Canada’s booming marijuana industry has lured dozens of serial entrepreneurs and venture capitalists into the once-forbidden space with soaring stock prices and the hope of a wide-open future.
In an industry flush with financiers, John Fowler is somewhat of a rarity — a 29-year-old CEO who actually worked in cannabis long before founding one of the nation’s 43 federally licensed medical marijuana producers.
Fowler’s background in cannabis, along with his more recent experience as a securities lawyer, gives him a unique insight into the business. But despite the many differences between him and other industry leaders, there’s no denying the entrepreneurial spirit that inspires them all. Fowler left a stable career at a Bay Street law firm in Toronto to run what was, at the time, an unlicensed, unfunded, startup cannabis company.
The average person might call it career suicide. Fowler calls it “a no-brainer.”
And considering Fowler’s atypical career path, it makes sense that his company, 7 Acres, would not only be an outlier in Canada’s rapidly growing industry, but uses one of the most innovative production facilities in the country.
While most producers grow cannabis under artificial lights in a warehouse, 7 Acres utilizes a massive hybrid greenhouse in Kincardine, Ontario. When complete, the greenhouse will be 342,000 square feet — roughly the equivalent of six football fields or a little more than seven acres, thus the name — and capable of producing 50 million grams of sun-grown cannabis per year.
Fowler says simply scaling up a small garden- or basement-style grow will not meet market needs in the near future, but the hybrid greenhouse will allow the company to fill the gap between the high capital and operating expenses of indoor growing with the environmental and quality benefits of growing in the sun.
The company also differs in its business model: Rather than selling direct to the consumer through Canada’s mail-order system, 7 Acres focuses solely on farming.
“I love that quote by Steve Jobs, where he says being focused is not just about doing that one thing; being focused is also about saying no to everything else,” Fowler says. “He took as much pride in what he said no to as what he said yes to.”
Fowler believes 7 Acres is the only dedicated wholesaler among the country’s licensed producers. He wants 7 Acres to be a retail brand, but doesn’t necessarily want to be the retailer.
“We want to be Coca-Cola, not the corner store,” he explains.
Fowler helped start Supreme Pharmaceuticals, the parent company of 7 Acres, in 2013. Since then, the publicly traded company has raised about $100 million in capital and is currently valued at about a quarter-billion dollars, despite still not having sold a single gram of its crop.
In the process, Fowler had to give up a lot of equity in the company. He says he’s “nowhere near the majority shareholder,” but it was a strategic move he doesn’t regret.
“When you don’t have any money, you have to give up a lot of the company to get it going,” he says.
Building the 7 Acres greenhouse would have taken a decade or longer if the company had to bootstrap it, Fowler says.
With adult-use legalization slated for July 2018, 7 Acres is ramping up its production capacity.
It went from 10 employees last year to 50 employees today and could have as many as 400 people on staff within the next couple years. So far, only about 40,000 square feet of the facility has been completed as a proof of concept. Fowler aims to be at full capacity within 18 to 24 months.
Though the focus appears to be on quantity, quality remains one of Fowler’s top priorities.
“I don’t think scale and quality have to be mutually exclusive concepts if you do it right,” he says.
In fact, he adds, it should be fairly easy to grow better plants at 7 Acres than somebody with just a couple lights in their basement. After all, 7 Acres has some pretty significant advantages: tens of millions of dollars in capital, a team full of scientists and passionate gardeners, access to the top engineering firms and technological advances, and the benefits of being a legal, licensed company.
But the process to get there hasn’t been easy and despite many indicators of future success, 7 Acres still hasn’t delivered a single product to a customer, another luxury afforded by the company’s investors.
The company had its pre-sales inspection with Health Canada in January. After several long years, Fowler believes 7 Acres is in the final stages of receiving its sales license and being able to sell the couple hundred kilograms it’s already harvested. The next step is ramping up the massive greenhouse to its full potential as a wholesale provider.
But Fowler admits even the best-laid plans may change as laws and the market tend to evolve rapidly.
“I’m not particularly rigid about what section of the cannabis industry we’re in,” Fowler says. “We want to be in it where we see the best opportunity.”[contextly_auto_sidebar]