Future of the cannabis industry is in the hands of non-users, says Quebec cannabis giant HEXO

The future of the marijuana industry is not set to go up in smoke. The future, in fact, looks to be smoke-free.

At least, that’s the view of Quebec-based licensed producer HEXO, which is focused on keeping cannabis users close and non-cannabis users even closer. “That’s why we are focused on cannabis experience that’s beyond smoking,” confirms Pierre Killeen, strategic business development manager at HEXO Corp.

About 4.2 million, or 14 percent of Canadians, aged 15 years and older, admitted to using pot in the last three months of 2018, note figures in the 2018 Statistics Canada report. Of those consumers, more than half (56 percent) reported using some form of cannabis either daily or weekly. “The real opportunity is in the other 80 or 90 percent,” Killeen tells The GrowthOp during a visit to HEXO’s facility in Gatineau, Que.

 

 

Now, the company is charging forward to make the most of this opportunity.

In 2018, HEXO announced the partnership venture, Truss, with Molson Coors, one of the largest brewers in North America, to produce non-alcoholic, cannabis-infused beverages. Then earlier this year, the company announced the acquisition of Newstrike Brands in a $260-million deal, one that is expected to boost HEXO’s production capacity “to approximately 150,000 kg of cannabis annually, on a total cultivation space of 1.8 million square feet,” as reported by The GrowthOp.

In 2018, HEXO announced the partnership venture, Truss, with Molson Coors, one of the largest brewers in North America, to produce non-alcoholic, cannabis-infused beverages.

Despite such ambitious undertakings, the company’s core business strategy is guided by just three words: innovation, convenience and control.

“Old cannabis is the flower; new cannabis is Elixir or products like Elixir,” says Killeen.

Elixir, packaged like a lipstick case, is a smoke-free, peppermint flavoured oral spray that’s easy and discreet to use. At the Canadian Cannabis Awards 2018, Elixir was awarded both Cannabis Product of the Year and Innovation of the Year. “People are genuinely curious and attracted to new and innovative things,” explains Killeen.

HEXO has launched over 50 products—from intimate spray to ready-to-consume cannabis powder—the focus on innovation and simplicity has remained steadfast. “Anecdotally, senior cannabis users often say, ‘I used to consume cannabis illegally when I was in university, and it’s much too strong now, I can’t control it.’ Our products allow people, in many aspects, to control their cannabis experience,” he says.

Fleur de Lune, the intimate spray, is for adult recreational users and contains 8 percent THC, 0 percent CBD. With a blend of THC oil and medium-chain triglyceride (MCT) oil, this product is “offered in a convenient and child-resistant 60ml spray bottle,” notes the company website. Decarb, on the other hand, is ready to consume activated marijuana powder that gives customers flexibility and provides an alternative to smoking, vaping and oils. “The company decarboxylates (decarb) the cannabis, which activates the cannabinoids (THC and CBD). The decarb product is ready to be consumed without heating so it can be sprinkled onto food, into drinks or directly consumed,” notes the company site. Decarb comes in six different products: High THC, Mid THC, 1:1 and High CBD.

Supporting the local economy, the secret Molson Coors operation and staying ahead of the U.S.

Nestled in a small community in the eastern part of Gatineau, HEXO’s cultivation and production space is just a 20-minute drive from Ottawa. Historically, the local Papier Masson mill, opened in the 1930s, supported the local economy, along with Brookfield Renewable, a hydroelectric power plant.

Over the years, the mill experienced continuous decline and had been operating under bankruptcy protection, as reported by CTV News Ottawa. With HEXO’s launch in 2013, the company’s two-member team has grown to 400 employees and is helping to revitalize the community.

Nestled in a small community in the eastern part of Gatineau, HEXO’s cultivation and production space is just a 20-minute drive from Ottawa.

Many employees are, in fact, hired from the region, including assistant master grower Jérôme Brassard-Duperré, who showed The GrowthOp team around the cultivation facility. Brassard-Duperré moved to HEXO from Les Serres biologiques de l’Outaouais, an agricultural cooperative, where he used to grow organic tomatoes—he adds that cultivating cannabis is very much like caring for any other agricultural crop.

It’s also at the Gatineau facility that HEXO is secretly—secretly because nobody, including employees, is allowed access past the secure parameter—developing infused beverages with Molson Coors. The joint venture is being led by former “Molson Coors executive, Brett Vye, who reports directly to the Truss Board of Directors, consisting of three members appointed by Molson Coors Canada and two members appointed by HEXO,” as per the official statement.

Ventures like these, Killeen believes, gives Canadian cannabis companies an edge over others.

“We have a unique opportunity in Canada to be global leaders in the industry. I often ask people, ‘When was the last time Canada was a leader, a global leader in the industry?’ And my answer is, ‘You will have to go back to the fair trade.’”

But with legalization fast unfolding in the U.S., the window of opportunity is closing quickly. U.S. consumer spending on legal cannabis is expected to reach US$20.9 billion by 2021 compared with US$4.5 billion in Canada, notes a June 2018 report from The Arcview Group and BDS Analytics.

“Legalization will come to the United States, and big businesses will move aggressively into this space,” Killeen predicts. “We need to establish a global footprint in order to protect ourselves, prepare ourselves for the ‘winter,’ to use the Game of Thrones reference: the Americans are coming into this industry and we need to move faster.”