“You’re not entitled to make money from an activity that you ruined people’s lives for doing. It’s morally reprehensible,” says Young. None of those original people — Terry, Rosie — made a dollar from legalization. “As much as the system barred growers and compassion centre people, they should’ve barred cops and vice squad officers. It’s just wrong. How do you sleep at night?”
Nick Lalonde at CannTrust was having his own trouble sleeping. On January 14, 2019, three days after Vic Neufeld at Aphria resigned, Lalonde was still trying to get someone at his company to take ownership of erecting the false walls around the unlicensed grow rooms.
He got an uneasy feeling when his company signed a deal to sell fifteen thousand kilograms of Aleafia bud. Aleafia, which listed on the Toronto Stock Exchange on March 19, 2019, was co-founded by Fantino, the former Ontario Provincial Police commissioner, and Souccar, former RCMP deputy commissioner, and was hated, even more than most government weed brands, by the legacy market. Back in 2004, Fantino shared his thoughts on cannabis legalization with the Toronto Sun. “I guess we can legalize murder too.” Lalonde felt sick to his stomach. “A company breaking the law,” he says, “shouldn’t be selling weed from the police.”
In September 2019, a month before vapes would become legal in Canada, the Centers for Disease Control and Prevention (CDC) told Americans to stop vaping.
People were getting sick from vaping, to the degree that the president of the United States warned Americans on Twitter about their harm, even though the vapes they were using were illegal. Vape pens from China sold at drugstores around North America contained a vitamin E acetate that was making people ill and, in at least forty-two documented cases, causing death. The vapes that were killing people were illegal. They weren’t sold at licensed stores or made by licensed companies. However, there was very little differentiation between the legal products and the illegal knockoffs; customers tended to think that if it was being sold at their corner shop, how could it be against the law?
But vaping has always been part of medical marijuana, and Cannabis 2.0 was seen as a giant new revenue stream. John Fowler believed vapes would be bigger than edibles. The reason why vaping has always been the preferred method of medical marijuana consumption is because people with cancer, with asthma, with heart conditions — really, anybody — shouldn’t inhale combusted materials. In the legal cannabis industry, vapes started popping up even before they became legal. Their discreet, odourless method of delivery makes them perfect for micro-dosing inside a club, investor dinner, or bar. The first pot from Flin Flon was ground up for vape pens. When Tony Dean was trying to change the weed laws in the Senate and tried pot to counter his side effects from chemo, he vaped. Linton paid $220 million for Storz & Bickel, a German vape company, in December 2018. Lorne Gertner had been working on vapes with Moses Znaimer since the very start of Cannasat, way back in 2005. Now, vapes were finally about to become legal, and the president of the United States was saying not to vape.
At the start of 2019, vapes were passed around high schools, mostly thanks to a company called Juul — which made candy-flavoured faux-cigarette products — but the CDC wasn’t targeting the legal tobacco vape market. Bubble gum nicotine flavours may be a deplorable business ploy, but Juul did well enough to attract $12.8 billion in December 2018 from Altria for 35 percent of the company. Altria, in the heavily regulated tobacco industry, was used to pivots. And would make more. On December 7, Altria invested $1.8 billion to own 45 percent of Mike Gorenstein’s Cronos Group — a deal further marrying Big Tobacco, like Big Alcohol, with Big Weed.
But the September announcement couldn’t have come at a worse time. The industry was pinning at least some of its hopes on vapes. In terms of the legal cannabis market, the big bet on vapes — which were expensive to produce — took a publicity hit before the first legal vape pen could be sold in October. Who could have forecast something like that?
“We loved vapes and were ready to bet big,” says James Poelzer, the former CFO of Ascent Industries, whose regulatory nightmares continued after recreational legalization and through the new year. As his dreams were tied up in edibles and vapes and recreational flower, he had both his medical and recreational licences suspended by Health Canada. To this day, Poelzer is bitter. He says Health Canada found a box of his documents regarding his grey market medical sales.
“We should’ve just shredded that shit,” Poelzer tells me, then drops the most notorious name in weed. “Like CannTrust.”
Poelzer resigned from Ascent at the end of November 2018, when his company’s licence was suspended. Ascent then announced Blair Jordan, former CFO, as their interim CEO. In a press release in April 2019, Jordan talked about appointing a crime expert as an independent director and, as the executive of a licensed weed brand, stamping out his industry’s connection with organized crime. To Poelzer’s dismay, Jordan said in an interview that his company had ties to the Hells Angels. He still says that today. “A huge amount of money, especially in BC, that found its way into the industry is from organized crime,” Jordan told me, speaking on an encrypted line. Jordan said he couldn’t even sit by a window in the Ascent office for fear of a Hells Angels drive-by. “My head was spinning,” said Jordan, who added that he walked with a bodyguard around his company’s headquarters in Maple Ridge. “They don’t come at you with guns and say, ‘Do this for us or we’ll kill you.’ Instead, they sit with you over coffee. They’re professional, but the threat is implied.”
Alison Gordon of 48North is friends with James Poelzer and has visited his facility in Maple Ridge many times. She says she never needed anything resembling bodyguards and didn’t catch any dangerous vibes. Whatever the truth is, a public cannabis company breaking the law and tied to criminals, and more BC underground growers operating lawlessly, attracts the same kind of negative headwind as the vape crisis, the police, and political profiteers. Despite the Altria money — because of it? Or maybe the money just made bad things look worse? — the industry was in crisis. In November 2018, a thirty-one-year-old Indigenous man in Winnipeg was arrested for possession of eighty-five grams; in April 2019, he was sentenced to ten months in prison. No one at Ascent Industries ever served time, and Blair Jordan ended up taking a job with a uranium corporation.
In January 2019, Malcolm Gladwell wrote a story in the New Yorker titled “Unwatched Pot,” with the subhead “Is Marijuana as Safe as We Think?” It was a tough time for Bruce Linton to offer Bill Newlands reassurance, but maybe there would be a silver lining.
CannTrust, on February 25, 2019, listed on the Nasdaq.
Chapter 13 All of the Lights
“It’s a no-brainer. You just keep buying shit.”
Terry Booth
On March 31, 2019, a Brink’s armoured truck carrying $900,000 worth of marijuana arrived at Hunny Gawri’s pot shop on Queen Street West. The shop didn’t have a loading dock, so Gawri’s team of twelve formed a daisy chain to pass the odd-shaped boxes of marijuana from the truck, through the back of the store, and directly into the secured upstairs safe room, to be locked inside the $350,000 vault. A new word has been created to describe the people who sell weed like bartenders; they’re called “budtenders.” These guys — and they’re mostly guys and mostly kids — are giddy, ecstatic: modern-day hippies buying into the legalization dream of some sort of liberation. Legal weed being sold like bed sheets or paper towels from an actual legal store in Toronto was a thrilling sensation, and it felt like getting away with something. But it was perfectly legal and there was jubilation in the air. The people on the ground with Hunny were mostly hardcore smokers. Being a minimum-wage-earning budtender isn’t a dream job unless you love the product and share a sense of pride in being front-line pioneers. There were pot shops already in the rest of the country, but the cannabis experiment would be judged, in part, based on how Hunny Gawri, opening Ontario’s first pot shop on April 1, 2019, sold his weed. Forty percent of Canadians lived in Ontario; if you wanted to beat back the black market, if you wanted to earn market share, you needed to sell the pot that Gawri and his young team was unloading there.
Gawri had never smoked marijuana. He’d never seen it before. “I just feel like, as an entrepreneur, I missed out on the chance to grow weed and become a licensed producer, but I wasn’t going to miss this,” says Gawri, then thirty-three, a fast-talking real estate agent, and father of five. He became synonymous with the Ontario brick-and-mortar pot shop moment when his store, Hunny Pot, sold the first legal gram from an actual store — not online — in Toronto. “I feel excited, nervous, and, if I’m being honest, a little scared.”
Gawri says that when his team formed their first daisy chain to unload the pot from the armoured truck, there was no smell of weed in the air. The pot, an even mix of product from Aurora, Hexo, Aphria, and, of course, Canopy, was sealed in childproof packaging, and inside the packaging was another box, so there was no way to sample, smell, or even see the product he’d just spent almost $1 million to purchase. But he was used to operating on faith. Gawri says that he struggled to get loans because of his business. Landlords, even in the fall of 2018, were reluctant to rent to cannabis businesses. “As soon as cannabis got mentioned,” Gawri says, “ridiculous red flags went up.”
Gawri, however, like all the cannabis frontier explorers, was plucky. What he had was belief. He called on family and friends for seed money, called every real estate contact in his Rolodex, and finally secured the dream location on Queen Street West, across the street from the old MuchMusic headquarters. At Christmas, Gawri learned he’d won a conditional marijuana retail licence. “At first I thought it was a joke,” he says.
He took four months to build his store, a job that, he says, normally might have taken a year. It wasn’t until the middle of March that Gawri received his actual licence, two weeks before he expected his first shipment of weed. But Gawri wasn’t stunned. He’d been working full out since Christmas, living in an Airbnb near his store. Gawri says he counted marijuana trees in his dreams. By the time the armoured truck arrived, he’d invested everything he had into his store. It was not easy, he says, inventing the wheel.
The Hunny Pot was designed for customers like Hunny Gawri. When he toured California and Colorado on a legal-pot expedition, he found himself baffled by the choices. Wasn’t pot pot? His shop would be different. Less like Costco, more like Uber Premier. It was an expansion of the Tokyo Smoke concept: Starbucks meets Vera Wang. Personal attention was the key. Each customer would have a one-on-one shopping experience. Since there was no advertising, and by law his windows were covered, customers didn’t come into the store knowing what it looked like or what they wanted, and they didn’t know which licensed producer made which gram of weed.
Alison Gordon of the licensed producer 48North had known this would be a problem since 10.17, when legalization began. It was difficult for consumers to choose their cannabis. We used to buy weed and take whatever we could find. Now there were different brand-name products in the same packaging at similar prices — and no one knew what the brands were. A budtender at the Hunny Pot, however, armed with an iPad, produced glamour-shot photos of the different strains, matched with descriptors of the marijuana.
It was a pot store for people like Hunny Gawri: people who had never tried pot before.
The first legal weed store in Ontario was three storeys high, with a cash register on the first and third floors. After Hunny’s team unpacked his stash, it was artfully arranged in clear glass snifters; you couldn’t touch the pot, but you could smell it. There were staff picks, like at a bookstore, in a glass case by the front door, and there were specific instructions outlining what the budtenders were and weren’t allowed to say — no medical suggestions, no promises for what the results might be. You couldn’t tell people how they’d feel or what the weed actually did. “Low and slow” was the mantra of the legal industry for beginners: take a low dose, consume slowly. No one wanted legal customers, who would ideally become repeat customers, taking too much pot their first time — or their first time since college — and calling their mothers because they were scared.
When the Hunny Pot opened on April 1, like when the first Tweed opened on 10.17, there was a line down the street of hundreds of people waiting to shop. The budtenders were personable, young, enthusiastic, and forbidden to take to the sales floor high. (You couldn’t sell wine drunk either.) For many cannabis customers, and all of the cannabis brands, the budtenders were the most important part of the process. What was legal pot like in Toronto? The budtenders set the tone. No Ontarian had ever shopped in a store for legal weed before, and the night before opening, again, as in St. John’s and Manitoba, people slept outside the store for a spot in line. History was being made.
Alison Gordon had her office directly across the street from the Hunny Pot, and on April 1, she passed out 48North lighters and rolling papers to the people in line. Inside the store, customers took selfies, and on Bay Street, analysts predicted cannabis revenue in Ontario would shoot up from $7.6 million to $19.6 million just from the opening of brick-and-mortar stores.
It had been a convoluted path to get here. Kathleen Wynne was the premier of Ontario when Justin Trudeau tabled the Cannabis Act; her plan for cannabis retail was similar to that in Quebec, in that cannabis stores would be owned and operated by the government, the same way the province sold booze. However, in June 2018, Doug Ford beat Wynne’s Liberals, and he wanted to privatize the system, similar to the models in Alberta, Manitoba, and BC. Wynne foresaw opening 150 stores within the first two years of legalization, which was far too few. For Ontario’s 14 million people, there were 666 government-owned and -operated liquor stores. With supply issues dominating the legalization rollout, stores in Quebec had to close a few days a week and Alberta had to shut down licensing between November and May. Despite the companies being so large, there still wasn’t enough weed.
Premier Ford, re-examining the scene in December 2018, announced that Ontario could open twenty-five stores, based on a lottery system. For Trevor Fencott and Michael Haines, the Mettrum cannabis partners who sold their cannabis company to Bruce Linton and Canopy before getting into retail and who already had seven Fire & Flowers up and running in Saskatchewan and Alberta, the system was a mess.
“Half of my time as CEO of Fire & Flower was spent arguing with the government,” says Fencott, adding that Ontario’s minister of finance, Rod Phillips, seemed to actively hate the sector. “He made no bones about wanting to take us down. And the lottery winners? They’d ask for $10 million for their licence, and for people who’d taken out a second mortgage to open their legal cannabis dream, they stood no chance to succeed.”
Fencott’s main beef is the Ontario Cannabis Store, a government-owned cannabis retailer that would also act as a wholesaler for the legal stores. A licensed producer like Canopy would sell their pot to the OCS, and then Fire & Flower would order pot from the OCS. (In Saskatchewan, the retailers could buy directly from the licensed producer.) Meanwhile, the government also sold directly to consumers online. The OCS had had an operating website since 10.17, and could, in essence, get its pot to consumers faster and fresher than any retail location, which had to take another step in the process — buying weed from the government they were also competing with. “It was the bastard offspring of two terrible things,” Fencott says. “Small business and private enterprise can’t thrive with a government monopoly competing directly with you. They want mom-and-pop stores living on scraps.”
The Ontario government signed agreements to buy weed from the biggest licensed producers like Aurora, Aphria, and Canopy, which didn’t have enough product, while Fencott, acting as a private businessman, had no problem securing more weed from other legal sources. He was an entrepreneur. He knew how to get things. But the government, he says, created a prohibitive system. He was legally unable to buy the legal weed his customers wanted. This, while all eyes were on marijuana. This, during a cannabis drought. Fencott says he once met with the team at the Indigenous-owned licensed producer Redecan and saw rooms of legal marijuana sitting in a vault awaiting distribution. But it was locked up until the OCS made the wholesale purchase and then sold the product to the stores.
“All of the bigs like Aphria and Canopy always overpromised and underdelivered,” says Fencott, mentioning that he had history from the medical rollout of working with, and selling cannabis for, the other licensed producers. “We all came from that medical universe and bought and sold to each other when we ran out of stuff: Terry Booth, Bruce Linton, Vic, and I. We’d constantly discuss who’s going to supply who — we had to when we needed product.”
Ontario’s supply problem, says Fencott, was really the OCS’s problem with distribution. The OCS, says Fencott, was hated by licensed producers and retailers alike. “Redecan hated the Ontario Cannabis Store!” he says. “They had a huge warehouse full of product, but the Ontario Cannabis Store rejected it. I would’ve bought it, but the OCS was a regulator and they had unlimited power — a monopoly.”
Two weeks after the Hunny Pot opened, April 14, 2019, another pot store called Nova opened its first location in Toronto. It was a simpler, one-storey affair, in an old Urban Outfitters that had been repurposed. The staff, like at Gawri’s store, looked like groovy summer-camp counsellors. I spent a day in the store checking it out for the Globe and Mail.
“No one asks me how I am,” a customer said to a young Nova budtender on that late spring afternoon.
“I got you,” the budtender replied, and the customer gave him a hug.
The budtender had dreadlocks and fancy sneakers and recommended an oil with CBD. “This will help you sleep,” he said, “and it’s odourless, so you don’t have to worry about detection from the kids.” His advice would probably be outside the lines with Health Canada. But it was a beautiful exchange to witness, and everything seemed to be working fine.