And two months later, Acreage Holdings was purchased by Canopy Growth for $3.4 billion. The two men — Bruce Linton and Kevin Murphy, the Acreage CEO — met in Davos, Switzerland, in January 2019, at the Cannabis House, a party house hosted by Lorne Gertner and the Canadian Securities Exchange.
Still, there were problems. Because weed was still not federally legal in the U.S., American weed companies couldn’t open chequing accounts. Dispensaries in Chicago and Los Angeles weren’t able to accept credit cards. An American investment bank couldn’t help take an American weed brand public. Banking laws, not weed laws, were what brought the money back to Canada.
This was what made Lorne Gertner so happy after 10.17. You wanted to invest in mining, you looked to Africa. Energy, talk to the U.S. And if you were looking to seek financing for your weed brands, you had to venture to Bay Street in Toronto, the epicentre of Canada’s big five banks, all able to support, invest in, and nurture publicly listed marijuana companies. After Linton brought BMO into the cannabis fold in January 2018 — the first big bank to publicly get involved with weed — the other banks followed, which sent the little guys scrambling. Now, most independent financiers like Chip devoted all of their time to American cannabis companies. McSalty, Linton’s financier, couldn’t compete with RBC and didn’t want to; the independents made their money in the margins. At the start of something, in the grey zone, not at its crest. Meanwhile, unlike in the U.S., the banks in Canada would lend money to Canadian cannabis companies and even allowed such simple necessities for running a business as a line of credit and banking online. So as the Canadian pot stocks rose in valuations by the Super Bowl kickoff in 2019, more eyes turned to the Canadian cannabis market. If you were looking for weed — whether to short a company or start your own — Canada, over anywhere else in the world, was the place to be.
That was paying off for Bruce Linton and Mark Zekulin at Canopy Growth. At Christmas 2018, Linton’s market cap was $8.9 billion. It was $16.6 billion on January 25, 2019. It was a start-up rivalling the market cap of U.S. Steel. God Bud, a strain named after a potent mix of Hawaiian crossed with Purple Skunk, had an effect like being submerged in a vat of Greek yoghurt set adrift in the Dead Sea. Linton says being him at this time felt something like that. He could feel no pain.
McSalty describes Linton’s confidence after the Acreage deal like “King Kong on coke.” Linton was walking on air. If you were an American entrepreneur or a multinational consumer packaged goods brand; if you made skincare or whisky, potato chips or soap; if you puffed a bong hit in college or danced at a bat mitzvah to Snoop Dogg; or if you were John Fowler’s church-going grandmother, you were likely to be thinking about or investing in weed. And the Canadian pot companies had so many businesses you could buy. The power that came along with a $16.6 billion market cap blew hinges off doors.
Pride of Smiths Falls: Linton at the Pride Parade in Toronto, 2019.
“It’s rocket fuel,” says Linton, who, like Terry Booth, tells me that he has attention deficit disorder, a condition that both men describe as a professional advantage. In cannabis, you needed to be doing everything everywhere all at once — there were other people for looking after the details. Linton says he took in the universe around him in early 2019, the Americans showing up at his door for deals and advice, and felt validated. After the risk came the reward: confidence. Entrepreneurs from all over crowded around him to make deals. I saw Bruce speak at a cannabis convention, and when he left the stage, it seemed like half of the conference followed him outside.
Linton tells me that he doesn’t like quiet, doesn’t read books, can’t stand “sad emotions” or a non-ringing phone. It’s like there’s an Instagram feed constantly on in his brain and he’s always in need of more likes, the next move. Linton made no bones about hopping a plane to Germany for a meeting, making it back in time to greet Ted Chung in Los Angeles, and then heading out to Smiths Falls, all without deep reflection. Lorne Gertner says nobody worked as hard as Bruce, and the movement was the point. It was always about the next thing, the next announcement, and he was able to compartmentalize and move on. The only people he was in contact with were the ones he was working with on current deals. And the more he ate, the hungrier he became. At the Raptors game when Kawhi Leonard played for Toronto to beat his former team, the San Antonio Spurs, Linton was in attendance. He wore a Tweed shirt. He shit talked with Toronto mayor John Tory. Life was thrilling. He was eating too much. Travelling all the time. Drinking every night in a new city for a meeting. And hustling. Always hustling. He had assets in Europe, the U.S., the Netherlands, and bought up the companies he wanted from his peers. Linton tells me he didn’t get jet lag. He didn’t check the market. Didn’t keep track of the value of his shares. Didn’t worry about Constellation. It was the happiest time of his life.
“What should I do?” he wondered. He smiles. “Everything.”
The Acreage deal after the Constellation investment was contingent upon federal legalization in the United States. It was the first deal of its kind and added to the Canopy war chest. Among the board of Acreage Holdings was John Boehner, the former Speaker of the United States, who now answered, to some small degree, to Bruce. If Bill Blair was divisive, John Boehner — in a cannabis activist’s eyes — was the Moby Dick of assholes. He was “unalterably opposed” to marijuana while in office and voted against legalizing medical weed in Washington, DC. However, if the Acreage deal passed, Boehner stood to pocket $20 million. In an interview he said, “There’s more interest in this than I would have guessed.” It made Alan Young cringe, and disgusted Rosie Rowbotham.
“The United States,” said Linton in his press release announcing the Acreage deal, “is the next stop on Canopy Growth’s desired path.”
With the U.S. having ten times the population of Canada, Linton thought, turning over his double-digit multibillion-dollar market cap, what could the value of Canopy be if it achieved equal scale there? Certainly that’s what Constellation Brands, the maker of Corona beer, considered. Canopy was a start-up. But marijuana was working. One hundred and fifty-one thousand Canadians now drew legal paycheques from weed. Those were net new jobs in the marketplace. In Smiths Falls, Canopy was the largest employer, providing over twelve hundred people with work. There were sixteen Canadian cannabis weed brands worth more than $1 billion each, none of which existed before 2013. Marijuana executives were becoming celebrities. John Fowler drove a Jaguar and smoked out of an engraved vaporizer that read “$100 million,” a gift from his partner at BMO. Toronto Life listed Alison Gordon on the city’s fifty most influential people for 2019, ahead of David Thomson, who owns the Globe and Mail and has the most extensive private art collection in the country. Terry Booth had gone from stealing his father’s weed and selling it to his buddies to growing so much marijuana in Edmonton that he changed the smell of his hometown. Cannabis had brought, according to Deloitte, $43.5 billion to Canada’s GDP. The business hadn’t even begun.
“Cannabis has been one of the greatest entrepreneur stories this country has had, if not ever, then certainly in the last few decades,” says John Fowler, whose Supreme Cannabis Company had over four hundred employees at the start of 2019. Fowler remembers the first time he tried weed and how much it agreed with his constitution. He grew pot in his closet and remembers doing a bad job at selling dime bags from his backpack at his local high school. There were marches in Ottawa in support of legalization in the 1990s, and there were the blunts he smoked in law school, including during the bar exam. Fowler finished third in his class. I say to him, “You know, if you didn’t smoke weed, you could’ve finished first.” “That’s backwards,” he replies. “Without weed, I would’ve dropped out of school.”
Thanks to legalization, pot was being reclaimed and reframed. The joke on The Simpsons that Alan Young liked back in the 1990s was an oblique reference to Otto having a funny smell on his jacket. In 2020, there was an entire episode dedicated to medical weed.
Deals in the sector blossomed from the $61 million that Linton paid in 2015 for Bedrocan to the $3.4 billion he had just agreed to in 2019 for Acreage Holdings. The scale was much different, and the mainstream, following Constellation Brands, was now looking for partners in weed. Molson partnered with Hexo, and Altria, the parent company of Philip Morris USA, with a market cap of US$163 billion, one of the hundred most valuable companies in the world, invested in Cronos. James Poelzer, at Ascent Industries, credits Linton and Booth with forcing the industry to think big. “The public markets and international expansion was never part of our original business plan, but right after legalization it felt like it was irresponsible not to pursue your biggest bet,” Poelzer says. Between Linton and Booth, it was a race to grow. Non-cannabis properties like BioSteel, a popular hydration product used by the NHL, became legitimate potential partners for cannabis brands. The juggernaut that is the Ultimate Fighting Championship struck a deal with Aurora. Kristen Bell from Veronica Mars launched a CBD line. Bruce Linton was pursuing a British company that made lotion and soap. “It’s not about grams,” he tells me. “It’s about milligrams. The trick is taking our shit and putting it into everything else.”
St-Louis at Hexo had the same idea as Linton. Any fizzy water, shampoo, or pet food could increase its cost per unit by adding CBD. In turn, that was where cannabis companies could find the best margins. Even though the licensed producers were having trouble growing quality cannabis at scale, they were already looking past their internal problems toward future horizons. In the hub-and-spoke model — Sébastien’s idea, in which a cannabis company is the hub and any number of different companies in different markets provide the spokes —you take anything with a distribution network and a brand name, and partner up with a weed company. A Pepsi cost a dollar. Put some weed in it, and you could sell it for ten. Cannabis made existing products more valuable. “A company that’s a good partner for a cannabis brand is anybody with a platform, but no CBD,” says Linton. “And what you buy leads to the migration of where you’re going. The point is to do it faster than anyone else.”
Not everyone, however, was convinced that Canadian companies could, or even should, take over the world. “Everybody wants to build these big mega-corporations, and it’s like we’re not only trying to become American, but 1952 America,” says Trevor Fencott, who became a Canopy employee after Linton purchased his company Mettrum. Fencott wasn’t sure about his new boss’s approach.
Uncontrolled growth isn’t necessarily good, Fencott tells me. “It’s like somehow having offices in ten countries around the world offers legitimacy, but uncontrolled growth isn’t the definition of success. In fact, it’s the definition of cancer.”
Fencott was going through a life change while working at Canopy. He liked Linton, but with his father battling cancer at the end of 2017, Fencott felt it was time for a change. Medical marijuana was relentless, and then, four days before he left Canopy, his dad passed away. He had worked hard at Mettrum, and it had begun quickly after he and Michael Haines started and sold their tech company. After selling Mettrum, Fencott and Haines both felt like they might leave marijuana altogether. Even though Fencott had fallen for the plant, the financials rang false to him, and he was beginning to worry about how the boom might end. Fencott spent time at Canopy and had stock options; still, he was concerned.
“We see grotesque corporate excesses happening and these crazy deals, and it looks like the high-water mark,” he says. “But what you really see is something more like Wile E. Coyote at the edge of the cliff: he’s running real fast, but all he stands on is air.”
Before he could leave marijuana, however, Fencott’s teenager brought home a pamphlet from school about the evils of pot. It wasn’t written by the 1920s Black Candle scribe Emily Murphy — not exactly. But the dog whistle of Reefer Madness rang in his home. “It was garbage, not the truth, as if the way we’re educating our children hadn’t changed since before Le Dain,” says Fencott, who sensed that the cannabis retailers were where a new generation of Canadians would actually learn about weed.
For the next generation of teenagers, weed could become more popular than beer. Still, Fencott hemmed and hawed until his wife Dana, a Big Pharma veteran (and cannabis consumer), encouraged him to remain involved. If pamphlets like the one his son brought home were how the kids were learning about cannabis, he owed it to the plant to tell the story properly. This time, however, says Fencott, he and Haines were going to work differently. Haines had Hoshi, an international medicinal licensed producer based in Portugal, and Fencott became obsessed with cannabis retail. An idea was born for Fire & Flower, which would use data to track every cannabis sale. Fencott met with Mark Zekulin at Canopy and Vic Neufeld at Aphria to discuss his nascent retail idea, an upscale, non-licensed-producer-affiliated retail-store chain that, above all else, could be a source for marijuana education. Says Fencott, “Against all these lofty valuations, I thought there could still be a space for truth.”
Ted Chung, Snoop Dogg’s business partner, remained committed to Canada, and to Canopy.
In 2017 and 2018, Chung came monthly from Los Angeles to Toronto — and quarterly out to Smiths Falls. Chung says he saw the human element that Trevor Fencott had pitched all those years back in how a cannabis company could contribute to the re-emergence of a small town. Since 2008, the Hershey factory in Smiths Falls had been abandoned, a cottage for squirrels and raccoons. In 2013, Linton invested his own money into 1 Hershey Drive and, though they almost missed paying contractors and it cost Chuck Rifici his job, the team did get the factory converted into a forty-two-acre cannabis grow op with thirty-nine growing rooms, making it the largest indoor cannabis facility in the world. Both the mayor and Ted Chung were proud.
Chung witnessed the growth of the city up close and illustrates the impact with the story of a small restaurant. Chuckles Jack was a little chicken shop owned by a Sri Lankan chef in Smiths Falls where Chung would dine whenever he was in town. A bon vivant, Chung liked eating out, especially exotic food, or at least a step up from roadside-restaurant chains. He befriended the young Sri Lankan and marvelled at how, over the years, Chuckles Jack grew from five tables and a waitress into a three-story joint with a patio and a happening bar. If marijuana was an incubator for job creation, Smiths Falls became ground zero for growth. They were creating jobs.
“Bruce and Mark made sure they connected with the people of Smiths Falls, and I saw their commitment to the town,” says Chung, who was the right guy to impress; as the creator and producer of the hit show Martha & Snoop’s Potluck Dinner Party, he began talking to Martha Stewart about cannabis. Stewart, a billionaire, had questions. She was curious about California and Colorado.
Ted Chung had a different idea. He knew who she should meet. “I was impressed by the guys, and knew that she would be, too,” says Chung.
“What do you know about Canada?” Chung asked Stewart when she asked him how she might get involved in marijuana. “Canada,” he said, “is the best place to try.”
In Smiths Falls, Martha Stewart would bond with Hilary Black over their love of animals. While Stewart wanted to produce a line of CBD dog treats and ready-to-bake products, Black wanted Canopy to transform the country like it had Smiths Falls. She wanted Stewart to work with her on using cannabis to help fight the crisis with opioids. Black was still trying, with Mark Ware and Marc Wayne, the team that had been together at Bedrocan, to conduct research with medicinal weed. They did this work through Spectrum Therapeutics — the research arm of Canopy Growth that was looking to further the data on and comprehension of the plant. Despite the growth of these companies, quantitative data on what cannabis did to the mind and body was still hard to find. There were anecdotes all over. But in terms of science, it was still 2016-era evidence. The Acreage Super Bowl ad was poignant. But it fell short on proof. There was no doubt, however, that millions of people were using medical marijuana. And despite the increase in usage, to this day there hasn’t been an overdose death from weed.
That’s why Hilary Black wanted to harness the power of Canopy, the power of Martha Stewart, and the power of Snoop Dogg and Ted Chung to lobby the Canadian Senate and change the way that cannabis as medicine was taxed. She was supported by all of them in her work. Black had pitched Zekulin on a new job title — C-suite — and put together a team whose mission wasn’t only patient advocacy, but also global legalization — not from a legal perspective, but from a human rights one, echoing back to the original case with Terry Parker. True, Black was still pissed about Zekulin and Linton selling their shares before legalization, but she learned from that episode, advocated for herself, and was rewarded. Both her team and her compensation grew.
“With wind in our sails in every facet of the company, it was time to, you know, change the world,” Black tells me, adding that she ran into Martha Stewart in the Canopy headquarters and galvanized her, as she did everybody, with her personal story.
Chung had brought Snoop to Canopy for the partiers. But that was only half the business story. Next Bruce Linton wanted to offer Martha Stewart for the moms.
Just three months after legalization, Linton had assets in Europe, Africa, and South America. He had health drinks and hair care, not to mention the most funded capacity in Canada and a line of weed drinks and edibles ready to hit the stores, which he owned thanks to Tokyo Smoke. Retail was coming to Ontario, and now Linton also had Snoop Dogg and Acreage. Linton and Zekulin flew to New York to pitch Martha Stewart; Chung says Linton’s ready-to-bake concepts blew the entrepreneur away. “Bruce and Martha hit it off and the deal was consummated,” says Chung. In February 2019, Canopy Growth officially partnered with Martha.
“The bigger the place got, the easier it was to run,” says Linton. “I have more levers, more triggers, better currency, a better team — we need to always be moving.” Linton didn’t offer workers a shoulder to cry on or understand burn-out or fatigue. “I’m a bad motivational speaker,” he says. “I told the team, if this feels stressful and you’re bitching on your way to work, talk to HR. Stress should be when you have nothing to do because you’re going to get laid off. If you’re twenty-seven, this is the most interesting work experience you’ll ever have in your life. When do all of these things synchronize in the world — let alone Canada?”
Chapter 12 Dark Clouds
“The industry’s fucked.”
Stephen Arbib
Dollars behind the Constellation investment into Canopy were negotiable, Bruce Linton says. The billions. What wasn’t negotiable was the number of seats that Constellation would have on the Canopy board. Linton could have his money, but he’d lose his autonomy — and that condition wasn’t going to change. Conversations between the two brands began in 2016, and Linton knew he needed a flush American partner to extend his product range and distribution network. He had gotten close to inking a deal with Diageo, the British distributor of Guinness, Johnnie Walker, and Captain Morgan rum. But it was still difficult to get mainstream buy-in from non-cannabis brands, despite major industries witnessing the valuations of the Canadian weed companies. Alcohol, as a vice industry, was the category analysts expected to be most negatively impacted by cannabis sales. All the new pot smokers might not need as much booze.