Exclusive Interview with PLUS Products Co-Founder and CEO Jake Heimark
Cannabis edibles company PLUS Products (CSE: PLUS) (OTCQX: PLPRF) has top-selling products in California and Nevada. Co-Founder and CEO Jake Heimark last spoke with New Cannabis Ventures in November 2019. He checked in to talk about his company’s new products, maintaining a strong team culture during the pandemic and the path to profitability. The audio of the entire conversation is available at the end of this written summary.
PLUS has retained most of its core leadership team over the past several years. Over the past year, the company has invested in recruiting talent from outside the cannabis industry from areas like CPG and food science. Those team members, as well as those who have a successful track record in cannabis, are important to the company’s strategy going forward.
California and Nevada
The company has a presence all over the California market, selling its products in 350 dispensaries. It has also become a top-seller in Nevada after being in that market for less than a year, according to Heimark.
While the company has yet to make an announcement of where it will expand to next, it is continuously evaluating its options. The ultimate goal is to get the company’s products to as many customers as possible, according to Heimark. This means looking at other major markets like Florida, Michigan, New York and Canada. PLUS is considering the right partners to support its expansion efforts.
PLUS has achieved a high level of consistency with its THC products and saw an opportunity to do the same in the hemp CBD space. The CBD market, although crowded and characterized by conflicting state and federal regulations, has given PLUS a platform for national reach. Though this segment is not as large as initially anticipated, it is a steadily growing business for the company, according to Heimark.
PLUS focuses on understanding how and why consumers are using cannabis products, and it found that many people use cannabis for anxiety and stress relief. In response, the company launched its PLUS CBDRelief brand, which features high-CBD, low-THC gummies.
The company has also launched the HI-CUBES brand for customers who want a powerful product experience without having to consume many gummies. HI-CUBES are the most concentrated gummy in the market, according to Heimark.
PLUS continues to examine other product categories and consumer needs for future launches.
Last summer, the company acquired the option to purchase supplier Emerald Bay Wellness. Emerald Bay supplies PLUS with cannabis oil. With questions about the consistency of the supply chain, having the option to acquire Emerald Bay was critical for the company at the time, according to Heimark. The option has since expired, but PLUS remains a debt investor in and a close partner of Emerald Bay.
As a public company CEO, Heimark is consistently looking for expansion options, both in terms of M&A and organic growth. If PLUS does opt for M&A, he stresses the importance of following any deal with effective integration.
PLUS during the Pandemic
The PLUS team is made up of both essential employees who need to come in to manufacture products and people who can work from home. Early on the in pandemic, the company shut down its factory to take the time to ensure everyone would be able to work six feet apart. This change has actually led to an increase in efficiency, according to Heimark.
The company’s work-from-home team members have been able to make a smooth transition to working together remotely. PLUS hosts regular virtual lunches to bring together team members for important announcements and team bonding. The length of the pandemic and the current work environment is uncertain, but PLUS wants to maintain a strong company culture and build the company’s narrative despite the pandemic and physical distance between team members.
Positioning for Profitability
At the beginning of the year, PLUS made a major shift in its fundamental approach. The company shifted from a “grow at all costs” mentality to a focus on the bottom line. Between Q4 and Q1, the company reduced its burn rate by 75 percent. In the first quarter of this year, the company burned about $1 million. With $14 million at the end of Q1, the company has a lot of runway ahead of it in terms of funding, according to Heimark.
The company does have an outstanding debt position. It is considering its options, including extending and amending or finding a way to pay off that debt, according to Heimark.
When it comes to future fundraising, Heimark believes in the power of storytelling. If a company has an exciting story that makes sense, it can attract retail, institutional and strategic investors who see the opportunity for future returns. Though the market in Canada has not performed as well as many hoped, this presents an opportunity for strong operational companies that can demonstrate the ability to execute, according to Heimark.
PLUS plans to continue prudent investment of its capital while moving toward becoming cash-flow positive. Heimark expects the company to reach that goal by the end of this year or the beginning of next year.
The company also tracks metrics like market share and SKU velocity. PLUS has achieved leading market positions in California in Nevada with leading SKUs in each.
Navigating Today’s Challenges
While factors like the pandemic and regulatory changes are a challenge, Heimark anticipates the possibility of major changes to the market. California is beginning to step up enforcement, shutting down illegitimate operators, which represents a big opportunity for companies like PLUS. Additionally, the potential for the government to look to cannabis as a source of tax revenue could drive faster federal legalization and more stringent enforcement.
Regardless of when or if these changes occur, companies need to operate efficiently. Heimark is confident in PLUS’s strong underlying business and ability to scale as opportunities arise.
New Cannabis Ventures provides an Investor Dashboard for PLUS Products, which is a client. Listen to the entire interview: