In this edition of "Rising High," The Fly conducted an exclusive interview with Aaron LoCascio, founder and chief executive officer of Greenlane Holdings (GNLN), a global platform for the development and distribution of premium cannabis accessories and products. Here are some of the highlights:
TREND SPOTTING: Greenlane, a global seller of premium cannabis accessories and specialty vaporization products, operates a house of brands, third-party brand accelerator and an omni-channel distribution platform. “One of our strongest core competencies is being able to spot trends in the marketplace whether it be an up-and-coming brand, consumer consumption habits or new product features,” LoCascio said. “We then take that information and we’ve been able to very successfully bring in exclusive third-party brands to meet those consumer demands over the last 15 years.”
He said the company has also been focused on its own Greenlane brands over the last couple of years, launching a series of house brands to meet customer needs. “Staying ahead of consumer preferences is one of the key differentiators and a strong way to stay ahead of competition,” the CEO said. He added that there is also an incredible amount of fragmentation that still exists in the marketplace and will exist for quite some time even as consolidation takes place. “This is very important to Greenlane’s competitive advantage as well,” LoCascio said. “We currently service more than 10,000 individual brick and mortar stores by building relationships with more than 7,000 individual customers. We do expect consolidation over the years to take place but really the strong foundation of relationships is key to long-term success.”
STUDENGLASS PARTNERSHIP: Greenlane announced on November 18 a retail partnership with Stundenglass to become the exclusive distributor of the Gravity Hookah, a gravity-powered, contactless water hookah. The product, which accommodates hookah, dry herb, and cannabis consumption, features a 360-degree gravity system that utilizes kinetic motion activation, cascading water, and opposing airflow technology to produce hits. “This is another one of those prime examples of how Greenlane has been able to spot up-and-coming brands or trends in consumer behaviors and strike exclusive relationships with third-party sellers to bring world-class products directly to consumers,” the CEO said. “Stundenglass is the latest and greatest iteration of that. It’s a very unique and evolutionary product, which is the first of its kind and quite elegant.”
VAPOR.COM CANADA: The company announced on November 24 the launch of vapor.com Canada, an e-commerce platform offering shipping to Canada. The platform sells similar products to vapor.com U.S. with the inclusion of select items available only in Canada and shipping is fulfilled by vapor.com’s Canada-based warehouse. “Being an omnichannel distributor has served us quite well during the peak of the pandemic earlier in the year,” LoCascio said. “We saw a tremendous increase in our e-commerce businesses and while we had a small footprint in Canada on the e-commerce side, this represents another meaningful investment in further building out our digital infrastructure and playing off of the nearly 200% increase in e-commerce growth year-over-year.” The CEO added Greenlane sees digital as an important component of its revenue going forward. “This represents the latest investment in our digital infrastructure and we’re very excited by the launch,” he said.
Q3 EARNINGS: On November 16, Greenlane reported third quarter loss per share of (35c) on revenue of $35.8M, which compared to a loss per share of (64c) and revenue of $44.9M for 3Q19. The company also reported net sales of Greenlane Brands up approximately 65% to $5.6M and core revenue, or non-nicotine revenue, up 36% to $32.3M. “This latest earnings cycle really represented a strong execution of our strategic vision that we laid out for the world in Q4 of last year,” the CEO said. “We set out to reduce our concentration of nicotine sales so that we could get back to our roots and focus on our ancillary cannabis product sales.” As the company laps the one-year mark, LoCascio said it is incredible to see the implementation of the plan. “The execution of that strategic vision is beginning to bear fruit in the form of that very meaningful core business growth all while met with some significant challenges and complications that COVID has brought to the equation,” he said. “This is just the beginning of what we believe to be strong execution on the growth of our ancillary cannabis products with Greenlane Brands at its core into 2021 and beyond.”
CORONAVIRUS: The coronavirus pandemic has impacted many companies within the cannabis industry and LoCascio said Greenlane saw some very significant shifts in consumer buying habits. “At the end of March and the beginning of April, when shelter-in-place orders took effect, we saw a very meaningful decline in our sales to our retailers around the world,” he said, noting Greenlane operates a couple of its own physical stores which it shuttered. “At that time when those stores closed, we saw monumental increases in e-commerce revenue.” The CEO added as the summer went into full effect and countries reopened their economies, Greenlane did see a meaningful increase back into retailer revenues. “We’re going to keep a close eye on how that may shift as we enter into Q4 here and frankly into Q1, as we do see COVID cases continuing to rise,” he said. “Some governments are taking similar actions as they did earlier in the year. It’s great to be an omnichannel distributor with so much diversification where we can really capitalize on the opportunity wherever it may exist.”
LEGALIZATION: When asked about the potential federal legalization of cannabis in the U.S., the CEO said it is the million-dollar question everyone wants to know. “In my professional and personal opinion, I believe that we will see meaningful change in the regulatory landscape around cannabis in the next two to three years,” he said.
DELIVERY SYSTEMS: As technology advances and delivery systems for cannabinoids become more diverse, LoCascio said he has a bit of a bias towards cannabis vaporization as he has been involved with it for the last 15 years. “I believe it to be the most efficacious experience with cannabis and believe that there’s a lot you can do with technology to further enhance the experience in combination with the hardware and the software,” he said. “There’s going to be a lot more technological advancements that come out of vaporization products in particular because it’s a platform for new technologies to really thrive.”
CHALLENGES: When asked about the biggest challenges facing the industry, the CEO said he believes the regulatory environment is still one of the largest obstacles in the space. “Even if it’s not full cannabis legalization at the federal level, there remains a large number of hurdles that one has to overcome if involved in or around the cannabis industry,” he said. “Simple things still to this day, like banking, are very challenging or can be very challenging for no other reason than an outdated regulatory structure.” LoCascio added that a meaningful change in legislation would be beneficial to the market. “I think anything in a positive direction for cannabis will really open up a tremendous amount of new opportunities and eliminate some of the legacy challenges that still effect this industry to this day,” he said.
OPPORTUNITIES: As the cannabis space develops, LoCascio said Greenlane sees the biggest opportunity in its portfolio of house brands. “We launched a total of seven Greenlane brands to date and we have more in the works leveraging some of the successes that we’ve seen early,” he said. “We see that as a huge opportunity for Greenlane and the go forward future as we look to increase our total overall concentration of Greenlane brands.”
CANNABIS STOCKS: Other publicly-traded companies in the space include Acreage Holdings (ACRGF)Akerna (KERN), Aleafia (ALEAF), Aphria (APHA), Aurora Cannabis (ACB), Auxly Cannabis (CBWTF), Biome Grow (BIOIF), CannTrust (CTST), Canopy Growth (CGC), Canopy Rivers (CNPOF), Charlotte’s Web (CWBHF), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos Group (CRON), CV Sciences (CVSI), CURE Pharmaceutical (CURR), Delta 9 (VRNDF), Emerald Health (EMHTF), FluroTech (FLURF), General Cannabis (CANN), Green Thumb Industries (GTBIF), GrowGeneration (GRWG), Harborside (HBORF), Harvest Health (HRVSF), HEXO (HEXO), Hemp Inc. (HEMP), India Globalization Capital (IGC), Indiva (NDVAF), Indus Holdings (INDXF), Innovative Industrial Properties (IIPR), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), MediPharm Labs (MEDIF), MedMen (MMNFF), Mjardin (MJARF), Neptune Wellness (NEPT), Omnicanna (ENDO), Organigram (OGI), Planet 13 (PLNHF), Sproutly (SRUTF), Stem Holdings (STMH), Sunniva (SNNVF), Supreme Cannabis (SPRWF), Valens (VLNCF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Trulieve (TCNNF), Village Farms (VFF), Vireo Health (VREOF), Wayland Group (MRRCF), WeedMD (WDDMF), Wildflower Brands (WLDFF), YSS Corp. (YSSCF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).
ZYNE
+
APHA
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Aurora Cannabis
+0.08 (+0.73%)
CV Sciences
+ (+0.00%)
CannTrust
+ (+0.00%)
Canopy Growth
+0.38 (+1.35%)
Cronos Group
+0.17 (+1.98%)
Trees Corporation
+ (+0.00%)
IGC Pharma
-0.11 (-4.94%)
Tilray
+0.25 (+2.90%)
Trulieve Cannabis
+ (+0.00%)
Greenlane
+0.37 (+8.17%)