The head of Canada’s largest medical marijuana producer had a message for Ottawa businesspeople Thursday morning at city hall: legalized weed is coming soon, and his company is ready to be No. 1 in that space as well – and not just in Canada.
“We didn’t want to stand around and wait and have a big company form in another country to come take us over,” Bruce Linton, the chief executive of Smiths Falls-based Canopy Growth Corp., said in his keynote speech at the Mayor’s Breakfast event.
“We want to be really not very Canadian. We want to dominate the world.”
Mr. Linton said Canopy is already working on new products to compete directly with alcohol, including beverages infused with THC, the active ingredient in marijuana. Such drinks could come in a multitude of flavours and in different strengths comparable to beer, wine and spirits, he added, but without the nasty side-effects of booze such as hangovers and weight gain.
“The alcohol market’s a funny one,” Mr. Linton told OBJ after his speech. “It’s very fickle. Some genius invented flavoured vodka. Now everybody’s spending their money on brown alcohols that are stored for long times. I think because of its fickle nature, (alcohol) is susceptible to disruption from other products. The products that we’re bringing to market are substantial disruptors. I think that category is always open and we have a new, better answer.”
Originally founded in 2014 as Tweed Marijuana, Canopy Growth Corporation currently controls more than 25 per cent of the Canadian medical marijuana market. It now supplies medical cannabis to more than 16,500 customers across the country under the Tweed brand and owns production facilities in Smiths Falls, Toronto and Niagara-on-the-Lake.
The first medical marijuana producer in Canada to go public when it debuted on the TSX Venture Exchange, the company graduated to the TSX in July of this year. Since its debut on the main exchange, Canopy’s stock has risen nearly 25 per cent to $3.95 as of early Thursday afternoon.
The company has inked agreements to distribute cannabis abroad in Australia, Brazil and Germany and has raised more than $140 million in capital, much of it from U.S. investors.
In August, Canopy reported revenues of $7 million in the first quarter of fiscal 2017, a whopping 300 per cent increase from a year earlier and a 39 per cent rise from the previous quarter.
But Mr. Linton said the company sees a whole different level of growth potential in the recreational marijuana market, which he estimated is already worth at least $7 billion a year even before legalization.
The federal Liberal government has said it plans to introduce legislation next spring to begin the process of legalizing and regulating marijuana for recreational use.
Anticipating that move, Canopy signed a three-year deal with rapper Snoop Dogg in March giving it exclusive rights to some of the Long Beach, Calif., native’s “content and brands” in exchange for cash and company stock. Last fall, the company announced a partnership with DNA Genetics, one of the world’s foremost cannabis breeding firms.
“We wanted to make really clear that the Canadian public understood we were going to be going very aggressively after the recreational market,” Mr. Linton told the audience, adding his company’s goal is to eventually capture 40 per cent of that market. “This left very little doubt.”
In response to an audience question, he conceded he is “a bit afraid” of potential competitors from the alcohol, tobacco and pharmaceutical sectors, adding he sees big tobacco as Canopy’s biggest threat.
“Tobacco companies have tons of money, and they have really no future business,” Mr. Linton said. “The cigarette guys are going to be a bit desperate, and they’ve got lots of money.”
Despite that, he said Canopy is still in the driver’s seat because “right now we have the momentum and a bunch of products.”
He told the crowd that Canada, with dozens of producers and a well-developed distribution network already in place for medical marijuana, is almost a decade ahead of most other nations in its ability to capitalize on the market potential of legalized weed.
“I believe there is going to jobs, training and an opportunity to create a huge, international group of companies that all started in Canada. We shouldn’t squander it.”