THE LP ISSUE ISSUE 1 – MAY 2018
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SUMMER 2018
OLAB PROJECT KOLAB PROJECT kolab
A DIFFERENT KIND OF SUBSCRIPTION COMPANY
A Note From The Founders It’s the final homestretch... the last quarter (hopefully) before Canada legalizes recreational cannabis. With this inaugural edition of Papers, our vision was to go deep and to do better to understand the foundation of the cannabis sector: the Licensed Producers. Working in partnership with Ample Organics we conducted a survey designed to better understand both the challenges and opportunities that Canada’s licensed producers are experiencing. Read on to see insights and data snapshots of our results. From here, we go to the next frontier of the cannabis industry, which is to better understand how to optimize the experience of the end user. Data, strains, treatments and products that can be created, prescribed and paired for impact and effectiveness. Here we share the story of Strainprint, a Canadian start-up changing the cannabis data landscape for the benefit of patients, researchers and licensed producers. A look at patients brings us back to what initially drove the public shift toward legal medical cannabis, patient need. Currently, 81% of Canadians believe in the medicinal value of cannabis but only a fraction of Canadian doctors provide access to their patients. This question of the medical education and patient access gap has been overshadowed by the upcoming legalization of adult use recreational cannabis — and we want to change that. And so, we are launching Canada’s inaugural Medical Cannabis Week from May 22–24. The week will include original patient research, a thoughtful and detailed policy roundtable and a technology and innovation showcase produced in partnership with Canada’s leading technology and health communities — TechTO and HealthTO. Read on and then please share your ideas, thoughts and feedback with us. We look forward to hearing from you. Blaine Pearson Reva Seth Jay Rosenthal
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in this issue The LP CEO Survey
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How Big Data is Disrupting & Optimizing the Sector
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Introducing Medical Cannabis Week
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Startup Stories
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The Greening of Green
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Ask the Expert: Brad McNamee on Innovation
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Combatting Cannabis’ Staffing Shortage
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In the Weeds… With Hugh O’Beirne
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MAY 2018. Issue One. Volume One.
Cover Illustration Jeannie Phan
Contact: editor@businessofcannabis.ca
Contributing Artists Maia Boakye, Courtney Wotherspoon
Publisher Blaine Pearson E DI T OR I A L
A DV E RT I S I NG
advertise@businessofcannabis.ca
Editor at Large Bryan Borzykowski
PR I N T I NG
Writers Anna Sharratt, Bryan Borzykowski, Blaine Pearson, Diane Peters, Jay Rosenthal and Reva Seth
C ON TAC T
DE S IG N
Art Direction & Design John Furneaux and Marina Prates Projektor Brand Image Ltd.
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Moveable Inc.
Papers, 998 Bloor Street West, #10587, Toronto, ON M6H 1L0 416-705-8382 Visit online: businessofcannabis.ca
Copyright notice: © Papers 2018. All rights reserved. Trademark Pending. No part of this magazine may be reproduced without the written permission of the publisher. All information contained in this magazine is, as far as we are aware, correct at press time. Business of Cannabis and Papers cannot accept responsibility for errors or inaccuracies in such information. If you submit unsolicited material to us, you automatically grant Business of Cannabis and Papers a licence to publish your submission in whole or in part in all editions of the magazine. All material is sent at your own risk and although every care is taken, neither Business of Cannabis nor its employees, agents or subcontractors shall be held liable resulting for loss or damage. Business of Cannabis endeavours to respect the intellectual property of the owners of copyrighted material reproduced herein. If you identify yourself as the copyright holder of material we have wrongly attributed, please contact us.
contributors MAIA BOA K Y E
“ When I moved back to Canada in 2015, what surprised me most was how large Canada’s cannabis sector was and its potential for national economic
BRYA N BOR Z Y KOWSK I
Legalization day will see me...
growth. Through my work on Papers, I also became aware of its significant impact on the environment because of its size. Legalization is important for so many aspects socially, economically and environmentally and Papers is uncovering an important niche through their publication. The more we are able to learn, the more infrastructure we can put into place to make it more efficient and beneficial to Canadian citizens and ultimately, the world.”
“ Probably writing stories about legalization.” While working on Papers, what surprised me most was…
“ Just how optimistic everyone is about investment and growth. It makes sense, but it’s still so new and uncertain that I would think there would be more caution. But it’s full steam ahead.” Rolling tips?
“ Get your wife to roll.” DI A N E PET ER S
Legalization day will see me...
“ Writing more stories about cannabis.” While working on Papers, what surprised me most was…
“ What a business opportunity it presents not just to the early players in the market, but a lot of other sectors too.” Rolling tips?
“ Sorry, I have no game whatsoever.” A N NA SH A R R AT T
Legalization day will see me...
“ Hopefully busy with lots of features!” While working on Papers, what surprised me most was…
“ Deals are done at an incredibly rapid pace and the landscape is perpetually changing. It’s fascinating how so much is decided with such an absence of regulatory clarity.” COU RT N E Y WOT HER SPOON
Legalization day will see me...
“ Giving virtual high-fives to my fellow Canadians for a day that was hard-fought and long overdue.” While working on Papers, what surprised me most was…
“ I wasn’t so much surprised as I was impressed that any interested exec (or individual, for that matter) can take a two-day crash course to learn about the cannabis industry (through Durham College), and become armed with the skills to work in the industry and help it grow. Three cheers for higher education!” Rolling tips?
“ Get someone else to do it for you.”
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Canada’s #1 Cannabis Software Medical and recreational, we’ve got you covered.
From seed to sale and beyond, find out why 70% of Canada’s licensed producers use Ample Organics. Let’s grow together — book a demo today! AMPLEORGANICS.COM
BEST OF CANNABIS AWARDS - 2018
WINNER Best Enterprise Software Company
WINNER Most Disruptive Technology
THE LP CEO SURVEY: Cannabis Executives Feeling Good About the Future An Ample Organics and Business of Cannabis survey found that companies are optimistic about their growth prospects, but there are risks to keep in mind.
85%
Export cannabis to other markets
41%
Import cannabis from other markets to fill demand
82% As cannabis legalization expands, in which of the following actions will you be engaging?
With adult-use recreational cannabis soon to become legal, Canada’s licensed producers appear optimistic about the opportunities ahead. According to a new Ample Organics and Business of Cannabis LP, C-suite survey, 91% of businesses feel confident about revenue growth over the next year, while 85% are confident their business will grow over the next three years. Most of the 35 C-suite executives who took the survey also see big opportunities for their business. Eighty-five percent said
Enter supply agreements to provide product directly to retailers
65%
Expand indoor growing facilites at our current location
59%
Add indoor growing facilites at additional location
47%
Enter supply agreements to receive product from other LPs
32%
Enter supply agreements to provide product directly to other LPs
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What do you view as the greatest risk to the industry’s overall success?
50%
47% 41% 32%
24% 18%
“All in all the outlook is positive,” says John Prentice, president and CEO at Ample Organics, a company that develops enterprise planning resource software for the cannabis industry. “There’s a great opportunity here. It may be a little wild and unpredictable in the early days, but
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Lack of strong industry cohesion
6%
Black market options for consumers
Oversupply of product
Undersupply of product
Consistent quality assurance
Product safety
Consumer acceptance
Variable Provincial regimes
Shifting Federal regulatory environment
that exporting cannabis to other markets was a trend to tap into, while 82% said the same about entering supply agreements to provide product directly to retail outlets.
New entrants into marketplace
6%
3%
Negative stories around legalization’s impact
15%
Global competition
12%
27%
like any new industry, no one can predict what’s going to happen.” Safety first One encouraging sign is that 97% of survey respondents said the industry is taking sufficient steps to ensure responsible and safe cannabis usage among Canadians. That does contradict an earlier Business of Cannabis/ Nanos Research poll where only 17% of Canadians said the same. Prentice
Is the cannabis industry taking sufficient steps to ensure safety and responsible usage among Canadians?
Agree
Somewhat agree
3%
21%
76%
Somewhat disagree
There is a signifcant disconnect between the industry and the Canadian public around perceptions of ensuring safety and responsible usage.
LP CEO Survey April 2018
isn’t surprised that there’s a disconnect between the industry and the public. “The Canadian public hasn’t been fully exposed to the systems that prevent cannabis from getting into the hands of people who shouldn’t have it,” he says. “That will be explained more when cannabis hits retail.” Still, there is one big concern that relates to safety and the industry’s growth
Disagree
Unsure
18%
17%
24%
25% 16%
Nanos Research Public Opinion Poll December 2017
prospects. Half of those surveyed said that black market options for consumers remain the biggest risk to industry success. The illegal market has been thriving for so long, and it’s so big, that it’s unlikely it’s going to close up shop when cannabis becomes legal, says Prentice. It’ll still be selling its product at cheaper rates, too, when tax and overhead to build a legal grow-up comes into play.
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What are your top areas of investment?
91%
Marketing & Branding
97%
Building team and adding employees
87% 87%
Product Development
Enhancing current OR adding additional facilities
72%
Reseach & Development
62%
Quality Assurance
50%
Environmental Testing
50%
Corporate Acquisition “The underground economy has massive production capabilities and competitive pricing,” says Prentice. “Legal producers have to be better and cheaper and that’s going to have to happen through product variety and innovative delivery methods.” Other risks include a shifting regulatory environment and variable provincial regimes, with 47% and 41% citing these as challenges, respectively, but Prentice thinks that regulatory issues will work themselves out.
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Growing investments Clearly, there will be some ups and downs in the first few months or even years after legalization, but most companies feel confident enough to make investments in their business. A whopping 97% of survey respondents said they’ll likely make a major investment of at least $1 million into their company over the coming year. When asked what areas of the market they’ll invest in, 97% said hiring, 91% said marketing and branding, while 88% said
What would survey respondents like the public to know about the industry?
Legalizing non-medical use doesn’t mean that there aren’t hundreds of thousands of people in Canada for whom cannabis isn’t a consumer choice, it’s a medical need and should be treated like other medicine.
enhancing facilities, adding additional facilities and product development. It would help, though, if the government were clearer on what it plans to do. Just half of the C-suite executives surveyed think there’s adequate support coming from the government around getting companies prepared for legalization. Prentice agrees that communication between industry and government has been lacking, but it’s starting to improve.
The public needs to be educated that the way LPs grow cannabis is not the way it is grown for the black market. Reassure the consumer that the Canadian LP system is strictly regulated and QA is of the highest standards.
We produce safer products with more standardization than the black market and better value.
“It’s about time more than anything else,” he says. “Health Canada has indicated that it will be more collaborative with the industry going forward and there are indications it’s doing that.” Ultimately, success will happen for the companies that can move quickly and have a compelling product lineup. It’s no different than in any other industry. “It’s the same thing as building cars or shoes,” he says. “It’s just a different product.”
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How Big Data Is DISRUPTING & OPTIMIZING The Sector By Reva Seth
Until recently it was the LPs, as the product creators, who were both the foundation and the focus of the cannabis sector. But as the next wave and evolution of the cannabis industry emerges, it’s the tech start-ups and data analytics firms that will be the source of nimble opportunity and sector disruptions. The cannabis sector is in a unique place. At a time when big data is the indispensable strategic tool at the centre of every global industry, the cannabis sector is struggling with a clear lack of data.
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Management guru Peter Drucker’s most famous quote, “You can’t manage what you can’t measure.” holds true for the cannabis sector as well. However, as a result of cannabis having been, until very recently, both illegal and stigmatized, the industry simply lacks information and struggles with the dominance of misinformation. For instance, there is little recent, high quality, controlled medical research from which to draw upon to support anecdotal reports of cannabis treatment success.
“The future of the cannabis sector cannot be based on the equivalent of Yelp reviews,” says Andrew Muroff, CEO, Strainprint Technologies, Ltd., “Real-time, validated data hasthe ability to both help patients in their journeys – but also help LPs adapt to serve their communities’ needs, with evidence-based product development.” In turn, this lack of research hinders the acceptance of cannabis as a treatment by doctors, which deprives both the industry and patients from its benefits. Additionally, the industry is just starting to gather large pools of data on users, strains, the impact of ingestion methods, and statistical evidence of user preferences and buying patterns. As a result, existing users make do with what is available and large swathes of the potential patient user market are left disengaged and overlooked. But this is changing. And fast. And it’s the companies driving the collection and analysis of this data that are reshaping and really next-levelling the industry. A research- and data based understanding of how cannabis impacts users will lead to improved product design, more effective prescriptions and improved patient experiences. Strainprint Technologies is a mobile cannabis tracking app that currently has over 400,000 medical cannabis sessions tracked, and that number is doubling every two months. In markets like California, tech companies further removed from the plant have now reached the scale at which
their customer base can be used to glean industry insights that are not reliant on user input, but a far more reliable and consistent indicator: consumer purchasing behaviour. For instance, Eaze, an on-demand app that delivers cannabis across California, recently released an industry insight report based on 350,000 cannabis consumers as well as attitudes and usage data based on a survey with over 15,000 respondents. This amount of data on purchasing trends, social behaviour patterns on times and usage forms, and the accompanying demographics is invaluable not just to marketers but for the development of effective public policy, as well as educational and safety purposes. As emerging industries develop, the use of data to drive key business decisions is essential, so expect the level of data insights and analysis to grow exponentially in both impact and sophistication in the coming months.
Strainprint’s Muroff says, “The app has generated over 6,000,000 data points and Strainprint data is showing compelling, actionable trends for our LP partners.” PA P E R S
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Medical Cannabis Week Where the conversation on medical cannabis grows up
Currently, more than 260,000 Canadians have legal medical access to cannabis. Medical cannabis, perhaps even more so than adult recreational cannabis, is the market segment with the greatest economic, innovation and health potential. Medical cannabis is one of the world’s newest, fastest-growing and most complicated industries, and it’s one that Canada is well-positioned to globally lead in and benefit from as a result of having spent the past decade and a half building the most sophisticated medical cannabis framework in the world.
And by increasing and amplifying the focus on the medical cannabis sector, there is the opportunity to also strengthen the domestic life sciences sector in terms of research, global talent attraction, employment and therapeutic options for patients. Business of Cannabis is launching Canada’s Inaugural Medical Cannabis Week to provide an annual occasion to advance a multi-stakeholder dialogue on patient needs, regulatory development, product innovations, international research and partnerships, as well as market developments.
Join us!
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May 22–24, 2018 Downtown Toronto Highlights of the week will include: 1. The Future for Patients + Practitioners – Sponsored by Emblem, GrowWise Health and Strainprint. Hosted by Salesforce. 2. 360º Roundtable Discussion | Medical Cannabis 2030 – Convened by Blakes. 3. Technology and Innovation Showcase in Partnership with TechTO and HealthTO – Sponsored by Cannvas MedTech.
Presented by:
In partnership with:
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Start-up Stories Canada’s cannabis sector is innovative, high tech and ready to compete globally. Here are a few of the visionaries:
Namaste Technologies Sean Dollinger, CEO
Tell us about Namaste Technologies, and what it brings to market. NamasteMD is changing the way Canadians can acquire prescriptions and access medical cannabis. We are the first Canadian company to digitize patient acquisition of cannabis. While most Canadian cannabis companies rely on physical clinics and doctors to reach patients, our online marketplace offers patients the chance to access the largest selection of medical cannabis sourced from both domestic and international cultivators. This gives patients the broadest selection of cannabis to best support their wellness. This is different than existing online platforms for medical cannabis, which tend to make it very difficult for patients to switch between providers and access different types of medicines. Namaste offers everything from one location. We are also using machine learning to improve conversion rates, and most of all, to optimize our users’ buying experience. 14
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Tell us about your start-up story; when and how did you get into the cannabis sector? Namaste Technologies began as an e-commerce start-up selling vaporizers and accessories through international markets. We established a presence in over 20 countries and quickly became the largest online retailer globally. From there, we identified the opportunity to leverage our database of vaporizer consumers and acquire medical cannabis patients and we launched NamasteMD, Canada’s first fully-integrated patient acquisition portal, which is approved and available on iPhones and Android devices as well as on PC. This strategy will eventually be rolled out in every country where we operate and which has a form of legalized cannabis. If we could take away one lesson from the experience of going from small start-up to public company it would be to always focus on customers first. In today’s world of global e-commerce, your online reputation and consumer feedback are critical to growth. We’re lucky to now have both vaporizer customers and medical cannabis patients and we are committed to staying ahead of the curve on consumer experiences. For instance, we are integrating machine learning algorithms to personalize a consumer’s buying experience by providing them with more relevant content that suits their needs.
What’s ahead for your team? Our company slogan is “We Are the Future of Cannabis,” and our vision is to continue to drive innovation in the cannabis industry by introducing new technology to the market and to provide patients with personalized content and strain recommendations based on their specific needs. We will be using our machine learning algorithms to optimize the full experience for medical cannabis patients and to offer the largest diversity in the market.
Tell us about the team culture at NamasteMD. Our team culture is one of radical candor! We debate ideas and solutions — no egos, just the best results. NamasteMD in numbers. Namaste operates online retail sites in over 20 countries and in nine languages. Our management team is diversified across the Canada and overseas. We have engineers in Dublin, Romania and Spain, with sales team members across the globe. Learn more: NamasteTechnologies.com NamasteMD.com
Slang Worldwide Peter Miller, CEO
Tell us about Slang, and what it brings to market. Slang offers access to the best brands, distributed throughout the largest legal markets in the world. In the U.S., for example, we have a strong supply chain and a distribution footprint across 11 states. We are focused on placing the best brands on our platform, so that our consumers can expect a consistent experience and level of quality from their favourite branded products in every legal cannabis market.
Tell us about your start-up story; when and how did you get into the cannabis sector? I got started in the cannabis sector in early 2013 and with a background in tech and a family history of traditional agriculture, the cannabis sector was a major leap for me. The successful ballot initiative in Colorado in 2012 opened my eyes to the legalization movement and led to my discovery of the fledgling Marijuana for Medical Purposes Regulations (MMPR). I dove in headfirst, incorporating Agripharm Corp. in 2013 and vending it into Mettrum Health Corp. in 2014. By 2016 my focus was on the best products, brands and ideas coming out of the American market. In this industry, things change quickly and the changes are bigger than most people expect or are used to seeing in other fields, making it important to balance speed and attention to the market with focus, execution and long-term thinking.
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All my education, insights and experience are now focused on pairing the best brands with the best distribution and supported by the best supply chain. Slang Worldwide is the vehicle for executing that mission. What do you see ahead for the industry? At a macro level, the future of the industry is certain; people will enjoy cannabis as they have for thousands of years, and the groups that produce the best cannabis products and experiences will be successful. The short-term outlook for regulation, the capital markets, and consumer trends are anybody’s guess. Our team has a pretty polished crystal ball, but I’m not sure it’s clearer than anyone else’s. All we can do, and will do, is stay educated, focused, and execute our strategy with all of our human and capital resources.
Civilized Derek Riedle, Publisher
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Tell us about your team. Our team is like the United Nations of cannabis, with experience and perspectives from the cannabis and capital markets in North America, Europe and Africa. We try to maintain a meritocracy and let the best ideas win. Any statistics or data that you would like to share? Good data and statistics are elusive in this space and a significant source of competitive advantage. With our footprint I believe we have some great data which we will continue to collect, analyze and use to inform our decisions. Stay tuned. Learn more: slangworldwide.co
Tell us about Civilized, and what it brings to market. Civilized is a premium media and lifestyle brand that embraces and highlights the modern cannabis culture. Our vision is to reflect the millions of motivated and productive adults who choose to enjoy cannabis as part of a balanced lifestyle. No other industry has the high-growth potential of cannabis, and we believe that quality media can help accelerate the development of this industry by sharing stories, ideas and information that’s been more or less forbidden for the better part of a century.
Tell us about your start-up story; when and how did you get into the cannabis sector? I’d worked in marketing, communications and politics for my entire adult life. And, I’d also been a cannabis consumer, so I fundamentally understood that the reality of cannabis was very different from the stereotypes and media story. So, I was personally invested in living a more authentic life and emerging from the cannabis closet. Plus, as a professional communicator, the opportunity to break stereotypes and change culture was irresistible to me. We launched Civilized on September 22, 2015, and by doing so we paired two of the fastest growing industries together: digital publishing and cannabis. And we haven’t looked back! Today, we continue to embrace an audience that has always existed and is not reflected in current cannabis culture: productive, motivated people who enjoy cannabis responsibly. What’s next for your team? Nobody can predict the future, but here’s what I can say: We are playing the long game, steadily growing our audience, our range of meaningful brand experiences and shareholder value.
We have a very talented team, for example, our chief content officer is Cory Jones, former chief content officer of Playboy Enterprises. We have Michael Cohl, former chair of Live Nation, and Mitch Fox, former group president of Condé Nast and former publisher of Vanity Fair on our board of directors. Civilized in numbers. Well, reflecting on 2017: • We more than doubled our traffic with over 9 million visitors to Civilized.life • We grew our monthly traffic by more than 325% (from 350k monthly in Q1 to almost 1.5M monthly in Q4) • We beat our annual traffic goal by 50% • We wrote and produced almost 3,000 pieces of editorial content • We grew our content notification database from 1,000 to 17,000 subscribers Random fun fact? I’m a diehard Toronto Maple Leafs fan — GO LEAFS GO! Learn more: www.civilized.life Facebook: civilized.life Twitter: @civilized_Life
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THE GREENING
OF GREEN By Diane Peters
Growing cannabis is not an environmentally friendly endeavour, but some companies think they can cut costs — and please customers — by improving the sustainability of their operations. Cannabis plants are greedy: they need a lot of light, nutrients and double the amount of water that grapes require. Currently all legal cannabis in Canada is grown indoors and these buildings use huge amounts of energy for lighting and climate control. Reports estimate that cannabis production in the U.S. burns through 1% of the nation’s electricity, while the average kilogram generates about 4,600 kg of carbon emissions. The City of Denver recently reported that 4% of its electricity is being used by the cannabis industry. It also takes four litres of water to make half a kilogram of cured buds. Then there’s wastewater, which often contains fertilizer and herbicide when it’s dumped in sewers. For a green crop, cannabis is anything but green. “Our industry is one of the worst in the world for being non-environmentally friendly,” says Warren Bravo, CEO of Green Relief, a licensed producer based in Puslinch, Ontario.
Illustration: Maia Boakye
As the industry moves toward full legalization, and demand for cannabis soars, Canadian producers will use more resources. That will put pressure on local infrastructure, causing friction between growers and municipalities, who may limit growers that want to expand. Some Canadian companies have already taken steps to reduce their environmental footprint, while others, such as Green Relief, already consider themselves green. For most, becoming more sustainable is about reducing costs. Bravo says he produces one gram for $1.43 while his competitors run upwards of $3. “The traditional thinking out there is that green tech costs more to run,” he says. “But we’re the lowest cost per square foot producer in the country.” Turn down the Lights One of the main issues for the cannabis industry is that, traditionally, it’s been grown inside and much of the industry’s plant science is based on indoor
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conditions. Canadian regulations favour indoor growing for security reasons, plus these facilities are easier to keep sterile. These operations need powerful lighting though, and companies will keep grow lights on for 18 hours a day or longer, depending on the plant’s growth cycle. With lighting eating up almost 40% of a facility’s considerable electricity bill, producers are looking to more efficient LED lighting. Green Relief, for instance, runs LEDs that use 40% less energy than conventional bulbs. Complicating matters is that lights generate heat, so indoor growers must cool their facilities year-round. That, combined with dehumidification, accounts for another 50% of electricity costs, according to a report from the city of Denver. One solution is to grow in a greenhouse. Tantalus Labs in Maple Ridge, B.C., has set up a 75,000-square foot greenhouse called SunLabs. The facility turns on grow lights only after the sun goes down, uses some energy for dehumidification and only needs air conditioning in the summer and heat in the winter. Dan Sutton, Tantalus’ CEO, says that his facility uses 90% less electricity per square metre than indoor operations.
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“Greenhouses provide this awesome intersection of economics and sustainability,” he says. There are some additional expenses, such as purifying outdoor air that naturally circulates through the greenhouse, and cleaning is more effort. They also need extra security precautions, like additional cameras and high fencing, but they’re cheaper to build and run than an indoor facility. Cutting Back on Water Reducing water usage is a big undertaking, too, but companies are finding novel ways to cut back. Tantalus uses a 2.5-acre catchment system built onto its greenhouse roof to collect rainwater. It puts its wastewater through three stages of filtration and then flows it back into the catchment. “Our draw on the city’s water grid is zero,” says Sutton. It also uses a drip irrigation system that puts moisture directly on the roots of plants, avoiding waste. Green Relief takes an unusual approach to wastewater reduction by using aquaponics to grow its plants — it’s the only fully licensed producer in the world doing so. It grows its product in water and connects it with tanks filled with 6,000 tilapia. The two systems swap nutrients, with the fish’s waste offering a natural fertilizer.
The facility uses 90% less water than conventional growers, as the water stays in the system. It also saves money on fertilizer and gets a tax receipt when it donates fully grown, edible fish to food charity Second Harvest. More Greening Needed Some companies may be doing their part to make the industry more sustainable, but there’s still a long way to go. Brittny Anderson, co-founder and director of operations for The Cannabis Conservancy, an organization that offers sustainability certification for North American growers, hopes the industry assesses the sustainability of packaging. “The first thing they’re going to turn to is singleuse plastics,” she says. She hopes LPs will eventually look to reusable, biodegradable or compostable materials.
Doing it Right: Canada will become the first G7 country to legalize and regulate adult-use recreational cannabis from production to consumption. Globally, there is a patchwork of legislation governing medical and emerging recreational use of cannabis, but nothing that encourages consistency and accountability across jurisdictions for a socially responsible recreational cannabis industry. The Global Cannabis Partnership is an international initiative that focuses on the establishment of worldwide corporate social responsibility standards related to the production, marketing/public education, sale, aftersales service and informed consumption of legal adult-use recreational cannabis. Business of Cannabis is proud to be the Business Media sponsor for the Global Cannabis Partnership. To learn more visit globalcannabispartnership.com
Pushing a green agenda may not be viable for all companies, due to the up-front costs, but businesses will have to embrace some sustainable elements. Customers may demand it, like they have in other industries. “More and more people want to buy products that align with their values,” says Anderson. “The exact same thing will happen in the cannabis industry.”
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Project a brand image that reflects your aspirations.
Brand Stories Brand Identity Brand Communications projektor.ca
Ask The Expert:
Brad McNamee on Innovation Cannabis Wheaton’s Chief Infrastructure Officer talks about tech and an ever-evolving industry. By Diane Peters
Over the next few years, licensed producers will likely have to start producing far more product than they have been to meet demand in Canada — and potentially beyond. The ones who will do best in this nascent industry will be the businesses that embrace innovation and new growing technologies. But how is the science and tech around growing changing? Brad McNamee, chief infrastructure officer at Cannabis Wheaton, a Toronto-based company that helps fund cannabis-related ventures, explains. Q: How much are growers using the latest tech? Brad McNamee: A lot of companies have gone with tried-andtrue methods to get to market. But once they get their facilities operational, they’re looking for ways to do things better, and they’re setting up little R&D departments. They’re trying to find efficiencies to grow plants better and faster and to reduce labour. They need to stay competitive as more producers come online. Q: What kind of technology is leading the pack? BM: We’re seeing big advancements in LED lighting. Manufacturers are doing trials to tailor their lighting products to the cannabis market. Different plants need a different type of light spectrum, plus cannabis plants need different wavelengths during the vegetative state versus the flowering state. Q: How is plant science changing? BM: Growers are getting more scientific in how they propagate their strains. In the past, everyone did cuttings from mother plants. That’s fine on a small scale, but on a large scale the genetics start to wane. So, the cannabis industry is now doing genetic slicing and putting the genetics right into the plants.
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Q: But because of the industry’s history, don’t we have limited knowledge of plant genetics and growing best practices? BM: Nobody knows how to grow cannabis yet, not on a big scale. Growers are still working to select genetics that will grow well in their operation and they’re looking for characteristics that won’t be susceptible to things like powdery mildew and infestation issues. Plus, they need to have the characteristics that consumers want. Then when growers add something new, like an LED light, you have to tailor your inputs like your watering and fertilizer. Q: How about innovations in harvesting cannabis? BM: There are lots of innovations coming around the harvesting, drying, curing and extracting process. We’re seeing some extraction machines that are able to pull out much higher concentration levels of THC and CBD and terpenes. Q: Where are these ideas coming from? BM: For extraction, they’re coming from the essential oil and the fish processing industries. A lot of these companies are moving towards the cannabis sector as they see a need. They’re taking existing technology and refining it for this sector. Q: There must be numerous sectors that have tech that could be applied to the cannabis industry. BM: As this increasingly becomes a legitimate sector, we’re going to see a lot of innovation take place. Other businesses are going to realize they have technology that can be adapted to this industry. As banks and governments relax their rules, they will be more able to participate as well. And it won’t just be on the growing side. The IT and high-tech sector has software programs that can track all of the data that’s accumulating in facilities to help with efficiencies, and also regulatory issues around documentation. Q: What do you think the industry will look like in five years, innovation wise? BM: I think the industry will look quite different. We might be growing vertically, in multi-rack systems. We’ll have a better sense of the ROI of the new ideas coming to the industry today. We’ll know how to grow a better quality plant. We’ll have more automation. Many of the things that make for better plants and productivity will be small, subtle changes, but they’ll make a real difference.
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COMBATTING CANNABIS’
STAFFING SHORTAGE ANNA SHARRATT
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AS THE CANNABIS INDUSTRY GROWS, MORE ROLES WILL NEED TO BE FILLED. BUT WILL PEOPLE BE AVAILABLE? HERE’S THE DIRT ON FINDING STAFF.
At Canopy Growth Corp., there’s a hiring bonanza every week. Since January, the company has added numerous staffers in a variety of areas, from operations coordinators to managers of national revenue, and the employment-adding blitz isn’t ending anytime soon. Jordan Sinclair, communications manager for the Smith Falls, Ontario-based licensed producer, says the business recently added 40 new employees — mostly trimmers, who manicure the medical cannabis plants and assist growers — bringing its total number of employees to 550. “We’re going to need them shortly so we’re starting to fill the roster now,” he explains. Canopy is just one of many businesses that can’t seem to hire fast enough. As legalization looms, licensed producers must fill all sorts of positions, from farmers who toil in the cannabis fields to executives who can help take the cannabis sector mainstream. According to Cannabis at Work, an Edmonton-based cannabis staffing firm, more than 150,000 jobs will need to be filled over the next two years in Canada, while that number could get as a high as 250,000 in the U.S.
Illustration: Courtney Wotherspoon
If Canopy wants to fill the hundreds of positions it expects to hire over the next couple of years, it will have to look to other sectors for talent. The company has already been poaching people from other industries, such as beer and pharma, says Sinclair, adding that it is getting easier to find people as the industry grows and the stigma of working for a cannabis business disappears. “Two years ago, when we tried to hire senior marketing people, we would get a certain pedigree of candidates,” he says. “Now we go to hire a new marketing person and we get the CMOs of brands that everyone in the world has heard of.” Still, there’s a real worry among companies and industry analysts that hiring won’t be able to keep up with rapid pace of business growth. Glenn Fraser, the Toronto-based co-leader of the Cannabis Services team at MNP, a Canadian accounting firm, believes that for some cannabis firms, it’s already difficult to find qualified candidates, even at the senior executive level. “You see it today — it’s hard to get good people,” he says. “I think it goes all the way through the organization.”
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When he hears that some firms are hiring dozens of people a week, he’s skeptical of their long-term success and questions the quality and long-term viability of these new hires: “You look at the rapid speed of the growth these companies are at and you wonder: Is this just a means of getting bodies in the room? Or is there a strategy?” Heavy lifting for HR With so many up-and-coming companies vying for talent, it’s going to take a lot of work from HR departments to ensure that their business isn’t caught with too many unfilled positions. That means looking at other sectors for hires, says Alison McMahon, founder and CEO of Cannabis at Work. Most cannabis hires come from the investment, pharma, mining and agricultural sectors, she says. Many of these staffers have skills that are transferable to cannabis — be it a background in finance that can lead to a CFO role, experience working with pharmacies or farming skills that can be parlayed into growing and greenhouse technician roles. It helps that cannabis industry salaries are on par with the sectors people are coming from, says McMahon. According to her company, which does salary surveys every year, cultivation managers, on average, earned $87,050 in 2017, marketing managers pulled in $110,000 and senior accountants earned $98,340. Paying solid wages will undoubtedly prove useful as talent becomes harder to find.
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For Canopy, the biggest concern right now is ensuring HR can handle the high volume of applicants. “The challenge that we have is moving through the HR processes to get people into the jobs,” says Sinclair. “The scale of growth means that the HR people who work here are the busiest people in the world.” To make things easier, the company is constantly estimating how many employees it needs to hire — and in what roles. “It’s all about our projections,” says Sinclair. “You need to know what the bottlenecks might be as you scale up — which parts of those are going to be human solutions, and which parts are going to be mechanization.” A hiring strategy is key Companies may be tempted to hire as many people as possible – like in the technology space, where investors want to see signs of strong growth – but staffing up must be done carefully and methodically, says Fraser. “Companies are starting to see where the future lies – and trying to fill those voids. You need to define where you think you’re going to be. Your human capital strategy should be around your mission.” Many companies are attempting to determine what direction they want to take their firm and are hiring accordingly, he says. For example, medical cannabis operations are staffing their boards with former pharma executives, building their organizations with people who have experience in a sector that’s closely aligned with the one they’ve joined.
“They’re surrounded by people who fit their strategic direction,” says Fraser. Having a strategic direction that governs hiring can also stave off legal issues that rapidly expanding organizations can get caught up in, says Lorenzo Lisi, practice group leader of Aird Berlis LLP’s workplace law group. “Your ability to put restrictions on employees may be limited because you’re in a competitive market,” he says. For instance, some businesses may want to do away with the three-month probationary period. Companies must also make sure that they’re not crossing any legal lines when it comes to hiring people from the competition. In some cases, more relaxed rules may make sense, but don’t do something out of desperation, he says. Look to schools for staff Even if firms do their best to hire for the right jobs at the right time, hiring holes will remain. McMahon says that there may be a shortage of staffers on the growing and production sides — particularly in management — because of new regulations governing who can grow cannabis. For instance, some potential hires may have worked in the black market and have trafficking or illegal cultivation charges, she says, and may be barred from joining a legally operating business. That, of course, makes legal licensed growers hard to source. “Where do you find a licensed grower?” says Fraser. “That’s not something you go to a headhunter for.”
Ultimately, training programs, which are springing up in colleges and universities across Canada, may be the solution to the ever-present need for skilled workers. Ontario’s Niagara College has launched a graduate program called Commercial Cannabis Production, which teaches students how to cultivate cannabis. The Collège communautaire du NouveauBrunswick’s Dieppe Community College now trains students to be licensed producer grow technicians. Kwantlen Polytechnic University teaches a series of courses entitled “Cannabis Professional Series.” For executives, Durham College is offering intensive two-day seminars for those who want to learn about the cannabis industry. They’ll study emerging trends in Canada, regulatory and legal considerations, ethical issues, basic clinical concepts, and cultivation and quality control fundamentals. Fraser believes that these types of programs could create a whole generation of new graduates armed with the specialized skills needed in the cannabis industry. Companies like Canopy will be waiting for those skilled workers and executives to arrive, but Sinclair does think they will come. Why? Because with competitive salaries and a chance to build something from the ground up, working in this industry, he says, “is an opportunity of a lifetime.”
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Don’t grow a commodity. Build a brand.
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Thinkers & Doers • Strategy & Branding • Ad & Design • Digital & Innovation Want to chat? allo@mackiebiernacki.com PA P E R S
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In the Weeds
with Hugh O’Beirne President of the New Jersey Cannabis Industry What time do you usually wake up? I get up 5:30–6:00 a.m. Do you have a set morning ritual or habit that gets the day started? Email review, calendar review and professional reading; nothing overtly healthy.
It’s 10 a.m. on Wednesday. Where are you and what are you focused on? I'm in the Trenton office and focused on one or more of the myriad of issues surrounding the expansion of the NJ medical marijuana program, full legalization, NJCIA events and other initiatives to build member value.
What time does the day end? 8:00–9:00 p.m., but that last hour and a half of work is usually accomplished at my local cigar shop. Post-work Wednesday evening sees you...? Saying goodnight to my children. Watching TV or playing video games.
Where’s lunch and with whom? What’s on the menu? Duly skipped unless there is a business purpose.
How do you relax at the end of the day? That cigar and the video games do it.
First drink of the day is... 2–3 coffees followed by a coffee. Afternoon is all about doing what? Usually meetings with industry, press, our staff and public officials. We have to ask. It’s 4:20 p.m. and you are where, doing what? Wistfully contemplating what that could be like post-legalization in NJ.
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Do you work in the evening? Just emails and texts … next day planning stuff. Bedtime is… I tend to fall asleep on the couch between 11:30 p.m. – 12:00 a.m.
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Green & Silver Symposium, Fall 2018 Cannabis & Optimal Aging
Medical cannabis is one of the most highly promising and potentially disruptive health, wellness and anti-aging therapies to become available to Canadians. Join us for this full-day Symposium in downtown Toronto, as we engage with industry experts, medical practitioners and educators, as well as patients, families and health support workers, to help create a deeper understanding of the potential relationship between elderly Canadians and medical cannabis. Sessions & Showcases will include: • Can Medical Cannabis Help? Cannabis researchers and medical practitioners discuss the latest data & research, therapy treatments and choices; • The Fastest Growing Market: Industry leaders & innovators discuss the need for an impactful conversation, reaching the broad spectrum of older Canadians; • The Cannabis Wellness Market Consumer Showcase: Public education sessions and discussions. For more details visit greenandsilver.ca
