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A look inside the vaults – and marketing strategies – of Mettrum Ltd. and Canopy Growth Corporation, two of the biggest players in the country's medpot game
Call it the business of bud for the Beemer set. From marketing gurus to wheelers and dealers with ties to Bay Street investment firms who know a good thing when they smell it, medical cannabis is going corporate in a very big way. Those lucky enough to own a coveted licence to produce weed are already planting the seeds for market domination in anticipation of the explosion of demand that’s sure to come when the Trudeau government delivers on its pledge to legalize it. The long, strange trip to end pot prohibition just got trippier.
I no longer have any idea where I am. I start to have 80s flashbacks of Harry Stinson’s Mad Hatter, the insane birthday party destination where kids behaved like savages in an empty warehouse between hot dogs and cake fights.
I can’t shake the feeling that at any moment children covered in whipped cream will race by in shopping carts. Saving grace: unlike the Mad Hatter, this place smells super-clean. There’s none of the terpene hit I’d expected.
I’m somewhere in the bowels of Mettrum Ltd., on a tour of the company’s Bowmanville plant hidden among the cornfields off the 401. I needed a GPS to find it.
The first licensed producer in Ontario and one of Health Canada’s largest licensed growers of medical marijuana, it’s as high-tech – and corporate – as cannabis gets. Call it the business of bud for the Beemer set.
I’m here at the invitation of Graeme Morrison, a young “public relationships” contractor from Argyle PR. With us are Mettrum CEO and founder Michael Haines, who was chair at Blammo Games in a previous life, and president George Scorsis, who jumped from a sales and marketing gig at Red Bull six months ago.
It’s the Saturday of the Easter long weekend, and Haines’s wife is along for the ride. They’re on their way to a family event. CJ the photographer has joined us as well. There’s one woman working the call centre.
We enter “the vault,” which leads to a very Spy Vs. Spy elevator that takes us down to long white hallways dotted with security cameras. Scorsis points out the seismic censors on the walls, there to protect the massive underground cisterns, the “three sisters” that make a perfect secure location for product to be prepared, packed and stored.
Earlier, we dug out our drivers’ licences and filled out paperwork (and heard about bulletproof glass) to obtain security fobs. Swipe, code, swipe, code, swipe, code at checkpoint after checkpoint.
These guys are beyond serious about security, which probably has something to do with the fact that former RCMP commissioner Norman Inkster, a pioneer in IT security, sits as an independent director on Mettrum’s board.
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Mettrum president George Scorsis (left) and CEO Michael Haines are forecasting double-digit growth in their medpot business.
Bud is becoming big business, one of the fastest growing sectors in the Ontario economy, in fact. Seventeen of Canada’s 30 licensed growers are based in Ontario. And those lucky enough to hold a Health Canada licence to grow medical weed are planting seeds for the explosion of demand that’s expected when the Trudeau government delivers on its promise to legalize.
Bay Street is already positioning itself to buy in in a big way.
Follow the corporate connections of players behind the scenes and it doesn’t take long to draw lines to investment firms with money to burn on bud. Other Mettrum board members include Don Wright, former chair and CEO of TD Securities, and William Assini, former senior vice-president of PricewaterhouseCoopers Inc.
When it comes to the blossoming medpot industry (agri-pharmaceuticals, as the new wheelers and dealers in the biz like to call it), there’s lots of potential for market domination. Which is probably not good news for storefront mom-and-pop dispensaries afraid of being pushed out by the laws of supply and demand as the feds regulate the trade. But that’s another story.
No one’s making big money just yet. There are too few patients – some 34,000, authorized to buy weed for their ailments under Health Canada’s Marihuana For Medical Purposes Regulations – for the 30 licensed producers currently operating in Canada. And one company, Canopy Growth Corp. (see sidebar), has already cornered almost a third of registered medpot users in Canada.
Mettrum recently reported an 18 per cent increase in revenues for the quarter ending December 31, 2015, along with losses of $1.3 million. That’s $300,000 less than the $1.6 million the company lost in the previous quarter.
But the company, which is trading at $1.49 a share on the Toronto Stock Exchange, seems to have no problem raising cash through public stock offerings or getting its licence amended to facilitate expansion.
The company acquired a licence in 2014 for the 60,000-square-foot facility I’m touring, allowing it to increase production capacity by some 8,000 kilograms per year. That’s about three times more than the 2,400 kilos it was producing at its original facility just up the road. Mettrum has a third operation, Mettrum Creemore, in Clearview, whose licence was recently amended to allow production of 1,200 kilograms of dried cannabis and extracts. In April 2015, the company bought Hempola in Barrie, now called Mettrum Hemp, which sells cannabis-based products in some 2,000 stores across the country.
Mettrum is now producing 100 kilograms of product per month, says Haines, who keeps the conversation tightly focused on what he calls the “Mettrum spectrum” on our tour. It’s their way of branding the product on a sliding scale of THC potency and CBD levels. It’s medical cannabis simplified.
THC gives the psychoactive effects – the high – but also helps with appetite stimulation and pain control. CBD doesn’t get you high but works as an anti-inflammatory, an anti-seizure medication and an anti-psychotic and has shown neuroprotective properties. THC and CBD both provide interesting benefits for those who are sick, injured or broken, but not everyone wants their relief to get them stoned.
And this is where Mettrum seems to be positioning itself in the market: the meds without the high. The company doesn’t even speak of marijuana, calling it cannabis and stepping away from the rec image to build a powerful, physician-approved brand.
Scorsis is quick to work into our conversation that recreational weed use was never really his thing.
These guys have the medical model wrapped up and are happy to educate physicians about products that can be prescribed for a long list of medical conditions and symptoms.
Indeed, Mettrum is working closely with some of this country’s best-known researchers in the field. Mark Ware is a leading pain researcher at McGill University Health Centre and executive director of the Canadian Consortium for the Investigation of Cannabinoids, a federally incorporated non-profit founded with a grant from the Canadian Institutes of Health Research (CIHR), the government of Canada’s health research investment agency.
With Ware’s help, and a few more strains, the company is expecting double-digit growth, says Haines.
The latest crop is at the start of a new cycle, so it’s not much of an olfactory delight. Still, with fans blowing ever so slightly, the gentle movement of air through the leaves seems to make everyone relax a bit. Plants just do that to people.
Master grower Luke Escott, a founder of the company, is proud of his work. He hooked up with the Mettrum guys through golf connections and was happy to share years of experience growing weed in what he stresses was a “legal environment.” Escott entered the business in 2001 as a certified grower for patients under the government’s original medpot program. He’s been overseeing Mettrum production since 2013.
Haines calls Escott’s knowledge “tribal.” And from the looks of Escott’s plants, his tribal knowledge is awesome.
“When we see emails from a mom whose kid can now go to school because his seizures are under control because they’re using Mettrum Yellow, it feels good,” he says.
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If Mettrum is as coporate as cannabis can get, then Tweed in Smith Falls is the Restoration Hardware of pot. In the upstairs corporate offices there’s lots of natural light, with bright green pops of colour here and there. It’s all a bit Douglas Coupland, with packaging to match that you could display on a shelf. It’s got a cottage feel. It appeals to the growing number of medpot patients who are new to cannabis, and the fun marketing is no doubt helping Tweed grow.
Take strain names, for example. A high-functioning professional might feel awkward talking to a doctor about AK-47 or Bubba Kush, but Tweed has rebranded these well-known strains. AK-47 is here called Herringbone, and Bubba Kush is Norfolk. All the strains – more than 20 on offer, with plans to add more – are featured online and in a printed Yield Guide, along with beautiful descriptions and terpene profiles called “terpography.”
The Tweed plant used to house the Hershey Chocolate Factory, the first outside Pennsylvania and a big employer until it moved south, leaving many in the town out of work.
The plant was still zoned for industrial and commercial use when Tweed came calling in 2014 with its plan to open a medpot grow-op. The community and politicians were more than welcoming. You can’t help but notice the cop shop directly across the road, continuing the historic and symbiotic relationship between cops and weed.
The sprawling complex consists of eight buildings on some 20 hectares. It’s ground zero of Canada’s booming medpot empire.
Tweed and sister company Tweed Farms, a 10-hectare site in Niagara-on-the-Lake that houses a 350,000-square-foot greenhouse operation, are wholly owned subsidiaries of Canopy Growth Corporation, the first licensed producers in Canada to be traded on the TSX Venture Exchange. Canopy recently scored a big win in the weed wars, purchasing long-time Netherlands-based medpot producer Bedrocan. Its “core partners and friends” include Snoop Dogg, who has his own line of cannabis products, Leafs by Snoop, which includes hand-weighed flowers, concentrates and edibles, helped along financially through a partnership with Casa Verde Capital, the L.A.-based venture capital firm started by Snoop last June with $25 million in seed money to fund pot startups.
Tweed is notable for another reason: its founder and former CEO, Chuck Rifici, is currently the CFO of the Liberal Party of Canada.
My host today is Jordan Sinclair, who strikes me as more policy wonk than hipster. He’s worked his way through some interesting communications gigs before landing at Tweed.
Sinclair knows his stuff. Before we hit the grow space, we chat for a while in the Tweed lunchroom, where other employees jump in and out of the conversation. Everyone is polite, and there’s lots of eye contact. Team Tweed seems energized. Its website welcomes visitors with a Morning Hi and short features on its growers as well as the latest news in cannabis. As seriously as Tweed takes its marketing, it’s even more on-point with production.
Dressed in a lab coat and scrubs with disposable booties over my Docs, I’m tempted to slide across the shiny floors. I look like an idiot, but it doesn’t matter, because suddenly the most amazing aroma hits me. I’m on terpene overload and, for a moment, I am speechless.
The tour takes me past the mother room, where plants grow under bright lights. Tweed workers flutter around everywhere, wearing lab gear – hair nets, Tyvek suits and safety glasses.
We meet up with company president Mark Zekulin, who’s also Tweed’s legal counsel.
Once a senior adviser to former Ontario finance minister Dwight Duncan, Zekulin admits that this was not part of his imagined career path. His resumé included a gig as senior policy manager for the Business and Industry Advisory Committee to the Organization for Economic Co-operation and Development (OECD). But he looks pretty happy to be showing me around this massive weed warehouse where workers are busy trimming product. Some of this is done by machine, but a lot is done by hand. There’s a pervasive feeling of busyness.
Big copper drums left behind by Hershey are now used for mixing product. A new space has been set up for extraction. Oil is a big deal for licensed producers. Tweed’s line of baked goods mixes was developed to be combined with its oils. Everyone at the plant raves about the cupcakes.
But Sinclair saves a flowering room for last. It’s full of marijuana. The plants are thriving. Workers are only allowed to touch the plants with gloves on. I get really close to stare at the crystals.
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