Emblem CEO: Product Innovation, Brand Building and Distribution in Cannabis

Emblem (TSXV:EMC,OTCQX:EMMBF) CEO Nick Dean believes that product innovation, a comprehensive brand portfolio and strategic distribution channels are key to succeeding in the cannabis industry as it continues to develop.

In the interview below, Dean discussed how Emblem has pivoted in this direction, securing supply agreements in place of cultivation infrastructure. He also addressed the company’s strategic move into Germany as a first step in its international partnership plan.

Below is a transcript of our interview with Emblem CEO Nick Dean. It has been edited for clarity and brevity.

Investing News Network: Please give our investor audience an overview of Emblem and its unique business model.

Emblem CEO Nick Dean: Emblem made a significant pivot in 2018 by focusing our efforts on core competencies of product innovation, brand building, and distribution. It is our belief that by focusing on value-added cannabis derivatives and new product innovations — which generate the highest margins — we are able to access a variety of patient and consumer groups, especially those seeking non-combustible formats.

Emblem is quickly realizing favourable revenue per gram for our derivative medical formulations. We believe the future of shareholder value will be derived from market share, brand strength and profitability. This will only be achieved by offering distinct product innovations to our end-users that can’t be easily replicated.

Great products need to be tied to strong brands that resonate with patients and consumers. On the medical side, Emblem has established itself as a trusted medical cannabis provider, having been one of few licensed producers (LPs) to allocate appropriate inventory for medical patients post-legalization. We’ve also built award-winning customer service to enhance the patient experience, and ensure we are providing education, product knowledge and guidance.

Symbl is our first adult-use brand and is the brainchild of our world-class marketing team. With distribution in several key markets including Ontario, Alberta, BC and Saskatchewan, we have seen significant sales traction. The feedback we have received regarding the product quality and branding has been overwhelmingly positive. We believe that the bright blue packaging sets the product apart from others, and that the product quality will keep those consumers coming back.

Underpinning this is our distribution strategy. Getting products on shelf is as important as having quality products and branding. We understand that having products available doesn’t guarantee sales, and we have been heavily focused on establishing relationships with retailers across Canada and internationally, including Shoppers Drug Mart, Fire & Flower and Starbuds. We are continuing to explore opportunities and open up distribution channels as we expand our reach and bring more capacity online.

Finally, moving away from cultivation to an asset-light model based around supply agreements enables us to focus our financial and human resources on products further up the value chain. By avoiding the high initial costs of large cultivation production facilities, Emblem is able to maintain a strong cash position, focus on our core competencies of product innovation and branding, and receive large quantities of cannabis input products with a predictable, index-adjusted price.

INN: Please tell us about the suite of products that Emblem is developing.

ND: Building a strong innovation pipeline is a critical part of our growth strategy. Our current product offering includes premium dried flower, a range of strain-specific oils, and Atmosphere, a recently-launched dose-metered oral spray that provides patients with a more precise dose in a convenient format. Emblem is focused on innovating products in forms that more closely resemble traditional medications so that both patients and healthcare providers can take comfort in knowing they can easily track medication, adjust as needed and ensure treatment accuracy.

This month we are excited about the launch of our new 10 milligram Emblem Oil Capsules — an easy-to-use, pre-measured dose treatment option. These will also be available for adult-use under our Symbl brand in early 2019.

We also expect to launch our sustained release tablet formulation to the medical market in 2019 — developed through our collaboration and licensing agreement with Canntab Therapeutics (CSE:PILL) — pending Health Canada approval.

INN: What is Emblem’s strategy for generating product demand?

ND: We believe that consumers and patients connect with brands, which will ultimately drive demand for our products. Brand building has been and will continue to be one of Emblem’s core competencies.

In the medical market, Emblem has established itself as a trusted brand among patients and health care providers. Since legalization, we have onboarded patients at a faster rate than ever before, challenging predictions that the medical market would lose patients to the adult-use market. We believe that the reason for our continued patient growth is twofold — consistent, quality products in dosage forms that doctors feel comfortable prescribing, and being one of the LPs who have met 100 percent of product commitments to patients.

In addition to our award-winning customer care team, we have built a medical sales team that is cultivating relationships with physicians and healthcare groups across the country, providing product education and patient support services. Finally, our team of GrowWise nurse educators provides front-line support to patients and practitioners to help guide them through treatment plans at 18 locations across Canada.

In the adult-use space, while there are restrictions on the promotion of cannabis, we believe that these push our teams to think outside of the box and apply new thinking to traditional ways of reaching consumers. Emblem’s CMO, Maria Guest, brings 20 years of experience innovating and growing brands in a highly regulated industry as a former Senior Marketing Director at Labatt Breweries. She leads a best-in-class group of marketers, which is working across a number of different marketing disciplines — from experiential activation to PR — to pursue ideas that inspire consumers and connect with them in new and innovative ways.

INN: What are Emblem’s plans for accessing the German market?

ND: In October, we signed a definitive agreement with Acnos Pharma GmbH, a German pharmaceutical wholesaler, to form a joint venture — Emblem Germany GmbH. The company is owned 60 percent by Emblem and 40 percent by Acnos. Subject to regulatory approvals, Emblem will supply Emblem Germany with cannabis oil for sale to German pharmacies, wholesalers and clinical labs for medical purposes. We expect the first delivery to be made in the second half of 2019, following completion and GMP certification of our new state-of-the-art 30,000-square-foot Product Innovation Centre. Emblem will be one of very few LPs to supply the Germany market with cannabis oil. I would like to add that Germany is simply our first international partnership, as we look to expand into other countries across Europe and the globe.

INN: What is next for Emblem and how does that fit into the company’s long-term plans?

ND: In the last 12 months, Emblem has built a world-class team, we’ve made incredible strides to re-focus the company on product innovation and branding, we have a strong balance sheet and we are punching above our weight compared to many of our peers in terms of adult-use revenue, quarterly growth, and other key metrics. Our focus going forward will be to continue executing on our strategy. Flawless execution will separate the real companies from the promoters. This is just a snapshot of our efforts and we have no intention to slow our pace.

We maintain the belief that Emblem is very undervalued compared to peers and we are confident that our asset-light, high margin approach to the industry will reward shareholders in the long run.

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