The Evolution of an Industry: Cannabis Companies You Should Know, Pt. 1

Photo by Justin Cannabis

2016 was a great year for the legal cannabis industry.

States that legalized recreational cannabis prior to 2017 saw a huge increase in tax revenues, job creation and local economic activity. And this has resulted in a sort of “green rush,” where we’re now seeing dozens of other states begin the process of legalization in some form.

As with any new and vibrant industry, however, there are some companies that simply stand out among the rest. These are the companies that will not only prove to be huge opportunities for cannabis investors, but huge opportunities for those who advocate the legalization of cannabis as a way to instigate positive social change while building local economies.

In this series, I’ll highlight some of these companies and show you why they’ll end up being some of the most successful players in the legal cannabis industry.

Cannabis Companies to Watch: Défoncé Chocolatier

Bloomberg claims it’ll make up half the legal cannabis business.

I think it’ll be more.

I’m talking about edibles, and there is more and more data suggesting that the demand for edibles could soon outpace demand for flower. This is a very big deal, as it indicates a maturation of this consumer segment.

Gone are the days of limited options and low-quality offerings. Today, when you walk into a dispensary, you’re greeted by a vast array of flower, edibles, oils, tinctures, concentrates and whatever else these mad scientists can dream up.

But without a doubt, it’s edibles that are seeing some of the biggest growth. In fact, the good folks over at New Frontier Analytics, which monitors and manages cannabis data, have found that the growth in edibles has actually fueled much of the boom in sales we’ve seen over the past couple of years.

Dispensaries love edibles, too, as the price points on edibles tend to be higher, thereby allowing dispensaries to capture higher sales per customer.

Personally, I’m a fan of edibles. Not just as an investor, but as a consumer. I really don’t like smoking, but if I do want to enjoy the herb I can easily do so with an edible. The tough part is finding an edible that doesn’t smell like bong water or taste like sand.

No More Pot Brownies

For the past couple of years, I’ve been hit up by well over a dozen edibles manufacturers seeking early-stage capital. While I do see the huge opportunity in edibles, I’ve always turned them down. That’s not to say they were necessarily bad deals, but when it comes to edibles, I want to see more than just spreadsheets and sales projections. That stuff is important, but when it comes to edibles, I’m not interested in investing unless management is serious about quality, not just quantity.

Anybody can pump out cannabis-infused food, but it takes real skill and passion to create something that really elevates the edibles market. And quite frankly, that’s where I see the real, long-term opportunity.

As more and more states legalize, edibles consumers are going to demand more than just pot brownies. Baby boomers, stay-at-home moms, professionals—most of these folks aren’t interested in sugar-crusted jelly rings and space cakes. That stuff was fine when they were younger, with less disposable income. But today, these people are looking for more.

Défoncé Chocolatier

Défoncé Chocolatier is a maker of high-end, artisanal chocolates infused with cannabis. I was actually introduced to Défoncé by one of my contacts in Los Angeles who’s personally working with this outfit.

Now before I go any further, there’s something you have to understand about Défoncé. This is not a company making commodity chocolates for the masses. This is quality cannabis-infused chocolate that was created by a team of veteran artisans that use single-origin cannabis and gourmet chocolate.

Défoncé actually sources its chocolate from TCHO Chocolate. If you’re unfamiliar, TCHO is a high-end chocolatier in San Francisco. It sources its own cacao beans directly from farmers and controls every step of the process from fermentation and roasting through molding and packaging. And this isn’t some little mom-and-pop shop, either.

TCHO does more than $6 million a year in revenues, and its considered one of the most successful high-end chocolatiers in the world. This is not only where Défoncé sources its chocolate, but it’s also where Défoncé found some of its earliest partners.

That’s right, TCHO isn’t just a supplier, it’s a partner. And definitely worth mentioning is that TCHO CEO Louis Rossetto and President Jane Metcalfe are co-founders of Wired magazine. They know how to run a company, and these folks thought it would be a good idea to partner up with Défoncé.

In terms of where Défoncé gets its cannabis, the company sources it from Hummingbird Medicinals, which grows and raises its cannabis in the Sierra Nevada foothills, which just so happens to be the best micro-climate on Earth for sun-grown organic cannabis.

Hummingbird Medicinals uses biodynamic farming techniques that utilize complex composting methods to build soil so abundant with microbes that fertilizer is not required. This particular method also leaves the smallest footprint possible for a farm. In fact, it actually improves overall soil health. Also worth noting is that this method is effective at growing strong, vibrant plants, some of which measure up to 16 feet tall and 30 feet wide.

All quality food products begin with quality ingredients, and this is what sets Défoncé apart from every other edibles maker I’ve come in contact with. Let me explain…

First, let’s start with taste.

Défoncé’s chocolatiers are not rookies. Their careers were spent at high-end chocolate manufacturers before joining the team. As a result, they understand how to create chocolate that pairs extremely well with cannabis.

The company’s cannabis oil is actually treated with such care that it only exhibits small traces (and pleasant ones at that), of cannabis. You can actually pick up hints of rosemary and sage. That’s the cannabis, which happens to clock in at more than 85 percent cannabinoids—an exceptionally pure cannabis concentrate.

Consistency is also a very important differentiator here.

It’s nearly impossible to find dosing consistencies in edibles. In fact, Défoncé has made the only edibles product I’ve ever had the delivers stable consistency.

You see, each bar contains exactly 180 milligrams of THC. Each section of the bar contains exactly 10 milligrams. The molds have actually been custom-made to capture the chocolate in quantities and shapes that guarantee dosing for overall bars and individual sections. And just to ensure this consistency is never lost, each batch of chocolate is tested three times by CW Analytics labs in California.

Design has also helped put Défoncé in a different class of edibles.

While some may not put much thought into it, Défoncé has designed its packaging in a way that it communicates a higher caliber of edible. In fact,, a media company that targets millennials (and enjoys a $100 million valuation), said “If Apple designed pot chocolate bars, this is what they’d look (and taste) like.”

There are a lot of edibles brands out there desperate to find a solution to the taste problem associated with edibles. Défoncé’s manufacturing secrets are protected, and management is in an excellent position to exploit that. The company just opened up a new manufacturing facility to cater to what could soon be a very significant demand.

In fact, just a couple of months ago, the company finalized a new partnership with Chong’s Choice, one of the most respected brands in the market.

Here’s what Tommy Chong had to say about the deal:

“As a swiftly growing and ambitious cannabis company, we work hard to find premium partners—companies that share our passion for cannabis, for paying meticulous attention to detail and quality, and for building thriving businesses. And in Défoncé, we know we have found a fantastic collaborator. These bars are like rectangles of munchies heaven.”

Chong’s Choice management team released the following statement”

“With this new partnership, Chong’s Choice further establishes its position as a leading cannabis brand. The current line of products, which includes pre-rolls, flowers, oil cartridges, and THC breath strips, now includes the most prestigious infused chocolate in the world. The collaboration, too, highlights Défoncé’s emergence as the most respected and sought-after manufacturer of artisanal infused chocolate in the market. The company’s line of unique chocolate bars have set the new standard in the edibles market, and its seed-to-bar approach is a national model.”

This is a very big deal as Défoncé’s first celebrity partnership is with one of the most successful celebrity brands. I suspect there will be plenty more to come.

Jeff Siegel, who’s been active in the financial publishing business since the mid-90s, works as a consultant, has been a featured guest on Fox, CNBC, and Bloomberg Asia, and is the author of the best-selling energy book, Investing in Renewable Energy: Making Money on Green Chip Stocks and is the co-author of Energy Investing for Dummies.

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