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Is Sean 'Diddy' Combs getting into the cannabis business?

Sean Combs arrives at the Metropolitan Museum of Art Costume Institute Gala (Met Gala) to celebrate the opening of “Heavenly Bodies: Fashion and the Catholic Imagination” in the Manhattan borough of New York, U.S., May 7, 2018. REUTERS/Eduardo Munoz
Sean Combs arrives at the Met Gala in Manhattan, May 7, 2018. REUTERS/Eduardo Munoz

Rapper and producer-turned-business mogul Sean “Diddy” Combs said he expects to cross paths soon with former Combs Enterprises president Dia Simms, now head of a new cannabis-focused branding and distribution firm called BRN Group.

“I am extremely proud of the work that Dia has done for Combs Enterprises, and wish her the best as she launches BRN Group and changes the cannabis game,” Combs told Yahoo Finance Canada in a statement. “I am confident our paths will be crossing again very soon.”

Combs, who parlayed his hip-hop career into a business empire spanning clothing, alcohol, fragrances, marketing and media, would join a list of stars who have jumped on the cannabis bandwagon that has grown to include Martha Stewart, Snoop Dogg, Seth Rogan, Whoopi Goldberg, and Melissa Etheridge.

“I worked with Sean for many, many years,” Simms told Yahoo Finance Canada in an interview. “We’ll see what the future holds in terms of things we will be doing potentially together. I’m not ruling that out.”

Combs recently waded into the CBD beverage market through his investment in AQUAhydrate. The Los Angeles-based bottled water producer was recently acquired by the Alkaline Water Company in an all-stock deal. The two companies plan to work together to release a line of infused products.

BRN Group describes itself as a “first of its kind, privately-held, global brand development, management and distribution company that licences, manages and distributes superior cannabis brands worldwide.”

The firm will be headquartered in Toronto and New York. It will focus its early efforts on hemp-derived CBD, as cannabis with THC remains illegal at the federal level in the United States. According to regulatory filings, directors include Green Growth Brands Inc. (GGB.CN)(GGBXF) co-founder Adam Arviv, as well as two individuals from Florida-based Southern Glazer's Wine & Spirits. Simms, whose resumé also includes roles at Clear Channel, GlaxoSmithKline (GSK) and the U.S. Department of Defense, will serve as chief executive officer.

ATLANTA, GEORGIA - SEPTEMBER 14: President of Combs Enterprises, Dia Simms attends day 3 of REVOLT Summit x AT&T Summit on September 14, 2019 in Atlanta, Georgia. (Photo by Moses Robinson/Getty Images for Revolt)
President of Combs Enterprises, Dia Simms attends day 3 of REVOLT Summit x AT&T Summit on September 14, 2019 in Atlanta, Georgia. (Photo by Moses Robinson/Getty Images for Revolt)

Combs recruited Simms in 2005 as his executive assistant. By 2017, she was named president of Combs Enterprises, a role that involved oversight of the company’s lucrative alcohol brands⁠—Cîroc Vodka and DeLeón Tequila.

The crossover between beverage alcohol and cannabis has been most notably demonstrated by Corona beer-maker Constellation Brands Inc.’s (STZ) $5 billion investment in Canadian licenced producer Canopy Growth Corp. (WEED.TO)(CGC).

Simms said her experience building widely-known alcohol brands will inform BRN’s work with cannabis clients. She cites the shift in consumer perception of tequila from a lowbrow liquor to a premium spirit as an example of what that will look like.

“In the early days of tequila, tequila had a bad reputation,” Simms said, referring to its hard-partying, worm-eating image. “Part of tequila promotion for me was taking the time to develop education-focused content that explained the heritage and the heartbeat, and why tequila deserves the same respect as whiskey. I think there is an opportunity to do that kind of loving storytelling about the background of cannabis brand-by-brand, strand-by-strand.”

She said there is an enormous amount of education work to be done as cannabis transitions from an illegal drug to a mass-market product. Celebrity spokespeople, she said, will need to bring more than star power in order to build brand resonance with consumers.

“The partnership I came from, you have Cîroc Vodka and Sean Combs. He is known as an arbiter of style who throws some of the most sought-after parties. If he trusts a brand, then it makes sense for you to entertain with it,” Simms said. “If it’s an unnatural pairing, consumers are going to see right through it.”

She said cannabis brands can also learn from the branding successes Combs Enterprises achieved by marketing products to more diverse audiences, and by promoting diversity within the company.

“You really have to be intentional about understanding the totality of what the North American market looks like, and will look like in the future in terms of level of diversity,” Simms said. “Today, we’re just leaving money on the table.”

Yahoo Finance Canada
Yahoo Finance Canada

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