Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Midas Letter (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Fire & Flower (CVE:FAF) Announces Licensing Agreement with Two Ontario Retail Lottery Winners

% of readers think this story is Fact. Add your two cents.


Fire & Flower Holdings Corp (CVE:FAF) CEO Trevor Fencott is excited about the company’s debut on the TSX Venture Exchange. Fencott is thrilled with the growing interest in the company, noting Fire & Flower’s trading volume was 3 million on its debut. The cannabis retail chain recently announced it reached licensing agreements with two cannabis retail lottery winners to create Fire & Flower branded stores in Kingston and Ottawa. Fire & Flower has 7 stores in Alberta and 2 in Saskatchewan with plans for more. So far, sales have exceeded expectation and the 9 stores have combined for $10 million in revenue over the first 90 days of recreational sales. Fencott is thrilled the company’s individual stores have surpassed estimates as well and, based on run rates, are on track for $4 to $5 million in revenue per store annually.

Transcript:

Narrator: Fire and Flower is a cannabis retail franchise, with provincial licenses to operate seven cannabis retail stores in Alberta, two cannabis retail stores in Saskatchewan, as well as a wholesale cannabis supply business.

The company is currently pursuing additional licenses to operate stores in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario.

Fire and Flower stores recently surpassed $10 million in sales since legalization. The company had five locations open on October 17th, and has since doubled its retail footprint.

Fire and Flower began trading on the TSX Venture today under the ticker symbol FAF.

James West:   Joining me now is the CEO of Fire and Flower Holdings Corp: Trevor Fencott joins me. How are you, Trevor?

Trevor Fencott:    I’m well, I’m well, thanks.

James West:   Excellent. First day of trading, over 3 million shares trades; that’s not too shabby.

Trevor Fencott:    That’s a lot of shares, yeah.

James West:   Great. So tell me: what is the Fire and Flower story?

Trevor Fencott:    So the Fire Flower story is, we are the leading independent retailer of cannabis in Canada, and what I mean by that is on the one side, our competitors are vertically integrated licensed producers who produce a product they’re actually selling at retail, and the other side we have what I call re-vectoring businesses, so retailers or other businesses with a legacy business that are coming into cannabis as kind of their growth story.

But Fire and Flower was designed from the ground up to just do cannabis retail in Canada. So we’ve acquired a tech company in the summer, because we believe that we need to be, like, data-focused. So for us, having a digital platform that was developed from ground up is very, very important, and we think that’s paying dividends in our stores.

James West:   Right, how many stores do you have?

Trevor Fencott:    We have nine; seven actively selling in Alberta, and two in Saskatchewan.

James West:   Oh, that’s fantastic. Any plans to expand to Ontario?

Trevor Fencott:    Absolutely, absolutely. So we actually just did a press release this morning that two of our agreements with lottery winners in Ontario have been posted for public notice. So we are going to, in fact, have Fire and Flower branded stores with lottery winners in Ottawa and Kingston.

James West:   Oh, that’s fantastic.

Trevor Fencott:    Yeah, we’re very excited.

James West:   So is it the case that the winners of the Ontario lottery, the 25 licenses, is it your experience so far that most of them are going to have to partner with an existing LP to actually make it through the short window that they’ve got to get into business without getting hit with penalties?

Trevor Fencott:    I think that it is realistic that people are going to need help, whether that’s from someone in the cannabis industry or a normal retail industry, or the real estate industry, I think that’s sort of up for discussion. But I think they are going to need help, because most of the people, you know, could open a store, but to open it on the April 1st deadline I think is going to be tough. But also, it’s not just opening a store; it’s running a regulated retail business. So it’s not just a variety store or a GAP or something like that; this is a regulated endeavour, which is going to be a challenge.

James West:   Yeah. Even Starbucks, when it identifies a new location, takes six months to get it ready. So I always thought, what was the thinking behind that genius? Anyway, so that’s good to see, though. So they’re going to salvage the situation by letting companies partner with the LPs; that’s a relief.

Is there a limit to how many stores you can have in Canada?

Trevor Fencott:    Well, in Canada, it’s done province by province. So in Alberta, where we started, there’s a limit of 15 percent of the available licenses, so there’s a cap there per corporation. And then in Ontario, ultimately I believe the limit will be 75 per entity, and licensed producers are not able to retail in the province.

James West:   Okay. Don’t licensed producers get one store location at their point of manufacture?

Trevor Fencott:    Yeah, I believe, yeah.

James West:   And that’s it.

Trevor Fencott:    Yeah.

James West:   Huh, very interesting. So how has the, how has sales been going?

Trevor Fencott:    Sales have been going very, very well. I mean, we’ve published some data, which is the first 90 days of sales in Alberta and Saskatchewan; we’re 10 million in revenue from nine stores. So it was quite –

James West:   Wow. In 90 days?

Trevor Fencott:    In the first 90 days, yeah.

James West:   And what is the gross margin?

Trevor Fencott:    The gross margin, we’re aiming for 50; I think it’s coming in at about 40 percent, but we haven’t even got our higher margin items like the apparel line that we have, as well as other things like accessories, and ultimately we believe our data platform will be very high margin for us.

James West:   You bet, you bet. Any plans to move into the United States at all?

Trevor Fencott:    Well, I think for us to move in and own stores, we would want to be, of course, sure that it’s completely legal at all three levels of government. For us, we will take the model we’ve seen in Ontario, where we are, in fact, licensing our intellectual property and performing consulting services for an owner that is not Fire and Flower; the lottery winner is, in fact, the license owner.

I think that allows us to start to look at the US in a more careful way, and ahead of our plan. But plans that operating on the ground, I think, we’re TSXV listed, so we want to be compliant with them at all times.

James West:   And I’m curious about some of the metrics around retail consumers. What do they – what is the break between the consumers looking for extremely high THC product versus those looking for something less than wheelchair weed?

Trevor Fencott:    Yeah, I think that that’s interesting. In the beginning, we certainly saw a fixation on high THC, and that was what we see go out of the door very, very quickly Day One and perhaps Week 2. But now we’re seeing, I think, a little bit more of a gradual approach where people have actually come back for multiple purposes at this point, and I think the excitement over, like, let’s just get the maximum THC possible has now moved into something more reasonable, which is look: I’m going to consume this, I actually want this to be an enjoyable experience and not just the maximum THC.

James West:   Right.

Trevor Fencott:    And that’s part of our educational premise as well, which is, for example, when someone comes in who’s a little bit older and says, you know, I tried this in the 70’s when I was in high school, I’m ready to come back to it, I’d like to experiment with this – our advice to them is, you don’t need the maximum THC. So, working with our cannistas, it actually turns out that for them, 5 percent THC would be similar to what they experienced first time.

So we kind of had to guide them on that journey.

James West:   That’s interesting. You know, as a lifelong consumer of cannabis, certainly I remember in high school it was all about being as high as possible at all, all the time. And now, fast-forward 40 years, it’s like, if I have, you know, a puff off a moderately strong joint, that’s me good for the next two hours and I don’t need anything more.

If I do smoke any of the high tests, you know, basically go to my room, shut the blinds, shut the door, put the headphones on, whack the drums, that’s all I’m good for. So that’s interesting.

Now, what about, is there preference being seen in terms of people asking for indica over sativas at all?

Trevor Fencott:    Well, that’s interesting, because the way we try to organize our store – because we feel our job is to kind of curate this experience for them. It’s a very confusing world of cannabis, and so by curating it in terms of our strain wall, where we have it all laid out, not in terms of indica and sativa – because according to Health Canada, what we’re allowed to talk about are things like terpene profiles, which again, there’s some debate as to whether indica or sativa is even an accurate moniker, because when you have it tested, genetically it’s like, well, that’s not an indica or that’s not a sativa.

So we like to talk in terms of terpene profiles, and we really take a cue from our licensed producer partners who, of course, are our vendors. So we’ll talk about the strains the way that they want them to be talked about, and the way that they can talk about it with Health Canada, which is in terpenes.

James West:   Hmm, that’s interesting. I find that somewhat disturbing, and I mean, but more disturbing to me is, due to the illegal nature of cannabis over the last 70 years, is that the gene pool has become so diluted and, you know, there’s just zero sort of curation of the gene pool for the most part. I mean, entities like DNA Genetics have done a fantastic job of seeking out old-world strains, preserving them in some pure form, blending them, hybridizing them with others where appropriate, but, you know, for the most part, you try, you know, Grandaddy Purps from California versus Grandaddy Purps from Amsterdam, you’re getting two completely different products, in large part.

So is this something that is irretrievably gone in terms of breeding stock of cannabis? Or is it something that we can move back towards now that it’s legal and we can do all kinds of research and studies on the gene pool?

Trevor Fencott:    I think it is something that is not lost. I think that those kind of genetics, as you say, those groups do a great job; DNA does a fantastic job of that. I think what we’re going to see, though, is the new strains embraced for what they are. So instead of calling them OG Kush or whatever it is that actually may not be the right moniker anymore, we’ll have new names for these things. And our job, certainly, as a retailer is to curate this experience and explain some of these things to our customers.

So of course, as we get more research options available, I know UBC is actually doing some sort of genome testing for varietals, I think that kind of stuff is going to be important. And as the licensed producers become arguably what they should be, which is product companies, not sort of raw producers anymore but sort of product companies, that kind of research is going to be a key differentiator for them in terms of communicating to consumer this is not just this genetic, this is a modified genetic, and that actually itself is a product.

James West:   Right, right, which some people will seek out.

Trevor Fencott:    Yes. Well, exactly, because it’s all about this and your body. Like, the genetics of the plant, and then your human genetics, give you the experience.

James West:   Yeah. So at $10 million for your first 90 days implies a run rate of $40 million per year. Is that what your expectation is?

Trevor Fencott:    Well certainly we saw a little bit in the beginning which was, you know, lineups around that block; that sort of stabilized very quickly in the first week. So we are actually saying that our run rate is going to be significantly higher than our early-year estimates. We used the MJ Bizfact book data about $1,200 per square foot, which is the aggregate of US data, and applied it, well, no discount, just to Canada, let’s say if that works, and that gave us about 2.1 million per store, per year, and that’s how we modeled the business originally. It looks on that; if we can keep that pace up, we’re on track for 4 to 5 million per store, per year, which is impressive.

James West:   So, getting back to the preferences of your customers, what percentage are looking for premium dried flower versus what percentage is looking for everything else, primarily extracts?

Trevor Fencott:    You know, I think that it’s very, very dominantly flower at the moment, but I don’t know if that’s actually because that’s what consumer preference is, or it’s that that is what is available. So we really don’t have, I believe, a representative product mix that compares to the black market. So certainly our experiences in store are that our customers, you know, are coming, and I don’t believe a lot of them are coming from the black market; I don’t think that we’re displacing the black market at this point, both in number of stores, but also products available, and also delivery methods available. So for example, you know, in Saskatchewan, where we are allowed to do online ordering, we’re allowed to do delivery, it’ll become closer to a black market experience and we’ll start to displace those, but in terms of what a store is available, what products are available right now, it would be dominantly dried flower.

And the extracts and the oils are really, if you think about it, it’s an analog to the medical system. There’s been no new product developed yet for the recreational market; it’s an extracted, you know, maximum of 30 milligrams of THC per millilitre of product; we all know the Health Canada specs on that.

James West:   Right.

Trevor Fencott:    So there’s going to be some product development that’s required, I think.

James West:   Interesting. All right, Trevor, well, we’ll leave it there. Congratulations on getting public, and again, we’ll get back to you in due course and see how you’re making out. Thanks for joining me today.

Trevor Fencott:    Thanks for having me.

Original article: Fire & Flower (CVE:FAF) Announces Licensing Agreement with Two Ontario Retail Lottery Winners

©2019 Midas Letter. All Rights Reserved.


Source: https://midasletter.com/2019/02/fire-flower-cvefaf-announces-licensing-agreement-two-ontario-retail-lottery-winners/


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.