Nutritional High (CNSX:EAT) Impressive West Coast Distribution Footprint

Nutritional High International Inc (CNSX:EAT) (OTCMKTS:SPLIF) (FRA:2NU) Co-Chairman  Adam Szweras shares the company’s plans for a busy 2019. Nutritional High has a West Coast footprint with a presence in California, Nevada, Oregon, and Washington in addition to operations in Colorado and Illinois. Nutritional High is fully integrated in California and Colorado, and has made impressive steps in terms of its distribution platform. The company’s distribution gross margin in Colorado is 18-20 percent and its wholly-owned California distributor Calyx now generates profits between $1.3 and $1.5 million monthly. Nutritional High’s expertise is in extraction and edibles manufacturing and is producing Marley Natural products in Washington and Oregon. Nutritional High has plans to expand its Nevada operations and has launched a joint venture in Canada.

Transcript:

James West:   Joining me now is Adam Szweras. He is the co-chairman of Nutritional High, trading on the CSE under the symbol EAT. Adam, welcome.

Adam Szweras: Thank you, thank you for having me.

James West:   Adam, Nutritional High has been around for quite a number of years. I’ve been following it with kind of one eye, I didn’t participate in it any point yet, but so give us an overview.

Adam Szweras: Well, now’s a great time.

James West:   Convince me, convince me!

Adam Szweras: Well, I mean, Nutritional High started out with a focus on Colorado, over the last really two years we’ve shifted most of our focus to California and Nevada and the western US, so we right now have facilities in California, northern California we have a manufacturing facility, we also own a distributor that’s either the largest or the second -largest distributor in the state, one of the largest, and wasn’t before we bought it. So we’re really proud of that.

We have a, we’re still continuing on in Colorado; we have just opened up a facility in Oregon making edibles and extracting oil, and we’ve just signed a deal with a privateer subsidiary to make their products in Washington and Oregon as well.

James West:   Oh, privateer – that’s a big deal. Those are the guys who put Tilray on the map.

Adam Szweras: Yep, yep, and so we’re doing the Marley Naturals products in Colorado – not in Colorado, sorry, in Washington and Oregon, and that’s just starting right now, so that was a great vote of confidence to see that happen.

James West:   No doubt, no doubt. So the product line is all about edibles and extract?

Adam Szweras: Edibles, extracts, oils, yes.

James West:   Okay. And what sort of volume of sales do you do, and who do you sell it to?

Adam Szweras: Well really, we sell it to dispensaries; so we don’t sell to retailers ourselves, we don’t have any retail operations. In California, we own a distributor, so most of our revenue right now, is from this distributor, Calyx Distribution. It is, as I mentioned, one of the largest. They, in the last, since we bought it, when we bought it, it was running at about $200,000 a month in revenue, and now it’s up to $.12 million, $1.3 million, $1.5 million USD; just in the first six months of owning it, we did $11 million of revenue, and just ramping it up, and what we wanted to do with that was create a pipeline in order to sell our products that we’re starting to manufacture in California, we’ve been doing it white-labelling on a very small basis, and now that our Sacramento facility is being ramped up, we’re going to be able to expand that significantly. We’re going to be selling our own cold-ethanol extracted oils, chocolates, and we have a bunch of other innovative products: many mints, small mints that will give you the nice microdose of THC but won’t you give all the calories.

James West:   And you won’t need a wheelchair.

Adam Szweras: No.

James West:   [laughter]

Adam Szweras: Not unless you eat a whole box.

James West:   that’s quite the sales numbers. Now, what kind of gross margin do you realize on your sales, generally?

Adam Szweras: So on the distribution, we have in the neighbourhood of 18 to 20 percent gross margins, and on the edibles, that’s much higher. So the gross margins in Colorado, where we have a longer history, is, you know, pretty decent, it’s in the neighbourhood of 650 percent plus gross margins, and in California, we think we’ll even be able to do better as we ramp up our facility.

James West:   So you’re gong to sell all of your products through distributors who distribute them to dispensaries?

Adam Szweras: Yes. So, or, either thorough our own distributor. So in California it’s our own; in Colorado and elsewhere, we don’t own the distributors, but we are looking at strategies to own that pipeline.

James West:   Okay, where do you get your input? Your cannabis, THC, CBD?

Adam Szweras: Growers. So we don’t grow; we don’t want to take the risk of growing. I can’t say we’re not good at growing, we’re not growers. We’re good at making oils, extracting oil, and making edible products, and that’s the people we have around our company, that’s not me, they’re great at it. We have Billy Morrison, who’s one of the almost founding directors, he was there almost on Day One, and his approach to oil extraction has been amazing, and he’s this technical genius. And we have Jim Fraser, who’s our CEO, and he’s run chocolate factories, not marijuana chocolate factories, but chocolate and edibles facilities throughout the eastern US, and built companies.

James West:   Wow, sounds great. So is the company profitable, and if not, when will it be?

Adam Szweras: No, it’s not profitable, and I don’t want to project when it will be because we’re in growth mode, we have a lot of growth –

James West:   So you keep putting all your free cash flow goes back into the company?

Adam Szweras: Yeah, we’re putting it into expansion. So even in the distributor, as new products are coming online, we’re looking at expanding our pipeline and to bring partner products and our own products and that takes marketing dollars. It’s takes just going in and making sure the dispensaries are carrying it.

James West:   So how many shares are out?

Adam Szweras: So we have about 300 million shares; our market cap is about just under $80 million, so especially compared to some of the others out there we’re very cheap, so we just had to convince you to invest. I think our biggest competitor is probably Origin House, and if you look at their, I think they’re 47 revenue multiple with their $500 million market cap, and we’re 7x. we also have a facility we’re buying in Nevada, it’s operational, so we’ll e in Nevada shortly, and we have a joint venture in Canada. So we’ll be in the biggest markets and the best markets in short order along with California and the other.

James West:   Okay, well, that’s great, Adam. I’m glad to see that you guys have captured so much market share; that’s impressive. We’ll come back to you in a quarter’s time and see how the year is progressing.

Adam Szweras: thank you very much. Thanks a lot.

Original article: Nutritional High (CNSX:EAT) Impressive West Coast Distribution Footprint

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