Exclusive Interview with Bhang Corporation Chairman and CEO Scott Van Rixel
Nine years, ago Bhang (CSE: BHNG) (OTC: GOLDF) began as a chocolate-focused cannabis company, and today, it has a house of brands that spans edibles, tinctures, pre-rolls, vape, CBD products, and more. “Our model and message haven’t changed since the beginning,” says Chairman and CEO Scott Van Rixel. “Brand is what matters.” Van Rixel spoke with New Cannabis Ventures about his company’s approach to branding, strategic partnerships, and plans to continue growth in the cannabis industry. The audio of the entire conversation is available at the end of this written summary.
Van Rixel, trained as a chef and chocolatier, had a chocolate and gelato facility with his brother in Albuquerque when his friend invited him to tour one of the first cannabis labs in California. Van Rixel signed his half of the business over to his brother and headed west to make his way in the cannabis business. Given his background, chocolate was a natural pathway into the space.
Bhang’s Leadership Team
Van Rixel is joined on the management team by talent that has garnered experience in a number of other industries. President Tom Stein and Chief Marking Officer Samantha Collins both have experience in the regulated alcohol industry. COO Jamie Pearson is a successful entrepreneur and previously served as a brand manager for Cypress Hill. Chief Science Officer Jeremy Applen has held several positions responsible for establishing regulatory programs in multiple states.
Different Silos
Bhang’s business model is divided into different silos: royalty licensing, wholesale, and CPG goods.
The company’s royalty licensing program is its oldest silo. Through this division of its business, Bhang licenses its branding and formulas to state-licensed partners. These partners pay a royalty fee then produce and distribute Bhang’s products. For example, the company is partnered with Origin House in California and Trulieve in Florida.
Wholesale of raw hemp goods is Bhang’s second business silo. This segment helps the company keep a finger on the pulse of market pricing and helps to build relationships with labs and farmers, according to Van Rixel.
Bhang’s consumer packaged goods – everything from beverages and topicals to chocolate bars and hemp cigarettes – are the third revenue silo of its business.
Product Development
Van Rixel sees three different approaches to product development in the cannabis space. First, cannabis companies can look to other industries for trends that can be brought to this space. He points to energy drinks as a product category that can be tailored for the cannabis space. Second, cannabis companies can look to existing cannabis product ideas that need refinement. Third, technology-driven product development brings entirely new ideas to the industry. Bhang’s approach to product development is largely looking for ways to use cannabis to enhance existing products in multiple different categories.
Bhang’s approach to branding also targets specific consumer groups, rather than using a “one-size-fits-all” approach. For example, the company’s Charlie Bravo Delta line features men’s wellness products and the Ohana line features women’s wellness products.
The company also has different categories for its hemp cigarettes. One category is a cone-style pre-roll that looks much like a traditional joint. It has no filter and a stronger flavor profile. This product is geared toward cannabis consumers. The other category is tailored to cigarette consumers. This product looks like a slim, straight cigarette. It has a filter and a slower flow rate. It looks and feels like a cigarette but delivers a hemp experience.
Distribution Strategy
In the U.S., Bhang’s THC products are distributed through its state-licensed partners. Bhang also will be distributing its THC products to international markets, such as Canada, through its joint venture with INDIVA.
In the U.S., the company distributes its CBD products through direct-to-retail sales. The company also distributes products through its wholesale division. When it comes to international distribution of CBD products, the company relies on distribution partners rather than going direct to retail.
Going forward, the company is interested in expanding into a number of international markets such as Asia, Australia, Europe, Central America, and South America.
Strategic Partnerships and Acquisitions
Strategic partnerships are an important element of Bhang’s business model. The company has demonstrated an ability to navigate regulatory structures and deliver. Van Rixel finds he does not have to spend much time selling Bhang as a good partner; rather, he can focus on the specifics of making a partnership work. This means determining what each partner will be responsible for, how each will benefit, and how the partnership will benefit the industry. Each successful relationship lays the groundwork for the next, according to Van Rixel.
Van Rixel sees acquisitions as a natural consequence of working in the cannabis space. Successful companies will acquire one another and combine for even greater success.
Funding
Prior to its RTO this year, Bhang was funded through private investment from groups and individuals. Following its public debut on the CSE, the company is fielding investors asking when it will do another private placement.
Van Rixel points out that companies that rely solely on internal cash flow may be missing out on growth potential. He foresees the company pursuing more capital to drive growth in the future.
Building Steam
Bhang is getting its bearing as a public company, and Van Rixel expects to see the results of a fully functioning public company with a business model driving growth in the fourth quarter and first quarter of 2020.
As Bhang grows and remains committed to the importance of brand, Van Rixel is aiming to keep the company flexible. Flexibility is paramount to handle frequent regulatory changes inherent to the cannabis industry.
To learn more, visit the Bhang website. Listen to the entire interview:
