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Savvy investors and smart consumers can usually detect quality. And, a company’s commitment and passion for attaining it.
Sugarbud Craft Growers Corp. (
TSX-V: SUGR,
OTC: RLLRF,
Forum) is a Calgary-based, consumer-driven boutique craft cannabis Company focused on the cultivation and production of high-quality, genetically-diverse, select-batch connoisseur cannabis products. In other words, the good stuff.
With several supply agreements recently announced, Sugarbud has a clear line of sight on revenue. Harvests now occur once every month-and-a-half at its Stavely cultivation facility, and the Company has firmly established commercial operations operating at a level sufficient enough to meet their positive revenue and EBITDA objectives for 2021.
In this exclusive vodcast with Stockhouse Media’s Dave Jackson, Sugarbud’s Chief Executive Officer John Kondrosky discusses recent company news, what’s on the horizon for Sugarbud, and investment opportunities the rebounding cannabis sector.
TRANSCRIPT BELOW:
SH: So to start off, can you tell us a bit about yourself and the Sugarbud brand?
JK: Well, let me start more with I think, where we are as a brand. I think one of the hallmarks that both consumers and investors can really grapple with and hang onto here is our focus. We have a real, genuine, authentic passion for great cannabis which we believe translates into exceptional products, but more importantly really a relentless commitment to consumer satisfaction. And for us, this is really important. You know, we are producing exceptional top-quality products for , a very intelligent consumer, and we understand that we need to work really hard to find a place in their day. So this is top of mind for us each and every day. I think for investors, the thing to think about for Sugarbud really comes down to operational and financial discipline. This is an incredibly challenging and competitive space. We know who we serve, and we know how to drive shareholder value. We've got a very clear vision on how we're going to do that. We'll talk a little bit more about that, I suppose, over the next few minutes, but that has really become one of our hallmarks of our brand. We understand where we're going, we understand who we serve. And we look forward to delivering on that.
SH: The Company made an intriguing statement that it believes the recent drive to split the market between the binary choice of "price/value" versus "premium", is short-sighted, along with, a focus on singular product attributes such as potency. Can you expand on this for investors and what should they be looking for?
JK: Yeah, well, you know, we certainly understand that potency value are important considerations for consumers. I think it would be naive to suggest otherwise, but I think what we really are referring to here is that cannabis is an incredibly complex plant and by nature you know, as a dizzying variety of genetic composition forms consumption methods. And quite frankly, I think consumers are really just beginning to understand the true potential of this product, particularly as it expands into recreational use. We believe in our view, and this is part of our part of our brand, is that consumers really are owed an experience across a wide variety of attributes. And when you really break down cannabis into its essence, it's a product for the senses and it always has been. And if you think about fine dining, we tend to eat with our eyes, and cannabis flower consumers for example, there's almost a ritual attached to the consumption of cannabis.
Consumers will open it, they'll smell it, they'll weigh, they'll touch it, they'll feel it. And they're looking for a wide variety of indicators that what they've purchased is not only going to meet their expectations, but really satisfying their expectations. And we think that to really define the intersection of quality and value, companies like Sugarbud owe it to the consumer to really focus on these multiple attributes, and more importantly deliver on. And so far, we're happy with how we're approaching that. The feedback we're getting is that we appear to be on target, but we're just getting started on that.
SH: You recently announced a contract with Embark Delta Inc. to develop solventless cannabis extraction products. This will be news to many investors. Can you unpack the benefits of this process over traditional methods?
JK: Sure. You know, it's interesting because I would actually argue that solventless extraction is more traditional than the extraction that we've come to know. Solventless extraction processes don't disassemble the plant like classic extraction that we've come to know in recent years (CO2, ethanol), where you're really separating the essence of the plant and reassembling into something. Solventless extraction uses elements like heat, temperature, cold, pressure, and it really maintains the pure essence of the plant. And as an organization and company, that's really focused on the quality of our flower going in, then the essence that brings to the consumer experience, we think that solventless extracted products like flower rosin are a perfect match for our product portfolio expansion and will really allow consumers to enjoy the benefits of the high terpene profiles that we provide in addition to potency flavor and the other attributes that they're looking for.
SH: The Company looks set for strong growth in 2021. How are you placed to expand operations to meet this demand?
JK: Well, we've got a very unique facility. We, unlike many of our peers, we haven't used size and space to really attack future production capacity, we've used three dimensions. So our facility is actually quite modest in size relative to many of our peer group. It's only a 30,000-foot square facility, but it has the potential to produce up to just under 12,000 kilos of dry cannabis annually. So we've got a tremendous amount of room to scale our facility that keeps us agile, it keeps us nimble. I think as you can tell, we tend to let revenue drive our scale, but we're working in three dimensions, so actually we're a little bit unique in the Canadian space, not alone, but still relatively unique, we grow vertically. Each room has the capacity for anywhere from 1000 to 4,000 plants at any given time, so this gives us a tremendous amount of opportunity to scale production to future revenue needs. And that's not the thing that I lose sleep over. So really where we're focused right now is delighting our consumers, our target customers with the products we have. And as it stands today, the big focus for 2021, obviously for us is to continue to expand our geographical reach as much as product adoption within their chosen geographies.
SH: A self-sustaining revenue-first business model that the company employs should sound like music to the ears of investors. How have you seen this benefit Sugarbud over its competitors?
JK: Well, coming back to your first question, my background is actually in highly regulated medical device and pharma, and operating efficiency is everything in that space. I'm not allergic to verticals, but I believe that verticals take time. I think where cannabis may have overstepped itself is, that we as an industry maybe tried to bite off too much of the elephant and try to get too far too fast. So what we did, we ended up seeing was lots of debt, lots of overcapacity, and lots of redundancy. Our view is that we've got a facility that we know we can turn on a dime and bring online new capacity in a relatively short period of time. So we're not as distracted by building capacity and advancing revenue. We're more focused on driving revenue to support capacity, to ensure profitability and ultimately drive shareholder value. We are a business first. I think that's you know, part of the Sugarbud mantra. We are a business, we understand what we need to do, and we understand what we need to deliver to our shareholders, most importantly, as much as what we need to deliver to our consumers. But if we delight our consumer and we drive product adoption, we believe that everything else follows in suit.
SH: Can you discuss the long-term strategy for the company moving into 2021 and beyond, and what retail and institutional investors should be looking out for?
JK: Well, I think what everyone should be looking for is really two key themes. Clearly geographic expansion is top of mind for us. Our recent activity, we've moved out of our regional approach and we're now entering Ontario, and we're going to continue to explore and expand our opportunities to reach new customers, new consumers in new markets wherever possible. I think the second big theme though, is portfolio development. You know, Sugarbud is first and foremost, a consumer product company. We are in the business of delivering great products to consumers. Yes, we choose to grow our own products, but ultimately, it's the products that we deliver that are going to define our future moving forward. So a lot of time and attention is going to be going into new product development, product innovation, and certainly portfolio expansion.
SH: And finally, John, if there’s anything I’ve overlooked please feel free to elaborate.
JK: Well, I don’t think you’ve overlooked anything. I‘ve enjoyed the time. The only thing I would really add in closing, is that as a team, we’re incredibly proud of what we’ve accomplished over a short period of time. We are still relatively new to the scene, we understand that, but we’re thrilled where we are at this point in time, and I think the best is yet to come.
For regular updates, visit
www.sugarbud.ca.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.