Rising High: Exclusive talk with house of brands Carma HoldCo

Carma Chairman talks cannabis brands, challenges, opportunities and more

In this edition of "Rising High," The Fly conducted an exclusive interview with Chad Bronstein, TYSON 2.0 Co-Founder and President, CEO of Fyllo and Chairman of Carma HoldCo, a house of brands focused on creating icon-inspired cannabis products. Here are some highlights:

NATIONAL SCALE: Carma HoldCo is a cannabis company focused on creating products evoking deep consumer connection and elevated experiences. The company houses TYSON 2.0, the premium cannabis brand of legendary boxer Mike Tyson, as well as Ric Flair Drip, the cannabis line of renowned pro-wrestler, Ric Flair. Through a vast network of industry partners including Columbia Care (CCHWF), Verano Holdings (VRNOF) and HEXO (HEXO), TYSON 2.0 and Ric Flair Drip products are now available at over 1,000 retailers across 40 states and select provinces in Canada. “We have really grown and expanded across the United States,” Bronstein said. “Our whole model has been curated to excel on a national scale through developing standard operating procedures that are consistent across each state and represent each brands identity.”

He noted understanding what consumers are conversing about, what they are interested in and how they respond to products helps to set Carma apart from competitors. “We’ve done a really good job of developing products that sell in market and people are happy with,” the chairman said. “We differentiate ourselves with the ability to really move across states with those SOPs.”

PARENT COMPANY FORMATION: In November of 2022, TYSON 2.0 and Ric Flair Drip announced the brands would come together under a new parent company, Carma HoldCo. “When we started the business, it was originally TYSON 2.0 and we were only focused on the brand with Mike Tyson,” Bronstein said. “With Mike as a devoted partner, we decided we were ready to launch more brands and under Carma, we launched Ric Flair Drip. By centralizing our branding, marketing and distribution efforts, TYSON 2.0, Ric Flair Drip and the other game-changing brands in development, will be able to scale faster to meet increasing global consumer demand.”

Carma is planning to launch another two or three brands in the next few months with other celebrities, he said. “The business now is a holding company for brands,” the chairman said. “Our focus is to continue to bring in brands that we think will do well in the market and resonate with consumers.”

HOLYFIELD PARTNERSHIP: TYSON 2.0 also announced in November of 2022 that Mike Tyson and four-time World Heavyweight Champion of the World Evander Holyfield came together to create and deliver TYSON 2.0 ‘Holy Ears’ THC and Delta 8 infused edibles. The partnership stems from Tyson and Holyfield’s intense career rivalry from 1996 to 1997, which ended with Tyson biting a chunk out of his opponent’s ear in their heavyweight rematch in June 1997.

“We launched ‘Holy Ears’ for the holidays and we’ll probably continue to do those for holiday times,” Bronstein said. “That was the focus with Evander. We wanted to bring him on to be a part of Mike Bites and pay homage to one of the most memorable situations in boxing history. We were happy to have Evander join the family as part of that launch.”

REVENUE GUIDANCE: Additionally in November of 2022, Carma reported that TYSON 2.0 and Ric Flair Drip have generated $50M in revenue since launching and are forecast to reach $160M in revenue in 2023. “We do still expect to reach our target revenues in 2023,” the chairman said. “We’re doing extremely well in scaling across the states and have made a big jump into the Delta 8 market. We’re in thousands of smoke shops and convenience stores across the United States.”

He added the company launched in Canada through its partnership with HEXO and is planning to announce expansions into additional countries in the near future. “I feel like we’re performing right there with that revenue number, if not outperforming that number by the end of the year,” Bronstein said. “Our top-line revenues are pretty high, and we hit profitability in January, so we’re pretty happy with where we are at.”

INDUSTRY COST CUTS: A number of multi-state operators have recently announced cost-cutting initiatives including reduced footprints and headcounts and the chairman noted cost reductions are happening in all industries. “It isn’t just cannabis, it’s across the board,” he said. “We’re seeing cuts at major tech companies, entertainment companies, retail companies, etc. It’s not just a cannabis issue, it’s the macro environment and fears of a recession leading to these cuts.”

Bronstein noted Carma will not have to make any cuts as it is not a large enough company in terms of operations or headcount. When asked about how industry reductions may impact future consolidation in the space, he said he expects 2023 to be a year of heavy consolidation. “If the deal is right, there is going to be a lot of consolidation,” the chairman said. “It depends on who the company is and what it costs to run that company. There are going to be companies that need to get consolidated. Some people won’t have choices, they’re going to need to go under a larger umbrella.”

ECONOMIC CONCERNS: When asked about how rising concerns around inflation and recession will impact the space, Bronstein said the industry is not so impacted through a consumer standpoint as it is due to 280E and a lack of SAFE Banking. “This is where the cannabis market is really being affected,” he said. “That’s why the prices are dropping and people aren’t able to raise capital.” The chairman added the cannabis space is seen as being a recession-proof industry, which was demonstrated during COVID when it became essential and consumers continued to purchase cannabis. “I don’t think the cannabis market is being hindered from the recession,” he said. “It’s being hindered by the laws that make it hard for operators to succeed. We’ve learned many times from recessions that alcohol and cannabis will still be purchased throughout hard times.”

LEGALIZATION: Following the mid-term elections, Republicans won control of the House of Representatives while Democrats retained control of the Senate and Bronstein said he is hopeful for regulatory change in 2024.

“Everyone has been wrong in the cannabis market on when the timelines for federal legalization are,” he said. “I do think that both sides will probably try to use cannabis as part of the election campaigns with voters. Hopefully we do see a change in 2024 from either side because maybe they’re trying to win a new voter base.”

CHALLENGES: When asked about the largest hurdles facing the cannabis space, the chairman pointed to 280E and banking reform as the biggest challenges facing the industry. “Most people can’t bank with JPMorgan (JPM) or Wells Fargo (WFC) or other banks and it’s limiting across the board,” he said. “It would have a positive impact on the industry if everyone can run their businesses like a typical Fortune 100 business can run a business.” Bronstein said the removal of 280E is necessary in order to even the playing field for cannabis firms. “Cannabis has a lot of limitations for operators which is why the industry is suffering,” he said.

OPPORTUNITIES: As the cannabis sector develops, the chairman said he sees many, many opportunities within the industry. “What we’ve learned in cannabis is you have to be thick-skinned and patient,” he said. “There are still a lot of people buying cannabis, the sales are growing year-over-year and the companies who survive throughout these hard times will have an opportunity to be the biggest players in this space.”

Bronstein added there will be a lot of opportunity for cannabis companies to grow as new recreational markets open up. “Carma is excited for huge opportunities moving into 2023 for market expansion, product expansion and launching new brands,” he said. “You’re going to see a lot from us. We’re only a year and three months old and we probably surprised a lot of people with how fast we grew in the industry. We’re going to continue to expand and create an ecosystem of partners that further our growth.”

CANNABIS/PSYCHEDELIC STOCKS: Publicly-traded companies in the space include Acreage Holdings (ACRHF), Aleafia Health (ALEAF), Atai Life Sciences (ATAI), Audacious (AUSAF), Aurora Cannabis (ACB), Avant Brands (AVTBF), Awakn Life Sciences (AWKNF), Ayr Wellness (AYRWF), Body and Mind (BMMJ), Cannara Biotech (LOVFF), Canopy Growth (CGC), Chicago Atlantic (REFI), Clever Leaves (CLVR), Columbia Care (CCHWF), Compass Pathways (CMPS), CordovaCann (LVRLF), Cresco Labs (CRLBF), Cronos (CRON), Curaleaf (CURLF), CURE Pharmaceutical (CURR), CV Sciences (CVSI), Cybin (CYBN), Delic Holdings (DELCF), Delta 9 (DLTNF), Entourage Health (ETRGF), Fire & Flower (FFLWF), Flora Growth (FLGC), Flowr Corporation (FLWPF), General Cannabis (CANN), BZAM (BZAMF),Greenlane (GNLN), Green Thumb (GTBIF), Goodness Growth (GDNSF), GrowGeneration (GRWG), Hemp (HEMP), HEXO (HEXO), High Tide (HITI), India Globalization Capital (IGC),  Indiva (NDVAF), Innovative Industrial Properties (IIPR), InterCure (INCR), IM Cannabis (IMCC), Wellbeing Digital (KONEF), Khiron Life Sciences (KHRNF), Lowell Farms (LOWLF), Lotus Ventures (LTTSF), MediPharm Labs (MEDIF), MedMen (MMNFF), NewLake Capital (NLCP), Organigram (OGI), Planet 13 (PLNHF), Reunion Neuroscience (REUN),  Revitalist (RVLWF), RIV Capital (CNPOF), Relmada (RLMD), RYAH Group (RYAHF), Safe Harbor (SHFS), SLANG Worldwide (SLGWF), Small Pharma (DMTTF), SNDL (SNDL), Sproutly (SRUTF), Skye Biosciences (SKYE), Stem Holdings (STMH), Sunniva (SNNVF), TerrAscend (TRSSF), Tetra Bio-Pharma (TBPMF), Tilray (TLRY), Tryp Therapeutics (TRYPF), Trulieve (TCNNF), Verano (VRNOF), Village Farms (VFF), Wesana Health (WSNAF), Zynerba (ZYNE) and 4Front Ventures (FFNTF).

Keywords: cannabis, weed, stocks, marijuana, cultivation, legalization, CBD, THC, hemp, psychedelics, ketamine, psilocybin, LSD, MDMA