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Hiku—Building a Portfolio of Iconic Cannabis Brands

Overview

Hiku Brands Company Ltd. (CSE:HIKU,OTCUS:DJACF) is a vertically integrated cannabis brand house and licensed producer that took form following the merger of DOJA Cannabis Company and Tokyo Smoke. The first of its kind, Hiku works within a cultivation-to-retail model and, as such, owns both production and retail facilities.

The company has a significant national retail footprint, with seven existing storefronts across British Columbia, Alberta and Ontario. Moving forward, Hiku will continue acquiring brands and expanding the number of points of sale within 2018.

With a mission of delivering hand-crafted cannabis products and immersive retail experiences to its customers, Hiku understands that cannabis consumers come in all shapes and sizes and have a variety of different needs. To this effect, they have put together a portfolio of four different brands, each focused on different consumer segment.

Like in the coffee industry, where a single brand sells 25 percent of America’s coffee and allows its integrated coffee farms to focus on innovation, Hiku believes that there is an opportunity to develop a similar presence in the cannabis space, where its vertically integrated brands can focus on innovatively targeting the needs of its audience of over 500,000 variable consumers. Hiku’s brand portfolio consists of four iconic cannabis brands — DOJA, Tokyo Smoke, Van der Pop and Maitri — Hiku has the tools to address a variety of potential customers ranging from active and wellness-conscious ‘west coasters’, urban professionals, women, and the large base of Quebecois cannabis consumers.

Hiku is led by a strong team of visionaries that are using their branding, industry and corporate development experience to help position the company as a leader in the recreational cannabis market. The management team includes CEO Alan Gertner — founder of Tokyo Smoke — and Trent Kitsch — founder of SAXX underwear and DOJA.  

Investment Highlights

  • Vertically integrated brand portfolio targeting the varied needs of cannabis consumers
  • Licensed producer at final stages of sales license application
  • Management of product from cultivation to point of retail
  • Existing network of storefronts across Canada
  • Emerging recreational market in Canada expected in summer of 2018
  • Industry-recognized management team of proven brand builders

An Iconic Blend of Cannabis Brands

As the product of brand mergers and acquisitions, Hiku is founded on a strategy of building a portfolio of iconic cannabis brands to meet the variable needs of Canadian cannabis consumers of all kinds.

DOJA

DOJA is a cannabis lifestyle brand and licensed producer under the ACMPR that cultivates handcrafted cannabis in British Columbia’s Okanagan Valley. Focused on developing lifestyle products for wellness-conscious west coast individuals, DOJA is expanding its production capacity while also delivering access to cannabis education and community at its DOJA Cafe in Kelowna, BC.

With one fully operating facility producing 660 kilograms per year and plans for expanding production to over 5,000 kilograms per year, DOJA is currently in the final stages of the sales licensing process, with a pre-sales inspection scheduled for February 2018. The company is also working towards obtaining a license for cannabis oils by the second half of 2018.

“As there are currently only 26 independent companies with cannabis sales licenses under the ACMPR in Canada, receiving confirmation of our Pre-Sales License Inspection from Health Canada is a major milestone for Hiku,” said Hiku CEO Alan Gertner. “We look forward to soon selling DOJA-branded cannabis to our valued customers.”

Tokyo Smoke

Focused on serving the needs of design-minded creatives and urban professionals, the Tokyo Smoke brand targets sophisticated consumers located in metropolitan areas with relatively high disposable incomes.

In six locations across Alberta and Ontario, Tokyo Smoke brand stores offer immersive retail experiences that blend cannabis with complementary culture, high-end coffee and community. Items sold include smoking accessories, coffee and stylized merchandise that support Tokyo Smoke’s mission of being a leading lifestyle brand.

Van der Pop

The Van der Pop brand is one focused providing cannabis products — accessories, topicals, serums, oils and capsules — to the fastest-growing segment of recreational cannabis consumers: women aged 25 to 60.

Seeking to better understand the role that cannabis plays in the lives of women, Van der Pop has collected insight from 1,530 women across North America in a comprehensive survey. Results from the survey indicated that while 66 percent of women hide their usage due to the associated stigma, there is still significant interest in the role cannabis can play in skin care, dining, as well as other aspects of daily life. This information will be indispensable for Hiku as it continues to develop Van der Pop as one of its key vertically integrated brands.

Maïtri

In February 2018, Hiku signed a letter of intent to acquire 100 percent of Maïtri Group Inc. Maïtri is a Quebec-based cannabis accessory and design brand specifically targeting Quebecois consumers that was founded in 2017. Since then, Maïtri has provided consumers with cannabis accessories, education, innovation and community.

Maïtri has already received a number of industry recognitions, including having been a finalist for 2017 Lift Cannabis Awards ‘Brand of the Year’, a category which was then won by Hiku’s Tokyo Smoke brand.

Quebec is expected to represent more than 25 of the cannabis market in Canada. Currently, the province hosts an estimated cannabis market of $1.5 billion a year. With a strong understanding of the local market, Maïtri is a gateway through which Hiku can make a natural entrance into ‘la belle province’.

“We are thrilled to welcome Maïtri to the Hiku brand portfolio,” said Gertner. “This is an exciting first acquisition for Hiku – and an incredibly important one as we look forward to growing Maïtri in the Quebec market and beyond.”

Operations

Production

Under the DOJA brand, Hiku is currently producing cannabis at an annual rate of 660 kilograms a year out of its Dominion facility located in the Okanagan Valley. The company is also in the process of expanding its production capacity with the construction of the Future Lab, which will measure just under 30,000 square feet and contribute an additional 4,500 kilograms of cannabis per year. The Future Lab will also house an extraction facility, bringing Hiku into the ever-growing market of cannabis oils and extracts.

With the goal of further increasing its access to pharmaceutical-grade cannabis, Hiku has also entered into supply agreements with strategic producers within Canada: Aphria Inc. and WeedMD Inc. Aphria is one of Canada’s lowest cost producers and is located in Leamington, Ontario, the greenhouse capital of Canada. WeedMD, meanwhile, is a licensed producer and distributor operating within a 26,000 square-foot facility in Aylmer Ontario. WeedMD has also recently acquired an additional property on which it is currently retrofitting an additional 610,000 square feet of greenhouse space.

Storefronts

In integrating DOJA and Tokyo Smoke, Hiku has a retail footprint of seven legal brand stores that span across British Columbia, Alberta and Ontario. This includes the DOJA cafe in Kelowna and Tokyo Smoke’s six immersive storefronts which have collectively reached over 350,000 customers.

Moving forward, Hiku will integrate two retail models. One will be a stream of cannabis dispensing stores and the other, a selection of brand stores maximising in-store customer experience with consistent quality and exclusive product ranges targeted to specific types of users. To this effect, Hiku plans on adding further storefronts to its existing network within its first year.

Management

Alan Gertner—CEO of Hiku, Founder of Tokyo Smoke

Alan Gertner, a lover of technology, design and everything in-between, most recently led an over $150M organization at Google in Asia. He is a proven leader in strategy and operations, including as a founding member of Google’s first Global Business Strategy team while based in Mountain View, California. He was formerly a Management Consultant at Oliver Wyman in New York and graduated Dean’s list from the Richard Ivey School of Business, Canada’s leading business school, in 2006. As a youngster, Ge spent every moment he could interning at wild and weird startups – from building flashy flash websites to developing and selling the garbage bin billboard.

Trent Kitsch—President of Hiku, Co-Founder of DOJA

Trent Kitsch founded SAXX Underwear Co. in 2007 and successfully built SAXX into a globally recognizable brand and the fastest growing underwear brand in North America before exiting the business in 2015. In 2013, he and his wife Ria founded Kitsch Wines in the Okanagan Valley. He is an MBA graduate of the Richard Ivy School of Business with a major in Entrepreneurship.

Jeff Barber—CFO

Jeff Barber was the Co-Founder & Managing Partner of a boutique M&A advisory firm from 2012 to 2016. Previous to that, he held investment banking roles with Canaccord Genuity Corp, and Raymond James Ltd. He started his career as an Economist with Deloitte and possesses extensive experience raising capital and advising on M&A transactions. He is a CFA charter holder with a masters degree in Finance and Economics from the University of Alberta. Ltd.


 
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