She works at Canopy as the director of patient education and advocacy because she wants to harness Bruce Linton’s power, and she says, to his credit, that her boss empowers her to speak her mind. Black has assembled a robust social responsibility team for the expungement of cannabis arrest records and elimination of the excise tax. She believes, and has convinced the cannabis task force, that even with the legalization of recreational marijuana, the medicinal program must remain intact. The same product can be used for different things.
She tells the Walrus Talks audience how she began: in the late 1990s, with HIV a continuing health crisis, she delivered weed on her bike to patients suffering side effects from their medications. They beeped her Motorola pager. She was nineteen years old and received support from gay men, who told her, “If they try to arrest you, we are going to chain ourselves to you and we’re going to hunger strike.”
From her early activism into adulthood, Black has seen the health epidemic change; today, the health crisis is opioids. Taking a deep breath, Black tells the story of Gemma Leroux Higgins, her best friend’s daughter. In 2017, at eighteen, Gemma succumbed to a fentanyl overdose. After taking time off to support her friend’s family, Black returned to Canopy to launch a $2.5 million Canopy-funded endowment at the University of British Columbia for a professorship of cannabis science. The BC government, in support of the initiative focused on the role of cannabis as a solution to the opioid epidemic, added $500,000 to the endowment.
It’s an emotional time and she’s exhausted. If Linton is the business face of marijuana, Hilary is the heart. However, she doesn’t like feeling used. On the day of her talk, a story comes out about insiders at Canopy Growth who sold their shares prior to legalization. Every insider on the list, including Murray Goldman (Marc Wayne’s stepdad, who helped launch Bedrocan), Mark Zekulin, and Linton himself, is a white man. The total profit, from selling over two million shares, is more than $135 million. Black, who has options, doesn’t sell, and has a hard time reckoning with all the white men getting rich while activists still haven’t had their cannabis records expunged. The activists’ records can still bar those individuals from the legal industry they helped build. Black knows she’s luckier than most, and yet, while advocating for patients, she also knows there’s an alternate world of money from which she’s excluded — despite being onstage. And in that world, white men cash out behind closed doors while she stumps for the cause.
Black doesn’t mention this in her talk, but she carries the story around in her wallet as she tries to balance her nerves, frustrations, joy, and exhaustion.
“What I get excited about right now, and where I feel a tremendous amount of responsibility, is the global impact of repealing prohibition,” she says, concluding her talk. “This is a war on drugs. And this is a war on people, and a war on families. And tomorrow is not just the beginning of a new legal industry. Tomorrow,” she says, “is the beginning of the end of that war.” The crowd gives her a standing ovation. Black flies from Ottawa to Vancouver and lands just in time — on 10.17 — to meet her activist friends. The group, in her words, “party their faces off,” and when she wakes up the next morning, exhausted after years on the cannabis front lines, she won’t leave her house for three days.
Lorne Gertner has his own 10.17 story. Manitoba is the first province to have a real Tokyo Smoke, a Tokyo Smoke where you can actually buy weed. Manitoba, shockingly, has become a province close to his heart. Since the days of visiting Brent Zettl in Flin Flon, Lorne has been returning to the province and inspecting his store in a strip mall, beside Reitmans and Moores. On 10.17, these stores are closed and quiet. Tokyo Smoke is pumping and jammed. There is a line to get in. People are smoking weed.
“My God, this is fucking Winnipeg,” says Gertner. “How high can this go?”
Gertner is ecstatic. From the moment he got into the business with Moses Znaimer back in 2000, he’s been an advocate, mentor, and angel investor to the industry. Both John Fowler and Alison Gordon cite him as a help in getting their companies started. Bruce Linton spent nearly $300 million to acquire Hiku, Gertner’s parent company behind Tokyo Smoke. (Between the time the deal was announced and its closing, Canopy’s stock doubled, making the windfall for Lorne closer to $600 million.) When everyone was selling coffee, Gertner sold the coffee stores. And it worked — in terms of garnering press, setting the trend, and making him and his son business rockstars. Gertner has created the Apple store of weed and is rich. Well, rich again. Richer. And, having left Google to launch a new family business, so is his son. And now, after so many years, marijuana will be legal at the stroke of midnight.
Puffing on a Tokyo Smoke prototype vape, he says, “All of these people had broken the law for most of their lives, but not anymore and I was with them.”
Gertner, like Linton, wakes up early the next day to rush back to Toronto, where people are still openly consuming cannabis on the streets. Legalization has started and the world was watching and there were no overdoses. No riots. Cars and markets didn’t crash and the schools stayed open. 7-Eleven didn’t run out of chips.
“Canada,” says Gertner, “is the cannabis capital of the world.”
Part III Revenge
Chapter 11 God Bud
“I look out the window and I see these fucking aliens. I’m the CEO of a cannabis company — and I’m going to die today for sure.”
Terry Booth
The cannabis capital of the world attracted American money. Nelson Peltz is an American investor; he became Terry Booth’s strategic advisor at Aurora on March 13, 2019. Recreational legalization was five months old and Peltz was seventy-nine. Forbes put Nelson Peltz’s worth at over $1 billion. When Booth imitates Nelson’s voice, he makes him sound like the Penguin.
Upon entering Canadian cannabis, Peltz had the option to purchase 20 million Aurora shares. When this fact was announced, the Aurora stock shot up 13.94 per cent. “I believe that Canadian licensed producers, and Aurora in particular, are well positioned to lead in the development of the international cannabis industry as regulations evolve, with a strong, globally replicable operating model,” Peltz said in the Aurora release touting his involvement in the Canadian licensed producer.
Peltz got rich in the 1980s off, in part, Michael Milken’s junk bonds. He is an activist investor, someone who invests in a company but isn’t content to let his money ride. He insists on becoming a partner in the businesses he takes on. Peltz gets involved. He and his company, Trian Partners, are like when your mom remarries an army colonel, and now your new stepdad comes into your house and it’s no longer okay for you to eat cheese strings in front of the TV. Trian takes stakes in companies it believes are undervalued and pushes management to make changes to boost the stock. Aurora’s market valuation in the spring of 2019 was $6.85 billion. In 2018, it did about $55 million in sales. It was second, in terms of market cap, only to Bruce Linton’s Canopy Growth, but Terry Booth was not content to be number two.
“Aurora? I remember that company vaguely,” says Linton, “but they’re so far behind us I sometimes forget what they are.”
Nelson Peltz is a veteran of consumer packaged goods, or CPG, which is what the pot business was becoming: grams weren’t sold in a park beside bushes, they were packaged, distributed, and replicated like thumbtacks, at scale. With billions invested in Procter & Gamble and Nabisco, companies that the Canadian weed brands were now trying to become, Peltz brought along serious know-how, but also a reputation for scuffling. He had waged a nasty two-year public battle with his partners at Pepsi. That fight, which ended in 2016, saw Peltz exiting the company after his $269 million investment increased in worth to $1.83 billion. After seeing Pepsi’s stock drop after Peltz’s exit, a reporter for Forbes said, to paraphrase, that no CEOs want to see their stocks drop but, in ridding themselves of the truculent Nelson Peltz, it might be worth the cost.
Peltz, following his exit from Pepsi, was sitting with one of his partners and Terry Booth at a restaurant in Lower Manhattan. “Can you believe it? These Canadians are worth more than MGM,” Peltz said to his partner, while Booth, clutching his Ketel One, smiled.
“We have better product,” said Terry. “They make movies. We sell weed.”
In September, just before legalization and at arm’s length from the Ascent Industries fiasco, the cannabis industry was on a hot streak. Aurora, in particular, was shooting flames. Before legalization, Bloomberg reported that Aurora was in talks with Coca-Cola to make CBD drinks. The next month, Booth listed Aurora on the New York Stock Exchange. By January, the company had moved past Apple on Robinhood as the hottest, most liquid, or traded, stock on the exchange. Liquidity, Booth says, is what you want in a pot stock because it means investors are buying and selling your shares. This makes your company hot in a market where you can’t advertise and creates fervour, leading to hasty choices. Fear of missing out drives movement in shares. If your stock is liquid, continues Booth, you’re not reaching out to investors with your dick in your hand; they’re coming to you. Aurora was trading hotter than Apple with some of the least sophisticated investors in the world. Many people investing in Terry were stoned.
Rainbow Connection: Terry Booth, who started a cannabis company with his high school friends in Edmonton, graduated from stealing his father’s weed to building a greenhouse in Edmonton so large that pilots would complain about the glare from its rooftop when landing their planes.
Terry was, too.
In November 2018, at the MJ Biz conference in Las Vegas, Booth, onstage, says “Ontario and British Columbia shat the bed” when describing the province’s approach to weed stores. That he’d had many drinks before he said it didn’t make it untrue. Booth actively engaged in cannabis functions and with cannabis people. He wasn’t in marijuana only to make a buck. He lived his brand. This might even have endeared him to Nelson Peltz, as long as his stock stayed hot.
In Las Vegas, he told Bruce and me the story of attending a 4.20 party in Vancouver. He was walking around enjoying himself when he met someone, and he was happy to engage. “This little dude steps out of the bushes. ‘Buy some edibles?’ Okay. So I buy two big-ass cookies from this guy and wolf one down.” Booth made his way through the party, shaking hands with vendors and handing out T-shirts and hats. A typical CEO meeting the public. Except the public was smoking weed and selling edibles and this was Terry Booth. “I had a rip on a bong and the rip on the bong made me hungry, so I ate the other cookie,” Booth says.
At this point, he was stoned. Bad stoned. Everything slowed down. He was paranoid. Hallucinating, even. He thought people were looking at him and they were — he was a marijuana celebrity who two minutes ago was handing out hats. He wanted to escape and his mind jolted from one idea to the next: How am I doing? Am I cool? What about our stock price? Nelson Peltz looks like Danny DeVito. And where the fuck is this hotel? Booth was decked out in his company clothes, which put a target on his back as he tried to disappear. It was a marijuana nightmare and one of the reasons Health Canada eventually put caps on the amount of THC in edibles: too much THC and you might as well have taken acid. Booth felt that way now, but somehow, praise the lord, he made his way back to his hotel room. He closed the door and turned off the lights. “I lay down on my bed and called my wife. I look out the window and see these fucking aliens. I’m the CEO of a cannabis company — and I’m going to die today for sure.”
Aurora, Nelson Peltz would soon discover, wasn’t Pepsi or MGM.
Constellation Brands wasn’t Pepsi or MGM, either. Bruce Linton says Constellation may have given Canopy more money than their billion-dollar investment in the sector. The disruptive money was the original sum, says Linton, the $190 million investment the Corona-maker paid in 2017 for 10 percent of Canopy, at a time when cannabis manufacturing was still considered, by some, especially in the U.S., to be dealing drugs. After that, the next infusion — the $5 billion Canadian in August 2018, right before legalization — only made sense: they were building a moat around their investment with more investment. Constellation was prescient about the short term. On December 20, 2018, the Farm Bill in the United States was passed, signed by President Donald Trump. It allowed American producers to deliver CBD across state lines and created a federal system for cultivating, processing, and marketing hemp — which is weed without THC.
CBD comes from hemp and is legal. THC, the psychoactive compound also found in hemp, is not. After the Farm Bill passed, CBD became valuable and this, and CNN’s Sanjay Gupta’s viral endorsement of the molecule, created the CBD craze. Gwyneth Paltrow touted the product and soon it would be available on Amazon and at Whole Foods. CBD is the non-scary component of weed, and this reduced stigma and opened up a huge market for Canadian marijuana producers: marijuana for people who don’t want to smoke weed.
Canadians were now leading hemp technology. They could isolate CBD molecules from THC in their cannabis plants. All that money spent on research and development and hiring scientists was now applicable in the U.S., a market ten times larger than Canada’s.
The U.S. market for hemp-fuelled products like CBD was estimated to grow, after the Farm Bill, from $2 billion in 2018 to $20 billion in 2021. Linton, with Constellation money, was licking his chops. America, with its loose laws behind advertising and its huge population, was coming around on weed. On January 1, 2020, Illinois became the eleventh U.S. state to legalize recreational marijuana, a month after Michigan. You could now buy a joint in Chicago and Detroit.
And the American marijuana momentum kept rolling: at the start of 2019, cannabis nearly got promoted at the Super Bowl. Acreage Holdings was an American medical marijuana company and, for the big game on February 3, they wanted to place a sixty-second television ad. The opportunity would cost between US$5 million and $10 million. The money was no problem for Acreage, which had a market cap of over US$250 million. CBS, the network broadcasting Tom Brady’s New England Patriots versus the Los Angeles Rams, publicly mulled it over before ultimately rejecting the clip — a poignant plea from veterans and mothers to allow their countrymen to enjoy the relief they were currently experiencing thanks to medical weed. It was a sign of the times. After Oklahoma passed a bill in the summer of 2018, medical marijuana was legal in thirty American states.
Cronos, the company that Chip, the independent investment banker, once had to raise $100 million for on a Friday afternoon, traded on Nasdaq. Americans could also buy shares of CannTrust and Aurora on the New York Stock Exchange. Trevor Fencott says new bought deals were being offered to Canadian cannabis companies every day. It was all about expansion, press releases, and growth. CannTrust opened facilities in Denmark and Australia and told the press that Australian greenhouses would one day supply weed to Asia. If Asia legalized marijuana — and why wouldn’t they? Argentina, Malta, Brazil, and New Zealand all had legal medical programs — how much money would the Canadian licensed producer be worth? Nelson Peltz said the Canadians had first-mover advantage in these markets. Bruce wanted to own them all.
The Acreage Super Bowl ad may have been shitcanned by CBS censors, but it nevertheless went viral. It caught Bruce Linton’s eye. He saw American consciousness shifting: it was as if he were a minor league ballplayer getting called up to the Show. He appeared with Jim Cramer on Mad Money and talked to the pundits on CNBC; he said he liked the Acreage commercial. It touched him.