“I had someone yesterday telling me that Harborside was the first brand, TFB, and I think that’s right,” Edward Schmults, CEO of Harborside (OTC:HBORF) told a packed conference room at the Benzinga Cannabis Capital Conference.
Known as a tireless advocate for cannabis and health and wellness and for driving broader acceptance in the California community, Schmults said that over the last nine months Harborside has changed significantly.
American Reset Story
“Three new businesses have been bolted,” he said. Oakland-based pre-roll brand Sublime, Urbn Leaf and Loud Pack, enabling the company to obtain a collection of strong brands and a “terrific manufacturing facility.
“The result is a very different company. So, maybe the title is an American reset story because it's changed significantly.”
All of this has enabled Harborside to become a top-three retail platform in California. Now, “the company has what it needs to succeed and no more. We don't have excessive assets in any one particular area.”
Schmults stressed that Harborside can now live up to the expectations of its investors. It has managed to achieve scale in California, thanks to which the company was able to attract new capital.
“We raised $77 million in capital. There’s no way any of the individual companies would have been able to do that without the scale that we recently achieved.”
California Market As Cannabis’ Future
California is one of the biggest marijuana markets in the world, approaching $7.5 billion in legal market sales. Because of that, a lot of people and MSOs are afraid of California, he said.
But, what are they afraid of?
“They're afraid of compliance in a rugged regulatory environment. They're afraid of taxes, but aren't we all? They're afraid of California employment laws, and they're afraid of competition. So you look at 800 cultivators, over 1000 retailers, and anywhere from 1300 to as many as 2000 brands out there. And sure it is tough,” he said.
Nevertheless, with 40 million people in the state, and some 20 million between 20 and 50 years, this is where you need to be, this is the future of cannabis, he said.
Harborside’s Plans
All Harborside retail stores will be rebranded to Urbn Leaf, except for the Harborside Oakland store. The company is keeping that one as sacred ground because that’s where it all started, Schmults explained.
The company also plans to adopt Urbn Leaf's modus operandi. He praised the company’s in-store experience, saying that they relentlessly train their budtenders.
Harborside plans to focus on the accessibility of online orders for in-store pick up to reduce friction points and then home delivery. Schmults noted that having 40% of Urbn Leaf private label in the first quarter helped it achieve record gross margins in a challenging retail environment. That’s why the company is planning to add more gross private label products to the retail mix.
In addition, the company is planning to aggressively improve its cost optimization.
“I love the $42 million in cash on our balance sheet. That’s a real strength today, and we're working hard to do something about the stock price,” Schmults concluded.
Photo: Courtesy of Avery Meeker on Unsplash
