There was a time when, if you wanted a beer in Canada, you were drinking a Molson’s product.
Then we got smart and realized we didn’t have to drink swill, that there were brewmasters out there who cared about their product, and we could even brew our own product if the feeling swept over us – one that was based on quality rather than quantity, that tasted more like nature intended and less like someone had trained a cat to stand over the bottle.
The marijuana industry in Canada is hitting that point quickly, as every weed pitch I’ve heard recently has been less about building a million square feet of cannabis grow space, and more about finding the best growers, and putting them in manageable, low cost spaces where they can thrive, build a following, and focus on what they do best.
This is the smoker end of town, where an enthusiastic consumer market is thought to be likely to pay more for better end products.
Products that will do what you ask of them and won’t disappoint.
To be interested in that as an investment, you’re going to be the kind of person who feels the market will pay a premium for a brand that people recognize, or that builds a dedicated audience, and that the Molson’s of the world will come looking for those before they will the bulk brands.
In short, you believe your multiple will come not from construction, but from acquisition.
I am one of those people.
Speakeasy Cannabis Club (EASY.C) is not a name most of you will recognize, but that’s mainly a symptom of having gone public, like, today. In fact, it’s such a hidden treasure, so sparkly and new, the website hasn’t been indexed by Google yet (find it at www.speakeasygrowers.com).
But this isn’t some tiny urban shed with hipsters mollycoddling four plants under LED death rays, nor a fly by night market guy creation.
Speakeasy sits on 290 hectares of prime Okanagan agricultural land, the sort that has given the world some of the best wines, cheeses, and apples for generations. Previously, this land gave birth to Sun-Rype, a national juice brand that started as a collective of local growers and blossomed into a major Canadian industry, that feeds every kid in the country.
Speakeasy is looking to take that model and incorporate it into the world of BC Bud which, if you think about it, remains the greatest weed brand the world has ever known.
Ain’t nobody asking around at the club for that ‘primo Maritime ganja’. BC Bud was a brand name before brand names were legal. It brought a premium price tag, so much so that a lot of the time when you bought it, it would turn out it wasn’t from BC after all.
BC Bud gave smokers across North America an education that the stuff they were huffing behind the bike shed was, in fact, local ditchweed, and that something better existed in the world.
Most of that came from the Okanagan, so much so that early Health Canada machinations were rumoured to have penalized the applications of growers from southern BC because they assumed any operation out of that region would be crooked.
Today, it’s swung the other way. The success of DOJA/HIKU Brands (HIKU.C) has pointed a spotlight at BC’s fertile farm country and the gates are swinging open.
Soon to go public listing Greentec Technologies (GTEC) has amassed a collection of artisan grower brands from across the country, but the Okanagan is where they’re based. HIKU is right up the road. Down on Harvey Avenue, cannabis lounges and dispensaries have populated and flourished.
Kelowna is becoming Canada’s Colorado. If you’re a good grower, it’s ground zero.
And Speakeasy’s plan is to build the sort of facility that they can all share, building not just a brand, but many brands, and lowering costs by taking advantage of the Okanagan sun, shared resources, shared marketing, and soil that ranks among Canada’s holiest.
Currently, the company has constructed over 10,000 square feet of grow, and has presented Health Canada with its evidence package; the final step before cultivation license granting.
There was a time when that would be just another step in a long and much delayed process. There was a time when a company saying they’d sent in their package was met with a shrug, because that could be followed by years of silence.
Not anymore. The average wait for a license from this stage is around 20 days. The end license, if everything is in order, is less a crap shoot and more a formality. From what I understand, Health Canada only had ten questions that needed answering, which speaks to a strong likelihood of smooth transition.
When that license drops, phase II of their facility – an 80,000 sq. ft. expansion – comes next. The plan is to include an extraction lab, genetics lab, and a facility capable of producing 10,000 kg of product annually.
This may not be a struggle. These growers have produced before.
In fact, there’s twelve years of marijuana production under the old rules among this team, and ten times that in general farming for generations prior.
Experience is a key asset, but it extends to beyond the fields in this instance. Speakeasy Chairman Merv Geen is a former Chairman of Sun-Rype Brands, having taken it from IPO to $94 million takeout when Jim Pattison turned it private. He was also Director of the British Columbia Fruit Growers Association, BC Tree Fruits Ltd, and BC Fruit Packers.
What Merv Geen did with Sun-Rype, now-CEO and family member Marc Green has done with marijuana. He’s been active in the legal medical marijuana industry for a decade, having consulted with growers participating in the MMAR, MMPR, and ACMPR programs, helping them build their businesses and adhere to licensing needs.
The Okanagan has always had strength in the unity of its growers. From the rapid expansion of the wine industry to the way it integrates with local cheese and fruit and resort hotels, small growers have thrived out there and led the way for the agricultural industry Canada-wide.
That business model, of connecting smaller growers and giving them strength through a united front end and brand, is one that marijuana growers can learn from. With the licensee count now up to over 90, the ability for a smaller grower to build a national brand is limited. Making a living is one thing, but real success comes from consumers buying your product on a wide scale, and Geen has built such an entity before.
That this entity sits on an amount of land that is Canada’s largest single weed-based agricultural holding is worth noting. They’ve got a lot of growing to do.
— Chris Parry
FULL DISCLOSURE: Equity.Guru was paid a placement fee for this article.