The cannabis industry is projected to reach $146.4 billion by 2025, according to Grand View Research, representing a 34.6% compound annual growth rate. While many companies are focused on cultivation and retail, these business models involve high capital expenditures to produce commoditized products. Investors may be better off looking at companies focused on branding and licensing given the lower capital expenditure and competitive barriers.
DNA Genetics, co-founded by Don Morris and Aaron Yarkoni, is one of the oldest and most established cannabis brands in the industry with a vast library of highly sought after and award-winning strains. With wholly-owned subsidiaries in California and Amsterdam, the company is uniquely positioned to expand into both North American and European markets through strategic brand and cultivar licensing deals capable of generating high margin recurring income for shareholders.
In this article, we will take a look at the company’s portfolio of award-winning strains as well as its unique business model that already is scaling into markets worldwide.
Award Winning Strains
DNA Genetics has amassed more than 200 awards in all categories at the most prestigious cannabis events around the world, making DNA a global standard in breeding and growing truly best-in-class cultivars. Such awards include the High Times ‘Top 10 Strain of the Year’, which was inducted into The High Times Seedbank Hall of Fame in 2019. Co-founders Don and Aaron have also been recognized for their contributions to the industry, having been named as part of High Times’ 100 Most Influential People in Cannabis and receiving the High Times Trail Blazers Award for contributions made towards uniting the fields of entrepreneurship, politics and medicine. In addition to its in-house strains, the company owns the rights to the Crockett Family Farms’ entire line-up, which are known for their exceptional flavor profiles. These strains promote high-yield production, pharmacological efficacy, and consumer interest.
The company markets these strains through an online and televised media presence. In the near future, the company’s founders will be featured on Pimp My Grow, a new video series, where Don and Aaron team up with Cypress Hill’s B-Real. They travel across the country turning amateur grows into industrial operations. The episode will appear on the PROHBTD Media Network—the first and largest cannabis lifestyle video network in the world.Unique Business Model
DNA Genetics has developed a licensing platform that is designed to keep capital expenditures low and profit margins high. License agreements are designed on a case-by-case basis with varying royalty terms, exclusivity rights and best practice consulting on the licensee’s scale and markets in which they operate. These licensing agreements produce high margin, recurring revenue over time.
For example, the company licenses its brands and genetics to Canopy Growth Corp. (TSX: WEED) (NYSE: CGC)—the largest cannabis company in the world based on market capitalization—for use in its highest priced products. In March, DNA and Canopy extended their partnership through 2024 and expanded it to include select European markets.
The company has agreements in place in Canada, Europe and several U.S. states. Management projects to reach 12 states and five countries by the end of 2020, and ultimately expand to reach 20 states and ten countries by 2021. The company will also release its own product offering in California, where its brand is well positioned at the top of the world’s largest cannabis market.
DNA Genetics is one of the oldest and most established cannabis brands in the industry with ambitious plans to grow its footprint over the coming years. Investors may want to keep an eye on the company as it looks to become a publicly-traded entity over the coming quarters.
For more information, visit the company’s website at www.dnagenetics.com
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