Publicly traded CBD company Martin Sumichrast, CBDMD's CEO joins Dan Humiston to discuss the significance of having their stock, YCBD trading on the NYSE. As one of the industry's only companies to be trading on this prestigious exchange, he accepts the obligation to professionally promote and educate the benefits of CBD and explains how working with high-profile influencers like golf great Bubba Watson helps to legitimize CDB. Produced by podCONX
Publicly traded CBD company
Martin Sumichrast, CBDMD's CEO joins Dan Humiston to discuss the significance of having their stock, YCBD trading on the NYSE. As one of the industry's only companies to be trading on this prestigious exchange, he accepts the obligation to professionally promote and educate the benefits of CBD and explains how working with high-profile influencers like golf great Bubba Watson helps to legitimize CDB.
CBDMD
Martin Suminchrast: [00:00:00]the top 10 companies or so, which we're one of them, only have 17% of the overall market share. And that means 82%. There's all these little companies out there in a mature industry. It's the other way around. As you get the top 10 and then the other, everybody else, the other 20%.
So for us, that's 80% market share that we're going to go after and we're at like one and a half, 2% of market share. So I look at it and I tell my folks, we need to get up to seven, eight, 10% market share, and it's right there to get. today and raising cannabis capital. We are joined by [00:01:00] Martin Summa crest, the chairman and CEO of CBD MD Martin. Welcome to the show.
thank you so much for having me. It's a pleasure being here.
Dan Humiston: I'm looking forward to having you on the show for a while. And I know all of our investor listeners are really going to enjoy today's show because CBD M D is the only CBD company trading on the New York stock exchange.
that's just incredible. And for the industry, it's just a really positive step in the right direction. Since the passing of the farm bill, the CBD industry has exploded Marty with thousands of cannabis companies selling CBD in one of the most disruptive years ever.
You had a huge increase in net sales. What's the secret sauce that's driving CBD MDs. Incredible success.
Martin Suminchrast: that's a great question. I would always say, the number one thing when you're trying to, Take a business from, where we were when the farm bill passed with 18 employees and grow it into a business. Now we're at 180 employees [00:02:00] and be successful at it. You have to have focus and our focus was.
We wanted to build the brand in the space, like brand matters to us. Sales, obviously matter to us, don't get me wrong, but brand matters. And we've been through this, my partner, Scott Kaufman, and I, we're entrepreneurs, we've bought and sold businesses. And we understand in these new industries, you get this early rush.
And that's what we saw. You pointed out perfectly, in 2019. And we're probably. Two or 3000 companies come to market and I don't call them brands. I call them products because that's what they were, everybody and their uncle had a CBD product. And you saw them everywhere, but nobody really sat down and said, okay, how do you create a long lasting brand?
Because when you get brand, you create value. think of red bull in the energy drink space. I don't want to go so far as say Coca-Cola in the soda space, but you get my point. brand matters over time. And so that's what we did. we think we have one of the [00:03:00] best names in the space.
it fits everywhere. You don't have the video, so you can't see it on my shirt, but, Bubba, Watson's one of our guys that fits our attack. You can see some of the names of some of these CBD companies and I'm like, Manitoba harvest. So how does that fit anywhere?
What is that? it's catchy people get it. and so you start with that. And so brand has created, customers, and from there you work on, obviously having great products, doing everything properly, and then ultimately getting the trust of the customer.
the trust of the customer is everything. And we've worked really hard to do that. And to do that, you can't cut corners. particularly in an industry that kind of comes out of this murky cannabis, we kind of thing, the average customer is ah, I don't know, is this gonna get me high?
that was the big question when we started a couple of years ago and we're the largest non THC CBD brand. and that's important because they, we wouldn't have gotten bubble lots and we wouldn't have gotten Bella tore lifetime, All these different leagues. And we got the biggest roster of athletic clients of any [00:04:00] CBD company, let alone any cannabis company.
And you couldn't have gotten all that. if Bubba fails a drug test, So you pick a direction, you stay focused, you stay true to it, and you just, grind it out. And what we're finding is that, the direction we took was the right direction. and the sales are there.
when you go up 77% in sales and Oh, by the way you spent the entire second year in COVID, that's pretty good.
Dan Humiston: . I would say that's pretty good. Talk about COVID , how has it impacted the CBD industry?
Martin Suminchrast: my dad always used to say that crisis brings clarity. we told wall street when we got started at the end of 2018, we needed four or five quarters to build everything out and we were going to be running losses until we kinda got to that point.
we got to that point, at the beginning of this year where we saw, okay, we had, gotten the manufacturing built out. We had hired everybody. We had gotten the logistics center, ironed out, all of our corporate, our sales teams, our it, all that, hiring all these people, doing all this.
and we said, okay, now we're [00:05:00] there, imagine a plane taking off, use a lot of gas and then you get to cruising altitude and you pull back the throttle. So that's where we're. and then the question, as a business person is okay, how do you get to profitability?
and in a normal environment, you're looking at your SGNA and you're looking at cuts and you're looking at things you don't want to do Andusually, you're always thoughtful about it, because sometimes it's people, sometimes it does and COVID hit, there was none of that.
It was like, we're making these decisions like this afternoon. because it was like, I remember March 18th hit and it was Mecklenburg County where we are in Charlotte and , I was sitting on a call and somebody came to me and said they just went to shelter in place. And I went, okay,this is going to be something we all remember that.
I'm sure you are, the more you are and everything else. so the decisions were quick and they were, turned out to be the right decisions. we cut our SG and a. from 12 million on a quarterly basis to eight sequentially, that doesn't necessarily happen unless you really, have focus and you're doing it and yeah, our sales [00:06:00] dropped a little bit.
what we saw was, we were always an online play, we've always had a majority of our sales, online and the rest were to brick and mortar, but we were running about 60% online. We saw the brick and mortar obviously pulled back because of the store closing, but we saw our online just take off and explode.
And now we're running 75% online and our sales are up sequentially quarter over quarter. So it's been an incredible challenge. And I can't tell you how proud I am of all of the folks here at CBD MD , we never missed a beat. we had all the people working and we took all the precautions and, and we continued to ship out.
we've had the biggest quarters we've ever had and you're talking about shipping a lot of product. FedEx came to us the other day and in this getting off topic, but I'll give you some idea. We're like the second largest amount of shipments in this regional area in FedEx.
Dan Humiston: that's a good sign for the industry.
Martin Suminchrast: it's just an [00:07:00] amazing thing. Looking back, six months on what could have happened. And I looked at some of our competitors and I look at their numbers and some of these guys are down 60% year over year, and we're up 20, 30%,
Dan Humiston: the next thing I was going to ask you is that. it feels like the CBD industry is making a move from the wild West. Anything goes to being more professional. And this COVID may have accelerated that process a little bit and weeded out some of the bad actors and the hanger honors an addition to that.
I think there's some government involvement now that's weeding out some of the bad players. Are you seeing that?
Martin Suminchrast: Yeah. So , in 2019, everybody came in, then the easy money. Basically stop and thenthe smaller companies that thought they could make it. we're starting to go out of business and consolidation was happening and then COVID hit.
And that was the next nail in the coffin where a lot of the smaller places that were trying to get into retail and [00:08:00] didn't have, the robust. Direct to consumer business we have. And so the next leg of companies dropped off and now what you're going to see is regulations coming out. the FDA has already submitted the enforcement guidelines to OMB on BEOS scored it, just to give the listeners an idea.
That means they've figured out how much it's gonna cost. And then they're going to release that probably after the election. and that's going to be the first step. And that's basically going to say, Hey, listen, here are the things that you have to do. If you want to be in business, here are the things you can't do.
you mentioned bad actors. It's been this way, a lot of new industries, where you get the quick buck artists and the bad actors come in and they dirty up the place, but eventually they get weeded out and we're seeing that regulation is going to be coming in.
And then next year we think is the bigger regulation, which is really going to set the tone for the longterm future. , Ben, Brightfield group.
said that the top 10 companies or so, which we're one of them, only have 17% of the overall [00:09:00] market share. And that means 82%. There's all these little companies out there in a mature industry. It's the other way around. As you get the top 10 and then the other, everybody else, the other 20%.
So for us, that's 80% market share that we're going to go after and we're at like one and a half, 2% of market share. So I look at it and I tell my folks, we need to get up to seven, eight, 10% market share, and it's right there to get. Now that's before the overall industry grows. Industry right now is a billion and a half dollars.
Okay. They're talking about it growing too, depending on who you listen to 6 billion up to 20 billion. So you've got a huge growth in front of us, plus, we're going to grab that market share. So for us, we're super excited. And for 2021 and beyond,
Dan Humiston: oh my gosh. Like you said, the pie's getting bigger. there's going to be less players. So your slice of the pie just gets bigger. you're in a cat bird seat. You are in the catbird seat right
now.
Martin Suminchrast: and the regulators are going to say, Hey, you can't be in [00:10:00] business unless you do these things. And we've done all of them.
Dan Humiston: Yeah, you already there.
Martin Suminchrast: you have to be GMP certified, you have to have certain processing and things in your lab. And the smaller guys, they're just not going to be able to do it. And we really have a tremendous runway in front of us.
Dan Humiston: Man. what are the plans for 2020 since talking about the runway?
Martin Suminchrast: Yeah. So first of all, obviously we talked about grabbing that additional market share.
we're the first company, to be, allowed to run television commercials. And the way we got that was our relationship with Bella tour, which is the big MMA, UFC and Bella tour, they're owned by CBS Viacom. And so we went and said, look, we'd like to run ads and historically CBD companies.
Can't run ads. on television, but because we've done the work, we've built the partnerships, whether it's lifetime, whether it's, Bella tour, whether it's, all these other leagues that we've worked with, , the powers to be.
at CBS Viacom said, you know what, if you do it under this, commercial type, right? [00:11:00] , we'll let you do it. we started running that in September and our return was like, unbelievable. We couldn't believe. And we're like, wow, this is incredible for a new product, a new brand that hasn't been seen on TV,
and we think next year, our television opportunity. Is going to be enormous for that. Second of all new products, we've got some unbelievable products on the shelf, which we think are going to roll out here in the next 60 to 90 days, which are going to be, game changes. So we're excited about that.
and then the other one, which is a little bit of a sleeper, we don't really talk about it and it's come to us, as the international market. we have countries coming to us. We want to sell your product in, I think we have 16 different countries we sell into now and we didn't look for those.
they named us. . So that's an exciting piece beyond that. We're just continuing to grow our direct to consumer.
we like being the number one traffic site. Of any CBD company in the country. . And, we're now on a pretty good trajectory.
Dan Humiston: Pretty good trajectory. I would say that's for sure. I'm going to have all your [00:12:00] links in the show notes, including your symbol, which I believe it's why CBD is that? did you nail that one?
W what? An awesome symbol. Good for you. Good for you.
Martin Suminchrast: I thought it up, but Scott Kaufman, my partner thought it up. So
it's a great one. It's a
Dan Humiston: why CBD? Why? That's a great one. That's a great Martin. Thanks for being on the show today. It's been a lot of fun.
Martin Suminchrast: thank you so much. I really appreciate it. And let's do it again soon,