Following years of rapid growth since its founding in 2014, Smoke Cartel is going public. Now trading on OTC Markets under the symbol SMKC, the company is opening the door to an influx of new capital from investors. The decision makes one of the world’s most popular online headshops the first to be traded publicly.
What does this newly public profile—and the increased attention that comes with it—mean for the company? Why is now the time to go for a ticker symbol? We caught up with founder/owners Darby Cox and Sean Geng to find out why the company made this leap and what comes next.
Growth Through Acquisitions
In its first three years of operation, Smoke Cartel saw revenue growth that surpassed the founders’ wildest expectations. That influx of cash left Cox and Geng with a problem many business owners would envy: how and where to invest those profits.
The company has recently been channeling revenue into growth, acquiring the online merchandiser ErrlyBird and adding several new, in-house product lines to its offerings. Acquisitions like this don’t just make Smoke Cartel bigger, though. They also help to diversify the company’s catalog, allowing it to provide more products and services to the growing cannabis industry as it moves increasingly towards legalization.
Piglet, one of Smoke Cartel’s office dogs, poses with gear from new acquisition Errlybird. (Courtesy of Smoke Cartel)
Ramping up that strategy takes more capital than even a booming online headshop can provide on its own, though. By going public, Geng and Cox aim to bring new investment dollars to power their aggressive growth strategy and open new doors.
“After spending the past four years building a foundation for success and recruiting a team to match, we’ve decided that this is the right time to really dedicate ourselves to growing and pushing the boundaries of what Smoke Cartel can be, and where it can go,” says Cox.
Leading the Industry Into Federal Legalization
Geng and Cox also believe that by going public, Smoke Cartel will further its influence as a leader in the industry as federal legalization moves away from ‘pipe dream’ status and toward reality.
“Sean and I have always wanted to grow the company rapidly in order to position ourselves in the best possible place when federal legalization occurs,” explains Cox. And as their public offering reflects, Smoke Cartel’s founders are betting that shift will take place sooner than some think—indeed, that it may already be underway.
“More than 60% of people believe that marijuana should be legal, and thanks in part to the wildly out of touch policies proposed by Jeff Sessions’ Department of Justice, they are speaking up,” says Geng. “We feel it’s inevitable that the continuing conversation about cannabis criminalization, which we’re [hearing] more than ever before, will end in legalization on a federal level, and that leading up to that, more and more states will continue to legalize.”
Smoke Cartel’s early entry into the online headshop market has helped drive the company to grow during its infancy. As it presses that advantage by being the first such company to debut on public stock exchanges, it’s counting on having impeccable timing once more.
Making the move to a publicly traded model lets Smoke Cartel strengthen its position as a leading purveyor of smoking accessories and other cannabis accoutrements. But it also helps the company shape perceptions outside of the industry. Investors and a board, Geng points out, will help Smoke Cartel be taken seriously by members of the business community who may not be sold on cannabis as a mature industry.
“Going public doesn’t just give us access to investors and funding,” adds Geng. “It also lets us access the accountants, lawyers, and consultants we believe can help grow this business into a Fortune 500 company one day.”
And while opening the doors to investors also means opening the doors to investor scrutiny, that’s a challenge that Geng and Cox are eager to meet. Smoke Cartel, Cox explains, has always been devoted to transparency, meaning the founders aren’t not shy about discussing their books or business practices with potential investors. And driving public acceptance and understanding of cannabis is a founding value for the company—one that going public allows it to embrace wholeheartedly.
“We take pride in our record of educating people about cannabis and battling back against outdated stigmas,” says Cox. “That’s one reason we think Smoke Cartel is the best company to lead the industry toward more public acceptance, on stock exchanges and everywhere else.”