High Hopes: Q&A with Tweed Marijuana co-founder Bruce Linton

In its first year of operation, Smiths Falls-based medical marijuana grower Tweed has been creating quite a buzz – and not just among the users of its product.

Co-founder Bruce Linton sat down for a year-end chat with OBJ about everything from why being a graduate of Carleton University has made him a better entrepreneur to how his company has become the symbol of a struggling eastern Ontario city’s economic resurgence.

OBJ: You have quite a resume. Did you ever think when you were president of Carleton’s students’ association that one day you’d wind up becoming a (legitimate) pot dealer?

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BL:I think when you went to Carleton, you had to figure out how to start things, create things, because there wasn’t a lineup of people waiting to hire you. You better get in and dig. I’m not sure it’s a resume or a habit of method. The comment back from everybody who knows me is, ‘There’s a lot of things we thought you might get into, but we never thought you’d be the marijuana guy.’ (Smiles.) Really, it is a business because of the supply chain. But as far as the content (goes), I’m probably one of the least knowledgeable people who went to Carleton. Ultimately, I’m not sure that’s a liability, at least not with the financial markets. They like to know what you’re thinking about the opportunity, not the content only. And there’s a lot of really good content people out there (chuckles).

OBJ: What was it that originally attracted you to this business?

BL: You know, it was just having time to actually read the papers. I had a bit more quiet time in Q2, Q3 of 2012. It was really evident that the police chiefs of the country hated the old system, and when you started digging in, the obvious thing was that the Conservatives were going to change the system because they like the police. When you started to understand what the change was going to be, it was going to be to turn into an institutional delivery system that which had been a cottage-based system. None of the cottage-based participants, or few of them, appeared likely to be able to step in and participate, which meant all of a sudden, there’s going to be no real incumbent supplier. Even more exciting for me was that the government was no longer going to be part of the process of deciding who could have access. It was going to the physicians and their patients. I couldn’t believe that everybody wasn’t trying to start one of these. You start to wonder, ‘Are we wrong?’ Because a number of people said, ‘How would that look on your resume?’ That to me was more encouraging than anything. (Laughs.) It really was about supply-chain disruption and government exiting the approval process.

OBJ: One of your most important jobs is to raise capital. Talk about that process.

BL: The initial budget of how much money we needed to get started had one of the digits correct – it had a two in it. So about $2 million. But in fact it turned out we needed 14 times more cash than the initial estimate – $28 million was about the right number. It was a much more significant undertaking, just because the rules, when they came out, required a great deal more depth on security. We went with a much bigger footprint than had been originally planned. When you enter the Hershey factory, it is a big factory. It was a fairly active end of 2013, first quarter 2014.

OBJ: What was the reaction of investors when you told them what you wanted money for?

BL: It’s funny. It’s like going up a set of stairs, if you will. The first step was a bit challenging because what we were really saying to people is, would you invest in something where we’re going to spend all the money we get from you to build out a facility that we think is correct – the government’s giving us some guidance – but we won’t have a licence until they come by with a clipboard and inspect it. And if we’re wrong, it’s going to be a really expensive place to grow tomatoes or something. So that first group actually just took a complete blind leap. The harder raise was the second amount of money to come in in late 2013 because those people were kind of in a halfway-there-but-not-finished (situation). So that was very challenging. Plus, by the end of 2013, everybody was thinking that next year will be better for mining, next year will be better for these other activities, and they were thinking about saving their money to do something in 2014. As soon as we got to 2014, everybody realized that selling gold stocks and things is not going to work. So they quickly turned to what’s hot. All of a sudden, we went from being an uninteresting topic to people running at us with cash.

OBJ: Did that surprise you?

BL: I can tell you that on Christmas Day last year, I spent several hours on the phone with investment bankers. On (December) 26th, we closed a round where we bought the building on the 27th at 11 in the morning, and the financing round didn’t close until 3 in the afternoon. So for about four hours I was the proud owner of a very large factory with no certainty that there was going to be a business that had cash to operate in it. So it did surprise me, because it was really, really challenging to close that financing in 2013. I won’t say it was easy, but we certainly had a lot of interest in the 2014 activities.

OBJ: Where do you come up with your product names?

BL:The people who originally named marijuana strains went from things like Ghost Town Haze to AK-47 to Green Crack. All these names are street names. So we treat those as the Latin name, if you will, for the product, and what we do is pick strain names that reflect the Tweed branding. The majority of our patients are people who are in their 50s or maybe 60s. They could be suffering from arthritis or Parkinson’s or have chronic pain from a car or industrial accident, and they’re trying to quit using opiates or trying to quit using sleeping pills or whatever other medicines that are principally going through their liver. As they quit using those, they’re going to start using the Tweed product. And when they tell their friends and family what they’re using, we thought it’s much easier for them to say, ‘Buddy, the strain I’m using from Tweed, has really helped my arthritis’ versus saying, ‘AK-47’s really good s–t.’ That is important because your patients have to become your promoters. If you don’t give them a vocabulary where they can confidently describe what they’re using to other people, I’m pretty sure most of them aren’t going to be comfortable describing the AK-47 as ‘good s–t’ vs. the quality product that’s benefited them named Buddy.

OBJ: Fair enough. So how do you come up with the brand names?

BL: We can’t advertise, but we can interact (with customers). Social media allows us to ask everybody who cares, ‘What would you call it?’ Which then creates more of an audience participation, which is important when you can’t buy advertising.

OBJ: Where did the name Tweed come from?

BL:We used a couple of marketing agencies (Acart Communications and McMillan) at the beginning. The thought was you have to have a name that has some value and duration. We looked at many. We were almost Can Remedy. But ultimately one of the agencies came back and said, ‘This name we think would be a good one, except the dot-com isn’t available.’ So we had to get the dot-com and it wasn’t particularly expensive. I was a presenter at a conference in Las Vegas about three weeks ago, and I would hazard a guess that Tweed, as a producer of medical marijuana, is probably the best-recognized brand globally. The number of people who knew Tweed – and, of course, I’m wearing the tweed shirt and have the tweed coat and tweed everything – who came up and wanted to find ways to interact was amazing. It really caught on. Smart people like smart brands, and Tweed has that double entendre which really can work. If you think the market capital of a company with almost no revenues initially – like, zero when we went public – quickly soared in excess of $100 million, it was principally because social media and the media at large carried the story over and over again. It was a name you could remember.

OBJ: The government won’t allow you to advertise. But if you could, what would your slogan be?

BL: Really, what Tweed’s about is the experience for the client. It’s about approachability, it’s about a conversation you feel comfortable having. The confidence to express you’re working with us is kind of where we’re coming from. So I imagine if we could advertise, it would be about that – it wouldn’t be a picture of a leaf.

OBJ: Have you ever sampled your product?

BL: (Smiles.) I don’t have a licence, because I don’t have any basis to have a licence, so I haven’t. We have a whole customer committee, and they have a six-page process where they analyze everything about the product from the coloration to the smell to how it affects them to how it packs. We have many patients who work for us as employees, and we have many outside who are quite helpful and supportive. When you’re dealing with financial markets, what they really want to know is if you’re thinking about the business. To date, having not been a consumer of the product has probably helped. If you’re selling wine, you go can there. But if you’re selling opiates, as maybe our competitor product might be, that wouldn’t be a normal thing for the CEO to say, ‘These opiates are awesome. I’m using lots of them right now, and I’m super happy.’

OBJ: Have you had any issues with security, the police, etc., so far?

BL: I wouldn’t say we have issues. What we have is frequent visitors. We’re a highly regulated entity, meaning regulated for security clearance by the RCMP, regulated by Health Canada on a two-week to four-week basis, annual licence renewals, municipal bylaws we need to be compliant with, odour bylaws, all kinds of rules. But so far, we’ve been aware of the rules and have been able to stay on the right side of them. But boy, oh boy, there are a lot of considerations when you’re in a business that’s so regulated and such a startup. Everything has to be considered (from the perspective of) how will this affect our operational compliance before we do it – I mean anything from what nutrients you might want to introduce to whether or not you change the password on a door. Sometimes you get really lucky. The fact that the police station is directly across the road from Tweed, I think that’s terrific. It is a visible fact, I would suspect, for people who might think about doing something dumb like trying to break in. But it also means that in the event that someone did, response time is measured in seconds. It worked out just right.

OBJ: Speaking of that, why Smiths Falls?

BL: At the very beginning of the process, in order to get a licence you have to have the support of the municipality and no dissent from the police force or the fire department. What you’re doing is showing up in a town where people may or may not know you, presenting to council in an in-camera session the request that you be allowed to grow marijuana in the biggest building in town. And that has to get a positive response. The reason we chose Smiths Falls is its bylaws permitted agricultural activities inside the (former Hershey) building because it used to take raw milk and make chocolate. There were only two jurisdictions in all of eastern Ontario that had bylaws that didn’t need to be amended for us to do this in an industrial building. The second reason was, the building had been empty for five years, and on two occasions, the owner of the building had asked (council), ‘Could we please knock it down? It’s too costly to keep up.’ It was going to be knocked down if (council) didn’t like us. So the chances of them liking us were pretty good. We’ve now probably become corporate citizen No. 1 in Smiths Falls. The (company) rule is, everything we can buy (for supplies) in and around Smiths Falls must be bought there. All the labour for the construction comes from town. Everything we do in terms of fundraising goes to the food bank or other charities, and we do a lot of that. In one year, we’ve gone from, ‘Who are these guys?’ to being asked to be the keynote speaker at the chamber of commerce annual conference.

OBJ: Mayor Dennis Staples was even quoted in the New York Times.

BL: I think he now is at either 59 or 60 interviews about Smiths Falls, all of which have been positive. Prior to this, Smiths Falls had been the subject of a lot of interviews, but they were about Hershey shutting, about the Rideau Regional Centre shutting – not positive stories. I’ve been saying for a year or two, this is a town that has everything required to be successful except the, I’ll call it, commerce platform. They have a great new hospital, they have a great new infrastructure and water system, they have a terrific new community centre and hockey rink, they have a downtown core that’s very interesting and they have a very, very low cost of purchasing a home or renting a building. We could end up with something that’s like a campus of activities at that plant. You can buy a house in Smiths Falls and have change out of a hundred grand. So if you’re a startup, you’re an artist, you’re someone who is a creator and you want to move to a community, that’s pretty good.

OBJ: You’re interim CEO right now. How’s the search going for a new boss?

BL: We’re down to the final few candidates. No certainty that we’ll close with one of them … it’s a bit like telecom was in the mid-’90s, where these people with unbelievable careers and resumes and experience were applying to startups. They were all wanting to be part of it because they could see that for the foreseeable future, the telecom startup was going to be hot. We have had people applying who’ve been running companies of a billion, billion and a half dollars. We’ve had people running brands that you would go, ‘Really?’ from all the big names. Because people recognize that probably the most interesting job in Canada or North America over the next three years is going to be building potentially the biggest medical marijuana company, seeing potential legalization with the next election, doing mergers and acquisitions so that this company can become a billion-dollar enterprise. And that could all happen over the next three years.

OBJ: A billion-dollar company? That’s a pretty bold statement.

BL: We’ve done nothing to be a $100-million (company). We just started. And if you look at the sector, the number of potential patients, the number of ways the legislation could change, there’s a lot of demand here. We have a baby-boomer society that probably are going to start thinking that all these pills metabolizing through their livers isn’t what they want, and they want a quality of life. And despite the fact they told their children never to touch marijuana, they might have. So there’s going to be a really robust market for this kind of offering to deal with aging.

OBJ: You’ve talked about breaking into the European market. Do you think that will be viable?

BL: Canada has actually crushed it in terms of taking the best perspective and turning it into our legislation on how you produce, deliver, manage, measure – everything about marijuana. So I think you’re going to see our framework largely turning up with some alterations, from the Czech Republic to Albania, South Africa to parts of South America. So the opportunity to take our methods of compliance, our practices and protocols, and if you will franchise those into abandoned factories in other jurisdictions, that seems pretty likely.

OBJ: You’ve been involved in a lot of startups. I guess that’s where you get your high, so to speak.

BL: (Laughs.) I like the second-year startups way more than the first. The first year you’re so actively busy with things necessary so you can do what you want to do, but you’re not actually doing the business. Whether it’s the leasing of the facility, raising capital, stupid things like what chairs you’ll have, those things always consume the whole first year. The second year is actually much more fun, because you get to see the business come out of those efforts. You almost have to endure the first year so you can enjoy the second. I feel pretty excited for 2015, because it’s two companies that get to do the fun year now.

OBJ: What is the most fun about it?

BL: To me, the part that’s most fantastic is hearing customer feedback. In both those companies, we’re now actively hearing customer feedback. So you can keep taking that and aiming everything you’re doing in the company based on a more specific understanding of the end goal. Whereas in the beginning year, you have to do a lot of interaction with potential clients, but you have nothing you can give them and nothing they can give feedback on.

OBJ: You’re also CEO of a software firm, Martello Technologies. What’s your plan for the next few years?

BL: For Tweed, you picture as big an outcome as you can possibly create, and now we’re hiring the people who can make that a higher probability than just dreaming. It’s a good start. The next year will define the angle at which we’re aiming up. Right now, it’s pretty vertical. We’ve got a lot of things to execute. But this could be a very big company. And Martello is in this mode where our big partner (Mitel) just keeps getting bigger by buying everybody. So that one’s exciting. They’re a billion-plus (company), they’ve got gear everywhere on the planet and I bet they’re not done buying. Both of them, it’s kind of fun to think about the next year because it’s more about realizing the opportunity than trying to figure out if there is one. The number of times I get asked how the two companies relate, and I explain they’re both in high-tech. They just have different (meaning) on ‘high.’ You can actually see these are two macro trends: the idea that people want to have medical alternatives to dealing with what ails them, not in a curing process, but in managing the pain, and the fact that what we’re doing in the west end of Ottawa (at Martello) is now transitioning from selling people bits of equipment to becoming a subscription for the world to get their services. Those two trends are pretty dramatic, and they’re both global. I really like that Ottawa has some perspective on the next waves coming out.

OBJ: Any thoughts about what’s going to happen down the road for you personally?

BL: Well, we have this surplus space which is about two-thirds of the Hershey plant, and it has a massive dairy infrastructure that Hershey left. So I don’t see why I haven’t been approached by people who are thinking about being a cheesemaker or a dairy products maker. We would take that infrastructure – which is probably 12 or 15 million dollars of six-year-old equipment all in top shape for turning milk into whatever we want – and co-branding it across the Tweed platform. If you made stuff that tasted good and you really wanted to eat sometimes and it was right beside the biggest producer of marijuana possibly in the world, I think chocolate chunk might be green chunks of chocolate. I just need somebody who understands how to make milk into stuff, because the asset is there. I really do believe it’ll be the best thing for the community. We’ve just got to find a little time to get it done.