True Leaf Medicine International Ltd (CNSX:MJ) (OTCMKTS:TRLFF) (FRA:TLA) CEO Darcy Bomford discusses how cannabis and hemp can be used as unique ingredients in the pet industry. The company’s hemp-based products are sold internationally targeting the multi-billion dollar pet food and supplement markets. True Leaf are looking to expand their brand to equine care and are researching how CBD can be implemented inside their already proven hemp formulas to treat a wider array of animal illnesses.
James West: Hey, welcome back to Midas Letter Live. My guest this segment is Darcy Bomford. He’s the CEO of True Leaf Medicine International Medicine Ltd., trading on the Canadian Securities Exchange under the symbol MJ. Darcy, thanks for joining me again.
Darcy Bomford: My pleasure.
James West: Darcy, let’s talk a bit about the business model. This is the first company I’ve heard of that actually makes cannabis products for pets.
Darcy Bomford: Yeah, for sure. We started out as an LP applicant back in 2013, and my background, actually, is 30 years in the pet industry.
James West: Really?
Darcy Bomford: Yeah. So I had started a company, exited in 2012, and at that point in time I had a one-year non-compete, and that was just when the MMPR was coming into play, and I saw an opportunity in the cannabis space, and originally started as an applicant to produce medicinal cannabis for people, and secured a location. Unfortunately, we kind of missed the first tranche of approvals, and we got stuck in the queue with all sorts of other companies, right, so…everybody knows that story.
James West: Yeah.
Darcy Bomford: And then, about a year and a half into it, we took the company public, and then we did a pivot into the pet industry. My non-compete was up, and it was a great fit for me. I always saw cannabis and hemp, specifically, as a very novel and unique ingredient in the pet industry, so with a little bit of work, we put together a line of hemp-based supplements for pets, started a different division, and that’s really what saved the company. The capital markets really looked at it as a great opportunity, and ever since, True Leaf has sort of been known as this pet company in the cannabis space.
James West: The pet company that gets your dogs high.
Darcy Bomford: Well, no, we don’t get them high, it’s just hemp, but that’s always the question we get, you know, for sure.
James West: Right. But so, what are the conditions that pets might get for which cannabis is an appropriate treatment?
Darcy Bomford: Well, very similar to people, actually. Dogs are getting older, and they have anxiety issues. So we have a hip and joint formula for older dogs, and we have a calming formula for anxious dogs, which surprisingly enough is our number one seller. I guess there’s a lot of anxious dogs out there.
James West: Yeah, well, the small ones, I guess, are more anxious with all the big ones running around.
Darcy Bomford: Yeah, must be. I don’t know. Getting our feedback, or something.
James West: Yeah. Great, so the company sells a line of products. Do you sell them at pet stores?
Darcy Bomford: We do, yeah. We’re in 1,800 stores worldwide, so we’re generating a little revenue there. We started in the US in 2016, in May, we launched the product line. We also launched that year at a show in Germany; I had some contacts in Germany before, too. So we had a separate product line made in Germany for the European market, and in North America they are made in the US. We have a distribution centre in Missouri.
James West: I see. Has it been a bit of a process getting pet owners who might be sort of morally opposed to the idea of cannabis generally, and they sort of transfer that on to their pets?
Darcy Bomford: Yeah, definitely. You know, like your concern about or saying “Will my dog get high?” Well, that’s always the question we get, right? So the early adopters, they realize that hemp is different and it doesn’t have, you know, hemp seed doesn’t have CBD, it doesn’t make people high. So they’re easy to educate, but definitely the broader market, we have to teach them what hemp seed is, some of the benefits of the ingredient, and how it helps.
James West: So dogs have an endocannabinoid system inside as well?
Darcy Bomford: They do, exactly the same.
James West: And it works, I’m imagining, as a homeostatic sort of modulator of health generally?
Darcy Bomford: It does. It works very similarly to humans, for sure, but you just adjust the dose based on body weight. But our product actually is hemp seed based, right, so the same hempseed product you’d buy in a health food store – protein powder or hempseed oil – that’s the base ingredient that we’re using for our mix. There’s no CBD in it.
James West: Hmm. Interesting. So does that mean you have superior economics when it comes to growing it and that you’re not chasing the premium dried flower market for the connoisseur, you’re strictly treating pets?
Darcy Bomford: Yeah. Yeah, we’re actually, we’re buying right from the processor in Manitoba. We’re shipping the product to the US, and it’s a different price point, obviously. So our retail price point on our supplements are about half or less than the CBD products. But we also add other ingredients to the base formula of hemp seed to really supercharge the functionality. For example, that hip and joint product, we add curcumin, which is a very popular anti-inflammatory from turmeric. We also add green lip mussel, which is another anti-inflammatory product.
For calming, we add chamomile powder or extract, lemon balm extract and L-theanine, which is from green tea.
James West: Oh, okay.
Darcy Bomford: And together, it’s sort of like the entourage effect with hemp seed, right? We’re adding other plant-based active ingredients to really supercharge the hemp.
James West: Oh, that’s interesting. So is the sort of cannabinoid complex that pets respond to, is it, does it actually do everything that it does for humans? Like so, for example, the epilepsy: the anti-epileptic effect of cannabinoids on humans, is that also transferred into dogs?
Darcy Bomford: Yes, we have seen that, specifically for CBD. So our company, we’re trying to remain 100 percent legal on both sides of the border, right? So the hempseed products do not have CBD, but we are doing R&D on a future CBD line.
James West: Sure.
Darcy Bomford: And what we’re hoping is, you know, our license is still in the queue, right, on the medicinal side of our company. So we hope to receive our license to grow later this year, license to sell next year, and ultimately, we want to be able to grow our own CBD, extract our own CBD for our future pet formulas. So we have some IP there.
James West: So I see, recent press release, you announced a new hemp-based cat treat. So besides cats and dogs, what other animals do you have products for?
Darcy Bomford: We’re working on a horse, an equine line as well.
James West: Oh, really?
Darcy Bomford: Yeah. And the cat product was specifically in Europe, and in Europe, we are able to use hemp leaf, so there is some final cannabinoids in the product there.
James West: Very interesting. What about the financial picture of the company going out 12 months? Are you a profitable company now? Will you be soon?
Darcy Bomford: Yeah, we hope to be. We’re generating, I think we announced our third quarter was a million in sales; we hope to do closer to 1.4 million when we close this year. We haven’t announced it yet, but it will be somewhere around there.
Profitability on our pet division is around 3 million in sales, so we hope to get there next year.
James West: Oh, great.
Darcy Bomford: And then grow that business as a separate division, and then on the medicinal side we’ll have the same sort of global plant-based vision for quality of life for people, right? So it’s quality of life for pets and quality of life for people.
James West: Very cool. The whole industry: is there another big competitor? Like, do you have any fears of Hertz suddenly coming out with a line of medical marijuana treats for dogs?
Darcy Bomford: Yeah, we hear rumours of other companies, you know, looking at the space. I think with my experience, I have 30 years in the pet industry, so I know manufacturing, marketing, we’ve hired the best branding firm in the country to help us brand the overall company, starting with the pet division. I think there will be some more players coming to the table, but you know, it’s an industry that we really know, so we have a bit of a head start there.
James West: So are these branded under the name True Leaf, if I was go to my local Pet Valu where I buy my dog food, is that where I’d find it?
Darcy Bomford: Yeah. That’s right. True Hemp is the brand.
James West: True Hemp?
Darcy Bomford: Yeah, and you can buy it at, PetSmart has it, a few stores in Ontario, Global, and lots of mom and pops have it too.
James West: So what is the size of this market globally?
Darcy Bomford: Huge market, you know, when you recognize, or you start thinking about the pet industry and go into a grocery, store, it’ll never be the same again, because they have an entire aisle, sometimes two aisles, devoted to pet products, right?
James West: Right.
Darcy Bomford: It’s a $100 billion industry worldwide; pet food market in the US is 30 billion, and we’re targeting the supplement market’s around 1.6 billion.
James West: Wow, fantastic. And so how do you find the reception in the investor community for the whole concept of a cannabis company that focuses on pet products?
Darcy Bomford: Very well received. You know, it’s definitely a niche that we’ve focused on; I think the capital markets recognize that. I think there’s obviously a lot of noise in the marketplace, there’s a lot of players coming to the table. Every day you hear about a new million-square-foot grow. I think what we’re focused on is building a brand and doing it properly, and you know, we see valuations down the road more like 5 to 10 times sale. Hopefully it’ll be a bit of a kicker because we’re also in the cannabis space.
James West: Right.
Darcy Bomford: But we’re building a real business with real revenue, running it like operators, you know, so I think we have a great chance to create a real brand and some value here.
James West: Okay, well that’s great, Darcy. We’re going to leave it there for now, that’s a great introduction. We’ll come back to you in a couple of quarters and see how you’re doing. Thanks for coming in today.
Darcy Bomford: My pleasure. Thanks, James.