It was unseasonably hot this February 18-22 in Boca Raton, Fla., as I attended the annual Consumer Analyst Group of New York Conference. It’s one of my favorite events, because I get to hear – and be in the same room with – the CEOs of some of the biggest, publicly held food and beverage companies as they “sell” their companies to the Wall Street guys.
Despite the heat, most of the attendees and all of the speakers wear sport coats, if not suits. This year, one new presenter wore a sport coat that didn’t quite hide the black T-shirt with wild lettering, much less the jeans.
He turned out to be the founder, chairman and CEO of Canopy Growth Corp., the apparent leader in developing cannabis products in the newly legal Canadian market. Sales of $2 billion, a market capitalization of $16 billion and yes, publicly traded – New York Stock Exchange, no less.
“I operate the biggest legal producer of cannabis on the planet,” was Bruce Linton’s opening remark to the crowd. They seemed impressed. The analysts wander in and out of these presentations, depending upon their interest in the next consumer goods company scheduled to speak, but for this session, the huge meeting room was packed.
The legalization of marijuana in Canada and potential for same in the U.S. “is an opportunity unheard of in our lifetime,” Bill Newlands, CEO of Constellation Brands, said during his presentation two hours earlier. The U.S. marketer of such old-school “relaxation” products as Corona beer, Mondavi wines and Svedka vodka is the biggest investor in Canopy Growth. Constellation already has sunk $4 billion into the Canadian company, and if all warrants are exercised will own 50 percent of Canopy Growth.
A lot of company executives, not just those in the food and beverage industry, talk about disruption. Linton implied cannabis is the very epitome of disruption ... certainly for companies like Constellation, as well as Diageo, Anheuser-Busch InBev and Molson Coors, all of whom reportedly are testing the waters. As for the rest of the food industry, we’ll see.
Legalization of marijuana and its derivatives occurred last October in Canada, and just before Christmas, the Government of Canada published draft regulations on how marijuana edibles and cannabis-infused products are to be produced and distributed across Canada. Those products are expected to be available across that country by the end of this year. To the dismay of some, mixing cannabis into alcoholic products is prohibited, but there will be plenty of other opportunities for Constellation, Molson Coors and others.
Despite the T-shirt, Linton impressed the financial analysts with talk of patents, plant genetics and other intellectual property, “delivery technologies,” and an understanding of the potential for legal pot and associated products in markets around the world. We recently reported how Martha Stewart has joined Canopy Growth as an advisor, with the first collaboration being a foray into pet products.
Canopy is not all about the hallucinogenic side, although that’s certainly a part of it. Linton talked of mildly relaxing beverages, in the same league as beer and wine, and sports recovery drinks. Also about the medicinal benefits of cannabidiol, the non-hallucinogenic component of marijuana and hemp: “anti-anxiety, anti-inflammatory, PTSD [post-traumatic stress disorder], animal health, sleep” among its benefits and applications.
While Canopy Growth is the publicly held parent, Tweed Inc. is the original storefront subsidiary, which set up shop in Smiths Falls, Ontario, in 2014 – ironically, in an abandoned Hershey’s chocolate factory. Symbolism? Tweed initially produced high-quality cannabis products for limited medicinal use, but it also forms the infrastructure – farms, research, product development, distribution, marketing – for Canopy Growth.
Canopy Growth is ready for legalization in the U.S. and around the world – although with that $16 billion market cap, it’s no longer under anyone’s radar. Neither is Hydropothecary Corp., the chosen partner for Molson Coors.
So Linton’s outfit was perfectly fitting. A sport coat, yes, but beneath that a black T-shirt and jeans. Frankly, no different than what you’d see from an entrepreneurial CEO at Natural Products Expo West, which is my next trip. Sufficiently business-like, but different. And these days, different is good. So is disruption.