Dooma Wendschuh Founders Update March 23, 2018
One week after the Wheaton Income announcement and a lot is already changing for our company. We have been receiving collaboration offers from a variety of our contacts both within the cannabis industry and outside of the industry. We have also received some news coverage which you can see elsewhere in this Shareholder's Update. Several companies have commented that the transaction caused a substantial bump in Wheaton Income's share price. It's been a very exciting week.
Personally, I spent much of the week traveling as I spoke at a conference on Cannabis Branding and Marketing and met with a select group of our current investors to discuss our next funding round, amongst other things. Importantly, we also kicked off an initiative to ensure we receive our cannabis LP license and carry out the transaction with Wheaton as quickly as possible. This is probably the most important thing our company is working on and the successful and rapid completion of the licensing process will make a huge difference in our company's degree of readiness when beverages are legalized in Canada. This will be a massive effort and take substantial resources. If any of our investors have experience with Health Canada LP licensure, we would welcome your advice and guidance as we proceed down this path with Wheaton Income.
In closing, I want to share an insight from my speech at the Cannabis Branding and Marketing conference. When the room was opened up for questions, a gentleman who had been in the industry for many years raised his hand and said that new regulations on packaging were making it so that each package was costing him about $3 or $4 dollars per package. He said it was unsustainable. He asked how he was supposed to make money when packaging was costing him so much. My response to him was, "packaging is not your problem. It's your solution." I told him that flower and marijuana oil is a commodity - and as we've seen in Oregon (where there has been a 10x decrease in the price of cannabis due to the fact that in 2017 they had produced 3x more cannabis than the market demanded) the price of these commodities will fall. Take a look at the vodka Industry. There is probably less than a penny worth of wheat in a bottle of Grey Goose. I don't know the exact amount. But I do know that if you include all the labor, cost of materials, and even amortized cost of distilling equipment, the cost of the liquid inside a bottle of Grey Goose costs less than the actual glass and and cap that comprise its packaging. You're selling a few dollars of liquid for $40 bucks per bottle. You're only able to do that because you have phenomenal packaging and a a bottle you can build a brand around. This is the new reality we are entering in the cannabis industry. We're shifting away from an agriculture-based industry and into an industry where quality is determined by branding, packaging and consumer perception. Those who cannot adapt will be left in the dust.