Cookies and Gage Growth Corp.: A Recipe for Success in Michigan
April 19th, 2021
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National branding is very difficult to achieve in the cannabis industry. The federal ban on interstate cannabis commerce is the major obstacle, as most companies are unwilling or unable to set up full operations in multiple states. If a company were to choose the multi-state operator approach in the current environment, the varying regulations among the states would present other significant challenges to operating a unified and successful business.
Cookies is an iconic brand in the cannabis world, probably as close to a nationally recognized and dominant name in the industry that exists. Founded in the Bay Area in 2012 by the rapper Berner and his cultivation expert partner Jai, Cookies has grown into one of the most recognized lifestyle and cannabis brand based on innovative genetics and an authentic image full of street cred. Cookies doesn’t go it alone, however. Key partnerships have been essential to the brand’s growth, and in the lucrative Michigan legal cannabis market Gage Growth Corp. (CSE: GAGE) is the exclusive partner of choice. Here we will take a closer look at the relationship between the two companies.
Cookies and Gage Make Sense
Cookies first built up a dominant position in the California market through a commitment to quality, tireless marketing, and partnerships with everyone from the best growers to the most influential social figures. As Berner put it in an interview with Forbes, “I find the best growers everywhere and try to give them a boost by bringing them into the Cookies family in an organic way… I’m embracing what all of these great people do. You can’t micromanage all these stores and be great. You have to find great people, work with them, and have them embrace your vision.”
That inclusive, empowering attitude permeates the Cookies culture and informs every partnership for the company. Find good people who are great at what they do and partner with them. In Michigan, that means Gage. In announcing the partnership, Berner stated, “In my opinion, Michigan is the second largest market for cannabis next to California, mainly because of how educated the market is on quality flower and extract. We took our time to find the right partners, needing the right team for production, manufacturing and retail since retail was included. The group we chose had to fit culturally as well and after spending time with Gage, we were sold on the quality of cultivation and operational skills. They were just dope!”
Gage was founded on the idea that a highly competent, vertically integrated company could establish a dominant position in the lucrative Michigan cannabis market. The company controls its own cultivation, processing, distribution, and retail operations in the state. Gage produces premium products that regularly sell out and command some of the highest prices in the market. According to Headset Insights Pulse, in 2020 Michigan cannabis consumers spent an average of $85 per shopping trip, the highest figure in the nation. According to Gage, their own customers spent an average of $164/visit, nearly double the statewide average.
Consumers and designers alike love the Gage retail concept. Their stores garnered design awards from ADCANN, Leafbuyer, and the Detroit Metro Times. What do you get when you combine premium quality products with a comfortable, secure, and inviting retail setting? Success. And when you add in an exclusive partnership with a leading national brand? Even more success.
Michigan? Yes, Michigan
Some of you may be wondering, why the big focus on Michigan? Berner alluded to the power of the market above and teasing out some of the numbers gives us a clearer picture. Michigan, the 10th largest state by population, approved medical cannabis in 2008, and by the time adult-use was legalized in 2019 the state boasted the second-largest medical cannabis market in the nation behind California in terms of medical cardholders.
This relatively mature medical market set the stage for the explosive growth of the adult-use market. Monthly adult-use sales have grown about 864% from December 2019 to January 2021. In 2020, the state of Michigan posted almost $1 billion of cannabis sales, a staggering 250% increase from 2019. This strong growth trajectory continues in 2021 with $108 million of cannabis sales in January, which equates to $1.3 billion when annualized.
The Michigan cannabis market is exploding, and the Gage/Cookies partnership is right in the middle of it. Berner and the Cookies team correctly identified Gage as a key player in the state, and some other notable players in the industry have done the same. The company has been backed since the early stages by noted cannabis and healthcare investor Jason Wild, founder of the $2 billion fund JW Asset Management. Bruce Linton, founder and former CEO and Chairman of Canopy Growth Corp., is the Chairman of the Board for Gage. Now, with Gage having gone public on the Canadian Securities Exchange under the symbol “GAGE”, equity in the company is available to investors of all stripes.
The partnership between Cookies and Gage could bear considerable fruit over the coming quarters as four Cookies branded stores should be open across the state by the end of Q3. These two strong companies complement each other nicely, and investors are encouraged to take note. Cannabis consumers in Michigan certainly have.
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