High Tide CEO: Canada’s Cannabis Market Shows Growth Potential

- January 21st, 2019

High Tide CEO Raj Grover provides an overview of the company and its six operating subsidiaries.

High Tide (CSE:HITI) CEO Raj Grover has a vision for his company that includes expanding its reach in the cannabis accessory market beyond the US.

In the interview below, Grover outlined what is needed to be a successful retailer in Canada’s cannabis market. He also talked about the impact legalization has had on cannabis retailers and how the company is developing its online presence through the recent acquisition of Grasscity.com.

Below is a transcript of our interview with High Tide CEO Raj Grover. It has been edited for clarity and brevity.

Investing News Network: Please give our investor audience an overview of High Tide and its six operating subsidiaries.

High Tide CEO Raj Grover: High Tide is made up of six operating subsidiaries: RGR Canada, Famous Brandz, Smoker’s Corner, Grasscity, Canna Cabana and KushBar. RGR Canada was established in 2010 and designs, manufactures, imports and wholesales all of our smoking accessories. We manufacture approximately 3,500 SKUs out of the 4,200 that we have on hand.

Famous Brandz also designs, imports, manufactures and distributes smoking accessories. Unlike RGR, Famous Brandz is typically 90 percent celebrity and studio brands, such as Snoop Dogg, Trailer Park Boys, Paramount Pictures and Up In Smoke. This makes us the only company that has branding and licensing relationships with studios. Currently, we’re in over 2,000 shops and growing very quickly as we continue to license new brands.

Smoker’s Corner is where High Tide started 10 years ago. In 2009, the first store took off due to great customer service and product selection. Since then, the brand has remained profitable. Five of the 19 stores we had in 2018 are being converted into Canna Cabana retail locations. However, we will continue to develop the Smoker’s Corner brand and are opening more locations.

We acquired Grasscity, the Amazon of smoking accessories, last month. It’s the most searched for website for smoking accessories and has a vast portfolio of approximately 5,000 SKUs. Ninety percent of Grasscity’s business originates in the US. We also have 34 million unique visitors that interact on our forum and 600,000 registered users in our database. We are taking advantage of Grasscity’s already great margins and by optimizing them with our own products and thus enhancing exposure for our other brands.

We’re also working on our most ambitious retail roll-out yet with Canna Cabana, a cannabis product and accessory retailer. We’ve opened five stores in Alberta and have an additional 28 stores under construction. These should be finished by March 2019 and will open as accessory stores.

KushBar is another retail dispensary rollout and a real estate play with our partners. Hide Tide owns 50.1 percent of KushBar. Initially, we will have four locations in Alberta and we plan on expanding into Ontario.

INN: What is necessary for building a successful retail brand in Canada’s cannabis market?

RG: The most important component to any brand is first-class customer service. You need to know your customer, their age, demographic and what they want, before offering them a product. You also need product variety in your store and to make sure that you always have something new and exciting available. Additionally, you need to consistently deliver on your brand values, which goes a long way in building a successful brand in this market.

INN: How has Canadian legalization impacted cannabis retailers?

RG: For Canadian retailers who are just starting out, they’re not immediately competing with thousands of shops. This means they have some good days early on, alongside initial challenges. New brands are being created every day and some are going to become national and international brands, like ourselves. However, retailers are going to have to keep their businesses agile to comply with and adapt to changing rules and regulations. Overall, if you have a good business plan and you stick to it, theres is massive opportunity for Canadian cannabis retailers.

I’d like to add that you can’t control the government, but you can control what your company does. High Tide is currently focusing on four of our stores. We’re fortunate enough to have multiple businesses that can support us without the cannabis retail aspect and the moratorium in Alberta has allowed us to focus on our branding. We have the opportunity to make it strong in anticipation of being a national and international chain.

INN: Please tell us about your recent acquisition of Grasscity.com.

RG: In 2018, we set out to buy a major online business. Grasscity had been buying Famous Brandz products from us for the last few years and we saw this as an opportunity to move into Europe. Owning the most searched website in the world for smoking accessories, while also being the manufacturer of most of these accessories, provides a massive opportunity for us to expand our online footprint and gives us a lot of credibility.

Over the past 20 years, Grasscity has collected a vast amount of data and analytics that we can use to maximize the potential of the site and to help us throughout our value chain. In 2018, Grasscity generated C$5 million in revenue and I think we can maximize this. Over its lifetime, the site has collected 34 million unique visitors and has accumulated a wealth of brand equity. We’re going to take Grasscity to the next level as we integrate it with RGR and Famous Brandz and expand the site’s reach beyond the US.

INN: What is next for High Tide and how does that fit into the company’s long-term plans?

RG: High Tide has always grown through acquisition and organic growth, but the intent behind going public was to acquire companies that have generated a lot of value over the years. I personally know up to 300 vendors that are private companies and we’re focused on a few strategic acquisitions.

All of our subsidiaries have tremendous growth potential and High Tide’s vision is to continue to strengthen its value chain across the globe. By bolstering our portfolio in the US and the European Union through a couple strategic acquisitions, we will see a lift in our top line, which will play into our plan to grow globally.

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