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Brand FOCUS: Her Highness

Brand FOCUS: HER HIGHNESS

Why we Love them: Their gaudy luxe theme is great at drawing in lovers of kitsch.
Why we docked stars:
The brand consistency in packaging could use some work.

Don’t be afraid to do something different.
When creating your brand, it’s easy to slip into the trap of thinking that, in order to express the quality of your product, you need to take a clinical approach. In reality, the exact opposite is true. Studies have shown that brand personality plays a huge role in people’s purchasing decisions, and the Japanese Psychological Research journal reported that “the attractiveness of the brand personality directly affects positive word-of-mouth reports and indirectly affects brand loyalty.”9 While we’re not urging you to completely ditch your sense of professionalism, crafting a quirky brand image à la Her Highness, or conversely, creating one riddled with exclusivity (think Rolex), can help form a brand personality that lets you stand out.

Her Highness a luxury cannabinoid brand

Andy Warhol meets the Monte Carlo in Her Highness, a luxury cannabinoid brand that offers a variety of luxury THC and CBD goods. After seeing so many luxury cannabinoid companies offering products made for the most discerning connoisseurs, Her Highness turns this approach on its head. The unwavering dedication to queens and priestesses, alongside their delightfully gaudy gold packaging and bold red lip logo, creates an ironically pretentious brand that comforts customers rather than repels them.

Gone is the stuffy, high-end cannabinoid company that houses its allure in its seriousness and formulaic approach to self-care. In its place is your good time gal, Her Highness interested in making quality cannabinoid consumption a fun process with no limits on when, how, or why

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What Is The Real Cost Of Converting Your CBD To Delta-8- THC?

Often derivative products are taken at face value when being compared. Currently, this is the case when we speak with operators about CBD and Delta-8 THC. The decision-making process always centers around comparing the price of 1 kg of CBD isolate (~$533.00 / kg) to the price of 1 kg of CBG isolate (~$1,150.00 / kg), which at the surface shows the potential to double the gross revenue.

Once you dive into the hard costs of converting your CBD inventory to Delta-8, the story changes dramatically. Below, we go through a calculation that takes into consideration a variety of variables when calculating the costs of converting CBD. The fixed costs in this calculation are based on conversations we had with an R&D research chemist working at a licensed facility in Colorado.

What Is The Real Cost Of Converting Your CBD To Delta-8?

What Is The Real Cost Of Converting Your CBD To Delta-8?

Based on our calculations, there’s still room for Delta-8’s price per kilogram to drop before the conversion becomes unprofitable. Our model suggests that, on this scale, the breakeven price per kilogram is around ~$923.00. Based on our forecast published in last month’s report, this could happen as early as May of this year. We advise our clients not to keep large inventories of Delta-8 in house due to the current Delta-8 pricing volatility.

Input Categories Assumptions
CBD quantity (kg) 10
Market value of CBD isolate $ 533.00
Total cost of CBD $ 5,330.00
Solvent quantity (Liters) 15
Total estimated solvent cost $ 1,400.00
Catalyst quantity (grams) 50
Total estimated catalyst cost $ 50.00
Total estimated labor cost* $ 500.00
Total analytical testing cost   (QA / QC) $ 300.00

NoteS:
*Labor cost is estimated based on 20 hours
of labor @ $25.00/hr
**Conversion yield is calculated after conversion,
work up, and purification to final product.

OUTPUT Categories Assumptions
Conversion yield* 85%
Delta-8 THC quantity (kg) 8.5
Market value of Delta-8 THC /   kg $1,150.00
Potential Revenue
Estimated Profit
$ 9,775.00
$ 2,195.00

Total Input Cost = ( Cost of CBD + Cost of Solvent + Cost of Catalyst + Labor + Analytical Testing )
Potential Revenue=( (Percent Yield from Reaction * Input Quantity of CBD) * Delta-8 Market Value )
Estimated Profit = Revenue – Input Cost

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Cannabinoid Industry

When we discuss the challenges and hurdles facing the cannabinoid industry, we’re often discussing obstacles that are unique to the space given its ongoing state of infancy. While concerns like client acquisition and sustainable scaling are matters that even mature industries brush up against, there’s one problem in particular that exclusively exists as a thorn in the cannabinoid industry’s side: banking.

Despite being legal, cannabis businesses are unable to use the services provided by secure banking institutions. The denial of such basic assistance has created unnecessary difficulties, ones that have proved detrimental to those looking to grow with the space as it expands.

Exclusions like these only perpetuate the negative stigma surrounding the plant, and since lobbyists recognize that such ostracism from financial institutions will continue to hinder the industry’s progress, they have been campaigning to pass the SAFE Banking Act.

[T]he federal

agency would

“prefer” for state-legal

cannabis firms to be

able to pay taxes

electronically, as the

current cash-based

system under

prohibition is onerous

and presents risks

to workers.

Cresco Labs

CEO of Cresco Labs, Charlie Bachtell, put it best when he spoke with CNBC’s team over at Fast Money, claiming that “access to capital has been so difficult in this industry. And again, this is an industry that is the fastest growing industry in America. [It] increased to 320,000+ full-time employees in the industry last year – that’s up 32%, so this is an incredibly fast-moving, dynamic industry that we have, you know, a hand tied behind our back without access to traditional banking.

What is the SAFE Banking Act?

You may ask. The SAFE Banking Act is a piece of proposed legislation that would allow financial institutions to take on clients within the cannabis sector without the risk of facing federal penalties or a DEA raid.

If this doesn’t sound like a monumental game changer, consider that the head of the IRS, Commissioner Charles Rettig, told Congress that “the federal agency would “prefer” for state-legal cannabis firms to be able to pay taxes electronically, as the current cash-based system under prohibition is onerous and presents risks to workers.”3 Forced to operate as cash-based businesses, the most well-known and successful MSOs have had to pay taxes with duffel bags of cash. This ridiculous mental visual only highlights the absurdity of excluding multi-million dollar companies from the accessibility of banking.

With such obvious reasons demonstrating why financial institutions should start allowing cannabinoid businesses to work with them, you may be wondering what’s been holding them back. The main issue comes in the form of compliance risk. Though many states have fully legalized cannabis, the plant is still illegal at the federal level, meaning the issue of sanctions is a very real and very serious threat that hangs over the heads of banks and credit unions thinking about expanding into the cannabis industry. Unfortunately, their fear of facing the potential ramifications of working within the space further endangers the ones operating in it, placing cannabinoid workers at a higher risk for targeted robberies.

While not the massive reform that many people hoped to see, the SAFE Banking Act is a critical piece of legislation and a crucial step towards creating a compliant industry that’s adding thousands of jobs, bringing in millions of dollars in tax revenue, and ensuring that Uncle Sam continues to get his piece of the pie.

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The change of the seasons brings warm weather, but lately, this isn’t the only change we’ve been seeing. As we slough through rainy April with the hopes of soon seeing the sun, we also watch regulators shift their stance on cannabis and push for legislative change, and New York has been at the head of this charge. The CBD industry, on the other hand, is patiently waiting for their momentum to pick up, but good news could be on the way.

With the current USDA study analyzing whether hemp can be used as an alternative for cattle feed underway, and the potential for CBD to become a nutraceutical this year, you have a potent combination that could send prices soaring.

The future is exciting, and we look forward to being there with you every step of the way.

Kellan Finney

Balancing the speed of the cannabinoid industry’s growth with slow-changing regulations can be hard. On one side, the overwhelming desire for product and the ability to grow, process, produce, and sell has never been in higher demand. With more and more states coming online, the need to quickly scale or pivot is only compounding these supply chain stressors.

On the flip side, policy makers, still hesitant to fully embrace the cannabinoid industry, continue to debate the finishing touches on game-changing legislation. It’s important to remind yourself that, though this period may be frustrating for all those who want to start solidifying the space, every step forward is progress toward a new era. Try to remember that forward is forward, no matter how small of a step

Bryan Fields

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CBD industry

Note:
Figure 1. 2021 retail cannabis sales data by product category from
New Frontiers and Headset data.

Table 1. Consumer Survey data displaying preferences of CBD sorted
by use case and product type.

CBD industry

Flower continues to dominate as the leading category of products, making up over 50% of all products sold at dispensaries. According to New Frontier data, Maui Wowie, OG Kush, and Gorilla Glue are among the top three strains. Vape pens are a close second, and topicals and tinctures come in last, making up 3% of the market share for THC products. Topicals and tinctures only hold 3% of the market share for THC products.

This is in stark contrast to the CBD industry where the top product for all consumers is tinctures. We believe the difference in consumer preference is tied to the demographic of individuals consuming THC vs CBD. CBD does not have any psychoactive effects and is currently viewed as a supplement / vitamin / wellness alternative.

Due to this divergence, we advise our clients to understand which industry they want to focus on when launching a brand If your company’s goal is to own a brand which can acquire market share in both the THC and CBD industry, then we recommend launching an edible brand. Edible products show great promise and have a significant market share across both THC and CBD industries.

Launching a Brand

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Cannbinoid Monthly Update -August 2021

The cannabinoid industry continues to gain steam as Schumer rolled out his plan which would end cannabis prohibition and regulate the industry similar to tobacco. Pair this news with several other states legalizing adult use cannabis and the industry is on the precipice of extraordinary growth. The hemp CBD industry continues to consolidate as wholesale prices drop for most product categories including smokable flower. Lack of legislation surrounding the safety and legality of the molecule CBD has created obstacles that have challenged investors looking for short term gains. Given the rescheduling of CBD and classification as a nutraceutical, the industry is poised for considerable growth over the next decade. However, we must be patient, and that’s what we are here for. We look forward to being there with you every step of the way.

Kellan Finney

The draft of Cannabis Administration & Opportunity Act has been released and with it comes a multitude of potential insights for the future. While the details are likely to change, the major framework is clear for the future of the industry. Use the draft as an opportunity to alter future roadmaps and to be ahead of these changes.

Bryan Fields

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