Transporting precious cargo in high-stakes situations is nothing new for Thomas Gerstenecker.
Fifteen years ago, the former member of the Canadian Forces’ elite special operations Joint Task Force 2 was working in eastern Afghanistan as a security adviser with the United Nations. One of his tasks was negotiating with a local warlord in the middle of a poppy field so that aid could be safely delivered to civilians.
Today, Gerstenecker is still making deals to ensure valuable commodities get to their final destination.
The former soldier is founder and CEO of Almonte-based 3 Sixty Risk Solutions, the country’s largest cannabis transport company. His firm delivers pot and related products for more than 100 cannabis operations across Canada, including Smiths Falls-based Canopy Growth, and works with clients in other industries such as oil and gas and mining.
While Gerstenecker didn’t follow the conventional route to entrepreneurship, he says his previous careers in the armed forces and the UN – where the stakes could literally be life-or-death – helped pave the way for 3 Sixty’s success.
“Being an entrepreneur, you cannot be risk-averse,” he says. “You are definitely exposed to a high-stress situation, whether it’s meeting a client’s needs or making sure that you’re well-capitalized within the market.”
Launched in 2014, 3 Sixty began as a security consulting firm that branched out into the cannabis transport space when one of Gerstenecker’s early clients – now a well-known licensed producer – admitted it had no idea how it was going to get its products to customers’ doors.
After consulting with as many industry insiders and logistics experts as he could, Gerstenecker purchased a couple of vehicles and jumped into a field that was wide open for business.
Like the burgeoning cannabis industry itself, 3 Sixty has been growing like a weed since pot was legalized for recreational use last fall.
Just eighteen months ago, 3 Sixty consisted of two trucks and 10 employees. The firm now has more than 600 employees and 150 vehicles across Canada.
After merging with competitor Total Cannabis Security Solutions and going public through a reverse takeover early in 2019, 3 Sixty acquired Toronto-based secure cash transport company INKAS Group in a $13.75-million deal. Gerstenecker says acquiring INKAS gives 3 Sixty the market reach to challenge leaders Brink’s and GardaWorld for national supremacy.
“We can kind of supercharge that growth and be competitors to the other two key cash-and-transit companies,” he says. “I think we are definitely positioning ourselves to be noticed.”
Like a lot of young companies in emerging industries, 3 Sixty has yet to see a profit as it invests heavily in staff and infrastructure and pursues M&A opportunities.
The company’s revenues – which are split almost equally among transport, guarding and consulting services – were $3.4 million in the first three months of 2019, up nearly 900 per cent over a year earlier. In the same period, the firm’s expenses ballooned from $400,000 to $8.3 million, leaving it with a net loss of about $4.8 million.
Gerstenecker doesn’t sound concerned. He says 3 Sixty keeps adding to its cannabis customer base and now controls more than 60 per cent of the Canadian market. In addition, the firm has landed lucrative deals to provide security guards for high-profile clients that include the LCBO and is looking to partner with police forces that are starting to outsource “non-core” tasks such as transporting prisoners and providing court security.
“Given the skill set that’s required for that, it fits nicely within our overall framework,” Gerstenecker says.
As a former elite soldier, he’s used to thinking on his feet. That ability has come in handy while building a new business model from the ground up.
Delivering cannabis is a much more complex process than trucking cash to ATMs, Gerstenecker notes.
Vehicles must not only be armed and armoured if necessary, but also climate-controlled so as not to kill or damage their precious cargo. The company keeps tabs on every truck and van with sensors that deliver second-by-second data on factors such as temperature and humidity to drivers and the operations centre in Almonte, allowing security personnel to respond quickly if anything goes awry.
Gerstenecker says he expects the firm to climb out of the red by the third quarter, an “aggressive” timeline but one he’s confident 3 Sixty can meet. Next on his to-do list is a strategy to expand his operations south of the border, where cannabis is legal in one form or another in more than 30 states.
“In a very short period of time, you’ll see us in multiple states,” he says.