In this edition of "Rising High," The Fly conducted an exclusive interview with Jerry Pearring, chief executive officer of Real Brands (RLBD), a brand building company in the hemp-derived CBD space. Here are some of the highlights:
BUILDING BRANDS: Real Brands is a Florida-based brand building company active in the legal hemp industry focused on growing through smokables, edibles and topicals. Pearring said the company owns four trademarks, three of which it plans to launch between now and the end of the year. The first brand is the company’s HempAid, a clean and responsibly crafted line of CBD infused products. Pearring said, “We look at HempAid as sort of our value brand, a brand that we could take those SKUs and make them available to consumers that would be familiar with the space and either resell them online or in traditional retail settings." The second brand is the company’s Humboldt brand, which Pearring said is Real Brand’s “outlaw brand,” named after the black market in Humboldt, Northern California. “That’s a brand that we’ve actually designed a little more cutting-edge look for the packaging and we’ll probably start with those same SKUs,” he said. “Our original plans were to evolve more into the smokeable space. I’m not sure we’re ready to make that commitment today with what’s going on but that’s more of the cutting edge brand.” The company’s third brand is CBD Pharmacy which looks to combine ancient Chinese remedies with modern CBD benefits. Real Brands recently agreed to acquire proprietary CBD formulas consisting of ancient Chinese medicine and other ancient herbal remedies from Integrative Medicine U.S. and plans to use the formulas for CBD Pharmacy. “We will be combining those CBD ingredients with ancient Chinese remedies to have a unique point of difference,” Pearring said. “That would be one we would probably focus more on practitioners, chiropractors and acupuncturists versus traditional medical settings.” The company’s final brand is Omega Hemp, for which it is developing a line of beverages and researching additional SKUs in other categories in the food and beverage space.
COMPETITIVE EDGE: The CEO said he believes the company’s key differentiators are branding and its ingredient base, adding Real Brands is continuing to evolve. “We’re always looking at new opportunities to have unique formulations,” he said. “I think our marketing background and understanding positioning and driving sales through a strong market positioning is one of the advantages we have. There’s a lot of what they call white-label going on and I don’t think that really addresses the consumers’ interest in what this category represents.” Pearring said he also thinks Real Brands will have a competitive advantage from evolving its formulas into something more and the company has a deep trapline of people it has previously worked with in consumer products, both in distribution and retail. “Obviously a high percentage of business is expected to be online and that’s a very important part of our plan as well,” he said, adding the company has recently acquired realbrands.com and plans to launch its e-commerce site soon.
AUDIT COMPLETION: When asked about the recent completion of the company’s two-year audit, Pearring, who has served as CEO for 12 years, noted Real Brands is a pink sheets company. “We were on the bulletin board when I took it over and of course as many people in the economy went south and budgets got tight, we went to the pink sheets in 2009,” he said, adding the company spent a number of years repaying debt and reviewing different business plans. “When we came over here in 2017 to the CBD industry we were not only able to get our footing but also raise the necessary capital.” Real Brands retained an auditor in January, the CEO said, and while a two-year audit seemed pretty simple, it was a long process as the company had been off the bulletin board for a number of years “He said, “Now the uplisting process from there is two steps. One is filing the form 10 with the SEC and the second is filling out the application for the OTC Markets. We can do them in either order but we need the two of them combined together to uplist.” Pearring said he believes it is reasonable that the company could complete the uplisting between now and the end of the year, although comments could potentially come from the SEC.
EXPANSION: The CEO said Real Brands is currently focusing on putting one foot in front of the other, launching its three brands and e-commerce site with a target between now and year-end. “We have retained a consultant to reach out to about 200 retail chains at this point as a way of saying we’re not ready for trade shows, we’re not ready to hop on a plane and make sales calls but we’d like to introduce our company and show our artwork,” Pearring said. “As we launch our products, we will then ship samples to all these people so that in the future, maybe in 2020, these people have some familiarity with us.” He said the first step is to grow nationally and he believes it makes sense to focus on launching a regional footprint. “We did have at one point 50 to 75 smoke shops in South Florida,” the CEO said. “I think that’s the low hanging fruit that we can open up fastest but if some of these chains or distributors come on board we’re more than prepared to deal with those opportunities. Internationally, you work trade shows, you run your ads and you find your path but we’re not proactively looking for international opportunities.
CHALLENGES: When asked about the challenges facing the company, Pearring said the current short-run hurdle is securing larger funding opportunities. “We have to get uplisted before we can really have an opportunity to get in front of funds,” he said. “We still raise equity and we stay away from debt as much as possible but finding high net worth individuals that are qualified and interested in our brand is not the easiest thing to do when you’re a small company.” He added that “I would expect that once the uplisting is complete, the product is launched and the website is active, that’ll put us in a place where we can reach out to more of the institutional community." When looking at the challenges in the industry as a whole, Pearring said he sees the regulations and legalities around the space as the biggest growing pain. He said, "If you’re going to call something a pain bomb it has to have this ingredient base. I think once those regulatory issues are finalized it’s going to make everybody’s life a lot easier.”
OPPORTUNITIES: Pearring said he is very excited about the space as it has not yet seen the opportunities for CBD. “Consumer products that have been presented today, whether its topical or smokeable or ingestable, the opportunity is yet to be seen,” he said. “People are going to come up with uses for this product or there’s going to be some combination, that hopefully we come up with, that really captures the essence of what CBD really should be.” The CEO said he has been visiting smoke shops, selling the company’s line and looking at the competition as well as spending time with labs, product developers and formulators and he believes there is so much more to be discovered in the CBD industry.
VAPING CRACKDOWN: When asked about the FDA’s plan to take all flavored e-cigarettes off the market and review the impact of vaping on public health, Pearring said the situation is sad. “I completely agree that I don’t want to be influencing young adults to be smoking anything and the flavors could play a key role in that,” he said. “Then the fact that there may have been some things that caused death, that’s just a horrible situation. We’re very cautious anyway, just with our choice of SKUs, but we’re double and triple checking everything that was slated as a smokeable because we’d rather wait until the FDA comes out and tells us what’s next.”
OTHER CANNABIS STOCKS: Other publicly-traded companies in the space include Aurora Cannabis (ACB), Aphria (APHA), Canopy Growth (CGC), CV Sciences (CVSI), CannTrust Holdings (CTST), Cronos Group (CRON), General Cannabis (CANN), Greenlane (GNLN), India Globalization Capital (IGC), Innovative Industrial Properties (IIPR), ICC International Cannabis (KNHBF), Biome Grow (BIOIF), MediPharm Labs (MEDIF), Indiva (NDVAF), KushCo (KSHB), MedMen Enterprises (MMNFF), Elixinol Global (ELLXF), Planet 13 Holdings (PLNHF), Wayland Group (MRRCF), Khiron Life Sciences (KHRNF), Liberty Health Sciences (LHSIF), Organigram (OGI), Origin House (ORHOF), Sunniva (SNNVF), Sproutly (SRUTF), Tilray (TLRY), Trulieve (TCNNF), DionyMed Brands (HMDEF), GrowGeneration (GRWG), Harvest Health & Recreation (HRVSF), Zynerba (ZYNE), Delta 9 (VRNDF), Canopy Rivers (CNPOF), Westleaf (WSLFF) and Tetra Bio Pharma (TBPMF).
