Deal To Watch: Simplifying the Cannabis Consumer Experience

Key Stats:

Summary

Jane West has been selected as a “Deal to Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10%-20% of our due diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to [email protected].

Problem

It’s no secret that cannabis and CBD consumption is becoming more mainstream. Cannabis is legal for recreational use in 11 states and for medical use in 33. Another 15 states have decriminalized the substance. As these trends continue, demand grows for trusted brands and names, from consumables to paraphernalia. In this emerging market where large incumbents are nonexistent, there is plenty of room to win out.

Additionally, given the novelty of this market, curious consumers can become confused by the vernacular, making consumption daunting.

Solution

Jane West simplifies the cannabis experience for both the regular and first-time users. Specifically, Jane West offers a comprehensive cannabis, CBD, and paraphernalia product line with simplified rhetoric, inviting in users on both ends of the experience spectrum. The company operates on several verticals: glassware, one-hitters, and consumables (which can be further broken down into CBD and mini joints). 

In line with this simplified rhetoric are Jane’s “night” and “day” lines. When speaking with Jane, she compared her labeling to that of DayQuil and NyQuil, the popular flu medication. As opposed to using complicated lingo and diving in to the different strains and their composition, the entire consumables collection (with the exception of coffee which comes in light or dark roast) is broken into a binary day and night labeling system. This system radically simplifies the messy and often convoluted current means of cannabis classification both in terms of strains and desired effects. 

The “day” blend acts as a “sensory lift” and is meant to be consumed throughout the day for sustained energy levels. To experienced users, this would seemingly equate to a sativa strain. The night blend, as the name suggests, promotes sleep and relaxation, typically found in indica blends.

This binary labeling system is applied to ready-to-roll hemp, CBD capsules, and the mini joint lines, allowing novice and infrequent users to feel comfortable consuming. This dodges legal barriers as well, as CBD  extracted from agricultural hemp is legal under federal law, so long as it contains less than 0.3% THC. 

Again, Jane’s product offerings don’t stop at consumables. Also available on the site is a range of glassware, as well as travel paraphernalia. 

This variety of verticals and simplified rhetoric serve as differentiation from a number of competing brands, including others in the crowdfunding space. For example, Juna, a previous Deal To Watch (also on the Republic platform), focused solely on oil extracts. 

The Team

Jane West is no stranger to the cannabis industry and is an active and proud cannabis user. In fact, in 2014 Jane was criminally charged for hosting cannabis-based events in the Denver area. Nowadays, restrictions are more relaxed, but that hasn’t stopped Jane from being an outspoken agent of destigmatization. Though the attention has not always been positive, Jane has found herself in the press for a number of cannabis-related stories, making her a known entity in the space. In fact, she was even featured on CNBC back in 2014 for her cannabis-fueled entrepreneurial visions.

Jane is also a seasoned entrepreneur, having previously founded Edible Events Company as well as WomenGrow, a national professional networking organization for women in the cannabis industry.

Jane holds a Master’s in Social Work from the University of Denver.

The Market

The CBD/cannabis market is undoubtedly large and growing. In the US alone, the market size for cannabis stood at $11.3B in 2018 with a CAGR of 14.5%. Steadily, more and more of the market share is being devoted to recreational use. Additionally, “policymakers are keen on addressing conflicts between federal regulations and state that impede the growth of the industry, which if rules out to be in favor federal legalization, will exponentially drive the overall market in the country.”

In fact, today there are equity crowdfunding platforms dedicated solely to cannabis startups. Fundanna, for example, is covered by KingsCrowd. This specificity is a double-edged sword for companies like Jane West. On the one hand the market is trending. On the other, it is one of the most crowded in the crowdfunding space, making differentiation crucial for success. 

Terms and Financials

Jane West is raising on the Republic platform via Crowd SAFE with a semi-high valuation cap for the industry, sitting at $15M. The latter mentioned Juna, for example, capped its valuation at $4M. 

This raise is Jane West’s second crowdfunding campaign. In 2018, the company raised $189K from 550 investors. 

Revenue for the most recent fiscal year stood at $207,259, with the cost of goods sold for the same time period coming out to $138,023. The net income for the most recent fiscal year was -$465,050, setting the monthly burn rate around $38,754.

These numbers and more are all available on Jane West’s most recent Form C filed with the SEC.

Why We Like it

A Known Entity: If anyone knows the cannabis industry, it’s Jane West. She has been in the game for a number of years. Not only does she have prior entrepreneurial experience, she has prior entrepreneurial experience in the industry. Not to mention, she has quite the press following and as the saying goes- any press is good press. Jane also entertains over 24k Twitter followers (@theJaneWest). She is knowledgeable in the space, as she is a proud user herself that wants to destigmatize the industry. Jane’s outspoken personality will likely serve her well in this trending market. 

Heavy Competitive Differentiation: Jane West is not your average product offering. The day and night consumables are approachable to users of all backgrounds and experience. This inviting differentiation will only serve the company well as regulation becomes more lax and products become less stigmatized and more accessible. 

Additionally, the travel collection provides a niche addition to the product line not offered by many other retailers. As consumption becomes more commonplace, the demand for travel paraphernalia will undoubtedly grow. 

A Number of Verticals: Jane West is not just a consumables company. An entire line of glassware products is also available, as well as travel paraphernalia. This product diversification likely provides for healthy margins and tailors to a range of customers.

Additionally, while glassware is generally purchased once, maybe twice, throughout a user’s span of cannabis use, consumables offer a stream of recurring revenue. 

The Rating: Deal To Watch

Jane West is a Deal To Watch. There is no question that Jane West is well differentiated, and the number of verticals also provides a nice safety net. The cannabis space is arguably one of the most crowded in equity crowdfunding. Only time will tell if the company is built to stand out in the popular market. However, if any company is set up to succeed in this market, it is Jane West. The heavy product differentiation truly sets the line apart. Not to mention the range of press Jane alone has received. 

At this time Jane West has only 2 full-time employees (a lean statistic, but one that will need to quickly change if the business is to scale.) 

As someone that covers the crowdfunding space quite thoroughly, I can confidently say that Jane West stands out in a sea of similar companies. I am excited to watch where Jane takes the company as she rounds out this crowdfunding campaign. She has set the company up for immense success. Having said this, regulatory measures in the space are always something to take into consideration, and the space is crowded. 

Overall, due primarily to the impressive differentiation and founder background, Jane West is a Deal To Watch. For more information about the company and Jane herself, check out Jane’s Founder Profile here.