Longtime cannabis print publisher High Times is getting into the dispensary business. The company said that it has signed a binding letter of intent to launch branded retail stores in Las Vegas and Los Angeles. The company did not specify who it had signed the agreements with or the value attached to the agreements. The locations were only described as being in high traffic areas.
The dispensaries are intended to become flagship High Times stores and in addition to selling cannabis products, will also carry High Times branded products. The stores will also feature award winners from the company’s Cannabis Cup events. There are plans to expand beyond the first two locations.
In addition to the pivot into retail, High Times has named former Grupo Flor CEO Paul Henderson as its President.
High Times noted that Grupo Flor’s store, East of Eden, was one of the top-selling retail stores in the country.
Prior to entering the cannabis industry, Henderson had an extensive career running business units at
Goldman Sachs, GE Capital, and Apple.
“There is no brand in Cannabis that compares to High Times. High Times has ten times the number of social followers of any other cannabis retail brand, not including the millions of cannabis enthusiasts who visit the company’s media properties on a monthly basis., said Henderson. “The cannabis movement has grown in no small part due to the High Times brand, and we will continue to be the source for the highest quality product in this industry – just on a much more personal and direct level.”
Adam Levin, the company’s Executive Chairman stated. “Having the second mover advantage in this industry,
combined with the present downturn in the cannabis capital markets, provides unique timing for High Times to help non-branded stores to differentiate themselves from the industry’s larger multi-state operators. I know I speak for the whole team when I say we’re extremely excited to add Paul to the Hightimes family.”
The company’s November filing had suggested that in addition to retail stores, it could also open High Times consumption cafes. There are also opportunities to use the name for smoking accessories, apparel, and movies.
The move follows the recent resignation of Kraig Fox as CEO and the appointment of Stormy Simon to that role. Fox was seen as the leader who would bring the company’s offering over the goal line and help facilitate the move towards retail and licensing opportunities. He was in the position for less than a year.
Henderson will be more than President, he will also serve as interim Chief Financial Officer stepping in for David Newberg who quit on January 7th, 2020. Newberg was just rehired for the role in July 2019 for two years with a salary of $250,000 a year. He followed Neil Watanabe who joined in April 2019 as the company’s Chief Operating Officer and Chief Financial Officer. At that time, he was replacing Newberg, who had served as CFO for two year prior. Watanabe only lasted three months as he quit in July.
High Times Stock
The crowdfunded offering was expected to happen this past fall but has yet to come to fruition. According to the company’s filings, there are 24,384,571 issued shares, which High Times values at $11.00 giving the company a roughly $268 million market cap. The current total liabilities are $68 million and the revenue for six months ending June 30, 2019, was $10.7 million.
Events continue to be the big breadwinner for High Times. The Cannabis Cup regularly brought in millions and basically supported the publication. It seemed that High Times was moving towards increasing its focus on events with the acquisition of Spannibus, Chalice Festivals, and The Big Show. In the last company filing though, the company was barely breaking even on events. Events brought in $6.7 million, but cost $6.5 million to produce. It was a decline of 4% from the 2018 event revenue of $7 million.
The company had a winner in Michigan, where it had record attendance and sold out its booth space. It also hit the mark with a DOPE Cup and a Daly City, CA event. However, it wasn’t enough to offset a decline in attendance and booth sales for the regular annual California events held in San Bernardino, Sacramento, and Santa Rosa.
The Cannabis Cup events could become very important to the brands hoping to win. An award winner could conceivably gain entry to the flagship stores and also become a part of future consumption cafes. At this time no other event would be able to match this opportunity. For now, winners at cannabis festivals have only been able to use the titles for marketing purposes. If High Times is successful and commits to featuring the winners, then winning could mean lucrative sales contracts in addition to a trophy for producers and brands.