Wildflower, a veteran in the cannabis industry established in 2014, has quietly been growing its revenue by 250% year-over-year by simply letting its products do the talking. As of this week the company doubled the retail distribution of its premium hemp-derived, CBD infused products in the US to 600 outlets. Wildflower’s products can now be seen in 292 Dillard department store locations across the US. This new development brings Wildflower brands to new key markets such as Florida and Texas, as the company’s presence in North America expands from its base of 300 outlets in across America with a concentration in California, Washington, and New York.
Brand equity and recognition for “Wildflower” is building as its CBD infused oils, topicals and soaps have been circulating in such lofty places as Kim Kardashian’s baby shower, in Academy Awards gift bags, Saks Fifth Ave’s flagship store in Manhattan, and to the global masses of health and wellness-conscious adults online.
Based in the Vancouver, the company in late May, acquired its flagship Canadian distribution partner, City Cannabis. City has two of the eight licenses to sell cannabis in Vancouver City and received an Approval in Principal (AIP) for another on Cambie Street in the heart of the city and one in Comox on Vancouver Island, both expected to open this summer.
The City Cannabis acquisition and addition of the Dillard’s outlets is on the heals of Wildflower Brands Inc. (CSE:SUN, OTC:WLDFF) announcing a 78% revenue growth over last quarter, a jump from $1.4 to $2.5 million with a tidy 40% gross margin. Meanwhile, the company is close to completing its new production facilities in Washington State, where Wildflower is already sold in 200 retail outlets. When completed in about three months, the new facilities will increase production capacity by a whopping 20 times. This from a company that has spent next to zero dollars on any splashy advertising or marketing campaigns.
It all makes Wildflower an extremely attractive investment at this juncture with a highly reputable brand and an exponential production build-out to a multiple of 20 times. That provides a lot of leverage for investors into a company with only a $50 million market cap, ready to do battle with bigger brands of a $1 billion market cap.
CBD Led Growth
“The main impetus of our continued growth is our CBD-based products and the demand for CBD as a wholistic wellness products,” says Wildflower founder and CEO William MacLean. “There is a huge holistic wellness movement globally right now and more and more people are looking at CBD to fulfill that need for overall wellness. It acts a lot as a supplement, and it controls a lot of aspects of aging, and helps of course a lot of our customers who use it for more serious ailments. We just promote overall health and wellness with our products.”
Cannabis Industry market research firm Brightfield Group agrees with the trend, siting the recent hemp legalization in the US as the key catalyst and estimates the hemp CBD market to reach $22 billion by 2022. The expectation stems from the passing of the 2018 Farm Bill, which includes the US Hemp Farming Act of 2018 which unequivocally removes hemp as a designated controlled substance, legalizing CBD in all 50 states.
“Our success is all based on organic growth,” says MacLean “We haven’t been big on getting out there and pushing the marketing side of our products. What we do is let the product speak for itself. We put out samples. I’m not selling you smoke and mirrors, I’m going to put the product in your hand. You try it and you tell me if you like it. And that’s how our product has developed.”
Reaching Full Capacity Until Massive Expansion
At this point, Wildflower is at 90% capacity in its facilities in Washington with two full shifts running daily. Until the expanded facilities are completed come fall, the company will like grow its CBD product sales another 10% to full capacity. So for about one quarter, the company will have nominal increase in the short-term after experiencing 250% growth year-over-year̶–a brief pause until Wildflower opens up its new facility in Washington.
Since the CBD boom took off a few years back, Wildflower Brands Inc. has been using the City Cannabis relationship as a R&D centre by gathering consumer data for its CBD infused oils, soaps, topical sticks and tinctures. Now it is using its retail cannabis sales as a cash-flow engine to fuel its organic growth. “Right now you have the low hanging cannabis retail which is going to help fuel the short term development growth. The real tiger by the tail is the global CBD market,” says MacLean.
Fortunately Wildflower is well ahead of the curve in CBD product development and distribution. “Launching into Dillard’s doubles the number of retail locations we are in overnight,” says Maclean. “Our strategy is to build off our established brand equity in these key markets that can catapult us into becoming a household name. Dillard’s has the respect and reputation as a retailer that fits in with our loyal following.
Wildflower is also bringing CBD products directly to its customers. In 2018 the company began its technology platform arrangement with California-based Eaze, the largest cannabis delivery in service in the US. The company will soon be talking to additional European markets with the help of a current $15 million financing. The expansion into the European CBD market was initiated by an agreement set in March with Two Towers to market and distribute the Wildflower Wellness brand CBD+ line of products to Poland.
Customer led Product Development
“The City Cannabis retail chain in Vancouver gives us access to 20,000 consumers,” says MacLean. “They’re the ones that pick our products. They’re the ones that created the demands, and they were the ones who tell how to change our products.”
Allowing the customers to determine the product line has been effective to sales. “The previous year we did $1 million then in one quarter we did $1.4 million,” says MacLean. “Our growth is coming across all revenue streams. We’re at that point now where the business is coming to us. We’re receiving two to three wholesale inquiries every single day. We’re curating the accounts we have and we’re starting to drop the small accounts because of the economies of scale.”
Wildflower is readying itself for aggressive growth as the company will soon put to use its $15 million raised to fast track production, product development and channel support to fuel global expansion. Cash flow from the cannabis stores in Vancouver, online-sales, 600+ retail outlets in the US and delivery in California continues to grow revenue through a loyal customer-base and word-of-mouth expansion. With that kind of brand equity, once the bottleneck of the much-needed facilities is removed, the CBD door crashers will come storming in for more. And much like Wildflower itself, savvy investors are smart to jump in ahead of the crowd.
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