Background

As attitudes around cannabis shift, governments around the world are revisiting their antiquated drug laws. Whether it’s rescheduling cannabis for medical purposes, liberalizing CBD regulations or, in some cases, the legalization of recreational adult use, it’s clear that the North American tide of cannabis legalization is going global.

International cannabis reform unlocks a tremendous opportunity that’s significantly bigger than the North American market.  A UNODC report found that there were 157 million cannabis users globally with North America only accounting for about 15%. Jeffries Group estimates that by 2029 this market will be worth nearly $9 billion USD more than North America. 

Problem

In emerging markets, we expect brands will play an outsized role. While awareness of cannabis products is growing globally, consumers are still uninformed on the benefits of cannabis and, more importantly, if what they’re buying is reputable. Right now, international markets lack foundational brands needed to normalize cannabis consumption. 

The Solution

That’s where Choost Holdings comes in. Choost’s founder Locky Cooper approached Leaf Forward in May 2019 with the idea to build a cannabis brand platform for quick expansion into emerging markets. Confident in his vision and ability to execute, we co-founded Choost Holdings as a Leaf Forward principle venture. 

Unlike traditional cannabis companies that expand internationally through the construction and acquisition of expensive assets, Choost can rapidly launch global markets using an asset light brand platform. Instead of owning every aspect of production, Choost will build a global supply chain that does everything except production and manufacturing. This offers a launch platform for producers in low-cost jurisdictions looking to distribute their product to emerging markets. As the global supply chain of cannabis opens up and demand for product becomes more competitive, we expect producers will compete for access to these sorts of platforms.

Why Choost Holdings?

Co-founders Lachlan Cooper and Brett Chang, also a partner at Leaf Forward, are uniquely positioned to build this business. Locky earned a PhD in Medical Biotechnology from the University of Adelaide and went on to join a leading Asia-Pacific management consulting firm. After consulting, Locky joined Uber as the General Manager of South Australia where he managed a P&L of over $200,000,000 AUD and managed a high-performing team of 30. Most recently, Locky was a International Expansion Head at Beam, one of the fastest growing micro mobility startups in the world.

His co-founder, Brett Chang, is a partner at our Leaf Forward fund where he advised our portfolio companies on regulatory compliance and corporate development. Before founding Leaf Forward, Brett was a Senior Policy Associate at Uber Canada where he worked intimately with policy makers in Canada, Australia, the US, and New Zealand to develop regulations for ridesharing. 

Locky and Brett know how to rapidly expand a business in highly complex international markets because they’ve done it before throughout North America, Southeast Asia, Australia and New Zealand. 

Traction

Choost Holdings recently launched Fog, a modular wellness brand that can accommodate for all stages of cannabis legalization. Their first product Clarity is a once-daily, softgel CBD hemp capsule designed for optimal bioavailability. Available now in the UK. 

Fog embraces sustainable and innovative design. The brand’s elegant packaging and scientifically formulated capsules are a testament to that. With a commitment to plant base wellness, they’ve used only the purest ingredients sourced from hemp farms in the USA. Transparency is core to their business so Choost has released independent lab tests of their clarity product – you can see them here. 

Over the next six months, Fog will be launching a line of skin care products that will raise the bar in terms of efficacy and experience. 

Our view

The ongoing opening of the global cannabis market presents an unprecedented opportunity. The CBD-hemp market alone is predicted to reach $22 billion by 2022, in addition to the growing medical and recreational cannabis industry which has seen growing support globally. 

We’re believers in the first mover advantage in cannabis. As we saw in Canada, early brands were able to gain significant recognition, because of their positioning pre-legalization, as opposed to those who were heavily restricted post-October 19th. We think that emerging cannabis markets will follow a similar trend, which is why speed to market is so important. 

Locky and Brett are seasoned founders, able to launch and build businesses and complicated regulatory environments. As new markets come online, Choost is poised to capitalize on regulatory change and launch trusted cannabis brands for early users while educating the broader population about the benefits of cannabis legalization.