Understanding the US expansion plans of Canada’s largest cannabis retailer

On this episode of BofC Live, we connect with Vahan Ajamian, Vice President, Capital Markets of High Tide Inc in advance of our Business of Cannabis: New York event, of which High Tide is a sponsor.

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High Tide is a retail-focused cannabis company and through its retail brands – including Canna Cabana, NewLeaf Cannabis, Meta Cannabis and Meta Cannabis Supply – is the largest Canadian retailer of recreational cannabis as measured by revenue, with 93 current locations spanning Ontario, Alberta, Manitoba and Saskatchewan.

We wanted to connect with Ajamian about High Tide’s e-commerce retail brands in the United States and what that may mean for High Tide’s expansion into markets like New York.

BofC Live is the daily news and interview program of Business of Cannabis. Business of Cannabis highlights the companies, brands, people and trends driving the sector.

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BofC Live Transcript

Rosenthal: We’re gonna see each other in New York because High Tide is a partner of ours for our Business of Cannabis: New York event. But our history together goes back. It seems like a decade but I think it was less than that. I have a lot more gray hair since the first time we connected. So it’s nice to see you this way and we look forward to seeing in New York. You are the Vice President of Capital Markets for High Tide. And High Tide is the largest retailer in Canada. But also, you have a major presence in the US through e-commerce. Tell us a little bit about the company. 

Ajamian: So I’ve known Raj Grover, the founder and CEO for five or six years now. I joined the company in October of 2020. So the company has 93 stores now across the country. We’re the brick and mortar leader in terms of revenue and the leader in terms of market size. We also have a big US business. So in the United States, because we are traded on the NASDAQ, we limit ourselves to the accessories market. So in the cannabis accessories market, we number one, number two, and number three of the top five accessories platforms in the world as well as CBD. We recently acquired a very successful CBD company called FAB CBD, which generated about $11 million, $4.2 million in EBITDA.

Rosenthal: That’s considerable. That’s a big footprint of brick and mortar retail in Canada and e-comm in the States. And every week or so we get new announcements from High Tide. And this week we saw you’re going to be putting your own brand on brands through a partnership with Heritage. Talk a little bit about that. 

Ajamian: So we’re partnering with Heritage and with LOOSH to come out with our own white label program. We’ve been considering white label for quite a while, but we want to be slow and methodical and make sure we didn’t just jump in and do it just for the sake of doing it. We’re starting on the 2.0 products because we think that’s where there’s more differentiation, because there’s a lot of branded flower out there and it’s becoming more and more commoditized. It’s with the 2.0 products where we can really differentiate ourselves from a lot of LPs and we found the two great ones to start dipping our toe in the water and white label. So those are the first two, they should be launching in 3 or 4 months from now. And the other one where there’s low hanging fruit is FAB. FAB CBD, which is a very successful brand in the United States, and the obvious move is to bring it to Canada through partnership with a licensed producer.

Rosenthal: Actually that’s going to be one of the conversation points I think in our Business of Cannabis: New York, there are parallel tracks that are actually now not parallel, but are merging into a North American market. Regulations notwithstanding. The brands are crossing borders. The retailers, I think we’ll be crossing borders. Talk a little bit of how you’re viewing that because obviously the regulations aren’t actually there yet, but the world is there and consumers are there. 

Ajamian: Obviously Canada went fully legal a couple years ago. Now in the United States, it’s basically 50 different markets, medical, recreational, and not quite there yet, depending on where you are. So, you know, what we’re doing is we’re running pretty much the same playbook. And it’s almost the Amazon and Walmart model, right? We got the brick and mortar here in Canada and we got the Amazon style, it’s all tech in the United States. So what we did in Canada was the predecessor company that, Raj Grover, our CEO, started over 10 years ago now was focused on accessories. So we were the largest with 19 stores, the largest brick and mortar accessories company in Canada. And we were able to leverage those relationships, leverage those customers and make a turn it into the number one largest retail for cannabis across the country. And I think the same plan is happening in the United States. Now that we’re done a dozen years later, you don’t necessarily want to be number one in brick and mortar in the United States for accessories, you want to be three of the top five in online access. The playbook is pretty much the same. We continue to get do everything we can that’s federally legal, continue to sell CBD, continue to sell accessories, grow that business. We had over 100 million site visits last year in our online platforms. We serve over 2.5 million customers that we have our database and we regularly have touch points with these people. And these people use cannabis. Once we get the federal approval or the exchange approval, whichever comes first, we’ll be able to urn that on to selling cannabis legally. . Uh, you know, legally, um, when once, once we’re able to do so. 

Rosenthal: It’s going to be exciting to have these conversations in New York, which is an emerging market, right on the cusp, but also the sphere of influence of New York as it relates to New Jersey, to Massachusetts, to Connecticut, to Vermont and actually the whole east coast and the country as a whole is tremendous, which I think will be part of the conversation as well. 

Well, it’s great to hear the playbook. Great to hear the strategy. Look forward to seeing in New York as always.