Last month, small cap Spyder Cannabis (TSX-V: SPDR)debuted on the TSX Venture Exchange as a new but different kind of cannabis player – one that actually has a clear plan to succeed or at least to break through all the noise in an increasingly crowded and hyped space.
Investment Snapshot
Small capSpyder Cannabis (TSX-V: SPDR) already has a network of uniquely designed high-end vape stores in Ontario offering an industry leading suite of brands and partnerships with over 30 vendors in the e-liquids, tanks, herbal vapes and e-Cigs spaces.
The Company’s long-term "Cannabis Turn-Key Strategy” is to expand the current retail operational model to include a cannabis business segment focused on the operation of licensed cannabis retail stores in Canada plus build a network of branded boutique retail and kiosks selling hemp products in key US states in order to build a national brand.
Spyder Cannabis believes this strategy will allow it to generate stable revenue streams during the interim period before stores receive a retail cannabis license, and will allow the Company to swiftly pivot into the sale of cannabis products once appropriate licenses are received.
As for hemp, the Company is developing its own Spyder line of hemp-derived ointments, oils, capsules and topical creams for the aging, sports and health and wellness space. Otherwise, all hemp product offerings will target the aging, athletic and/or health and wellness markets with a core focus being around wellnessfor the aging population and health and wellness community. The second core focus will be around nutritiontargeting the sports and athletic community with a line of hemp-derived infused supplements along with vitamins, omega 3 and electrolytes.
Spyder Cannabis has also signed an exclusive agreement to distribute the three flavors of Tetra Natural Health’s Hemp Energy Drink in cannabis accessory stores and vapes stores in Canada and the USA.
Spyder Cannabis Has a Winning Cannabis Turn-Key Strategy
Small cap Spyder Cannabis alreadyhas three existing high-end vape stores in Ontario (located in Woodbridge, Scarborough and Burlington) offering a growing product offering comprised of e-cigarettes, vaporizers and accessories; a high-quality proprietary line of e-juice and liquids; and exclusive retail deals all dispensed in uniquely designed stores (plus online).
Currently, the Company has an industry leading suite of brands and partnerships with over 30 vendors for the following product ranges:
E-liquids.Over 100 e-juice products including over 25 Spyder’s established proprietary line.
Tanks.Over a dozen tanks to choose from for optimal e-juice.
Herbal Vapes.Over 30 vapes to select from including Pax 3 and Airizer.
E-Cigs.Over 30 different vapes and growing.
The Company’s long-term “Cannabis Turn-Key Strategy” (in addition to the existing high-end vape shop operation) is to have a cannabis business segment focused on the operation of licensed cannabis retail stores with the current retail plans being:
Ontario - Targeting 75 retail locations
Alberta - Targeting 5 retail locations
British Columbia- Targeting 5 Locations
This strategic plan will have two phases:
Under phase one of the Turn-Key Strategy:Spyder Cannabis intends to operate a number of retail locations that will, in contrast to a number of its competitors, generate revenue by operating as retailers of a variety of non-cannabis products.
Under phase two of the Turn-Key Strategy:Spyder Cannabis will (subject to the receipt of cannabis retail licenses from the Alcohol and Gaming Commission of Ontario and the Alberta Gaming, Liquor and Cannabis Commission) convert these retailers into cannabis stores at the earliest possible opportunity.
Spyder Cannabis believes this strategy will allow it to generate stable revenue streams during the interim period before the stores receive a retail cannabis license, and will allow the Company to swiftly pivot into the sale of cannabis products once appropriate licenses have been received.
In addition, Spyder Cannabis expects to launch the SPDR website by July 1, 2019. The new website is currently in an advanced stage of development, and will focus on selling cannabis accessories and a variety of hemp-based products on a retail and wholesale basis within Canada. The Company intends to focus on offering its own SPDR branded products, which are made up of a number top-of-the line and unique products, along with leveraging the Company's deep knowledge of the retail industry to offer a number of other best-in-class products that it has identified over the years.
Finally, Spyder Cannabis is partnering with Lobo Genetics to promote safer cannabis use through cheek swab DNA testing at its retail stores. This in-store DNA testing will allow consumers to gain immediate, actionable insights into their personal response to cannabis based on their genetic profile. This is a service that’s not readily available when shopping online or with competing brick-and-mortar cannabis shops and will allow Spyder Cannabis to sidestep strict marketing regulations which will help drive further traffic to Spyder retail locations.
Again, the timing of any expansion into cannabis will be subject to market and regulatory conditions. If Spyder Cannabis fails to obtain the necessary permits, authorizations or accreditations needed to expand its product offerings into the cannabis sector, the Company will continue to operate in Canada as a high-end vape shop retail business with an online presence for its existing non-cannabis product lines.
Spyder Cannabis Will Also Seek to Dominate the US Hemp Market
As another backup plan to take advantage of easing hemp laws in the USA, Spyder Cannabis will build (over the next 12-18 months) a US network of branded boutique retail and kiosks focused around selling hemp products. By next year, the Company plans to have 30-50 US kiosks open and operating in key states.
Since the ultimate goal is to dominate the USA hemp-derived retail market, Spyder Cannabis will partner with a variety of real estate developers in order to sign lease agreements for kiosks in Florida, California, Michigan and New York with the goal of deepening market share in these big states that are critical to building a national retail brand.
These kiosks will be located in high-traffic and desirable spots in malls (or near malls) that have close proximity to sporting venues and retirement homes and will offer a wide array of hemp product offerings that will include hemp-infused muscle balm, face oil, body lotion and bath salts, as well as hemp tinctures, capsules and sprays. In addition:
The Company is developing its own Spyder line of hemp-derived ointments, oils, capsules and topical creams for the aging, sports and health and wellness space.
All hemp product offerings (regardless of being in-house developed product or a product coming from from a third party) will target the aging, athletic and/or health and wellness markets with a core focus being around wellnessfor the aging population and health and wellness community (Note that hemp derived products can reduce pain and inflammation according to the US National Library of Medicine as cannabidiol reduces inflammation and pain-related behaviors in a rat model of arthritis). A second core focus will be around nutritiontargeting the sports and athletic community with a line of hemp-derived infused supplements along with vitamins, omega 3 and electrolytes.
In mid-June, Spyder Cannabis also signedan exclusive agreement with Tetra Natural Health, a subsidiary of Tetra Bio-Pharma (TSX-V: TBP; OTCQB: TBPMF)which focuses on identification, development and marketing of hemp or cannabis-based natural health products, or cannabinoids-based products authorized for sale by Health Canada. Under the agreement, Spyder Cannabis will distribute three flavors of Tetra Natural Health’s Hemp Energy Drink in cannabis accessory stores and vapes stores in Canada and the USA. The drink is expected to be available to consumers in Spyder’s retail stores located in Scarborough, Woodbridge, Burlington, and shortly at the Niagara Falls and Pickering locations, which are expected to be opened early this summer.
Spyder Cannabis will have launched its new Hemp Energy Drink line over the Canada Day long weekend across its existing Ontario locations as well as its two brand new accessories stores in Niagara Falls (Lundys Lane) and Pickering.
Note that the new Lundys Lane Location in Niagara Falls, two other retail locations that Spyder Cannabis operates in Burlington and Calgary and a location that it intends to open in Guelph (subject to negotiating terms with the landlord) will all be converted into cannabis retail stores once proper licenses are obtained for cannabis.
With an actual strategy to succeed as a cannabis player, the Small Cap Network will be paying close attention to Spyder Cannabisas its plans start to bear fruit.