Categories Cannabis, Interviews
Resonate Blends CIO David Thielen: Spent the last 18 months cleaning up our balance sheet
The cannabis company earlier this year rolled out six blends targeted at different experiences and is on track to launch two more
How is Resonate Blends different from other cannabis-based products?
We became a public company in late 2019 through a reverse merger with a technology company. We spun the technology piece out of the holding company and became a pure-play cannabis holding company. The first product we were going to introduce in 2020 was a beautiful vape line of products, high quality, tested very well. And then all of a sudden on the news, it was the vape crisis. And being a wellness lifestyle brand, we didn’t think it was a good idea to force that product into the market, even though we knew what the issue was.
So we spent 2020 cleaning up our balance sheet, taking care of all the toxic debt. And at the same time, we were developing this new brand of products called cordials. And there’s nothing like it in the market right now. It is a blend of terpenes, CBD, and THC. It’s nano-emulsified by our partner Vertosa and they’re putting these in little 10 millimeter bottles. Each of the different blends targets different experiences. So if somebody gets a little anxious during the day, they may want to take the Calm formulation.
Somebody that wants to go on a nice hike in the mountains here in California, may want to try Wonder. We found out that not every consumer wants the same experience, so we think this is going to have a mass appeal.
When do you expect your pending patents to be completed? And is there going to be any impact on sales due to this?
The patents are provisional, which takes a year for you to go back to see the patent office and design the specifics. So we’re doing that as we speak. But that’s not stopping us from going into the market today. It took us probably a year and a half just to get the formulations down to a science. And our team is very deep into plant science.
It’s a very deep science, so I don’t think anybody can really come up with that. But the IP is just going to be icing on the cake. We expect to have that within a year or two, but it’s stamped now, which sort of locks it in a little bit.
What’s your sales distribution strategy? Is it primarily going to be online sales or do you expect to have an offline presence as well?
We’re about to announce our new direct-to-consumer sales platform. We thought it was going to be ready in late Q4, but we think we’ll have it ready here with a big announcement in the next couple of weeks. Right now, we have great dispensaries throughout the state stocking our product. Today, we just announced one plant, which has nine locations in California. Very high-end, premiere dispensaries that just came on board. And we have a great distribution partner named MARS. MARS is all over the state, so we’re pretty well set.
But the beautiful thing about the direct-to-consumer platform is that it’s going to allow consumers to go into the e-commerce portal on our website, place an order for the cordials, and within four hours, have it home-delivered. Some people do not want to go into the brick-and-mortar dispenser. But we’re going to support both dispensaries and the direct-to-consumer and give Californians a choice as to how they want to receive their order.
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How do you see the current regulatory landscape for the cannabis industry?
We think that within the next 12 to 18 months, something is going to happen. If you look at the United States, today there are 36 states that have some kind of cannabis law, whether it’s medicinal or recreational and it’s bringing a huge tax base into each of those states. We think the banking laws are probably going to change in some form and we’re hoping that the federal law is going to change.
We’re building our company right now, for, either way, whether it’s in strategic states where you go state by state, or when the federal laws open, we’re able to scale into the other markets.
Tell us about your funding strategy. How do you intend to fund your growth plans?
In the last 18 months, we have cleaned up our balance sheet. When we took over the previous company that I mentioned at the beginning of my discussion, we inherited some toxic variable convertible debt. So the first thing that we did is we clean that up, and get a private placement. And early Q1 of this year, we raised $3.3 million. We used some of that money to completely pay off all of our debt.
So our balance sheet is completely clean. And we also paid for the launch of Koan cordials with this acquisition, that’s pending. But then likely we’re going to go to the market again and raise some capital to acquire and to expand. We feel that the days of getting convertible variable debt are over, and we’re going to the market with private placements.
What’s in store for Resonate Blends over the next two years?
We’re pretty sure that October, November, and December are going to be three busy months for us. We have two new formulations coming out. One is going to be geared towards love, to help with the intimacy issues that some people may have. And that’s going to come out in Q4.
And then we’re coming out with a very unique sleep product. We expect to have that out probably in early Q1 of 2022. And then every six months, we expect to have another variation of the cordials. We’ve already established the R&D in the front end of the cordials. So you can expect to see other forms – edibles, gummies, beverages, a lot of different products. Plus, we’re always going to be looking at other brands that we can roll into the company.
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