Launched in 2016, Grown Rogue International Inc (OTC: NVSIF)’s genesis dates back more than a decade to when it started cultivating medical marijuana used by local patients ranging from war veterans to grandmothers.
Chief Strategy Officer Jacques Habra joined Grown Rogue in early 2017, a few months after the founders converted a medical cannabis operation into a recreational marijuana company.
“My primary focus was developing the brand and we created the concept of enhancing life experience through cannabis,” Habra told Benzinga.
“As we have grown, my focus has shifted on investor relations and making sure the investment community understands our core values, strategy, and vision for the future.”
Grown Rogue likes to define itself as a “seed to experience multistate cannabis operator” with significant leadership experience in cannabis and operations in Oregon, California and Michigan.
“Our diverse branded product suite, strategic expansion into California and Michigan and unique operational experience positions the company as a sound investment,” Habra said.
Last year, Grown Rogue boasted average month-over-month growth of 28 percent, according to the company.
For Habra, the main factor driving Grown Rogue’s success is the management’s team “true operational experience” in cannabis.
The company’s emphasis on the consumer experience allows it to develop a direct business-to-customer relationship, providing it with a long-term advantage, the CSO said.
CEO Obie Strickler has a background in mining — something that Habra said brings an understanding of the regulatory issues that are paramount to success in a sector like cannabis.
“Further, Obie’s specific cannabis industry experience provides an effective sense of when to enter a market and how to grow through accretive acquisitions.”
Jacuqes Habra. Courtesy photo.
Grown Rogue plans to expand strategically throughout the United States, the exec said.
“We are also considering other Midwest locations as well as opportunities on the East coast,” he told Benzinga. “There are also some potential alliances in discussion with International operators. The difference in our expansion plan is that we design our growth around execution. We will expand when it makes sense and when we can deliver on our business plan.”
Benzinga: How would federal legalization change your business?
Habra: Grown Rogue would benefit greatly from federal legalization, as our headquarters are in one of the most cannabis-rich environments on the planet. The two outdoor facilities and state-of-the-art indoor center allow for a high level of production positioned for export through the nation.
Benzinga: What are the main challenges for your company and the industry in which it operates?
Habra: A few are:
- Challenging regulatory standards that are still being implemented.
- The misperception of cannabis as only a mindless recreational drug when the reality is that cannabis has tremendous medicinal benefits and, when properly dosed and applied, tremendous life experience enhancement potential.
- A lack of normalization of product standards, consumer purchasing standards and how to properly evaluate the potential of a company based on precedence and assets.
Benzinga: What is your take on cannabis industry consolidation? Do you have any M&A plans that you could elaborate on? Would you be interested in an opportunity to combine with another company or be absorbed by a larger business?
Habra: 2019 will be the first of several years of consolidation. The cost of entry into the market is rising and operators must find opportunities for strategic acquisition and/or mergers to maintain a competitive advantage.
As the industry matures, the winning operators will realize that they cannot do everything well and must find other companies with niche experience to maintain advantage.
Yes, we are always considering merger and acquisition opportunities. Our prospects right now are promising, so the idea of being acquired would have to be very attractive.
Benzinga: Can you comment on your valuation in relation to the research firm M Partners’ statement that Grown Rogue is trading at a significant discount to its peers?
The firm said that U.S.-focused multistate cannabis companies trade at an average of 7x 2020 EV/EBITDA, while Grown Rogue trades at 2.4x 2020 EBITDA.
Habra: Our valuation today does not represent our assets, momentum in Michigan, nor proper evaluation of past performance.
If compared to our peers, we would be trading at 4x or 5x current pricing.
However, we have only just begun our communications and outreach to the street on just how compelling our story is for shareholders.
Photo courtesy of Grown Rogue.
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