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KushCo Holdings: A Cannabis-Adjacent Company With Global Ambitions

December 26, 2018 1:31 pm
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The Benzinga Cannabis Capital Conference takes place Jan. 15-16 in Miami Beach. The event will include a number of presentations from executives at industry-leading companies.

One guest, KushCo Holdings Inc (OTC:KSHB), is a provider of ancillary products for the cannabis industry.

Benzinga spoke with CEO Nick Kovacevich ahead of the conference to gain a better understanding of the company, its operations and strategy.

A 'Picks And Shovels' Business

KushCo Holdings is a parent company for numerous businesses. The company’s brands include Kush Supply Co., which distributes vaporizer products, packaging, supplies and accessories; Kush Energy, which provides hydrocarbon gases and solvents; design agency The Hybrid Creative; and Koleto Packaging Solutions, which is engaged in research and development, intellectual property, and acquisitions.

Since it was founded in 2010, KushCo has sold more than 1 billion products and provides services to more than 5,000 cannabis companies, according to the company.

In this way, KushCo has become a major American cannabis company without touching the plant; the Santa Ana, California-based company adopted a "picks and shovels" approach to the sector.

“It’s a model that been used throughout history during boom time in other industries: look at Levi’s supplying jeans to gold miners, look at hardware processor chip companies and the internet boom," said Kovacevich.

See Also: 10 Reasons To Attend The 2019 Cannabis Capital Conference

Extensive Growth Strategy, Global Plans

KushCo said it's working with a number of cannabis dispensaries and cultivators in Canada, Europe and South America. Going forward, the company plans to further establish its international footprint.

“Part of our growth strategy is optimizing our global supply chain,” Kovacevich said.

KushCo intends to do this both through work with existing customers that are looking to access new markets and new customers in countries that have legalized medical marijuana.

U.S. Industry Consolidation, Farm Bill Benefits

As KushCo focuses on growth in the U.S., it's taken notice of consolidation in the cannabis industry.

“[In] 2019 and 2020, we will continue to see a higher than normal amount of consolidation in our industry," Kovacevich said.

"As brands reach their growth cap and look to take that next step up, it will involve one of two roads. They can look to be acquired or they can raise a large amount of capital to fuel that needed growth."

The company is always evaluating strategic acquisition opportunities, the CEO said.

“For KushCo, our goal is simple — we expect to transform the cannabis industry and be the leaders others look to emulate.

One major catalyst for the U.S. cannabis industry is the passage of the 2018 Farm Bill into law. The law legalizes hemp and hemp-derived CBD on a federal level.

The bill is expected to have major implications for companies involved in CBD. For KushCo, the legalization of CBD represents the opportunity to build on top of its existing relationships with CBD companies.

" … They will still need compliant, approved packaging and we intend to have these solutions waiting and ready. In addition, CBD products, like THC-dominant products, need to have packaging that stands out and creates that consumer equity to drive to a lifetime customer value," Kovacevich said. "Our IP and innovation business unit Koleto is a team made up of designers and engineers and we aim to work with our clients to develop new, innovative packaging solutions for those CBD businesses."

Cannabis Capital Conference

In addition to a presentation from CEO Kovacevich, Kush Supply Co. President Jason Vegotsky is also scheduled to present at the Cannabis Capital Conference, along with Vice President of Corporate Development & Investor Relations Stephen Christoffersen.

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