Will Dan Bilzerian remain the reigning champ or is Mike Tyson about to take his cannabis crown?
Although the arrival of the COVID-19 pandemic has wrought considerable damage to the worldwide economy, the global legal cannabis market is still continuing to grow in size. In fact, according to a recent analysis by Grand View Research, the market is expected to be worth $73.6 billion by 2027, with an anticipated CAGR of 18.1% over the next seven years.
This has been fuelled in part by the growing push to recognize medicinal marijuana as a legitimate healthcare option, as well as the increasing presence of CBD and legal-use recreational cannabis products in the consumer space.
As a result, there are also a growing number of high-profile celebrities who have begun lending their star power to the cannabis industry by partnering with companies that are looking to boost brand awareness.
People are going to love you, people are going to hate you. When you're in the public eye, it's just something that comes with the territory. Ignite Cannabis Founder, Dan Bilzerian
These partnerships tend to be highly lucrative for both parties, as pot stocks can leverage the star's name recognition and established fan base to expand their market presence, while the celebrity gains access to an industry that will soon be worth billions.
Over the last several years we've seen a slew of celebrities get in on the cannabis game, from Snoop Dog, Martha Stewart and Seth Rogen, to Gene Simmons, Willie Nelson and Green Day bassist Mike Dirnt.
However, one celebrity has emerged as the undisputed heavyweight of the premium cannabis industry: the infamous international playboy and Instagram star, Dan Bilzerian. For the last two years the former Navy SEAL and world-class poker player—whose personal net worth is estimated to be as high as $200 million—has been using his immense wealth and unparalleled social media presence to promote his own personal marijuana passion project, Ignite Cannabis.
And it looks like his hard work is beginning to pay off, as Ignite Cannabis was raking in more than $3 million per quarter for Dan Bilzerian during the latter half of 2019.
At this point, it seems like the only challenger to the Dan Bilzerian cannabis crown is legendary boxer Mike Tyson, who stepped has stepped into the ring with his own marijuana brand, The Ranch Companies.
That's why we decided to take a look at both companies, to determine which brand which emerge as the true heavyweight champion of the cannabis industry.
The social media wunderkind officially set the Ignite Cannabis company in motion during 2018, with a widely hyped launch party that took place inside his $100 million-dollar Bel-Air mansion. The Dan Bilzerian Ignite Cannabis party hosted thousands of guests, allowing the company to roll out its expansive product range to the public, which included vaporizer cartridges, concentrates, CBD oils and premium cannabis strains.
The company operates as subsidiary of Dan Bilzerian's larger investment firm, Ignite International Brands (CSE: BILZ), and describes itself as a "high-end global cannabis brand" that is dedicated to delivering the best THC and CBD products to its' customer base.
I've never half-assed anything I cared about. Everything I do is based on executing at the highest level and Ignite is going to top everything I've done before. I'll spare no expense, cut no corners, and do whatever needs to be done in order to build Ignite into a world-renowned cannabis brand. Ignite Cannabis Founder, Dan Bilzerian
Since then, Dan Bilzerian's Ignite Cannabis has rolled out a line of vaporising products to the public, as well as a range of CBD oils and "CBD toothpicks", which employ a unique, fast-acting design that allows for a 55mg sublingual dose of CBD, making them perfect for consumers that lead an active lifestyle.
According to the former President of Ignite, Jim McCormick, the CBD toothpicks are an expression of the "edgy" attitude and product position that is popular with Dan Bilzerian's loyal fanbase.
"We are very excited to add CBD-infused toothpicks to Ignite's national offering," McCormick said.
"These toothpicks are an entirely new, highly effective way to consume CBD and add an element of 'swagger' to those who use them, which is perfect for our brand and its fans."
And this certainly seems to fit with the Dan Bilzerian Ignite Cannabis public persona—which is built around a jet-setting lifestyle of glamorous parties, guns and bikini models filtered through the lens of Instagram—so it seems appropriate that he would adopt a similarly excessive approach to brand positioning.
The extravagant launch party was soon followed by a series of adverts across California depicting women in lingerie and sexualised puns, which attracted criticism from a number of different sources, including Olivia Mannix, the CEO of marketing firm Cannabrand.
"Honestly, shame on them. It's not only putting a damper on the cannabis industry, but it's putting a damper on the women's movement and women's rights," Mannix said
However, the campaign proved phenomenally successful, and Bilzerian himself seemed unperturbed by possibility that his antics may have caused outrage.
"We hire models, but that's a business thing. Any successful company has female models. Having attractive women is very appealing to most men," Bilzerian said.
"At the end of the day if you want to effectively market to a target group, you're not going to appeal to everybody. Those companies that try and cater to everybody, end up making everybody not care."
"I don't tell them how to run their company and they shouldn't tell me how to run mine."
The company now offers a diverse range of CBD and THC products to the US market, ranging from oils, edibles and balms to vapes and CBD pods, although the sale of the latter is exclusively limited to dispensaries in California. Luckily, CBD-based products made by Ignite Cannabis are already being sold internationally due to the considerably looser regulatory environment.
The company also had an extremely eventful 2019, starting with the reverse takeover of ALQ Gold which resulted in a $25.8 million capital raise at 1.50 a share.
Less than a month later, this would be followed by a distribution deal with Taylor Mammon & Nathan Limited, which saw the Dan Bilzerian Ignite Cannabis premium product line manufactured, packaged and rolled out to select wholesale and retail channels in the UK. This partnership was subsequently expanded in March 2020 to include Ignite's new skincare product line, which features a wide variety of cosmetic CBD products, including roll-ons, bath bombs, tattoo cream, moisturizers, creams, serums, and body oils.
"It's important to us and our partners that we continue to innovate and grow the Ignite brand with new innovative products," Ignite Cannabis President Curtis Heffernan said.
"We're excited to be able to introduce a new line of skincare products that we know will introduce the Ignite brand to a new audience. Our business relationship with Taylor Mammon has been a great one for us in the past and we know that together we will continue to expand Ignite globally."
Although, the real show-stopping announcement would arrive in June 2019—following Ignite's listing on the Canadian Stock Exchange (CSE)—when the company secured an exclusive licensing agreement with CX Industries. Under the agreement, CX will serve as extractor, packager, and distributor of Ignite-branded vape products and cartridges in Canada, giving the company access to one of the largest recreational markets in the world.
Another element that sets Ignite Cannabis apart from the competition is the carefully considered approach Dan Bilzerian takes to market share growth, which has allowed the company to sidestep many of the mistakes made by larger rivals such as MedMen (CSE:MMEN) and Aurora Cannabis (NYSE:ACB).
Rather than clumsily overextending its reach—or falling victim to excessive cash burn—the company was founded exclusively to target the high-end marketplace for premium cannabis brands, after Dan Bilzerian uncovered category research showing that there was a significant gap in the market.
More importantly, studies have shown that market leadership in the premium lifestyle product space—which also includes designer fashion, high end alcohol, and luxury cars—is typically driven by successful product positioning and top-down quality control. And Ignite Cannabis is uniquely equipped to capitalise on this fact, as Dan Bilzerian simultaneously acts as the company's owner, totemic brand ambassador and super influencer.
This means that he can function as a standard of excellence to his customer base—after all, he literally is the brand—while also leveraging his position as "The King of Instagram" to generate publicity and draw in new customers.
For evidence of this, you need only look towards the official Instagram account for Ignite Cannabis, which is virtually indistinguishable from Dan Bilzerian's personal account. The only difference is that the shots of Bilzerian partying it up with bikini-clad models now feature mountains of marijuana as well.
The company has also been doing well financially, and according to a revenue report from Q3 2019 Ignite Cannabis generated more than C$3 million in revenue over a three-month period last year. This represents a huge boost in product sales, as the company only saw C$3.6 million in revenue during the first half of 2019.
Unfortunately, the company is currently operating with a consolidated net loss of C$31.2 million—although this is hardly unique to Ignite Cannabis, as the industry is in the middle of a capital crunch—despite its impressive revenue growth.
Earlier this year we took a deep dive into the financial side of Dan Bilzerian's Ignite Cannabis, and found that the company had a market capitalization of roughly US$144 million in January.
At the time, this did not seem like a game-changing number—although it was still highly impressive for Bilzerian's first foray into the cannabis sector—as it was dwarfed by rival companies such as Charlotte's Web (CSE:CWEB), which was operating with a market cap of roughly US$1.12 billion.
However, the arrival of COVID-19 pandemic—not to mention the "Vape Crisis" induced capital crunch that took place in late 2019—has radically reshaped the landscape of the cannabis industry.
While the economic downturn may have caused the Ignite Cannabis stock to shed almost $100 million from its market cap, shrinking to just US$56.3 million, the damage pales in comparison to losses that have been incurred by the company's competitors.
The industry-wide downturn caused Charlotte's Web to slump considerably from its former billion-dollar valuation, and the company is now operating with a market cap of just US$449.6 million. And the situation is even worse if we turn our attention to one-time retail juggernaut MedMen, which has seen its market cap shrink to just over US$46 million according to certain estimates.
While it is still unclear what position Dan Bilzerian's Ignite Cannabis will be in once the cannabis market finally begins to recover, one significant change will be that it is now on close-to-equal footing with some of the industry's biggest players.
The high-profile boxer and former heavyweight champion of the world, Mike Tyson, has taken a more active role in the management of his privately owned cannabis brand, The Ranch Companies, in recent years.
Formerly known as Tyson Holistic Holdings, the company has been producing and distributing cannabis in the form of smokables, extracts and edibles since 2016.
I thought about how much good I could do by helping people with cannabis. It was a no brainer. The Ranch Companies Founder, Mike Tyson
However, what really put the company on the map was the recent announcement that "Iron Mike" would be opening a holiday resort—which is presently known as Tyson Ranch—aimed specifically at cannabis users in the near future.
While the luxury resort is still in the process of being built—with initial construction beginning in 2017—on a 400-acre site in the Desert Hot Springs, California, when complete it will function as a "Disneyland" for cannabis users.
Holidaymakers will also have access to a wide variety of attractions and accommodation options, including "glamping" units, outdoor amphitheatres, sporting arenas, wave pools, golfing facilities, and the world's longest lazy river.
Although a launch date for the resort has not been officially announced yet, the growing hype surrounding the venture suggests that it's eventual opening will likely draw thousands. And as seen in High Times, Vice, and Rolling Stone magazine, the Tyson Ranch is already building quite a reputation in the cannabis industry.
The Ranch Companies also added a new branded CBD water to its product range in 2019, DWiiNK, which contains up to 10mg of CBD—while also being free of artificial flavours, colours, and preservatives—that has been described as one of the "best-tasting and highest-quality CBD beverages" available on the market.
"DWiiNK is an exciting new addition to the Ranch's growing portfolio of branded products," Ranch Companies CEO Rob Hickman said.
"We expect it to be the dominant CBD beverage as a result of its incredible quality and affordable pricing."
This was soon followed by the announcement that the company had joined forces with world-renowned dog trainer, Cesar Milan, to launch a line of branded hemp-based dog supplements.
The Ranch Companies initial range of canine soft chews will consist of 4 SKU's, each containing hemp seed oil, a ratio of omega-6 to omega-3 fatty acids, and antioxidants to assist with skincare.
"This joint venture with Cesar Milan will help us to round out our branded product offerings, continuing to set us apart from other cannabis companies," Hickman said.
Aside from cannabis-themed merchandise and edibles, The Ranch Companies also specialises in the sale of cannabis strains grown by partner farmers. According to Mike Tyson, the company has a focus on both "consistency and quality" and "exotic genetics", which will allow it to deliver reliable, premium quality cannabis to its customer base.
To achieve this, The Ranch Companies employs a fastidious inspection and testing process for its cannabis products, ensuring that impurities are avoided at every stage of the production process.
At the same time, the company also submits its cannabis—which is harvested over a 30-day period to preserve the natural flavonoids and terpenes—to a flushing, drying and curing process, while also ensuring that its products have never been exposed to toxic pesticides.
To preserve cannabis trichomes—which are tiny growths found on the plant that boost flavour and contain additional beneficial compounds—the company also refrains from using industrial cultivation methods.
These steps are often skipped by competing manufacturers, as most cannabis producers tend to focus on weight rather than quality during the cultivation process, which can lead to larger yields at the expense of product consistency and flavour.
Clash of the Titans
While these two heavyweight hitters may seem evenly matched, at this point, it looks like Dan Bilzerian's Ignite Cannabis would score a clean knockout.
Even though both cannabis companies are taking on the lucrative premium cannabis market, Ignite's focus on shock advertising and targeted product positioning should allow it to leverage a considerably larger segment of Dan Bilzerian's fanbase than The Ranch Companies will be able to reach.
Additionally, The Ranch Companies could be in danger of overextending itself with its plans for a luxury cannabis resort, as its construction will require a massive amount of capex to become fully operational. This means that the resort may not be profitable for a significant period following its eventual opening and could eventually turn into cash-burning albatross around Mike Tyson's neck.
Another issue is that The Ranch Companies is also still a privately owned enterprise, which means that it is difficult to determine what the company's actual revenue numbers are, despite claims that they sell approximately "$500,000 worth of cannabis" a month.
However, the company's operating expenses and consolidated net losses are still a complete mystery, although Tyson has admitted to consuming up to $40,000 of cannabis on a monthly basis.
Ultimately, this all amounts to an admirable swing at the marijuana market from Mike Tyson, but as long as Dan Bilzerian is at the helm the championship belt has to go to Ignite Cannabis.
This could be one of the best investing opportunities of 2020
Legislative changes are blowing through the US, and with it, an ever-increasing number of states legalising cannabis for recreational use.
With the success seen in Illinois, which legalised for adult-use on January 1 and saw products moving off the shelf at an unprecedented rate, this company is primed to take advantage of the booming US recreational market.
They have secured partnerships with the biggest cannabis companies in the US, and their portfolio is second to none.
And with the sector-wide pullback of 2019, this company is now at a bargain-basement price.
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