acquired from Novartis (NYSE:NVS) in 2007 – as well as Le Cordon Bleu-trained Melissa Parks as its VP of Product Development, Nutritional High is on well on its way to becoming the next big thing in Colorado’s commercial edibles market.
Because of its technology and R&R model (roll-up and royalty model), whereby the company seeks out licenses in multiple high-potential states where they own the real estate and pay the licenses, many licensees have already beat a path to Nutritional High’s door in order to work with them on a royalty basis. But the real focus for Nutritional High is on acquisitions and growing the company into a major player in the edibles space, with the strongest revenue framework possible.
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SOURCE: Cannabis Financial Network