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International Cannabrands Inc (CNSX:JUJU) CEO on Northern Lights Distribution Deal

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International Cannabrands Inc (CNSX:JUJU) (OTCMKTS:GEATF) (FRA:31G) CEO Steve Gormley is thrilled about the company’s recent performance. Gormley notes that International Cannabrands was one of only a handful of companies that closed institutional capital in December, one of the worst months in years. On the heels of closing the company’s deal with La Vida Verde earlier in January, International Cannabrands announced a new distribution deal with Northern Lights, a California-based licensed distributor of medical and recreational cannabis. Gormley is also celebrating the successful rebranding of the company’s JuJu Royal brand, noting the redesign to appeal to millennial men will result in the brand being profitable by Q2 2019.

Transcript:

Steven Gormley:    And this was the worst December since 1931.

Ed Milewski:  I just read that. They were talking about, you know, selloffs, etcetera, and this was –

Steven Gormley:   We were one of only a couple of companies that were actually able to close institutional capital in month of December.

Ed Milewski:  You did your funding –

Steven Gormley:    We did our funding, it’s been a rolling close, we’re actually closing out at the end of this week.

Ed Milewski:  Okay, okay.

Steven Gormley:    And the great news is that The Vida Verde deal is complete. We actually announced last Monday the closure of that acquisition, of 51 percent of La Vida Verde, and now we’ve taken that family of brands in-house and we’re deep into integration meetings and hiring marking staff and sales staff to support the new distribution deals. I don’t know if you’re aware, but I also announced a week ago Thursday – it’ll be two weeks on Thursday – the closure of a deal with Northern Lights, which is a formidable distribution company and network in the California market for JuJu Royal.

And so now, my brands are going to be able to work together. We’re leveraging distribution across companies, we’re bringing on marketing support, and sales support, to be able to drive revenues in both companies – and as I announced a couple of weeks back, we’re 15 percent above our revenue projections at La Vida Verde, and we’re really excited and focused on our next acquisition.

Ed Milewski:  Yeah, so maybe just remind us of some of the more salient points for La Vida Verde.

Steven Gormley:    Right. La Vida Verde is a family of brands, because we really believe the multiples in cannabis will be lodged in brands, right? And we’re feathering in business that support vertical integration, like cultivation and manufacturing, certain service business, like the Riotous acquisition that we did in August.

We are looking at creating a company that’s predicated on earnings and EBITDA and acquisitions.

Ed Milewski:  Yeah, yeah.

Steven Gormley:    We are a middle market brand rollout play, and nobody’s doing what we’re doing. We’re only buying profitable brands that are EBITDA positive, and we’re rolling them up, so that when that time comes, when people are looking for earnings in the market, we’ll have the fundamentals to withstand the nuclear weapon.

Ed Milewski:  I know some of the people at Gravitas, and Vikas Ranjan, for example, was on the show.

Steven Gormley:    Yes, I’m seeing him later today.

Ed Milewski:  Vikas, I really, really like him, and we were talking about other tings, but you know, we talk about JUJU together an they’re good long0-term sponsors, as you probably have figured out.

Steven Gormley:    Yes, they’ve been a fantastic partner.

E.M. :    And if you can keep showing them good –

Steven Gormley:    They’ve been a fantastic partner from Day One. I met Vikas over the summer when I joined the team, and –

Ed Milewski:  Yeah, I think we ran into each other.

Steven Gormley:    I think I introduced you to him!

Ed Milewski:  Well, I knew him from before because about a year and half ago, I met him on, he’s involved in that fintech company. In fact, Vikas was on the show talking about it. He’s a real gentleman.

Steven Gormley:    And one of the most formidable intellects on Bay Street, right?

Ed Milewski:  Macro thinker, absolutely.

Steven Gormley:    And he was a big part of the reason, and Gravitas and Canaccord were a big part of the reason that I joined this organization and brought my team in to turn around International Cannabrands. I knew I had their support they believe in this vision of a rollup, they loved the idea of building a cannabis company based on fundamentals. And you know, they drank the Kool-Aid alongside with us, and recognized the value of the JuJu Royal brand, that was already housed inside International Cannabrands, and helped us raise the money to acquire the 51 percent of La Vida Verde that we presently –

Ed Milewski:  Well you know what? I think sometimes the first deal you do is the hardest one. But now that you’ve got some traction –

Steven Gormley:

Ed Milewski:  And I’m going to toot the horn of my team, here. Point out that in July we came on and we were at somewhere around $0.04. We eliminated a pref share structure that made the company impossible to finance; we cut the dot A; we got pref share holders to return 90 percent of their shares to treasury, and we locked up the other 1o percent. We acquired a great service business in Riotous, 25 percent; we restructured the La Vida Verde transaction and re-priced it to make it market-friendly. We re-wrote the business plan at JuJu Royal and quintupled distribution, and have added distribution and more sales and marketing since then.

And coming up shortly, you’re going to hear about our next target. You should expect that soon.

Ed Milewski:  So you’ve got to think there’s got to be a lot of things out there that you can do there’s a lot of small little operations, I mean, if you can sort of aggregate them, and keep doing what you’re doing, this is what, you know, CEOs get paid the big money for, right?

Steven Gormley:    We have a really specific profile, and funny, I was at Canaccord today with Gary Singh, and I sat down and talked to him about our strategy. There are so many strong, middle-market brands –

Ed Milewski:  I know Gary.

Steven Gormley:    Profitable. But what I look for in a management team, I want young and hungry. I want women and men in their mid-thirties, early forties, who are seasoned enough to know how to run their businesses and operate at a reasonable profit margin, but still young enough and energetic enough to want to along for the ride.

A lot of cannabis industry professionals that are close to my age are exhausted, and they’re looking to take money off the table. We’re finding that rare combination: successful operator who has a vision for what a Canadian public platform can provide.

Ed Milewski:  Yeah, and the fact that you sort of subscribe to a pretty clean lifestyle –

Steven Gormley:    I do.

Ed Milewski:  I know you do, and, no, listen –

Steven Gormley:    I’m open about that.

Ed Milewski:  And you know what, I know, because we’ve chatted, and I have my moments and blah, blah, blah…

Steven Gormley:    That’s a great point.

Ed Milewski:  You know what, I’ll tell you something: the energy that you have is very, very obvious and it’s contagious.

Steven Gormley:    Thank you, Ed. Thank you.

Ed Milewski:  And congratulations, because I know you can burn the midnight oil, if that’s the right saying, I don’t want to –

Steven Gormley:    I’ll say this: I did quite a bit of research in college and I’m Irish and Scandinavian, and we know what that means when it comes to the drink.

Ed Milewski:  And you speak, you’re a polyglot, you speak many languages.

Steven Gormley:    Chinese, Russian, German, French, Portuguese…

Ed Milewski:  This is good, this is good. Look, it’s a long term game. It’s not about – and if you’re getting some things done, you can get more things done, the more things you get done, and you don’t want to – cash flows, listen, without cash flows, if you’re spending more than what’s coming in, that’s ruinous.

Steven Gormley:    That’s right. That’s why we’re only focused on profitable brands. Now, JuJu Royal isn’t here, but it will be, by the second quarter of 2019. It was a solid brand, it needed to be refocused on Millennial males, we’ve done that, we’ve just come out of the gate with brand-new packaging, really sleek and sexy packaging that appeals to Millennial males, providing them a quality product at a lower market price point, and we’ve quintupled distribution. So we’re going like gangbusters, and we’re just elated with how the market is receiving our products.

And if you’ve looked at where we’ve come from the bottom in December, it’s been a steady climb from $0.07 to $0.11.

Ed Milewski:  Yeah, and listen, you know, this market can be nutty, and it can make you think you’re doing some great things and it’s just the stock market moving around. But I think the stock is basing nicely here, it’s starting to show some bubbling, and you’re probably very close to seeing another one of those –

Steven Gormley:    You know, I like slow and steady. I know a lot of people in the space like the hockey stick trajectory.

Ed Milewski:  I know.

Steven Gormley:    But we’re again, you know, we’re this odd combination of being a penny stock focused on fundamentals.

Ed Milewski:  Just remind the public how many shares are outstanding now?

Steven Gormley:    300 million.

Ed Milewski:  300 million. So it’s a $30 million market cap.

Steven Gormley:    Correct.

Ed Milewski:  Now, I often think of the fable of the tortoise and the hare, so I understand what you’re saying.

Steven Gormley:    Well, we’ve moved at a hare’s pace, with a tortoise’s mentality. So we’ve been methodical about our strategy and executing against our business plan, but we’ve moved really quickly. I mean, look at where we’ve come since July.

Ed Milewski:  No, no, I take my hat off to you.

Steven Gormley:    Thank you, sir.

Ed Milewski:  No, but I mean, you’re a clean liver. You have a clean liver.

Steven Gormley:    Well, it took its hits early on. I haven’t had a drink in 12 years.

Ed Milewski:  I know that. Good for you.

Steven Gormley:    I’m very focused on this business. And there’s a lot of people in the recovery community, oddly, that are in this business, like the alcohol business – it attracts all kinds, right? And having a clear head and a good family to go home to, you know, my wife and four kids, I’m blessed.

Ed Milewski:  They’re all well, I take it?

Steven Gormley:    Everybody’s well, and I’m the luckiest man alive.

Ed Milewski:  Yeah, okay. So we expect to see some more things happening?

Steven Gormley:    Yes. We’re going to be executing against this plan to continue to acquire profitable, middle-market assets that are solid brands in the regions and territories they serve, with really strong consumers and loyal consumers, and young management teams that are hungry, and get the opportunity of being part of a Canadian public company that has the currency to roll up synergistic businesses that we can double and triple and leverage across the board. I mean, really, that’s what we’re about.

Ed Milewski:  Okay, well, look: we’ll leave it there, you’re always welcome to come back.

Steven Gormley:    Thank you.

Ed Milewski:  You will be back.

Steven Gormley:    I will. You guys are my favourite. You’re my favourite Canadian.

Ed Milewski:  So, okay, well, all the best, and all right.

Steven Gormley:    You’re my favourite Polish Canadian.

Ed Milewski:  Okay.

Original article: International Cannabrands Inc (CNSX:JUJU) CEO on Northern Lights Distribution Deal

©2019 Midas Letter. All Rights Reserved.


Source: https://midasletter.com/2019/01/international-cannabrands-inc-cnsxjuju-ceo-northern-lights-distribution-deal/


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