Cannabis Brand Herbal Goods Co. Strives To Bring A Long-Held Smoking Practice To North American Markets
The cannabis space is constantly evolving, moving forward, innovating. But luxury pre-roll brand Herbal Goods Co. hopes to achieve the opposite, making a long-held regional consumption method a popular option among today's luxury cannabis consumers.
With over 100,000 cones sold so far, co-founder Oscar Bonilla Jr. believes the company is on its way.
A Pre-Med Son Of Immigrants Turns To Cannabis: Bonilla wasn't meant to be in cannabis — that is, if you ask his El Salvadoran immigrant parents. Despite their wishes, in 2013, the seeds for Bonilla's market entrance were planted.
Bonilla and co-founder and partner Jess Freeman took a trip to India for a language course. While there, they saw locals partaking in cigarette smoking that used the ebony leaf and ties rather than adhesives.
"The leaf has been used for thousands of years," explained Bonilla.
He'd learn about the leaf during his stay, developing an appreciation for its consistency and thickness. They didn't match any papers or wraps in the States.
He would also learn that the leaf was already popular in other nations, but the U.S. market remained untapped, especially the cannabis market. With the ebony leaf and cannabis, he saw an opportunity to launch a sustainable brand.
Years of planning would lead to HGC's launch in 2018 when Canada passed its first wave of adult-use laws. The company set up its headquarters in British Columbia, Canada, with several grows in Bengal and a Delhi-based operation site.
Operational Hardships Provide Lessons: Bonilla is used to the hardships of developing his product and maintaining its quality while often being far from operations.
The first hurdle came when developing the company. While the ebony leaf had much to offer, Bonilla said its tiny size made it unable to form pre-roll-shaped cones.
Researching led to modifying the cultivation process, allowing the leaves to mature longer and grow in size before harvest.
"We teamed with a local tobacco cigarette maker who had a facility that could house and manage what we need –and away we go," he said of the company's launch.
After launching, Bonilla said HGC has to contend with the hurdles of operating a business halfway around the world. He said the company achieves its success with weekly meetings and daily check-ins with its operations manager.
He understands that time and stress levels could be lessened if operations were closer to HQ. But then, the product wouldn't have the same connection to the region or the village members HGC employs.
The same could be said if HGC moved more of its operations to Delhi.
"We could go to Delhi and hire a workforce there, but that would take away the jobs of the communities that traditionally do this job," said Bonilla, noting that roughly 85% of HGC's India-based staff are women.
Learning From Setbacks: Learning from past mistakes rather than dwelling on them, Bonilla looks at unsuccessful deals as chances to improve the business overall.
A prime example came when a deal with KushCo Holdings, Inc. (OTC:KSHB) appeared likely.
The packaging leader asked HGC if it could make 1 million cones per month. The cottage industry brand had never done so, averaging only 5,000 per month to that point.
Regardless, they said HGC could do it. "We booked the ticket right away the next day, and we bounced back to India," said Bonilla.
The company quickly got to work on staffing and ensuring its harvest capabilities were up to the task. A few months later, the monthly total ask raised to 10 million, according to Bonilla.
However, the deal eventually would fall through as scaling efforts were underway.
"All of this work went out the door in a matter of 24 hours," said Bonilla who recalled the potential deal moving positively beforehand.
Instead of being deflated, Bonilla and HGC's team learned they could take the brand into a more "Western" process without losing the quality or heritage created by the cultivators and producers in Bengal.
"As we've been growing, our volumes have also been growing," said Bonilla, calling the experience a silver lining.
The rest of the year will focus on increasing brand awareness. At the same time, Bonilla is preparing for a future market where the market share of flower products will likely decline.
The Canada-based brand was especially concerned when cannabis 2.0 rolled out in October 2019.
March data from Statistics Canada verify the concern, noting that 2.0 products like edibles, vapes and topicals drove flower sales down. An 81% share by the end of March 2020 had become a 76% share by the end of September of that year.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.