Why Invest in Delic Corp. (CSE: DELC, OTCQB: DELCF) – the TL;DR
- Early Entry Into An Exploding Market Sector.
Psychedelic investments are soaring and so are expectations of how big this emerging market can grow. Delic is among the first half-dozen public companies in this space—many of which have seen incredible gains and growth. MindMed has quadrupled in value while Compass Pathways has almost tripled. Psychedelics companies will be supported by PURPOSE-DRIVEN investors, putting many shares in the hands of activists who are likely to hold with cult-like intensity. - Big Problem = Big Opportunity
Mental health problems rank as the number one cause of disability and illness in the world. According to the World Health Organization (WHO), over a quarter of the world’s population will be affected by a mental health issue in their lives. It’s clear that current treatments are inadequate at best. Psychedelic treatments are showing dramatically improved efficacy in addressing this massive global problem. This is one way great businesses are born – by disrupting a market addressing expansive, universal problems. - Reasonable Financing + Super Tight Structure
This is venture investing. We’re betting on this team to create value with our capital. The Delic team didn’t just put their hands out and ask for a truckload of cash. They raised just enough to go out and leverage their expertise and bootstrap VALUE for shareholders. Of the 54 million shares outstanding, over 35 million (including the team’s shares) have been locked up. This demonstrates significant commitment to shareholders and self-confidence in their ability to create value. - Best Team EVER
Matt and Jackee Stang’s careers have primed them for this exact opportunity. They have a proven track record of bringing fringe culture into the mainstream. Both Matt and Jackee were instrumental in the wealth creation that came with the birth of the cannabis investment sector. Matt spent 21 years as the face of High Times magazine and brought The Cannabis Cup to North America. Jackee is the former vice president of content at High Times and has transformed several other fringe brands into mainstream staples (Bulletproof, Quarter Brands, etc.). Other team members are equally impressive industry leaders in the space. - Delic’s Multiple Advantages In Gaining Exposure To Psychedelics
The team’s dual punch of extensive institutional knowledge and high-level connections make them the ideal liaison for putting your investment capital to work in this emerging sector. Their monetization strategy is to acquire existing, LEGAL, cash-flowing businesses in the space and use their media expertise and reach to amplify those revenues. Companies such as Delic stand to capture all of the hype around clinical trial breakthroughs without having to navigate regulatory minefields or making massive capital commitments associated with drug development.
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Marijuana Truly Is A Gateway Drug
If you’re an investor who made out on the rise of the marijuana sector, you’re undoubtedly paying close attention to the recent emergence of the psychedelics sector, right?
On the other hand, if you have no idea what we’re talking about here, well, yeah, we’re talking about psychedelic drugs that promote cognitive freedom and strengthen the brains. They can also make your head spin, turn your senses inside out and have you questioning the very nature of reality. These drugs include psilocybin (magic mushrooms), LSD, mescaline, and similar hallucinogenic substances. Like marijuana, the legal status of psychedelics is quickly changing.
Psychedelics are trending towards legality due to their therapeutic promise for treating a variety of conditions such as:
- End-of-life pain and anxiety treatment for late-stage cancer patients
- Depression
- Treatment-resistant depression
- Anorexia nervosa
- Anxiety disorder
- Post-traumatic stress disorder
- Lyme disease syndrome
- Alzheimer’s disease
- Attention Deficit Disorder
- Opioid use disorder
- Alcoholism
Growing awareness that these substances pose limited health risks compared to opioids is also driving the push for legalization.
Last month Oregon became the first state in the U.S. to legalize the medical use of psilocybin and the first to decriminalize the use of all recreational drugs. The nation’s capital, Washington, DC, also passed a measure that decriminalizes the personal use, possession, and growing of psychedelic plants and fungi. This follows similar moves during the past 18 months by the cities of Denver, CO; Ann Arbor, MI; and Oakland and Santa Cruz, CA.
This groundswell of legalization and vast increase in therapeutic use research is covered in our November 5th article, “Sector Overview—Psychedelic Inspired Pharmaceuticals.,” We recommend you read it for the backstory, it highlights how and why psychedelics-based businesses are now “a thing” and details some other companies in the space.
Let’s turn our attention to Delic Corp. (CSE: DELC, OTC : DELCF), a recently IPO’ed company that is led by a management team whose members were instrumental in steering the rise of the marijuana sector.
Delic Already a Thought Leader in Psychedelics
While other publicly traded psychedelics companies are focused on developing therapeutic products, Los Angeles-based Delic is working on providing business support for all things psychedelic. Not only does this give Delic both a B2B and B2C business model but differentiates them from other companies in the space. Other companies are burdened with the massive costs of running clinical trials. They also have to contend with the potential minefield posed by myriad regulatory hoops.
Delic is already a thought leader in the psychedelics space and well on its way to becoming an established brand. The company operates a comprehensive online platform designed to educate the public about psychedelics by providing the latest research, news, and other information about them.
With more than 5,000 articles and other web content, Delic’s Reality Sandwich channel is a valuable psychedelics information resource tool that already establishes the company’s bona fides as a thought leader in the sector. The Delic umbrella across social media already has over 55,000 combined followers.
The company is also taking its psychedelics thought leadership live with the first ever psychedelics wellness summit to be held May 1-2, 2021 in Los Angeles. Meet Delic offers participants more than 20 hours of psychedelic wellness education sessions led by visionaries and innovators who are leading the charge in demystifying psychedelics and helping turn them mainstream.
HOW LOUD CAN YOU YELL?
Delic management team members firmly believe in the health benefits of psychedelics as therapeutics and have an altruistic interest in bringing them to the public. But they are also uber-successful business leaders (more on this later) who have no interest in doing it for free.
The company currently owns a handful of valuable assets in the media and digital space. Hundreds of thousands of people visit their digital brands every month for educational and informational purposes. Delic delivers because some of the most connected and influential people in media and psychedelics are working with the company. Why is this important? In a brand new industry pivoting off of the cannabis revolution, it’s the right people and experienced management with foresight who become the next business leaders. With the media assets and talent they possess, they plan on doing just that.
Like any new emerging business sector, the current psychedelic industry is fragmented, scattered, and lacking any brand leaders. Yes, Compass Pathways (Nasdaq: CMPS), the Peter Thiel-backed drug developer trying to create the first psilocybin-based FDA-approved drug, is duly recognized as a “psychedelics” company. But Compass Pathways isn’t a brand. Compass is a company developing a (very) exciting drug.
Nike is a brand—the world’s most recognizable shoe brand. High Times is one of the world’s most recognizable brands in the marijuana sector, as well as one of the biggest promoters of other marijuana brands. MedMen (OTC: MMNFF)—despite their serious issues and hemorrhaging of cash—is a smaller player in the marijuana sector, but still a brand. Privately held Bulletproof is rapidly becoming a well-known brand in the nutrition and wellness sector.
Delic has publicly stated they are looking at acquiring or investing in revenue-producing assets in the psychedelic space. They plan to use the full weight of their media prowess and reach to give every company they acquire as much scale as possible. This will help them make these yet-unknown companies the brands in the space. That is something we can get behind.
And this focus on branding in their business strategy isn’t a new concept for Delic’s management. Delic co-founder Matt Stang was the face of High Times for nearly 20 years, during which he helped build multiple billion-dollar brands in the cannabis industry. Matt and others on Delic’s management team plan to do the same with psychedelics, but with a twist. The big difference being that High Times served as the microphone, earning advertising fees for building and promoting the brand, while the brand itself produced earnings from its product. With Delic, they plan to reap both sides of the equation.
Delic Already Deeply Rooted In Psychedelics
The Delic management team isn’t just making plans for how to grow their new company and generate revenues; they’ve already started doing it. Delic currently operates a revenue-generating eCommerce lifestyle brand called “The Delic.” The company is poised to close other revenue-generating deals imminently, many of which are already in the pipeline.
Having recently completed a financing to the tune of $3.5 million, Delic is cashed up and ready to give investors exposure to a number of deals in the psychedelics space. Delic is actively expanding its business with the goal of becoming the world’s “first ever psychedelic wellness corporation.” Company management is actively evaluating prospective deals and business expansion based on specific market potential, growth profile, revenues, brand, technology, management team, and the ability to create synergies with other Delic subsidiaries.
Delic Flush with Cash and Ready to Get to Business
Delic Corp. went public on November 16. The deal was financed by the offering of 15 million shares at CAD$0.20 per share, of which the company oversubscribed due to increased investor demand for a total of 17,250,000 shares issued raising a total of approximately CAD$3.45m. Outstanding shares at the time of listing came in at ~54 million, giving the company a market cap of about CAD$10,850,000 with approximately CAD$3,500,000 of cash.
Of the shares outstanding, more than 35 million will be locked up and only about 18 million are currently free trading, of which the vast majority are from the $0.20 financing. Why is this important? When there is a low float and no “cheap paper” free trading when a company lists, it creates a situation where there is very little resistance in the stock. When this happens, price appreciation in the stock is much more fluid—this is financial engineering at its finest and you should take advantage of it.
Nobody is investing into a company like Delic at CAD$0.20—a hot start-up in a hot sector—to sell for a few pennies higher out of the gate. Combine this ideal share structure with the huge amount of momentum in the psychedelics space in general and we feel like Delic will likely be uprated fairly soon.
The projected closing of expected deals in the coming months could potentially add a nice boost to the current share price. Public interest in psychedelics is rapidly expanding, which means that more and more investors will become aware of this fast-emerging sector. As the sector appears to be mimicking the emergence of the marijuana sector, any positive news relating to psychedelics should also help boost the Delic share price.
Psychedelics—like marijuana—could find favor within the surging megatrend of purpose-driven investing. For example, investments flowing into ESG funds more than tripled during the first six months of 2020 compared to all of 2019. Some analysts say that the 600-plus ESG-focused ETFs and related investments now represent more than $1 trillion under management worldwide.
Purpose-driven investing tends to appeal to those who approach investing as an opportunity to support ideologically favorable companies and products while also earning a return. Activist-oriented shareholders are less likely to let go of their holdings to realize small gains for their shares (think Bitcoin and Tesla here.) This puts more shares into strong hands, further narrowing the available float. And fewer shares in the face of demand amplifies share price gains.
Past Success an Indicator of Future Prospects
We referred to Delic’s management as being “uber-successful” above. We should probably provide a bit more detail. Given that a company’s management is often key to whether a business is a “make or break” proposition, the first thing to know is that Delic’s management team helped “make” the multi-billion-dollar cannabis industry. If you banked some gains there, then get ready for round 2. But let’s dig deeper so that you can gauge the full spectrum of their business acumen. That is, business acumen combined with personally knowing just about every player involved with the emerging psychedelics sector.
We’re going to repeat that last sentiment: “personally knowing just about every player involved with the emerging psychedelics sector.” That’s a huge point, as “who you know” often proves crucial to a new business’ success.
Matt and Jackee Stang, Co-Founders—Matt and Jackee, who both worked in upper management roles for High Times, possess exceptional skill sets, institutional knowledge, business acumen, and extensive connections in the psychedelics space. Little doubt that this will prove crucial in bringing about Delic’s vision.
Matt co-founded Delic with his wife after serving a 21-year stint with High Times, with roles as a senior advertising rep, director of advertising and sponsorships, and chief revenue officer. Matt was instrumental in establishing the High Times’ Cannabis Cup—the world’s largest cannabis festival—in America. This, along with other High Times-related roles, helped him establish one of the biggest business networks in the alternative drug world. These relationships will prove instrumental in successfully implementing all Delic initiatives, whether partnerships and acquisitions, or supply chain strategizing and brand building.
Matt has been an enthusiastic partner in the development of Delic from concept to reality. This was spurred in part by witnessing first-hand how his wife benefited more from a few sessions of psychedelic-assisted psychotherapy than she had from 20 years of traditional psychotherapy and antidepressants. Additionally, he recognized that the timing was perfect for making a transition from the cannabis industry to the emerging psychedelic space. Last, throw in some self-awareness that he and his wife were uniquely positioned to build what they expect to become the biggest brand in psychedelics.
Jackee is the co-founder of Quarter Brands, a California-based cannabis dispensary company and the former vice president of content and programming at High Times and former producer of the Bulletproof podcast. Jackee, who serves as Delic’s CEO, came up with the idea of creating Delic as the world’s first psychedelic wellness corporation by realizing that there was a tremendous amount of academic research being conducted on psychedelics. This research was proving the benefits of psychedelic-assisted psychotherapy but nobody was talking about it to the public. She also recognized that the high degree of interest in the medical and research fields suggested that psychedelics, like marijuana, could enter the mainstream and soon be universally accepted.
Kraig Fox, Director—With extensive executive experience in the media, branding, and cannabis industry, Kraig holds a key role in advising Delic on its business initiatives and in helping the company close important deals. Along with serving as former CEO and president of High Times, Kraig was the founder of CKX Inc. and a senior managing director of entertainment and media for Guggenheim Partners, among other important business roles.
His numerous major business accomplishments include helping navigate Guggenheim Partners’ $375 million acquisition of Dick Clark Productions and being responsible for operating some of the company’s other media assets, including Billboard Magazine, The Hollywood Reporter, the Clio Awards, and Adweek.
As founder of CKX, Kraig oversaw the acquisition of the Elvis Presley estate, and was responsible for all aspects of the company’s international media operations, including Elvis Presley and Muhammad Ali branding and licensing, as well as operation of Graceland and production of “American Idol” and “So You Think You Can Dance.”
To say that Kraig is a beast in business is a vast understatement, and he will undoubtedly prove to be a valuable asset going forward for Delic.
Greg Crowe, Mergers & Acquisitions Advisor—Greg has invested over $100m into the cannabis industry through both a leading family office and his private equity fund, Serendipity Growth Capital, where he is chief investment officer. He sits on the board of 14th Round, the leading manufacturing company in the cannabis industry and is an advisor to HERBL, a California-based cannabis supply chain solution provider. His fund has invested in every round of financing that Delic has conducted and owns over 10% of the company.
Brett Fink, Lead Monetization Strategist—The newest member of Delic’s management team brings significant expertise helping new companies effectively expand and scale their operations. Brett has guided and implemented monetization strategies for numerous up-and-coming companies in a number of different sectors. Brett was instrumental in helping grow Old Pal into one of the largest multi-state cannabis brands. Brett helped the brand become the top product by volume sales during the first year of business in both California and Nevada. He also guided the expansion of the company’s product line and brand name from California into Nevada, Oregon, and Washington. Most recently, Brett worked at 500 Startups, where he had a key role in helping grow business at Snapchat (NYSE: SNAP) and pre-IPO Casper (NYSE: CSPR).
Delic Holdings’ nine other company directors and advisors reads like a veritable “Who’s Who List” of people that helped bring the emerging marijuana sector into fruition and/or have significant roles in the holistic health field. They include the former CEO of PharmaCann (one of country’s largest vertically integrated cannabis companies), the founder of MagicalButter (cannabis edibles company), and the CIO and co-founder of Apollo Neuroscience, to name a few.
A Rising Tide Lifts All Boats
Delic is one of a half-dozen or so companies in the fast-emerging psychedelics sector to go public this year. Companies in the sector have experienced healthy market cap valuation increases since their respective IPOs, and positive news and share gains from any one of them could help drive interest in—and share price gains—in the others. Given the difference in IPO pricing, share structure and respective gains, Delic could easily run to CAD$0.50+ per share – even before any major announcements – just to get in line with the action experienced by the others. So look out when the deals in the pipeline start getting announced!
Delic is THE inbound marketing and information hub for the burgeoning psychedelics movement. Their relationship with and education of the general public is not only growing their network effects with layperson consumers and mental health treatment seekers. It is also attracting interest from existing businesses and clinics in the space as Delic establishes one of its many roles by connecting the interested to the vetted, legal and interesting offerings of psychedelic wellness.
Check out what Jackee and Matt have to share about their vision and business plan here, as they talk with Jody Vance from Equity.Guru.
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