In a once-abandoned Hershey chocolate factory in the small town of Smiths Falls, Ontario, the largest legal marijuana producer in the world grows, trims, processes, packages, and ships weed across the Great White North.
Canopy Growth is a cannabis holding company that supplies the drug to nearly half of Canada’s current medical marijuana patient base, following its acquisition of rival producer Mettrum in January. Unless you’re one of those 40,000 users who lights up with Canopy’s bud, you’ve probably never heard of the company.
In the fall of 2016, Canopy, which trades on the Toronto Stock Exchange under the ticker “WEED,” became the first company in the marijuana industry to achieve elusive “unicorn” status. The manufacturing giant blew past a $2 billion valuation on November 16, one week after eight US states passed ballot initiatives legalizing marijuana in some form.
(Its valuation, along with other publicly traded marijuana companies that saw their market cap grow after the US election, has since settled to $943 million, as of February 1.)
The manufacturer’s colossal growth stems from a belief that as more countries legalise marijuana on a federal level, companies like Canopy will be able to branch out into international markets. Canopy already exports marijuana products to Germany and Brazil.
Canopy wants to become the Proctor & Gamble of pot. Several brands fall under its umbrella and cater to different user preferences. There’s Tweed, a medical marijuana producer with slick and youthful branding that could be mistaken for a designer jean company. The Quebec-based Vert Medical allows Canopy to tap into the French-speaking market, while Bedrocan Canada has a distinct clinical feel that is likely to gain favour among strictly medicinal users.
Every day, Bruce Linton, founder and CEO of Canopy, passes a police station as he pulls into the parking lot of the 472,000-square-foot former chocolate factory where his company grows pot. It’s a stark reminder that his success couldn’t happen were he based in the US.
Since 2000, Canadians have enjoyed the ability to possess and grow small amounts of weed for medical use. In 2014, the government began licensing companies like Canopy to produce mass amounts of marijuana for patients suffering from serious diseases.
The industry raked in $869 million in legal sales in 2016, and is expected to reach $22.6 billion when Prime Minister Justin Trudeau opens up the recreational market this spring.
The legal framework around marijuana in Canada makes Canopy’s growth possible, Linton tells Business Insider.
“It’s really about the public policy. That doesn’t sound sexy or exciting. But if you don’t have the right public policy, you don’t have the right business opportunity,” Linton says.
Linton is a renaissance man, with over 10 years executive experience working in software, telecommunications, water sanitation, and concrete manufacturing. When I asked why he made the leap into the volatile cannabis industry, I half-expected him to wax poetic on the magical healing powers of the plant.
He had a more pragmatic answer.
Linton wanted to create a vertically integrated company — one that grows marijuana in addition to processing it for oils, gel capsules, and other products, and packaging it for shipment — because it would give him better control over quality and bring down costs.
Plus, the industry has no organised competition yet, Linton said. With marijuana regulation in the US trailing Canada’s more mature program, he saw an opportunity to get a head start in the increasingly global industry. He eyes the recreational market with optimism.
The company’s fiscal year ends in March, and Linton expects it to post $12 million in revenue, up from $2 million between 2015 and 2016. Canopy’s recent acquisition of Mettrum for $430 million brings its
production capacity up to six licensed facilities and 665,000 square feet.
Patients shouldn’t expect to find stoner iconography on Canopy’s website and in its facilities. The company aims to elevate the drug to higher standards.
“We didn’t try to pursue the lowest common denominator concept of, ”Let’s assume everybody’s stoned and not paying attention.’ We took the approach of, ‘Let’s assume everybody’s paying attention and maybe marijuana is something they’re interested in,'” Linton says.