But now, there was a hangover from the MedReleaf folks on his board. Payback was a bitch. And Booth was listening to Ron Funk. “I looked around the room at the board, and not one of those individuals ever started their own business, not one — all corporate employees, four of them ex-CFOs. I hope one of them smoked a joint,” Booth tells Bruce and me in Las Vegas.
He also tells me a story about Mike Singer, the former Bedrocan CFO, who told Terry that Aurora missed their reiterated guidance and who once smoked with him on Terry’s private plane. “I got him a little stoned, and flying back, I couldn’t get him to sit down. He runs into the bathroom and steals a bunch of shit. He’s like, ‘Look what I got.’ He didn’t realize it was my plane. I’m like, ‘It’s okay, man. It’s my stuff.’”
Booth says of Singer, “He’s a small-minded guy. He doesn’t smoke weed.”
Funk told Booth that he had no problem with Terry as chief executive officer. “It’s not me, you understand, who wants you gone. It’s Nelson Peltz,” Funk said. Peltz joined the Aurora board in March 2019 to help the company enter the U.S., for which the billion-dollar activist investor was granted 19.9 million common shares at $10.34 per share over a seven-year period, vesting quarterly over four years. Booth was stunned at what Funk said, though he shouldn’t have been. Booth had brought Nelson on to do the exact thing that needed to be done right now. That should have happened already. He considered Peltz a friend, even though he knew what Peltz thought of his company. He remembered that crack about MGM. Still, it was beyond his imagination to think that Peltz — though he was an “activist investor,” who joined boards with the express purpose of not sitting still — would conspire against him. Why Peltz?
He just needed a little longer. Why now?
Nelson Peltz, however, was probably right on time. Aurora was bleeding cash, rife with conflict and backstabbing. With the ship going down, deckhands turned on each other and Booth no longer trusted his top two lieutenants: Karasiuk, who orchestrated the Nova deal (and now sat on Alcanna’s board, Nova’s parent company) and Cam Battley, the politician, who, after Bruce Linton, had become the face of the industry. It sickened Terry that neither man smoked weed. It sickened Darren and Cam that Terry did.
Booth got Peltz on the phone. “When the stock is tanking, you get rid of the CEO,” Peltz told him, and reassured him that he wasn’t just paranoid from the mushrooms and blow — insiders were talking about him. Peltz orchestrated Terry Booth’s demise. “The best way to get rid of a CEO,” Peltz told Terry, “is to mount a whisper campaign.”
When the axe finally dropped on Terry Booth, it was February 2020. Aurora fired five hundred people. They wrote down $1 billion in assets. Singer — who stole Terry’s soap! — was named interim CEO.
Terry told the press, “I’m the latest carnage.” And into that carnage came Covid-19.
Chapter Covid-19
“The future of cannabis retail looks less like an Apple store and more like a Domino’s Pizza.”
Trevor Fencott
The pandemic made pot legal and haircuts against the law. In the spring of 2020, it was easier to score legal marijuana in Canada than it was to find a vaccine. Covid-19 was making hundreds of thousands of people sick, killing thousands. On March 14, 2020, Ontario schools were closed down, and on March 23, cannabis was declared an essential service. All businesses deemed non-essential were shuttered, and pot, seventeen months legal, had gone from contraband to essential. But the launch of 2.0 products arrived at a time when in-person shopping at stores was prohibited and curb-side pickup and delivery became essential, like oxygen.
“It’s a mad scramble,” says Trevor Fencott, trying to pivot his eighty Fire & Flower locations into delivery hubs and assuring his staff that their workplace was safe. Fencott had two children and five hundred employees and was, like everyone, making sense of the scene as it unfolded across the country and around the world. The first thing he did was suspend management’s pay.
“Retail is a [cash flow] pyramid and we did the math — if you can’t open a store, it feels like there’s only a month or two of life left,” Fencott says. Cannabis isn’t like booze or toilet paper, other items that people hoarded at the outset of Covid-19; cannabis has a shelf life. The cannabis executives wanted their product to be a consumer packaged good, but it wasn’t, not yet. The product weed customers bought the most of was good old-fashioned weed — grams (and sometimes ounces), not milligrams. This, however, remained a problem: If stores were closed or the supply chain was broken, the product would go bad. “It has to work. We have to deliver, and we move real quickly using the Circle K warehouse to divide up our radius [territories for drivers] and get cars on delivery in the streets,” Fencott says. For him, the pandemic was an existential fight to keep consumers from returning to the black market. If the legal industry was going to keep its new clients, and their desperately needed dollars, then the government was going to have to lend them support.
On April 7, 2020, the government of Ontario once again declared cannabis sales an essential service and allowed the shops to stay open. The Fire & Flower chain continued to work. Sales shot up and people bought edibles, drinks, and vapes with their pre-rolls and grams. The pandemic was a good thing for weed. Fencott says, “In times of crisis, cannabis is better than a fifth of Scotch. It’s better to have some gummies and go to sleep than drinking, arguing with your spouse, and kicking your dog.”
In the first scary, claustrophobic year of the pandemic, cannabis sales increased countrywide. With no Bruce Linton, no Terry Booth, and no CannTrust, weed sales rose 25 percent. As new shops kept opening in Toronto through the summer, the number of available products increased in kind. Up against Covid, in that work-from-home, home-schooled springtime of our discontent, Canadian licensed producers made bank.
“My own cannabis consumption is way up,” continues Fencott. “The pandemic is going to last a long time and I have to remain functional. I have cannabis after the kids go to bed and can sleep.”
Epidemiologists aside, no one could have predicted Covid-19. But the Canadian cannabis executives found focus. Sébastien St-Louis says his supply chain wasn’t the issue. He cut his distribution cycle — the time it took to go from cured and packaged in his factories to shelves across the country — down to thirty days. That August, he finally launched Truss, his joint venture with Molson Coors, and introduced six new drinks to the market. St-Louis was increasing his market share and liked his position against the raft of CFOs replacing Canadian weed founders; his new peers, he believed, lacked creativity. Of the new Canopy CEO, he says, “I know what Canopy is going to do under David Klein. It’s predictable, which makes it easy for me to prepare.”
What caused sleepless pandemic nights for St-Louis was the markets, which, he says, have always been short-sighted and easily spooked. If the markets crash, you can’t raise money and it becomes a vicious cycle; your stock gets crushed. In the spring of 2020, pot sales subverted the pandemic economic crisis. Sales receipts at weed stores were countercyclical: with travel and restaurants closed, movies and schools shuttered — nowhere to go and nothing to do — taking an edible became its own vacation. The weed brands did very well for themselves.
Starting that spring, legal cannabis retailers offered 2.5-milligram, 5-milligram, and 10-milligram gummies, and chocolates and beverages from companies like Canopy and Truss. Heavy users complained that the doses were small, but the sales of these products matched, almost, the sales in Colorado and California. Except in those states, consumers could get edibles dosed with 100 milligrams of THC; in Canada, 10 milligrams was the maximum total dosage per package, which meant heavy users had to buy multiple packets, which was expensive and, with all that packaging, bad for the environment. But the products, like the vapes, were odourless and discreet. John Aird, who finally got Olli onto shelves in 2020 — two years after starting his company — says the 2.0 category came at just the right time.
“Would we have liked to advertise and make a splash and not have them come out during the plague? Absolutely, but we’re still glad to get something of quality in a new category to market,” says Aird, who had simultaneously been working with Fencott and Michael Haines to develop Hoshi, which would service the European medical cannabis market. With a manufacturing hub operating in Portugal, and Germany seeming to make monthly strides on their path toward medical legalization, momentum, amid the carnage of the Canadian industry, was starting to build again and the international adult-use recreational program was beginning to seem real.
Trevor Fencott says that Covid-19 helped open his marijuana eyes when pot was deemed an “essential service.”
The miseducation of Trevor Fencott in cannabis had begun with pot as a product, and he’d never really considered it before as a social issue. He wasn’t afraid of weed and didn’t mind facing down the stigma, but he didn’t care about it in any particular way. He had stood in a hockey rink in small-town Ontario and bathed in the locals’ abuse, but he did that because he believed it was good for business.
But at that point, he’d really had no relationship with the flower; he was an entrepreneur discovering a niche. At Mettrum, over time, he began to form a cannabis relationship. It was medicine, he saw, and it worked. He was proud of what he did and of his business. Then, after Mettrum was sold to Canopy and Bruce Linton, the product became recreational in his eyes — like wine — as he opened locations of Fire & Flower and began using data from his Hyfire analytics to understand consumer tastes. Consumers had buying patterns. If they bought edible X, they might also buy a drink. He knew that vape users were interested in premium cannabis oils and that a certain kind of flower consumer only cared about the upper reaches of a strain’s level of THC. Fencott became a data scientist, and his chain of retail stores harnessed information that the Canadian licensed producers could use. He knew how to stock his shelves. And he maximized turnaround time and shelf space, the same way Couche-Tard sold Snickers bars and gasoline.
However, with Covid, Fencott had his second marijuana aha moment. The first one had been when he realized the information his child was receiving was bad and it pissed him off. The second revelation centred around the actual product: pot could be used for medicine or recreation, but most consumers — especially during a global pandemic — probably used it as he did, as some delicate mix of the two.
The pandemic was stressful. His staff was scared. His children were home. His industry was laying off employees and closing facilities. His own government, via the Ontario Cannabis Store, was his competition. And Trevor liked booze. But like Sébastien at Hexo, he cut down on alcohol while increasing his usage of marijuana. For Fencott, and Fire & Flower, the pandemic brought an increase in sales, but it also brought about a change in the way he could do business. Before Covid-19, only the OCS was allowed to do delivery. When the pandemic started, cannabis retailers were granted permission to deliver marijuana themselves. During a pandemic, who wanted to wait in line with strangers in a crowded place to pick up their pot? But also, who wanted to get weed from an unknown source? Could black market dealers be trusted to get vaccinated and wash their hands?
Fire & Flower, with assistance from warehouse specialist Couche-Tard, created distribution centres and same-day delivery supply chains. This was a game changer because, before the pandemic, the OCS had been adamantly against weed shops being granted the Uber delivery model. The OCS was the traditional drug dealer, except instead of meeting your guy in the park, the government showed up at your door. With the pandemic, legal players could sell pot the same way: direct to consumer in sixty minutes or less.
“The future of cannabis retail,” says Fencott, “looks less like an Apple store and more like a Domino’s Pizza.”
Arriving in time for the pandemic were kilos of legal Canadian weed. When all of the cannabis companies began to build scale, it took the better part of a year after legalization to optimize production. Following Cole Cacciavillani’s Blessed 13 inexpensive Aphria model, using mostly greenhouse and outdoor grows, Sébastien St-Louis says it cost him on average forty cents to produce a cannabis gram. The licensed producers were finding efficiencies in their cannabis assembly lines (after doing this for many years, they were getting better at their job). There was plenty of pot — too much pot —in the legal market during Covid-19, which was good because it matched the uptick in consumer demand. Plus, the licensed producers were not only making more of it, by and large, but even Alan Young would now admit that the legal weed for sale was good. It was undoubtedly cheap. And there was variety. That was good because the black market, while still taking almost 50 percent of the cannabis market share in the spring of 2020, was receding — so an objective of the Cannabis Act was being achieved.
None of these improvements were quick enough for John Fowler, who started Blaise Ventures in January 2020 to invest in small-scale Canadian craft weed brands. Legalization wasn’t perfect. But it’s also important to remember how great it was, says John. In reference to the stimulus cheques received by many licensed retailers and licensed producers, Fowler wants us to imagine a drug dealer getting a check from the government to keep getting their pot in stores.
Legalization remained a Canadian success story, at least in terms of public health fallout. At retailers in Alberta or Vancouver, it wasn’t hard to find a 50-percent-off sale. Imagine a drug dealer hosting Black Friday discounts. Pot had not become a societal problem. And during the pandemic, it became clear that the Le Dain Commission and Shafer were right.
Shopping for weed like shampoo became a perfectly normal thing to do and there was a party at Fire & Flower I remember loving. The people were caring and the food tasted great and the store looked amazing and then I remembered: everyone here is stoned.
In the U.S., however, the party could end much differently, especially if the attendees were Black. On the last Monday in May 2020, George Floyd was killed by police in Minneapolis for passing a counterfeit twenty-dollar bill. This murder of a Black man at the knee of a white police officer, recorded on cellphone and widely shared, would trigger the burning of Donald Trump’s America during Black Lives Matter protests in Los Angeles, New York, and, especially, Minneapolis’s city streets.
The repercussions travelled up north and Canada’s marijuana industry was once again re-examined through the vantage of race. “I live in Canada for a reason,” says Akwasi Owusu-Bempah of Cannabis Amnesty, which became a central point of attention in Canada as the world, and cannabis companies, responded to the George Floyd murder. “It’s a good place to live, and we can take some comfort that our current and historical experiences are different from the United States. But we are not that different as we’d like to believe when it comes to the way in which we treat racialized populations.” Owusu-Bempah, like Alan Young, holds his greatest level of contempt for the police officials running licensed cannabis companies while the very people they once targeted were left out of the industry. The hypocrisy reeks, Owusu-Bempah tells me, and exposes systemic abuse.
“You can’t talk about cannabis without talking about injustice,” he says, adding that the George Floyd murder also put the Canadian legal cannabis industry on blast. Where he felt strongest was in the failure of Bill C-93, which provided no-cost, expedited pardons for Canadians with simple cannabis possession offences. More often than not, these records for a product that was once illegal but was now an engine of big business — a product consumed by white and Black people at the same rates but that was six times more likely to result in the arrest of a Black or Indigenous person — had already wreaked havoc on the lives of the young people arrested. However, with cannabis legalization, Owusu-Bempah says, it’s not too late for reparation. Weed is a billion-dollar industry, but while 10,000 to 250,000 people are eligible to have their records expunged, by the summer of 2024, only 845 people had actually been granted “pot pardons” (455 applications had been returned because they were “ineligible or incomplete”). To this day there’s a system in place for reparation, but the system is broken, and that, beyond the moral implications, also leads to economic factors for the cannabis companies. “Canada had a great head start in legalized cannabis, but it’s infuriating that people convicted for crimes that are no longer illegal have not all had their records uniformly expunged,” says Owusu-Bempah.
Owusu-Bempah introduced me to a young Black man arrested for cannabis possession, and his thoughts mirrored that of many Black and Indigenous people toward the legal-pot world. “Why am I buying weed from you guys?” asked this man. “You’ve done very little to help the people in impoverished communities who have been jailed the most and now you want to play reggae at your store? You were arresting Black people for dimes.”
The George Floyd murder reignited the race conversation in Canadian cannabis. The cannabis companies had no choice but to listen. Sébastien made a donation to Cannabis Amnesty and Aurora did the same. Fire & Flower put up a black box on their social media channels to show solidarity to the Black Lives Matter movement, and Hilary Black, still at Canopy Growth, intended to mobilize the company, even as it was now led by David Klein, Constellation Brands’ long-time CFO.
“We’re trying to create a meaningful, authentic plan for corporate social responsibility (CSR) and David [Klein], to his credit, has made this a priority — when our chips are down, we don’t bail out on our commitments to the community,” said Black, who had seen Canopy facilities close in cities like Edmonton and Bowmanville, and round after round of layoffs affect more than one thousand Canopy employees. As Sébastien St-Louis had predicted, the new boss at Canopy wanted to trim costs and edge toward profitability, so he closed much of what Bruce Linton built. Billions in acquisitions became empty warehouses on the side of the road.