Exclusive Interview with Emblem President and CEO Nick Dean
Emblem has signed a letter of intent to acquire Ontario-based licensed producer Natura Naturals, and President and CEO Nick Dean spoke with New Cannabis Ventures about the strategic value of the deal and what he sees for the future of the company.
Before Emblem, Dean was the CEO of a creative agency and an active investor in the cannabis space. He found fewer and fewer opportunities to create unique ad campaigns from the ground up and found himself drawn to the blank slate of the cannabis industry. Emblem represents the opportunity to create new brands and product strategies from the ground up in a burgeoning industry.
The Three Pillars of Emblem’s Business Strategy
Emblem was founded as a medical-first cannabis company, and that area remains the company’s largest revenue stream, but the company is also expanding into adult-use. As the company grows, its strategy will focus on three core areas.
The company has never been intent on becoming the largest grower. Rather, it is focused on product innovation, building brands, and distribution channels. All three of these goals support Emblem’s core businesses: Emblem Pharmaceutical, Emblem Cannabis, and GrowWise Health.
The company has its proprietary flower strain and four oils on the market, as well as new products planned: oral sprays, gel caps, and sustained-release tablets. Emblem is also building a lab at its Woodslee, Ontario, which will support new product formulation. When it comes to building brands, the company has launched its first adult-use brand: Symbl. GrowWise Health supports the company’s patient acquisition strategy by providing on-site patient education through the company’s retail partnerships. The company is also forging distribution channels through supply agreements like one it has with the Alberta Gaming, Liquor & Cannabis Commission.
What the Natura Acquisition Means for Emblem
Before coming to the decision to acquire Natura, Emblem made a $3 million equity investment in the company in return for 3,000 kilograms of product on an on-going basis. Moving forward, it became clear that the two companies would benefit from coming together.
Natura is in the first phase of its retrofit in Leamington, Ontario, which will result in 15,000-kilogram production capacity by the end of this year. The second phase of the Natura expansion will bring the company’s annual production capacity up to 70,000 kilograms in 2019.
Prior to the acquisition, Emblem was planning to reach a 15,000-kilogram production capacity by the end of 2019 by building a greenhouse in Paris, Ontario, which it will no longer need to do. The Natura deal actually allows the company to reach that capacity much sooner. Since the transaction is a combination of cash, shares, and debt financing, Emblem is able to reach that aggressive milestone and realize significant cash savings, which will allow the pursuit of more product innovation, brand development, and distribution opportunities. Natura’s brand strategy and team also made the company a complementary fit for Emblem.
Key Markets
Once the company’s 70,000-kilogram production capacity comes online, Dean sees the company as well-positioned to meet the demand in the Canadian and international markets. Rather than pushing for a bigger cultivation footprint, Emblem will be pursuing more product innovation, potential joint ventures, and international opportunities.
Ontario and Alberta are the company’s two core markets in Canada. Emblem has its Woodslee facility in Ontario, the supply agreement with the Alberta Gaming, Liquor, and Cannabis Commission, and an equity investment in Fire and Flower, which is building out retail locations in Alberta and other provinces. Dean is confident that the company’s current marketing strategy will build anticipation and demand for Emblem products in both provinces.
The company has also entered the international market through a joint venture with German pharmaceutical wholesaler Acnos Pharma GmbH, which has a network spanning 20,000 pharmacies in the country.
Emblem will be looking to expand beyond its current markets, eyeing places like British Colombia, Saskatchewan, Italy, Australia, and Colombia. Anywhere that will have a large market for cannabis products will be a potential opportunity, according to Dean. Looking ahead, Dean expects to see more consolidation in the market as LPs realize the value of complementary partnerships, like the one Emblem has found with Natura.
Listen to the entire interview. Emblem is a client of New Cannabis Ventures.
