Exclusive Interview with INDIVA Co-Founder, President and CEO Niel Marotta
Canadian cannabis company INDIVA (TSXV: NDVA) (OTC: NDVAF), which has focused on edibles, has secured a leading market share and has plans to double down on growth within its footprint. Co-Founder, President and CEO Niel Marotta last spoke to New Cannabis Ventures in April. While the core leadership team on the corporate and operational levels has stayed the same since then, the company has recruited more talent with both cannabis and marketing experience. Marotta spoke with New Cannabis Ventures about his company’s expanding distribution and the pursuit of positive cash flow. The audio of the entire conversation is available at the end of this written summary.
INDIVA distributes its products in eight provinces and one territory, covering roughly 95 percent of the Canadian population, according to Marotta. The company’s next step is to go deeper into its footprint with new products and flavors. It has three gummy flavors on the market, and it will have seven within the next month. The company is also exploring additional flavors for its chocolate products. INDIVA has the gummy capacity for 30 million units per year and a similar capacity for its chocolates. It also has other product categories it is working on, such as pre-rolls, capsules and flower.
The company has experienced significant distribution growth through the Wana and Bhang brands. INDIVA introduced Wana Sour Gummies in September and Bhang chocolates in February. The distribution of these products has helped the company gain leading market share in the edibles category, according to Marotta.
While Marotta is hopeful Quebec will open the door to edibles in the future, the company currently has plenty of room to expand in the Atlantic provinces. With more stores being licensed each week, Marotta expects the company will benefit from the expansion to 250 to 300 stores in the province by the end of the year. He is seeing higher edibles penetration in British Columbia, but he thinks Ontario will begin to catch up as consumer access and education progresses.
A New Brand
In addition to its work in the edibles category, INDIVA has launched a new premium flower brand: Artisan Batch. The brand, launched in partnership with BC Craft, focuses on flower sourced from micro cultivators. The first product was sourced from a micro cultivator in British Columbia, and the company has several more SKUs planned. The brand gives micro cultivators a path to market through INDIVA’s established distribution and offers consumers access to high-quality, high-potency flower at a reasonable price.
When considering other potential industry relationships, INDIVA is looking at other product categories, like concentrates. Marotta sees ample opportunity to partner with other companies to bring products to market without having to be vertically integrated.
Within the past six months, INDIVA also launched CBD products, including CBD gel capsules and CBD chocolate. The company also plans to launch a CBD gummy. The company recognizes that there are consumers who do not necessarily want high doses of THC, and it will continue to pursue CBD products as a part of its product portfolio, according to Marotta.
Pandemic Operations Update
INDIVA has been able to operate safely through the COVID-19 pandemic thus far. There have been no cases at its facility, and the company continues to grow sequentially. It is operating as an essential business and continues to produce the same high-quality products, according to Marotta.
In August, INDIVA completed a $5 million equity financing. The month before, the company extended the maturity of its senior debt through to the end of October 2021. INDIVA now has positive working capital and plenty of runway for growth, according to Marotta.
INDIVA’s facility is fully built and licensed, which means the company does not have any significant capex requirements. Its capital is going toward making and distributing its products. The company has been paying down its senior debt, which will likely be a focus over equity going forward.
Reaching profitability is a major goal for the company right now, and it is close to achieving that goal, according to Marotta. Following the interview, INDIVA preannounced its third-quarter revenue to be in excess of $2.8 million.
In addition to profitability, the INDIVA team tracks important metrics like store penetration, market share and unit costs. The ultimate goal of the company is to generate a positive return on capital, according to Marotta. He is confident in INDIVA’s revenue capacity and growth prospects.
Competition remains a challenge. Other companies make edibles, and other companies do contract manufacturing. But, INDIVA strives to differentiate itself by partnering with award-winning brands that connect with consumers. Marotta also sees the opportunity to leverage product innovation from its partners. Wana launched a quick onset gummy in the U.S. this spring, and INDIVA is preparing to launch that product in the Canadian market in the months to come.
New Cannabis Ventures provides an Investor Dashboard for INDIVA, which is a client of New Cannabis Ventures. Listen to the entire interview: