Tweed Marijuana: Growing a controversial business

Bruce Linton wolfed down his lunch while trying to answer as many questions as he could on his half-hour break. As if being a CEO wasn’t busy enough, he is the also one of the secure key holders for Tweed Marijuana Inc., meaning if he is late getting back from lunch, none of the growers can get back to work. It’s just one example of the stiff regulations that come with growing and distributing a drug that is illegal for public use.

Back in 2013, Health Canada announced it was going to eliminatTweed5e licensing individual production of marijuana at home and turn the industry over to commercial growers. An experienced entrepreneur, Linton saw an opportunity, and set out to turn grass into green.

“It appeared that it would be challenging to comply with all the government rules unless you had experience with how big systems worked,” said Linton. “There is an awful lot of obligation to the government when growing this type of product. It looked to me like there wouldn’t be that many companies who immediately could start up and figure out how to comply and that if the government quit making it so hard to get a prescription, quite a few people would get one. So it started that simply.”

It took a huge risk for Linton to even enter the medical marijuana industry. Tweed had to invest $7 million establishing a secure facility before Health Canada would even grant them a license to grow marijuana.

“The first four or five people I talked to said ‘That is a very bad idea, you should not do that. It’s bad for your reputation, it probably won’t work. You should just not do that,’” said Linton. “And I went ‘Ok, I’m still going to do this, but you just won’t do it with me.’”

Tweed ended up converting the old Hershey factory in Smiths Falls, allowing for 160,000 sq. ft. of growth operations and 20,000 sq. ft. of office space. They also joined forces with a farm in Niagara who was pursuing approval but didn’t have enough money.

For staffing, since regulations didn’t allow Tweed to advertise jobs, they recruited their master grower Ryan Douglas from Maine, where marijuana could be grown legally. Training a large staff of growers, the plant in Smiths Falls currently has grows over 27 organic types of marijuana. They even have their own research and development for new strains of product.

Tweed1Regulations outline that Tweed is responsible for the product from “seed-to-sale”. In order to get product to patients, Tweed needs to perform rigorous background checks to make sure they are not selling into the wrong hands.

“The pharmacies wanted nothing to do with distribution,” said Linton. “So the patient picks us, we verify that they are who they say there, their address is what they say it is and we receive their prescription and hold them. They order through our phone system or online and we ship it to them once a month.”

Tweed also uses a variety of shipping methods, and sends the product in vacuum-sealed, unmarked packages, so it is not evident what they’re mailing.

Tweed officially became the first publicly traded medicinal marijuana supplier in Canada last April, opening at over $4/share. Linton said much of the motivation to go public was to remove the stigma that surrounded purchasing marijuana.

“What you’re looking for is information and evidence that this company is run properly. Being public means I disclose how I run my business and who the parties that run it are… The decision process is a lot easier when you feel comfortable with the supplier.”

Now joined by five other marijuana suppliers on the TSX, Tweed will be fighting for control of a market that is predicted to see a lot of growth in the next decade. Currently, Health Canada has forecasted that 450,000 to 500,000 people will receive a medical script for marijuana by 2020.

“Marijuana is everyday becoming more accepted. It doesn’t fix MS or arthritis but what it tries to do, with fewer side effects, is more effectively manage the symptoms and the quality of life for those individuals.”

That market growth will be helped by the possibility that soon, marijuana could be paid for by insurers or government health care.

Given the size of their operation, Tweed is currently licensed to produce 3500 kg of dried product a year. Selling at $7/g, there is opportunity for the local company to reach new highs.



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