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5 Things Wall St. is Watching After DOJA's First Day of Trading

August 10, 2017

 

Given that yesterday was DOJA Cannabis' (CSE:DOJA) first day of trading on the CSE, here are five things you should know about DOJA, the newest cannabis company on the CSE and Canada's only lifestyle focused licensed producer:

 

Getting away from the pack (aka. DOJA's strategic positioning & differentiation)

 

Being like just everyone else is cool when you are in high school, in business, not so much. Failure to differentiate can lead to all sorts of unfavorable outcomes, including lower sales and margins. Watch the LPs for long enough and you'll start to pick up on how each of them are trying to differentiate themselves (some more successfully than others) in attempts to avoid the inevitable commoditization of cannabis. This is not to say that commoditization is a bad thing, rather it goes to say that companies that wish to avoid (or who aren't strong enough to compete in a commoditized market) are going to have to differentiate themselves both quickly and effectively. DOJA is breaking away from the pack by setting themselves up as a "lifestyle brand” allowing them to become more than just a product to their customers, therefore allowing them to command a higher price. Additionally, upon Canadian recreational legalization, DOJA's status as a premium cannabis lifestyle brand is going to become even more important. More so than medicinal cannabis, recreational weed is sold on the basis of brand, as consumers want to consume the brand that their friends use, the brand that fits their ideals etc. DOJA's strategy fits well with this assumption. 

 

Quality + Brand = Success, or Something Like That

 

Let's be honest, it's a stretch to connect men's underwear with cannabis. That being said, it's very easy to make a solid connection between Trent Kitsch's success as Founder of SAXX Underwear and his ongoing success as co-founder and CEO of DOJA. Both companies reflect the intersection of quality and branding. SAXX Underwear gave consumers an innovative solution to a common problem, add top notch branding and you get one of the fastest growing men's underwear brands in North America. Applying this logic to DOJA, you can imagine how their unique (amongst the LPs) combination of a top shelf product and expert branding looks like a recipe for success. 

 

The Execution (aka. making it happen) 

 

We just went through DOJA's "recipe for success", but even the best recipes can turn out to be a flop if they aren't executed properly. The good news for investors is that DOJA has at least three things going for them in terms of execution.  One, DOJA has curated a range of top-shelf, handcrafted strains that they believe are ideally suited for Canada's emerging cannabis market. Two, location, location, location; Kelowna, British Columbia (DOJA's home base, and the location of their first Culture Café) is known for its wineries, lakes, golf courses and ski resorts, making it a popular tourist destination. DOJA plans to leverage the region's tourism to help them build a far-reaching brand. Three, their Culture Café's serve to help build brand awareness, pre-register medical marijuana patients and generate revenues through the sale of locally roasted coffee, branded clothing and accessories that fit the DOJA lifestyle. 

 

Where the magic happens (aka. the facility) ...

 

DOJA owns and operates a 7,100 square foot cultivation and processing facility located in West Kelowna, BC. The facility has three equal sized grow rooms that are each capable of producing approximately 660 kg/yr. In terms of storage, DOJA has a level 7 safe that has a licensed storage capacity of up to 650 kg of dried cannabis. And... that’s just phase 1. 

 

DOJA has the ability to add more than 40,000 sq. ft. of production space, potentially increasing their production capacity to more than 5,000 kg/year. 

 

Money talks (aka. key financial metrics and projections) 

 

Clearly, DOJA is pre-revenue given that they just begun cultivation this July, and have yet to open their first Culture Café (although their first location is set to open later this August, meaning revenues aren't far down the road). Beyond revenue, there a few other key financial metrics that existing or potential investors in DOJA should pay attention to. DOJA has $4.5 million CAD in cash (as of July 10th, 2017) and 58.8 million shares outstanding (as of August 9th, 2017). According to DOJA's July investor presentation, the company forecasts that phase one of their facility has the potential to generate $7.9 million CAD in revenue excluding oils. Upon the completion of their expansion plans, management estimates that DOJA will be able to generate over $60 million CAD in sales. Additionally, DOJA projects gross margins of 50% - 60% and EBITDA margins of 25% to 35%.

 

Conclusion

 

We're working on a marijuana stock profile for DOJA Cannabis, so be sure to check back soon and subscribe to our free email newsletter to find out when it becomes available. So you never miss an important update from one of Canada's 52 licensed producers, be sure to subscribe to our free LP updates email newsletter. Also, visit us on social media via FacebookTwitterStockTwits and Instagram.

 

D/M/O

 

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