Canopy Growth Corporation - June 2020

CANOPY GROW TH

DIGITAL REPORT 2020

CANOPY GROWTH: WORLD’S LARGEST CANNABIS DISTRIBUTION NETWORK IN ASSOCIATION WITH

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CANOPY GROWTH: WORLD’S LARGEST CANNABIS DISTRIBUTION NETWORK WRITTEN BY

JOHN O’HANLON PRODUCED BY

ARON RAMPLING

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C A N O P Y G R O W T H C O R P O R AT I O N

CANOPY GROWTH CORPORATION’S LOGISTICS DIRECTOR MATTHEW SLY TALKS ABOUT THE POST-LEGALISATION CHALLENGE OF DISTRIBUTION IN A REGULATED ENVIRONMENT

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anopy Growth Corporation (Canopy) was established in 2013 at Smiths Falls, Ontario as a grower, processor and

producer of medical cannabis. Cannabis originates from India and Asia, where it’s been used for many thousands of years and is so widely 04

used today that a history review is unnecessary.

It’s only recently though that western medical science has started to accept the efficacy of cannabis in alleviating illnesses such as epilepsy, multiple sclerosis (MS) and muscular spasms as well as a host of other conditions, both physical and mental. Research and trialling will doubtless isolate and validate many new cannabinoidbased remedies.

The debate about legalising cannabis has rumbled on for decades, those in favour pointing out that it is less addictive or physically harmful than either tobacco or alcohol, those against arguing that it is a gateway to hard drugs. However that argument is pretty much lost: legalisation in many countries has generally been welcomed

“ THERE WAS NOBODY TO FOLLOW, NO REARVIEW MIRROR: WE WERE THE LEADERS!” — Matthew Sly, Logistics Director, Canopy Growth

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C A N O P Y G R O W T H C O R P O R AT I O N

“ THE RECREATIONAL MARKET IS WHERE THE MAJOR PART OF OUR BUSINESS NOW COMES FROM” — Matthew Sly, Logistics Director, Canopy Growth

by enforcement agencies because it decoupled pot from the illegal drug trade controlled by criminals.

Cannabis for recreational use was legalised by the Canadian government in October 2018, opening a completely new market opportunity to the already well-established industry leader Canopy Growth and its subsidiaries, Tweed Inc (which grows the plants) and Spectrum Therapeutics (which supplies medical formulations).

Today, Canopy is the world’s biggest

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producer and distributor of cannabis and employs some 3,500 people.

From growing sites all around Canada, some under glass producing up to five harvests a year, some in open fields yielding a single harvest, the bulk product is brought in armoured trailers to the processing and packing plant at Smiths Falls.

It was in the run-up to legalisation that Matthew Sly was appointed Logistics Director of the company.

At that point the company employed just 150 people, he recalls, and had no formal logistics department. Until then it had been comparatively simple as all operations were out of a single site at

Canopy Growth: Regional Distribution Center CLICK TO WATCH

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2:19

07 Smiths Falls. But as acquisitions were

concentrates, had yet to be formulated

made in other provinces, licensing and

for a completely new market. One

moving the cannabis became more

big unknown was how large this new

complex and a supply chain profes-

retail market might become: Canopy

sional was needed.

increased production and growing

For him, the challenge facing Canopy

capacity at this time to meet expected

called to mind how the first settlers

demand but has since modified its

moving westward across Canada must

approach. It aims to maintain its posi-

have felt over a century ago. “There

tion as the world’s leading cannabis

was nobody to follow, no rear-view mir-

company but growth is being carefully

ror: we were the leaders!” Legalisation

matched to market demand as that

presented so many unknowns, and

becomes clearer.

though the core product was now

Recreational shipments outstrip

legal, today’s product portfolio, includ-

medical by a factor of around 10:1

ing edibles, vapes, beverages and

in units, says Sly. “That is where the w w w.c a no pygro w t h . com

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C A N O P Y G R O W T H C O R P O R AT I O N

The Great Clone Transfer: Moving over 120,000 cannabis plants from Smiths Falls to BC CLICK TO WATCH

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4:51

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major part of our business now comes

they provide, has made for a very

from.” And remember that this is a

successful partnership. We can have

high value, rigidly regulated product

goods to the value of anything from

requiring specialised handling. Brinks

CAD$5mn to CAD$20mn on a trailer,

is the global leader in security bulk

and this needs very specialised treat-

transfer of cash and securities for

ment because it not only has to be

banks. Within a month of legalisation,

secure but also in temperature con-

Canopy signed an ongoing agree-

trolled and pharma-grade transports.”

ment with Brinks Canada to provide

Brinks continues to be a key partner,

logistics for its domestic recreational

and it’s not hard to understand why.

distribution network. “We have a fleet

Its CEO Douglas Pertz was excited by

of armoured tractor trailers that we

the tie-in with Canopy, he estimates

use for all our deliveries. The value

the global cannabis industry to be

Brinks brings to us, and the network

worth around US$160bn. As finance

is increasingly traded electronically, it’s not just producers like Canopy who will be the winners.

The recreational product is confined to Canada, the medical distribution

E X E C U T I V E P R OF IL E :

Matthew Sly Title: Director of Logistics Location: Ottawa, Canada

is destined for Europe, Australia, and South America. Starting to export cannabis was quite challenging, Sly admits.

“One of my first challenges was figuring out how to move cloned plants and cultures to other continents. Navigating the regulations around the movement of agricultural products is one thing, doing that with a controlled substance is another!” His first international shipment was to Germany to open up the Europe market. His second international shipment was to Australia, which required special temperature and humidity-controlled shippers that were custom designed to make sure the cloned seedlings and cultures would not flower or come to harm in up to 36 hours of transit.

Part of Sly’s original brief was to set up a Canada-wide warehousing operation and he continues to help design all Canadian and global storage loca-

After a decade in the pharmaceutical and high-tech industries, Matthew turned his attention to logistics.

During his 20 years in the field, he has managed one of the largest auto parts fulfillment centers in North America and has also managed Walmart’s Eastern Canada Distribution Center. Now as the Director of Logistics at Canopy Growth Corporation, Matthew oversees all logistics and worldwide distribution of medical and recreational cannabis out of the world’s largest cannabis distribution center in Smiths Falls, ON. In 2018, Matthew piloted the design of Canopy’s Regional Distribution Center and continues to improve efficiencies with state-of-the-art technologies and innovative solutions.

tions. Here the experience he’d had of running Walmart’s massive Canadian w w w.c a no pygro w t h . com

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13 distribution facility equipped him for the daunting challenge. At the beginning of 2018 he was asked to plan and implement a recreational distribution network ready to capture a new and quite unknown demand. He had five months to buy a distribution center, set it up, work out the excise stamp requirements, and put contracts in place with carriers.

This called for him to be very creative to cater for as yet unknown quantities, products and even destinations.

Back at the Smiths Falls distribution center, Canada’s rigorous excise

2013

Year founded

$226mn Revenue in US dollars

3,500 Number of employees

stamp requirements were a further w w w.c a no pygro w t h . com

C A N O P Y G R O W T H C O R P O R AT I O N

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Canopy Growth: Corporation Culture CLICK TO WATCH

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5:33

challenge – and in this case an opportunity to implement the reliability, flexibility, speed and data capture that only automated packing can really ensure. As with tobacco, cannabis producers have to obtain a licence from the Canada Revenue Agency (CRA) permitting them to buy excise stamps – and each province and territory’s stamp is differently coloured “Every unit we ship out has to carry an excise stamp; and they come without adhesive. So I worked with a partner called Plan Automation LP to develop custom excise stamping equipment and high speed packaging lines that allow us to

“ THE VALUE BRINKS BRINGS TO US, AND THE NETWORK THEY PROVIDE, HAS MADE FOR A VERY SUCCESSFUL PARTNERSHIP” — Matthew Sly, Logistics Director, Canopy Growth

pick and place these stamps, at rates from 100-300 units per minute, with the flexibility to accommodate all our different product types.”

There’s been a big automation programme at Canopy, he says, placing it ahead of its competitors in being able to respond to customer orders flexibly and fast. An order can be received, packaged, stamped with an excise stamp and dispatched within four hours for delivery anywhere in Canada by 8am the following morning. Digital transformation is not achieved in w w w.c a no pygro w t h . com

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C A N O P Y G R O W T H C O R P O R AT I O N

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isolation of course. Brinks for example

to eliminate paperwork and transac-

has custom-designed its own systems

tional errors. We simply can’t have

so that Canopy can track exactly

errors because we are required by

where its trucks are, what orders are

Health Canada to account for every

on them and when they are delivered,

single gram. And we are introduc-

with proof of delivery (POD) instantly

ing more production automation, for

relayed to Canopy and triggering

example robotic picking and packing

an automated bill. “Because of the

of orders. The digital transformation

complicated regulatory environment

of our industry is the one key thing that

we work in we’ve had to automate a

will enable us to grow and be more

lot of our internal processes including

cost efficient.”

documentation controls and transfer processes,

Flexibility and agility are qualities Sly has learned from experience, he says.

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He could have added a great deal of

reach their potential to deliver value

confidence, since many would have

for themselves and the organisation

fled from some of the challenges he

– it is, he says, a fun environment for

describes. With a CV verging on the

someone who thrives on change.

picaresque, he has worked with con-

“Logistics is the heart of the company;

struction equipment, high-tech PCB

if the heart is not pumping properly

manufacture, pharmaceutical products,

everything will shut down.”

English teaching, auto parts fulfillment (at a rate of 20,000 products a day) and large retail distribution. Now, he is truly working in a culture that suits his personality. Canopy, he notes, gives its people the autonomy they need to w w w.c a no pygro w t h . com

CANOPY GROWTH 1 HERSHEY DRIVE SMITHS FALLS, ONTARIO K 7A 0A8 P0WERED BY

www.canopygrowth.com