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Growth Op

Growth Op

The pending legalization of pot is opening career paths and business opportunities that used to earn jail time. Here’s how some Atlantic Canada entrepreneurs are securing their territory

This is the final boarding call for Flight…

Not yet.

Paging passenger Evan Price…

Just a few more minutes.

Please proceed to Gate…

One more minute. Just one more…

Your aircraft doors are closing…

It was December 13, 2016. Evan Price had spent the previous week at a Montego Bay resort enjoying a brief, pre-Christmas sun-and-beach break from the Canadian cold with his girlfriend, celebrating his 33rd birthday and, oh yes, religiously checking his email inbox each morning and anxiously scanning the cbc.ca news website whenever he got the chance.

Price had been waiting for news that a long-awaited Canadian federal government task force report on the legalization and regulation of cannabis in Canada had finally been released. During the 2015 federal election campaign, then Liberal leader and now prime minister Justin Trudeau had pledged to legalize the recreational sale and consumption of marijuana (the dried, crushed flower tops and leaves of the cannabis plant that contain THC, the chemical responsible for its mood-altering high). The key questions Trudeau’s nine-member task force was supposed to answer were how to legalize, and how soon.

Those answers mattered to Evan Price, the president of The Truro Herbal Company—also known as The THC—a three-year-old Truro, N.S. company he had founded. The company had begun by seeking a toehold in the legalized medical marijuana business but was now hoping to use its still-almost-toehold there to deep dive into the much larger and more lucrative recreational marijuana market in Canada’s soon-to-be future.

evanpricequotePrice’s investors (he’d already raised close to $2 million, including $1.2 million just the month before) would be keen to know exactly what the task force was recommending and what that might mean for their investment.

Now, just before Price’s flight home to Canada was scheduled to take off, the report had finally been released back in Ottawa.

Frantically, Price electronically skimmed its 112 pages and 80 recommendations: sales should be restricted to those 18 and over… personal possession limited to 30 grams… limits on advertising… plain packaging… government shouldn’t set prices, but tax marijuana based on its level of THC… regulation of retail sales should be left in the hands of the provinces…

From Price’s perspective, the two key recommendations were that the task force was leaving the timeline for legalization “up to the Government of Canada”— thus continuing the “when” uncertainty—and, more importantly, that it was recommending the existing “medical marijuana regime,” the one under which The THC had originally applied for its licence in 2014, be continued at least until the legalized recreational market had stabilized. That was good news, allowing Price’s company to continue efforts to finally win its medical marijuana production licence (it would be the first in Nova Scotia) and develop that business while gearing up to participate in the much bigger legal marketplace as it evolved.

Price sent off a brief, upbeat report to his investors and hurried to board his plane. Just in time. His vacation was truly over, and his own long, strange trip as a pot purveyor had reached its latest cross road.

Before we join that journey, a brief history of the legal status of marijuana—also known unkindly by early prohibitionists as the “devil’s weed.”

Marijuana has been a controlled substance in Canada since 1923 when it was unceremoniouly lumped into the 1923 “Act to Prohibit the Improper Use of Opium and other Drugs.” Although possession could lead to seven-year prison sentences and trafficking was punishable by deportation (the roots of North America’s anti-pot laws appear to have had more to do with anti-Chinese and anti-Mexican immigrant sentiment than with public health concerns), the marijuana issue was mostly moot until the sixties when that devil’s weed suddenly became the high of choice among North America’s burgeoning baby-boomer population. In 1962, there were only 20 marijuana-related convictions in all of Canada; by 1972, the number topped 12,000.

In 1972, the federally appointed Le Dain Royal Commission into the Non-Medical Use of Drugs recommended an end to prosecuting individuals for simple possession of small amounts of marijuana for personal use. But that report, like others before and since, ended up as a government-shelf dust collector.

It wasn’t until 2001, in fact, following a decision by the Supreme Court of Canada, that the federal government agreed to legalize marijuana for medical use, allowing individuals with marijuana prescriptions for pain management to grow their own or buy directly from Health Canada.

During the first half of the 2000s, as public support for legalization grew, the federal Liberals tried and failed—twice—to pass legislation to decriminalize possession of small amounts of the drug. Its second attempt died on the order paper in 2006 when Paul Martin’s minority government was defeated in the House of Commons, triggering a general election, which was won by Conservative Stephen Harper.

Harper (no surprise) did not reintroduce the legislation. Arguing that marijuana was “infinitely worse” than tobacco, Harper declared the drug “something that we do not want to encourage.” So his government introduced mandatory minimum sentences for mere possession and doubled maximum penalties from seven to 14 years in prison.

The government also launched a rearguard effort to clamp a lid on the Supreme Court-mandated availability of marijuana for medical purposes. In the dozen years since the court’s decision, the number of licenced medical marijuana users had grown from 500 to 30,000.

“While the courts have said that there must be reasonable access to a legal source of marijuana for medical purposes,” Health Minister Leona Aglukkaq allowed in June 2013, “we believe that this must be done in a controlled fashion in order to protect public safety.” The government scrapped existing rules allowing medical users to grow their own pot and replaced them with new “Marijuana for Medical Purposes Regulations,” which required all users to purchase their drugs “directly from a licenced commercial producer approved by Health Canada.”

While that restricted how medical marijuana patients could acquire their drugs, it also suddenly opened a door for anyone who wanted to become a licenced commercial producer of marijuana.

Including Evan Price.

Evan Price did not set out to be a drug dealer. He set out to be an entrepreneur.

When he was in Grade 3 at Alice Street Elementary School in his hometown of Truro, N.S., he took part in an entrepreneur-encouraging program called “I Want to be a Millionaire.” With some basic training and $200 in seed money, young Evan developed a business plan, then created a company called High Tech Hygiene. It provided energy audits of household appliances like microwaves, as well as a cleaning service for VCRs and CDs, to neighbours and family friends. He turned a profit. And was hooked.

During his public school years, Evan earned spending money doing everything from shoveling snow in his neighbourhood to working at the confectionary counter at the local Empire Theatre chain. He was such a good snack salesman, in fact, he even won prizes for his success in “up-selling” customers to larger size popcorn treats.

Although his future career path had long since been set—“I think I was born knowing what I wanted to be”—Price acknowledges it took him nine university years to earn his Bachelor of Commerce degree at Dalhousie University. That’s not because he was slow, but because he was paying for school out of his own pocket and had to take time off to earn his tuition. He sold Mazda cars, and Swiss Chalet chicken dinners, and Tip Top Tailors suits. And, oh yes, at one point, he also concurrently served as vice president of finance and operations for Dalhousie’s student union, supervising 10 full-time department heads and 100 part-time staff while overseeing a $2.4-million annual budget, a $2.7-million investment portfolio and a $3.5-million health plan for more than 17,000 students. Not to forget the other “spare” time he spent volunteering as a local firefighter, running unsuccessfully for municipal office and serving as president of a provincial Liberal riding association. Phew…

At university, his favourite courses were in entrepreneurial skills and strategy management. In one third-year class, he crafted a business plan based around selling delectable, grown-in-thewild fiddlehead greens to high-end Halifax restaurants. Then he created a business to match the plan.

After spending an exhausting season scrambling from one wild fiddlehead patch to the next over hundreds of kilometres of Nova Scotia bog and riverbeds to pick a crop whose harvest season lasted only a month, Price eventually bought 10 acres of farmland along a river bed near Truro and transplanted 12,000 mature fiddlehead crowns to join the 6,000 already growing there. Suddenly, the business worked.

“Eight years later,” he says, “it’s still the cornerstone of the business.”

The cornerstone. But not the whole business.

Having created a fiddlehead farm on three acres, Price set out to figure out how to make the remaining seven acres equally productive and profitable. He considered a number of crops, including carrots and soy, but none seemed the right fit.

Price eventually discovered that right fit by accident. Among his many part-time jobs during university, Price had worked as a clerk at a provincial liquor commission outlet in Halifax. He couldn’t help but notice the province’s popular microbreweries had suddenly, dramatically, reduced the number of their retail listings. Why? When he set out to investigate, the answer turned out to be a convoluted, complicated story, but the end result was that the province’s microbreweries were in desperate need of a dependable local supply of hops for their beer.

So hops became Price’s next cash crop and his farm, now known as FiddleHop Farms, became the largest beer hop yard in Nova Scotia.

While he and some volunteers were busy planting their first crop of hops, Price recalls with a laugh, one of the planters looked around wistfully and wondered jokingly, “OK, so where will we grow the pot?” Price, who was mindful of the fact his farm was near a former military air base at Debert and that plenty of training flights flew over his fields, was quick to say “no way” to that idea.

But then, in 2013, he read a story in the Globe and Mail that the Harper government planned to change the rules for supplying medical marijuana and allow for the development of commercial producers.

Thanks to the fact that cannabis and hops plants look, taste and smell similar, early botanists had grouped them into the same genus. “They’re cousins,” says Price. “I thought, OK, we already have a hop yard. So why not?”

Indeed.

And that was how The Truro Herbal Company began.

Within months, Price had raised $700,000 in—pardon the expression—seed capital from local investors, including Barry Mellish, a former RCMP officer who agreed to serve as the new company’s director of security, and Dr. John Gillis, a Halifax pain physician who became its vice president of medical development. By November of 2014, Price announced plans to acquire a 6.4-acre site in the Truro Industrial Park in order to build a 15,000- square-foot grow-op to produce 15,000 kilograms of marijuana a year.

“Somewhere in the next six months,” he told the Truro Daily News confidently, “we could be growing product, and then filling orders sometime in the summer.”

Uh… not so fast.

In retrospect, Price says now, he thought he understood that the process would turn out to be long and difficult. A policy wonk who’d taken political science in addition to business and finance at Dal, Price had carefully read the Volstead Act, which established alcohol prohibition in the United States in 1919, as well as Demon Rum or Easy Money: Government Control of Liquor in British Columbia from Prohibition to Privatization, a “densely written tome” on the evolution of the liquor business there. But even he had no idea just how difficult and complex the licensing process would turn out to be.

What began as a simple 15-page application has since morphed into the requirement to generate 2,000 pages of original documentation covering every contingency from procedures for ordering new soil, to methods for validating the quality of the cannabinoids produced, to procedures for confirming the eligibility of medical marijuana patients, to… Sometimes, the company would file dozens of pages on a particular topic, only to receive its submission back with a few lines underlined and a vague request for “more information.”

Although The THC was one of the early applicants for a Health Canada medical marijuana production licence, the processing pipeline quickly became clogged with more than 1,600 wannabe pot peddlers, although many eventually fell by the bureaucratic wayside. Partly as a result, Price says the company rarely received responses to its own emailed requests for information. “There wasn’t even a timeline for returning emails,” he recalls.

Despite all that, the company did win what is known as Stage 3 Approval from Health Canada in November 2015. That allowed The THC to close the deal on its land purchase and develop “a construction plan” for its facility while “reviewing security system protocols.”

“Many other companies expected a fast licensing process and burned through a lot of cash very early in their applications,” Price proudly explained at the time. “We have been prudent for our investors and we’ll remain so as we progress through Health Canada’s application requirements.” But the wait, he suggested at that time, was almost over. “Patients here have been asking for months when will a local supplier be available and we’re one step closer to being able to say their wait is finally over.”

Uh… not so fast. Still. Again.

Besides all the hurdles still to hurdle, there was suddenly a new, if positive, wrinkle to consider. The month before, in October 2015, the federal Liberals had swept into power with a majority government and a clear pledge to finally legalize recreational marijuana use.

That changed… well, ultimately, everything.

Dundee Capital Markets had estimated the value of the medical marijuana market at about $100 million in 2015. But according to a Deloitte research study published last October, legalization “presents a bold new landscape for governments and businesses alike,” while adding cautiously and prudently: “What this new landscape looks like remains unclear.”

“There hasn’t been anything like this,” Mark Whitmore, vice-chair of Deloitte told the Toronto Star at the time, comparing the recreational marijuana industry to the dot.com bubble of the late 1990s, adding, “that wasn’t legislated.” According to Deloitte’s study, “Recreational Marijuana: Insights and Opportunities,” legalization could create a $22.6 billion-a-year Canadian industry with consumers smoking, eating and otherwise imbibing up to 600,000 kilograms of weed a year while spending more for their marijuana pleasures than they do now for beer, wine and spirits combined.

Better, from Price’s marketing perspective, more Nova Scotians (16 per cent) now use marijuana for medicinal and recreational purposes than in any other province. And, according to a Corporate Research Associates survey, 53 per cent of Atlantic Canadians (and growing) favour legalization of pot for personal use. The largest percentage of the pro-pot constituency is in Nova Scotia where 57 per cent support legalization for recreational use. Price insists he initially got into the medical marijuana business for commercial but also personal reasons. “I have an uncle and four grandparents who died of cancer. I believe they should have had pain management and palliative care options. And that others should have those options too.” That said, he also always understood legalization would eventually happen. “Even though Harper was in charge at the time, the only guarantee in politics is that change will come.”

And when that change came, Price wanted to be ready.

On the Thursday in early May 2017 when we meet for lunch in Halifax, Price has already filled up his morning in meetings about the detailed drawings for his company’s nowalmost- really-finally-ready-tobreak- ground grow-op facility so those plans can be blessed by Health Canada and construction can begin. In June, The THC advanced to the final review of Health Canada’s application process (the last step before proceeding with construction of a medical cannabis facility in Truro and becoming the first Licensed Producer in Nova Scotia).

After lunch, he will meet with more potential investors in The Truro Herbal Company. Late last year, Price announced the company raised an additional $1.2 million from four different private investors, including Chuck Rifici, the co-founder of Canopy Growth Corporation, the largest publicly traded marijuana company in Canada. Price admits his need for more experienced, patient investors will continue to grow as the company moves closer to production; Price estimates the business will eventually need $8–10 million in investment.

As for his own ambitions, Price says his immediate goal is to grow and solidify his marijuana business but, once that happens, he muses about the possibility of a second career in public policy. “I’m still fascinated by all of that.”

He’s not there yet, of course. And he’s not yet a marijuana mogul either, he admits with a laugh. Early tomorrow morning he’ll resume his weekly hands-dirty fiddlehead run—picking up the latest batch of market-ready greens at the processing facility in Musquodobit Harbour, then spend the day personally delivering them to high-end, local-source restaurants in Halifax for their weekend menus before returning to Truro to prepare for the next day’s farmer’s market there.

“I still like selling,” Evan Price says. He does. And he’s clearly good at it.


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