For these five Canadian marijuana businesses, it’s all in the family

Anisha Dhiman - thegrowthop.com Posted 5 years ago
image

From regulations to restrictions, the cannabis industry’s journey from illegal to legal is marked by many twists and turns; add in family dynamics, and the complexities of charting a path forward can skyrocket. How did these brands do it and how can aspiring businesses do it, too?

 

 

Neal Brothers Food Inc.

1a Chris and Peter Neal Neal Bros TGO e1551903405160 For these five Canadian marijuana businesses, it’s all in the family

From left: Chris and Peter Neal

Launched: 1988
Founding team: Peter Neal and Chris Neal
Company location: Richmond Hill, Ont.

When co-founders Peter and Chris, undergrad students at the time, launched Neal Brothers Food Inc. in 1988, they were aware of the mammoth gamble. “By focusing on organic, non-GMO or fair trade, we were hurting our bottom line because nobody was paying for such products at that time,” says Peter, co-founder and chief snacking officer of the Canadian specialty food brand known for chips and salsa. Not to mention, the company that started in their mother’s kitchen in Aurora, Ont., was also their first shot at starting a business together.

Despite the initial hurdle, the company marked its 30th anniversary in 2018. “Fortunately, we grew up in a family with a healthy sense of inclusivity, respect and trust. That’s a key foundation to any business partnership, be it family or otherwise,” Peter believes.

Now, the company is once again setting its sights on uncharted territory. Late in 2018, Neal Brothers announced a partnership with Toronto-based Newstrike Brands Ltd. to develop and manufacture cannabis edibles. Despite the bold move, support on the home turf, especially from their mom, has remained steady.

“My brother and I took my mom away for her 80th birthday to Montreal, and we shared this idea with her before the public announcement was made. My mom has never had cannabis, and she’s not a big drinker either, but she’s been supportive,” Peter says.

When it comes to understanding what Canadians are engaging with, the company will “take the same philosophy that we built on in 1988—focus on food that tastes good and consists of mindfully curated ingredients,” he says.

Entrepreneurship advice: Persistence. The brothers’ mentors would often say, “You have the magic sauce, you have all the ingredients, you just haven’t had that door open… don’t give up.”

 

Hexo Corp

1a TGO RT 6118 e1551903567913 For these five Canadian marijuana businesses, it’s all in the family

From left: Sébastien St-Louis and Adam Miron

Launched: Hydropothecary in 2013; rebranded as Hexo in 2018
Founding team: Sébastien St-Louis and Adam Miron
Location: Gatineau, Que.

Even though brother-in-laws Sébastien and Adam launched the company in 2013, the idea to start a cannabis business was never on their radar. In fact, Adam was initially quite certain growing cannabis was not for him.

Then one day, at a barbecue in downtown Ottawa, family friend Max Cyr, who was working at Health Canada at the time, informed Sébastien, co-founder and chief executive officer, about the recently announced Marihuana for Medical Purposes Regulations (MMPR) rules. “Coincidentally, it was Canada Day. A pretty Canadian start for a cannabis company: Up north, around a campfire, by the lake… and there they are talking about starting a legal commercial cannabis operation,” jokes Adam, chief brand officer. “If it wasn’t for Max (who’s now the director of regulatory affairs), Sébastien would have never heard about it and this business would have never started,” he adds.

Only 29-years-old at the time of the launch, Adam admits how starting a legal cannabis operation took courage. “There were others in the space who had over 20 to 30 years of experience over us. Moreover, there was less than two percent success rate on getting a licence, and some businesses had to spend almost $5 million before Health Canada would even consider inspecting their facility,” he says.

Once the idea was finalized, what soon followed was Sébastien staying up all night coming up with hand-drawn, spreadsheet plans for the company. “Our first capital raise was done on Dec. 31, 2013. It was New Year’s Eve, there was a party at my house, and I looked around the room at 20 to 25 people, and I realized almost 75 percent of them—our friends, cousins, aunts and our moms—were shareholders in our company. The pressure on us, to not lose all those people’s money, was intense. We weren’t joking when we would say, ‘If this didn’t work, there wouldn’t be a single couch for us to go sleep on’,” says Adam.

Turns out, finding a couch was never a problem they had to deal with. The company has grown from a two-member team to now 400 employees strong.

When it comes to his partnership with Sébastien, Adam says, “There’s no greater compliment, no greater vote of confidence you can give an entrepreneur than to ask them to start a company with you and offer 50 percent of it.”

In 2018, Molson Coors and Hexo Corp. launched Truss, a joint venture to develop non-alcoholic, cannabis-infused beverages. Additionally, Hexo was the recipient of the cannabis product, and innovation of the year, honours by Canadian Cannabis Awards in 2018 for Hydropothecary’s Elixir CBD Peppermint—Hydropothecary caters to medical, whereas Hexo caters to recreational users. “Diagnosed with terminal lung cancer at the age of 52, my father was our first customer to use our medicinal products. It was a very bittersweet moment; he passed not too long after that,” says Adam.

It’s that moment that continues to play a crucial role when it comes to designing future products. Adam explains, “We aim to develop products that people can consume, easily and discreetly. The day Elixir, smoke-free and sublingual cannabis oil was approved, I had one of those moments, where I said: ‘If only my dad could have used this’.”

Entrepreneurship advice: It’s not too late to get in the game. Entrepreneurs should find something that they’re good at, figure out a way to specialize and offer that.

 

James E. Wagner Cultivation Ltd.

1a JWC Founding Members TGO e1551903602691 For these five Canadian marijuana businesses, it’s all in the family

From left: Adam Woodworth, Chief Operations Officer and Quality Assurance Person, Laura Foster, Chief Compliance Officer, Krysta Woodworth, Chief Administrative Officer, with her husband Nathan Woodworth, President and CEO, and Dan Bexon, Chief Information Officer.

Launched: 2013
Founding team: Adam Woodworth, Laura Foster, Krysta Woodworth, Nathan Woodworth and Dan Bexon
Company location: Kitchener, Ont.

Awarded Employer of the Year by Canadian Cannabis Awards in 2018, James E. Wagner Cultivation Ltd. (JWC) was initially not conceived of as a family business—while Nathan, Adam, and Laura are siblings, Dan is their cousin. “The first members of our collective began growing cannabis is 2008 under the MMAR. However, it was in 2013 that the company was incorporated,” the team notes.

JWC received its cultivation licence in January 2017, and since then has been spearheaded by Nathan, president and CEO, who first began growing cannabis under the MMAR to treat his chronic intractable migraines. The biggest hurdle so far has been one that’s still faced by many cannabis companies: raising capital.

“At first, we raised money by selling shares to family and friends who were a part of our collective. Later, we looked to businesses we were partnered with, and then, finally, decided to take the company public in order to have access to the capital we knew we would need as we grew,” say the team members.

Not just a cultivation company, JWC has also developed a cultivation technique based in aeroponics, called the GrowthSTORM Dual Droplet system. Aeroponics is the process of suspending the plant’s roots in the air inside an enclosure, and then misting them with a specially formulated nutrient solution. “The Dual Droplet system, on the other hand, uses two separate nutrient formulations distributed in two different droplet sizes in order to further optimize plant health,” they add.

Entrepreneurship advice: Determination. Be determined to meet the goals, and respond to adversity and challenges with creativity.

Remo Nutrients

1a RemoNutrients TGO e1551904093459 For these five Canadian marijuana businesses, it’s all in the family

From left: Sandra Colasanti, VP of Client Relations, and Remo Colasanti, founder of Remo Nutrients.

Launched: 2014
Founding team: Remo Colasanti, Sandra Colasanti, Rebecca Twaites and Joel Twaites
Company location: Maple Ridge, B.C.

Winner of Top Nutrients Company by the Canadian Cannabis Awards (CCB) 2018 and nominated for Top Cannabis YouTuber 2018, Maple Ridge, B.C.-based Remo Nutrients was able to leverage social media for brand promotion before the laws became stringent post-Oct.17. The brand’s YouTube following currently stands over at 200k.

“Remo and his wife Sandra (nominee for Women in Weed trailblazer by CCB in 2018) have been involved with the Canadian cannabis industry for over 10 years. We had a reasonable social media following in the beginning that we could use to market our new products. This took a lot of stress away from having to start everything from scratch,” notes Joel, who along with his wife Rebecca (also Remo and Sandra’s daughter) came on board in July 2011. Joel is now the vice-president of operations; whereas, Rebecca is the financial controller.

As the cannabis industry moved towards legalization, the team was aware they would need a new plan. “As public money started flowing into cannabis production companies, we knew that, as a small family business, we wouldn’t be able to keep up with these companies. We chose to develop plant nutrients as a means to building a working relationship with these facilities. The products are now being sold in around 350 stores in 29 countries worldwide,” Joel claims.

That said, the team admits it wasn’t that easy to convince an experienced grower to switch its nutrient line when it had been using another line for years. “Moreover, when we first started, the cannabis industry still had stigma associated with it, and despite not actually touching plants in our day-to-day operations, we found that getting things like insurance, leases, payment processing, credit, security, etc. came at a huge cost and scrutiny. Fortunately, things have changed for the better since then,” Joel notes.

Entrepreneurship advice: Production and retail sales always seem to be the big-ticket ideas, but consider that existing cannabis companies need a whole library of other services that are currently being overlooked.

Munchy Brothers

Launched: 2018
Founding team: Pat Newton and Daniel Joshua
Location: Toronto, Ont.

From making an avocado pudding to butter chicken, Munchy Brothers Inc. (MB) allows people to whip up edibles they are familiar with.

Launched in 2018, the company’s initial product offering was frozen cookie dough that turned into a d’uh product once regulations around cannabis edible products were announced this past December for public consultation. “We were all set to launch that product, and then the regulations came out prohibiting anything that wasn’t shelf-stable (i.e. they could not require refrigeration or freezing),” says Pat, head chef and creative director (pictured in the video above), who started the company with his cousin Daniel, head of strategy.

What could they offer that’s shelf-stable and allow people to be creative? “Edibles not restricted to gummies and cookies,” answers Newton. “A lot of the edibles available are kind of the same thing—cookies, brownies, gummies, etc. There’s a huge multicultural community in Canada and their contribution to the edibles space is not necessarily being highlighted,” says Pat.

The company’s evolved strategy is to manufacture input ingredients like chocolate chips, salt, sugar and syrup. “If you want to make edibles at home now, you have to make the butter first, and it’s the butter than makes your house smell. With the input ingredients, you leave that entire process out; there will be no smell.”

Entrepreneurship advice: Find angles that nobody is tapping into; variety is the spice of the life.

 

Want to keep up to date on what’s happening in the world of cannabis?  Subscribe to the Cannabis Post newsletter for weekly insights into the industry, what insiders will be talking about and content from across the Postmedia Network.