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George Allen is the former President of Acreage Holdings (ACRGF), founder of Geronimo Capital, and has been on the show twice before, most recently when he had just come on as Chairman of Indus Holdings (INDXF). He joins the show today to discuss their exciting new deal. And for a deeper dive into the financials of the deal and company, check out their upcoming results and conference call on March 1 and 2.
Topics include:
- Huge news for Indus and the future of brands in cannabis! Indus is set to acquire Lowell Herb Co., and the combined entity will be renamed Lowell Farms.
- Very excited about this monumental business improvement - to unite behind a unified brand and what it means for them going forward - George has had his eye on Lowell since he came on the show the first time. What he likes about Lowell: great brand, great story, consumers love it.
- Will take a few days to get the name change official in Canada. Will then trade under the ticker LOWL. Putting the deal together and closing immediately - becoming one team. Buying what George believes is a billion dollar brand at a significant discount because Lowell has had great brand success but has had challenges with corporate culture. To ensure the combined entity is successful and everyone is invested, everyone has to know it's now Lowell Farms, a combined brand - something that has to be navigated with a lot of care and a lot of intentionality.
- Bringing together both brands - Challenging to build an asset light brand in cannabis - it's fashionable and investor-friendly because it's asset light and capital nimble, but reality is there isn't enough margin in California cannabis to source product on the open market and put your brand/label on it. Lowell had regulatory pitfalls and this became impossible for them to do; have been searching to get supply chain underneath this brand. To get consistent, high quality supply is what drives this team. They're passionate about their products, but buying product at negative margins is unsustainable and they're not the only ones like this. Not the last deal they'll do but the one they always wanted to do.
- An irreverent loyalty to the history and heritage of cannabis at Lowell - the ultimate example is their recent powerful billboard. Sharp contrast with other companies who are led by non-cannabis consumers. George thinks being a part of the community is essential to being part of the industry, a big believer in cannabis and a cannabis smoker himself. Lowell's commitment to giving back and creating real social justice.
- Future of cannabis retail; Lowell's retail and distribution goals. Expanding out of California. Lowell's huge social media presence, top 3 in the industry, using that momentum and narrative to build into other markets over the next year.
- There're many cultivators, but not many with the scale of this partnership - you can count the competitors on one hand. And they will continue to build that out - a lot of variety and high quality products. Building out infrastructure for nationwide marketplace when that happens, probably over the next 2-3 years. There will be stranded assets - Lowell won't go chasing them but part of their success will include vigilant licensing of the brand and investing in the legend of the brand, so it means something to consumers. After leaving Acreage (ACRGF), George understood the business model he wants to build on.
- No management changes with the new combined entity. Bringing on board many team & senior leaders from Lowell. No changes are expected going forward. Plan on bringing in more variety of flower, marked improvement on quality of flower, will only get the top tier, and will bring back some SKUs that they couldn't keep up with before.
- Flower will continue to live large in the industry. Pre-rolls grew 62% last year in California - flower still has a lot of legs. Innovating experience over other factors.
