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DOJA (DOJA.C) applies experienced branding muscle to the cannabis industry

09/13/2017

On July 1, 2018, the Government of Canada will allow recreational cannabis to be sold legally for the first time. The base retail market is expected to be between $5 and $9 billion.

When a commercial door like this swings open, it attracts truck-loads of venture capital.

There are now dozens of publicly traded weed companies.  Many Equity Guru followers are active cannabis investors.  For this reason, we are approached – almost daily – by weed companies wanting us to talk about them.

Mostly we say “no”.

When we do say “yes” it’s because the company has a differentiatior –  a unique product, a unique technological advantage – or a unique skill set.

DOJA Cannabis Co. (DOJA.C) falls into the later category.

The CEO of DOJA, Trent Kitsch is an established branding wizard.

When we say that Kitsch is good at branding, it’s not because he says he is – it’s because he’s already disrupted an industry that was dominated by mega-cap companies like Under Armour (UA.NYSE) and Nike (NKE.NYSE).

We are talking about men’s underwear.

This is not small potatoes.

The underwear market is worth a couple of billion dollars.

Cracking the underwear market is like trying to put a new soft-drink on the supermarket shelves. Basically impossible.  But Kitsch did it.  And here’s how.

In 2006, Kitsch went on a fishing expedition to Alaska, where his balls got stuck to his thighs.  He wondered, “Why isn’t men’s underwear more comfortable?”

When he returned home to the Okanagan, BC, he collaborated with a clothes designer to create a “paneled fabric hammock” that separated his testicles from his legs. From this prototype, he built the SAXX Underwear company which he grew and then sold.

We think it will be easier to sell marijuana into a frontier market – than underwear into a market dominated by multi-million-dollar marketing campaigns.

You want an example of DOJA’s approach to selling marijuana?

Here’s a screen grab from the doja.lifestyle Instagram account

Like all good branding – the image defies intellectual examination.

“93 likes”.

Apparently, the fit young woman is “Holding on to every last bit of summer”.

At the same time, she is wringing out her shirt – although it doesn’t seem to be wet.

There is also the matter of her jeans.

One of three things appears to be happening:  1. She’s just put her jeans on, 2.  She’s about to take them off, 3.  The top button is defective.

Attempting to market – anything – to the Equity Guru brain trust is like trying to sell dog meat to a pet owner.  We are hard-wired to resist the pitch.

That said, whatever she’s smoking – we’re smoking.

Let’s call it “94 likes”.

DOJA owns a licensed production facility in the Okanagan Valley.  In 2016 DOJA purchased the land for a 7,100-square foot commercial building.   The company then began a Phase 1 build-out of the production facility capable of producing 660 kilograms ($7.9 million in sales) annually.

On Sept. 11, 2017, DOJA released a production update:

  • DOJA is currently growing four cultivars of cannabis that have been meticulously curated to appeal to cannabis consumers’ lifestyle needs;
  • The master grower is utilizing state-of-the-art automation ensuring flower quality and consistency.
  • DOJA has approximately 2,000 cannabis plants under its roof;
  • Full compliance from the first unannounced inspection from Health Canada that took place on August 24, 2017
  • DOJA plans to harvest our first batches of premium cannabis in the third week of October;
  • After batches have been dried and cured, DOJA will request a Pre-Sales Inspection with Health Canada

There are currently only 25 companies in Canada that collectively hold the 33 cannabis Sales Licenses issued by Health Canada.

“Our plants are looking extremely vibrant, healthy and are maturing on schedule,” stated Kitsch, “We plan on harvesting our first batches of premium cannabis in the third week of October and anticipate being able to request our Pre-Sales License inspection with Health Canada in November, well in advance of the federal government’s targeted adult recreational cannabis use legalization date of July 1, 2018.”

“As an authentic premium cannabis lifestyle brand, we have established deep roots locally,” confirmed Kitsch, “and we will take the brand beyond the Canadian border.”

When you have two companies both with warehouses of high-quality pot vying for the same customers – the ability to brand is non-trivial.

DOJA is currently trading at .60 with a market cap of $35 million.

Full Disclosure:  DOJA is an Equity Guru marketing client.  We are also investors in the company.
 
NB: Doja Cannabis (“DOJA”) announced a name and symbol change on January 30th, 2018 as a result of its merger with TS Brandco Holdings Inc. (“Tokyo Smoke”). Effective 31 January 2018, the company trades as Hiku Brands under the ticker symbol HIKU.C

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Comments 2

  1. Joe says:

    The production capacity seems very weak though. Thoughts?

    • Chris Parry says:

      It’s their initial days of the their license. They’ve already got expansion property next door and plans to utilize it. If you buy, you’re buying for what’s to come, most certainly.

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