Premium Global Smoking Accessories Manufacturer and Canadian Cannabis Retailer
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High Tide Inc. (CSE:HITI) is an Alberta-based, retail-focused cannabis corporation that designs and sells premium-quality smoking accessories to wholesale clients and retail customers, and also sells cannabis products to retail consumers, through two business segments operating across five subsidiaries: RGR Canada, Famous Brandz, Smoker’s Corner, Canna Cabana and KushBar.
RGR Canada is home to High Tide’s manufacturing, wholesale and distribution operations. Since it was founded, High Tide has developed an extensive product catalogue that includes over 4,200 SKUs, of which approximately 75 percent are designed in-house, manufactured in Asia and distributed to hundreds of global customers from their 17,000-square-foot office and warehouse in Calgary, Alberta. High Tide is currently developing a new 25,000-square-foot distribution center from which it will operate in 2019.
High Tide’s second subsidiary, Famous Brandz, designs and manufactures smoking accessories featuring licensed celebrity brands, including but not limited to Snoop Dogg, Cheech & Chong’s Up in Smoke, Kevin Smith’s Jay and Silent Bob characters and the Trailer Park Boys. High Tide has recently developed and launched “Famous X”, a cannabis lifestyle product line that is being offered in convenience stores, gas stations, specialty stores and big-box retailers. High Tide mainly sells its Famous Brandz licensed accessories to customers in the United States and where permitted in locations across Canada, subject to Bill C-45.
High Tide’s first and founding retail brand, Smoker’s Corner, has 19 retail locations across Alberta, British Columbia and Nova Scotia. Until recently, nine of those locations were owned by the company and ten were franchise locations, with several locations now being converted to Canna Cabana retail cannabis stores. On average over time, each Smoker’s Corner location has generated $380,000 per year from the sale of smoking accessories.
High Tide’s newest retail brand, Canna Cabana, offers recreational cannabis products along with High Tide’s wide range of well-known smoking accessories. Canna Cabana is a ground-breaking brand that provides an approachable, playful and sophisticated experience for the retail customer. Canna Cabana staff are on boarded under an industry-leading training program that emphasizes education, customer service and responsibility. To date, five Canna Cabana locations have been opened in Alberta, but the company intends to open approximately 120 more stores across in Alberta, British Columbia and Ontario within the next two years.
Finally, High Tide’s third retail brand, KushBar, is in the beginning stages of development. High Tide owns a majority of this new retail brand, which is expected to have a small number of stores in Alberta and a much larger footprint in Ontario. KushBar will provide customers with a similarly comfortable, sophisticated and modern retail experience to Canna Cabana, featuring High Tide’s wide range of accessories and knowledgeable staff, but with the added benefit of the company’s strategic partner striving to secure strong locations in the large Ontario market.
Hihg Tide has also recently acquired Grasscity.com, the world’s number one online retailer of smoking accessories. The website receives approximately 5.8 million site visits annually and over 90 percent of the site’s revenue comes from its customer base in the US. Additionally, Grasscity has a substantial following on social media, its online forums and to its weekly newsletter.
High Tide is led by a strong and experienced management team and board of directors. High Tide Founder, President, CEO and Executive Chairman Raj Grover notably holds slightly more than 50 percent of the company’s common shares. Grover has over 17 years of experience in building successful companies and leads the industry in manufacturing capabilities. Additionally, since 2009 he has built the largest network of retail stores serving cannabis enthusiasts in Canada.
- Existing B2B smoking accessories business, featuring proprietary white-labeling programs, which turns retail competitors into wholesale customers.
- Five subsidiaries focused on the design, manufacturing, distribution and retailing of smoking accessories and cannabis lifestyle products.
- RGR Canada has over 4,200 SKUs, with approximately 75 percent designed in-house and manufactured in Asia on a proprietary basis.
- Largest purchase order ever received for cannabis smoking accessories was from Aurora Cannabis in the second half of 2018 (TSX:ACB).
- Famous Brandz works with licensed celebrity brands including but not limited to Snoop Dogg, Cheech and Chong, Kevin Smith’s Jay and Silent Bob characters as well as the Trailer Park Boys.
- Since 2009, Smoker’s Corner has grown to become Canada’s largest chain of smoking accessory shops with locations in Alberta, British Columbia and Nova Scotia
- Five retail cannabis locations under the “Canna Cabana” brand in Alberta with more than 120 planned across Canada within two years.
- Accessory supply agreement in place with the Ontario Cannabis Store (OCS).
- Acquired Grasscity.com, the world’s number one smoking accessories retailer, which receives approximately 5.8 million site visits annually.
- 90 percent of Grasscity’s revenue is generated in the US.
- Cannabis wholesale supply MOUs in place with FSD Pharma (CSE:HUGE), Maple Leaf Green World Inc. (NEO:MGW), Sundial Growers Inc. and the Supreme Cannabis Company Inc. (TSXV:FIRE).
A Five Enterprise-Based Business Model
Since the company’s inception in 2009 as an independent smoke shop operator, High Tide has become one of the largest counter-culture chains in Canada and a leading manufacturer and distributor of smoking accessories and cannabis lifestyle products. To date, High Tide’s success can be attributed to their ability to build brands and to deliver proprietary products through its recognized wholesale and retail channels.
High Tide has established five subsidiaries that focus on manufacturing excellence, wholesale distribution, brand creation and the establishment of recognizable retail stores. High Tide’s subsidiaries of RGR Canada and Famous Brandz fulfill the company’s B2B orders and offer white-label solutions for corporate clients. The retail segment, featuring Smoker’s Corner, Canna Cabana and KushBar, provide High Tide with revenue and an established presence across Canada.
Moving forward, it is High Tide’s intention to establish a retail presence within each province in Canada where private cannabis retail opportunities are supported. Each location will offer premium smoking accessories and lifestyle products, selectively purchased cannabis products, and will focus on educating customers about pairing cannabis products with the most appropriate smoking accessories in an approachable and sophisticated yet playful environment.
In 2011, High Tide founded its wholly-owned subsidiary, RGR Canada, a vertically-integrated manufacturer, wholesaler and distributor of premium cannabis accessories for retailers across Canada. RGR Canada designs approximately 75 percent of its products in-house, contracts for the majority of manufacturing in Asia, and then stores and distributes finished products from its 17,000-square-foot office and warehouse in Calgary, Alberta. In 2019, RGR Canada will be moving into a new 25,000-square-foot head office, warehouse and distribution center located near the Calgary International Airport.
RGR Canada has set up manufacturing contracts with industry-leading factories in China and has combined nine years of experience in designing and branding smoking accessories to develop several proprietary brands. Its best-known brands are Atomic, Evolution, Puff Puff Pass, Vodka and Zoom Zoom. In total, the company has developed an extensive product catalogue that currently includes over 4,200 SKUs of both proprietary and third-party products.
Partnerships and Agreements
In November 2018, High Tide received a large wholesale purchase order from Aurora Cannabis for a large variety of smoking accessories, which the company is in the process of completing.
“This record purchase order from Aurora is a major milestone for High Tide, a validation of our designs and the beginning of what we expect will be a very important business relationship for our company,” said Grover. “There is no better company than Aurora to have as our largest customer to date, and we look forward to capitalizing on the increased recognition that this order brings to High Tide’s product offering to attract and drive additional growth.”
In 2016, High Tide co-founded Famous Brandz, which is now fully-owned, as a branded smoking accessories company targeting a global customer base. Famous Brandz works with licensors to secure well-known brands including but not limited to Snoop Dogg, Cheech and Chong, Jay and Silent Bob as well as the Trailer Park Boys. High Tide also offers its licensed celebrity products under their in-house brand, Famous X, a lifestyle accessory line for convenience stores, gas stations, specialty retailers and big-box stores across North America.
In the two years since its founding, Famous Brandz has become a dominant manufacturer of branded smoking accessories carried by independent and chain retailers across the globe. Moving forward, High Tide intends to offer new licensed products, product lines and possibly lounge concepts through Famous Brandz.
Partnerships and Agreements
In August 2018, High Tide entered into a distribution agreement for its Famous X line of lifestyle and smoking accessories with Evergreen, a division of Summit Distribution LLC. High Tide provides Evergreen with a variety of products featuring brands from Cheech & Chong’s Up in Smoke and the Trailer Park Boys cannabis lines. The agreement enhances High Tide’s presence in the US cannabis market.
“Entering the outdoor sports and recreation channel represents an important evolution in High Tide’s retail strategy and is a major achievement for Famous Brandz”, said Grover. “For the first time, Americans will be able to see and purchase our high-quality products in market-leading outdoor, sporting goods, surf and sail, and winter sports outlets, among others.”
Ontario Cannabis Store (OCS)
The following month, High Tide signed a master accessories supply agreement with the OCS. High Tide will be providing hand-blown glass smoking accessories from its Famous X line of products over a two-year term, with the option to renew for an additional two years at the OCS’s discretion.
Smoker’s Corner is one of Canada’s largest counter-culture retail chains and has been in operation for over nine years with locations across British Columbia, Alberta and Nova Scotia. Of its 19 stores, 10 are franchises and nine are corporate stores. Each location is a reliable source of revenue for High Tide, with average yearly revenues of $380,000 per year. The best-performing location generates an average revenue of $850,000 per year.
Building off of its success with Smoker’s Corner, High Tide has developed a new cannabis retail concept called Canna Cabana. Each location will target High Tide’s existing consumer base and will offer recreational cannabis in jurisdictions that allow private cannabis retail operations. The new locations will be approximately 1,000 to 2,000 square feet in size.
High Tide has opened five locations in Alberta in Calgary, Lethbridge, Whitecourt and Edmonton and is planning on opening a total of 37 retail locations across Alberta. High Tide also expects to open eight locations in British Columbia, two locations in Saskatchewan and 75 locations in Ontario within the next two years.
In July 2018, High Tide acquired a majority share of KushBar Inc., a cannabis brand and retail concept intent on serving Canada’s cannabis consumers. High Tide has included the KushBar brand and retail concept in four retail applications submitted to the Alberta Gambling, Liquor and Cannabis Commission (AGLC). The company also intends to submit additional retail cannabis applications under the KushBar brand across the country.
In December 2018, High Tide acquired Grasscity.com, the world’s number one online retailer for smoking accessories and cannabis lifestyle products. The website is based in Amsterdam, Netherlands and receives approximately 5.8 million site visits annually.
“Grasscity is an iconic company with nearly 20 years of invaluable brand equity in the cannabis industry,” said Grover. “It is a natural fit with High Tide since our revenues come from the same product categories – bubblers, grinders, hand pipes, rolling papers, vaporizers and water pipes. With Grasscity, High Tide is now positioned to be a dominant player in both bricks-and-mortar and online retail, to go along with being a leader in the manufacturing and wholesale distribution of smoking accessories and cannabis lifestyle products.”
The site has over 550,000 customers in its database and approximately 90 percent of their generated revenue comes from customers based in the US. The retailer also fulfills approximately 65,000 orders per year. Additionally, Grasscity has approximately 1.1 million recipients in its email database, over 375,000 subscribers, 80,000 dedicated readers of its weekly newsletter and approximately 260,000 followers on Instagram, Facebook and YouTube.
In addition to their retail business, Grasscity also has over 34 million users on their forum pages. These users generate up to 75 million annual page views and contain over 640,000 cannabis enthusiast members that actively engaged with the topics in the forums.
Partnerships and Agreements
Multiple MOUs in Saskatchewan
High Tide is in the process of becoming a licensed wholesaler in the province of Saskatchewan and has signed several MOUs to supply the Saskatchewan cannabis market with 9,500 kilograms of cannabis products over the upcoming year. The MOUs were signed with FSD Pharma, Maple Leaf Green World Inc., Sundial Growers Inc. and the Supreme Cannabis Company Inc.
“High Tide has achieved an important strategic milestone by securing its first wholesale business partners for Saskatchewan and the province’s 51 retail cannabis outlets”, said Grover. “Entering into these MOUs positions High Tide as significant source of both cannabis products and lifestyle accessories in a forward-thinking market.”
Keys Please Partnership
High Tide has partnered with Keys Please to support the organization’s “Keeping Calgary Safe” initiative, a public awareness campaign that educates the general populous about the safe consumption of cannabis and other controlled substances as well as travel alternatives available to get people home safely. Keys Please has been operating since 1997 and is a pioneer in providing designated driving services in North America. The service offers designated drivers that transport individuals home in their own vehicle or deliver the individuals vehicle to a location of their choosing.
“As cannabis becomes more readily available and acceptable in our communities, it is important for us to make sure that we are reinforcing responsible behavior,” says Grover. “Safety is an integral part of our company, from employee training to in-store customer service to ensuring that consumers arrive home to their families.” After the legalization of recreational cannabis in Canada on October 17, 2018, campaigns such as this will be essential to educating consumers, the cannabis industry and local governments about the shared responsibility of building safe communities.
Raj Grover — Founder, President and CEO
Raj Grover is the founder of High Tide and its subsidiary companies of RGR Canada, Smoker’s Corner and Canna Cabana and is the co-founder of High Tide’s newest subsidiary, Famous Brandz. Grover started Smoker’s Corner in 2009 and RGR Canada in 2011 and has been operating profitably as a pioneer in the cannabis accessories industry ever since. Currently, he is a national franchisor and entrepreneur with 17 years of experience in building and selling successful companies. He leads the industry in manufacturing capabilities and has built the largest network of comparable retail stores in Canada.
Matthew Dexter, MBA, CPA, CMA — CFO
Matthew Dexter is a senior finance professional with over 10 years of experience working with CGAAP, USGAAP, IFRS and private enterprises in accounting, reporting, planning and analytical capacities.
Between 2012 and 2018, Dexter was the Associate Vice President of Financial Planning & Analysis at a large Canadian retailer of industrial and casual apparel. He has significant experience in short- and long-term financial planning and budgeting. He is an expert in corporate financial reporting, financial analysis and providing support to senior-level decision makers. Foreign currency strategies, business development and change management have also been areas of focus in his career.
Nick Kuzyk, MBA — Chief Strategy Officer and SVP Capital Markets
Nick Kuzyk brings over 15 years of experience in investor relations, mergers and acquisitions and business development. From early-stage ventures to large cap corporations, he has developed a balanced expertise comprised of both qualitative and quantitative aspects rooted in strategic communications and financial analysis. He holds an HBA and MBA from the Richard Ivey School of Business (Ivey) at Western University, is the Treasurer of the Alberta chapter of the Canadian Investor Relations Institute (CIRI) and has also completed the CIRI/Ivey Strategic Management of Investor Relations Program.
Andy Palalas — Chief Revenue Officer
Andy Palalas is responsible for developing distribution channels, sourcing new market opportunities and overseeing the revenue portfolio for High Tide. Palalas is a business growth and sales professional with a decade of experience in implementing sales programs for established corporations and startups. Palalas has most recently taken Famous Brandz from inception to one of the leading manufacturers of smoking accessories internationally with his experience in the loyalty marketing sector, a track record of explosive growth in franchise sales and operations and a holistic mastery of ground-level business development through to overarching marketing strategy.
Nader Ben Aissa — External Legal Counsel
Nader Ben Aissa is a lawyer at Hooey and Company Lawyers in Calgary, Alberta. He specializes in commercial law with a wide range of experience in corporate governance, equity financing, and mergers and acquisitions. In 2013, Nader received his Doctor of Law (JD) from the University of British Columbia. Two years later, Ben Aissa was called to the Bar and was admitted as a Member of the Law Society of Alberta.
Nitin Kaushal — Director
Nitin Kaushal is a managing director in the Deals practice of PwC Canada’s Corporate Finance group. He has over 25 years’ experience in the financial investing, life sciences, consumer healthcare, health care services and medical device industries. In addition, he has a strong involvement with PwC’s Pharmaceuticals and Life Sciences team to bridge the financial and scientific areas.
Kaushal’s past experience includes board of directorships with pharmaceutical and healthcare companies and he has also held senior roles in investment banking, venture capital and consulting firms. In 2008 to 2009, he was ranked as the Top Healthcare Investment Banker by Brendan Wood International. He has performed over 40 merger, acquisition, strategic advisory, and licensing assignments and was an advisor to two of the top five global pharma companies and M&A advisor on one of the top licensing deals in Canadian healthcare history.
Arthur Kwan — Director
Arthur Kwan has over 18 years of investment banking, capital markets and private equity experience, most recently as the Managing Director of Investment Banking for Paradigm Capital. Prior thereto, he has held senior investment banking positions with Scotia Capital, Peters & Co. and PI Financial. Kwan has led the origination, negotiation and execution of many investment banking mandates, including private placements, initial public offerings, short-form prospectus offerings, mergers, acquisitions and divestitures, with an aggregate transaction value of over $1 billion.
Paul Rosen — Director
Paul Rosen is a noted career entrepreneur and management consultant. Over past 5 years, he has become one of Canada’s most active investors in the emerging cannabis industry. Rosen was a co-founder of PharmaCan Capital Corporation and served as President and CEO of PharmaCan Capital for three years. Rosen also sits on the Board of iAnthus Capital Holdings, a publicly-traded investment bank invested in several medical marijuana licenses across the United States.
In 1999, he founded Skypad International and currently serves as CEO and Chairman. He is a member of the Law Society of Upper Canada and practiced constitutional law in Canada for several years. He received a B.A. in Economics from Western University in 1985 and an LL.B. from the University of Toronto in 1988.
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