Adaptation was key for CBD brand Medterra over the past year.
“We reimagined the business,” Chief Executive Jay Hartenbach told the Business Journal.
The 4-year-old company, based in Newport Beach, took steps to reduce expenses including renegotiating its own office lease. It raised a small undisclosed round of funding in 2020, which followed a $20 million raise in 2019.
Medterra also offered flexible terms to retail partners and provided branded prescription bags to support independent pharmacies and share information on its own products.
The company said it’s emerging from the pandemic on solid financial footing and believes it is “the only profitable, at-scale company in the CBD space in the U.S.,” Hartenbach said.
The company makes a variety of CBD supplements, topicals and gummies in addition to a new line of full-spectrum products that contain both CBD and THC chemicals. Products range in price; one bottle of full-spectrum capsules goes for $109.99.
$55M Forecast
Medterra is forecasting $55 million in annual revenue in 2021. About 60% of sales come from e-commerce, while 40% is attributed to retail sales across 20,000 points of distribution.
Hartenbach pinned Medterra’s success in large part to partners that it aims to grow alongside.
On the retail front, “we leaned in harder and asked our retail partners how we could help them increase foot traffic in their stores. We knew we needed them for our business to be successful,” he said.
“Now those efforts are paying dividends. We’ve become a preferred partner.”
In addition, the company recently announced a joint venture with publicly traded cannabis company Acreage Holdings Inc. Medterra is helping Acreage launch an online product; meanwhile Acreage is providing a glimpse into what dispensary distribution could look like for Medterra, Hartenbach said.
Kadenwood Goes Big; Raises $50M
Kadenwood LLC in 2019 entered the market for CBD consumer products with a 100% owned seed-to-shelf capability. It’s targeting CBD at those suffering pain, from athletes to young women to pets.
Nowadays, it’s claiming the title of “the largest U.S. supplier of vertically-integrated CBD consumer packaged goods.”
Investors believe the story. Last year, it raised $15 million. On June 29, the Newport Beach-based firm said it’s raised another $50 million Series B investment.
The latest investment came from The Craftory, Arcadian Capital Management and others; the investments are a combination of cash and media in exchange for equity agreements.
Deep Bench
The executives of Kadenwood have a deep bench in marketing expertise.
Co-founder and Executive Chairman Todd Davis was the co-founder, CEO and chairman of LifeLock Inc., which was sold to Symantec for $2.3 billion in 2017. He also serves on the board of the SPAC looking to take Irvine fintech Acorns Grow public later this year.
Another co-founder, Chief Operating Officer Doug Weekes, led each of Kraft’s beverage divisions as general manager, overseeing products like Kool-Aid, Capri Sun and Maxwell House.
A third co-founder, CEO Erick Dickens, has managed household brands such as Post Cereals, Right Guard and King’s Hawaiian.
Dodgers, Surgeons
Its team includes legendary Los Angeles Dodger Steve Garvey and Dr. Richard Carmona, the surgeon general under George W. Bush.
Media is a key part of Kadenwood’s strategy because “we’re demonstrating to retailers that we’re committed to advertising brands,” Dickens told the Business Journal.
The company plans to use $20 million from the latest funding round on a media campaign “to drive consumer awareness and support our retail partners with these industry leading brands.”
Kadenwood said it leads the nation in advertising CBD with 50% in 2020, a percentage that could reach 80% this year.
The company launched in 2019 with its Level Select sports recovery brand. In 2020, it acquired a line of wellness teas via Purity Organics and leapt into the pet market with the launch of Purity Preferred.
It recently acquired Social CBD, an Oregon-based maker of CBD topicals and gel capsules for young women. The deal was followed by its purchase of Healist Advanced Naturals, a United Kingdom-based brand with vegan, cruelty-free products for calm, relief, sleep and wellbeing.
18,000 Stores
The new lines of business give the company a retail presence in 18,000 stores and position Kadenwood to execute its “consumer-packaged goods” strategy, said Dickens.
“We’re going to have multiple brands with specific consumer positioning,” he said.
Dickens noted the company has room for a few more brands under its umbrella, and continues to seek opportunities to expand its cultivation, manufacturing and related capabilities through its biosciences division.
Planet 13: Experiential Retail Debuts Santa Ana
Planet 13 Holdings Inc., which operates the world’s largest cannabis dispensary in Las Vegas at 112,000 square feet, is entering Orange County with a bang.
The Las Vegas-based company, which trades on the Canadian securities exchange with a roughly $1.2 billion market cap (Canada: PLTH), launched in Santa Ana on July 1 with the grand opening of its first superstore dispensary in the state.
At 55,000 square feet, it’s the largest addition to OC’s retail scene this year. Planet 13 is located at 3400 W. Warner Ave., 4 miles from South Coast Plaza.
Santa Ana remains the only city in Orange County to give licenses to dispensaries; Costa Mesa is expected to in the next year or so, as is Corona just over the county line.
“The Planet 13 brand is synonymous with exceptional customer experience with a focus on extensive product selection, unique entertainment features, and world class customer service,” Bob Grosebeck, co-chief executive of Planet 13, said at the time of the opening.
“Our Orange County SuperStore is designed to encompass all of the above.”
The new location—the second largest dispensary in the world, behind the company’s first location in Nevada—touts coastal vibes with an 80-foot digital waterfall at its entrance and an interactive digital floor that leaves customer’s footprints in the sand. The lobby is also home to a custom VW surfer van that produces smoke via dry ice.
Customers are greeted by a 16-foot octopus sculpture as they enter the dispensary sales floor, a 16,500-square-foot space with 50 cash registers that are expected to keep traffic flowing through the center. The floor itself includes several in-house retail shops from popular cannabis brands Moxie, Select and Stiiizy.
Planet 13 has yet to complete two additional phases of the Santa Ana project, which will include, a restaurant, cannabis consumption lounge, and ancillary retail along with immersive artwork.
The dispensary is expected to hire up to 250 team members once fully operational.
Gold Flora: Plans $100M Retail Network
Gold Flora is aiming to build a vertically integrated cannabis machine in California.
Vertical integration is a term used by cannabis business to refer to operations from seed to shelf—spanning cultivation, manufacturing, distribution and retail.
The Costa Mesa-based cannabis brand and operator, which has raised $35 million since its 2017 start, including its largest round to date at the end of 2020, is focused on growth via retail expansion.
Sales from retail will in turn justify further expansion of its cultivation and related capabilities, according to Chief Executive Laurie Holcomb.
“We believe that cultivation—starting with the seed—is the essence of any cannabis company. We’re going to expand our footprint so we can deliver more flower,” Holcomb said.
Gold Flora currently has one dispensary in Long Beach. It plans to expand in Orange County via organic growth, applying for and securing licenses. It will also consider acquiring dispensaries.
Ultimately, the company aims to create a network of retail businesses that will generate between $100 million and $150 million in annual revenue.
The company is poised for growth not only because of its recent investments, but also because cannabis was declared an essential business amid pandemic-related closures, Holcomb said.
“We were very surprised to be deemed an essential business. No one saw that coming, but it gave people the option to medicate how they felt fit,” she said, noting cannabis continues to solve problems for people facing anxiety, pain and other medical conditions.
Gold Flora began in 2017 when Holcomb, the founder of real estate asset management firm BlackStar Financial, purchased 28 acres to build a 620,000-square-foot cannabis campus in Desert Hot Springs.
The company currently has 200,000 square feet in operation, and it charges a 15%-20% distribution fee for about 15 customers.
Holcomb said that by the end of 2020, the number of legally licenses dispensaries in California reached 600 retail locations and $6 billion in annual revenue. She’s expects that number top 1,000 locations and $8 billion in revenue by the end of 2021.
Gold Flora’s 100-person team includes COO Greg Gamet and CFO Chris Martin, both of whom were previously involved with cannabis paraphernalia firm KushCo Holdings, which was based in Cypress before being sold this year to a Florida firm.
Savage Eyes Expansion After $44M Buy
Savage Enterprises believes it’s secured a deal that will preserve and grow its business for years to come.
The Costa Mesa company, which owns several brands such as Savage CBD and Zen Panda that span cannabis, CBD and e-liquid vape products, said last month it entered an agreement to be acquired by Jacksonville, Fla.-based Acquired Sales Corp. for $44 million.
“We’ve seen a lot of acquisitions in the cannabis space that haven’t worked out,” Chris Wheeler, chief executive of Savage, told the Business Journal.
“We saw a lot of potential in this deal. We aren’t putting our employees at risk, and we get to pick and choose the relationships we have with our sister companies—all while having the financial resources of a publicly traded company.”
The deal included $15.8 million in cash and 8.7 million shares of Acquired Sales’ common stock.
Acquired Sales also said it would purchase Premier Greens LLC and bump Savage’s stake in MKRC Holdings LLC to 100% for $2 million. Premier Greens holds five conditional use permits from the City of Palm Springs for cultivation, manufacturing, dispensing, delivery and distribution of cannabis, while MKRC Holdings owns a 5,560 square foot building that the company intends to use for growing, selling and transporting cannabis.
Savage is in the process of growing its team—having added some 25 employees this year alone for a total of 65 employees—and expects to maintain its headquarters in Irvine.
It’s already in talks to explore partnerships with Acquired Sales’ other brands, including hemp-derived product maker Lifted Made, and plans to strengthen its position in inventory and logistics.
Looking ahead, the company also aims to boost its wholesale business, which currently has 5,000 accounts across its brands.
