Cannabis CompIiance Inc. Launches in Canada
We are excited to announce the launch of our new consulting firm, Cannabis Compliance Inc (CCI) in Canada! We started consulting in the cannabis space in Canada three years ago under NHP Consulting Inc – and today, we are migrating the cannabis staff from NHP to CCI. NHP will continue as a sister company to CCI, where NHP will focus on pharmaceutical, medical devices, food, cosmetic and health products. CCI will focus on all cannabis activities.
CCI provides risk mitigation, due diligence and government licensing for commercial cannabis producers around the world, with a focus on the Canadian marketplace this year.
Our business model is recruiting top expertise in cultivation, security, regulatory, quality assurance and financial planning – people who have demonstrated their abilities in the last three years for licensed producers. The hands-on experience of our team ensures that all of our consulting projects are fulfilled based on the best practices in the licensed industry. CCI is privately owned by Brian Wagner, who also owns NHP, and our senior leadership team is in Quebec and Ontario.
Canada is well underway to create a new regulatory model allowing for the cultivation, processing and retail sales of recreational cannabis products. As the only G7 country in the world to take this bold step forward, Canada is poised to be a global leader in best practices for the regulated commercial sector.
We have three core services: (1) achieving regulatory licence for cannabis cultivation; (2) on-site training in quality assurance and cultivation; and (3) provide due diligence for licensed producers through continued education/training.
Rahul Rajan is the Vice-President of Sales and Acquisition, managing our sales team and leading our investor brokering. Michael Elkin is Vice-President of Partner Channels, working directly with our leading industry partners to provide our clients with full turnkey solutions during buildouts. Michael previously designed security systems while at Marcomm and Convergint, whose designs lead to the licensing of Tweed, 7 Acres and Delshen.
Jayson Goodale is our cultivation expert, who was head grower for Tweed Farms for three years, designing and managing their unique greenhouse in the Niagara region; his background in commercial horticulture combined with his senior position at Tweed Farms, is a rare combination. On our regulatory team are Rachna Saini (former QAP with Prairie Plant Systems, the first licensed producer in Canada),
Benilda Sable (strong food science and industrial hemp background) and Ayesha D’Lima (former quality position with Aurora Cannabis). Our sales consultants Ryan Bourdages (Montreal) and Garrett Spahn (Toronto) are also joining CCI full time. All of our staff are full time, salary based employees across Canada.
The Market Opportunity
Medical cannabis is currently the only product available for sale to Canadians as of April 2017. The Trudeau government has committed to legalizing the cultivation and sale of both medical and recreational cannabis in Canada by July 2018. As of March 2017, approximately 130,000 Canadians are purchasing medical cannabis from licensed commercial producers. Around 10,000 new users are signing up every month.
Recent market analyses by Deloitte and also the Parliamentary Budgetary Office are predicting the cannabis industry to be worth $15bn to $20bn annually (recreational and medical combined), but even these are often cited as conservative estimates. The truth is, no one really knows the potential of a fully legalized cannabis market.
Where Canada is leading the global movement is in the allowance of licensed retail sales. While not currently permitted, a federal task force issued their recommendations to the government in December 2016 laying down the proposal for retail sales. While it is still up to the Trudeau government to put their own framework together, the task force report has been applauded by most sectors in the industry – and the general consensus is that it will, by and large, be adopted in full. The proposal makes room for finished products including edibles, beverages and possibly topicals/capsules. Retail sales for recreational product, perhaps via specialized “pot shops” alongside specialty pharmacies, will be a strong pillar for the cannabis market in the years to come.
There has never been a business opportunity quite like this. It is not often that a product suddenly becomes legal which the public knows and consumes, to be manufactured by private companies licensed by the government.
Let’s suppose the market is worth $20B in five years. How many commercial producers could the market support? For sake of argument, let’s say med-sized producers (25,000 sqft facilities) own 50% of the market; craft producers (10,000 sqft) 20% of the market; large producers (150,000 sqft) 20% of the market; and “very large” producers (600,000 sqft) 10% of the market. We believe that medium-sized producers will have the strongest advantage in responding to industry trends, hence the 50% market take.
Based on these assumptions, a $20bn market can support 1,000 profitable craft producers, 714 medium producers, 50 large producers and 6 very large producers. In all, 1770 commercial cannabis producers. In reality, the cost of production (and wholesale pricing) must go down over the next five years (based on trends we’re seeing in the United States), pointing to perhaps a reduced market size. But if we run with these simple assumptions, we might predict that the industry is going to need well over a thousand licensed producers to keep up with the market demand. No matter how much uncertainty is factored into these assumptions, clearly the market will support well over 500 producers. A far cry from the current 41 we have today.
What is the startup capital to enter the commercial cannabis sector? Greenhouse style, which we believe offers the best advantage in COG, costs $100 to $175 per finished square foot to build and fit with equipment. So, a 25,000 sqft “medium” facility would cost between $2.5mm and $5mm to build and equip.
Health Canada is not capping the number of producers, and they do not set prices at this time. Any company can apply for a commercial licence, if their application materials are robust and their security clearances pass. However, in the last few years the wait time for getting a licence has been 1.5 to 2 years on average. While the industry is expecting these wait times to shorten considerably, at present this is the reality we all have to live with.
Our Commitment to Integrity and Partnership
The foundation of our company is integrity, transparency and mentorship. Our team has prepared and rescued many files (while under NHP Consulting), including high profile clients and smaller startups.
CCI is committed to full compliance and risk mitigation. After all, security and quality assurance are designed to prevent theft and contamination. Every crop is worth millions, and no producer can afford a recall or bad publicity. Our services are a must have for risk mitigation, and we are committed to our files right to the end – and after licensing as well.
We are also thrilled to announce strategic partnerships with leading industry service providers, including Ellis Don (general construction), CBRE (commercial real estate), BAM Strategy (marketing and public relations), CannaPro (greenhouses and equipment), Advanced Extraction Systems (extraction equipment), International Vault (vault construction), and Genetic and Magal S3 for security equipment and integration. When our clients are looking to put their designs out to tender, we can secure the best bids from the country’s leading vendors.
Where We’re Going
CCI is launching in Australia and Germany in 2017, and we are committed to bringing the Canadian standards to every emerging market in the world. We are also laying the groundwork for providing due diligence and licensing services to dispensaries and legal retail outlets, which we are rolling out in the early summer of 2017.
At the core of all of our plans is the vision we have in being the best in class – the highest standards, the best partners – with integrity and transparency.
Come Meet Us
Come visit us at these industry shows where we have a booth, and talk to our senior team to learn about our services and programs:
• ICBC (Berlin, Germany): April 10-12
• O’Cannabiz (Toronto): April 21-23
• Lift Hemp and Cannabis Expo (Calgary): May 6-8
• Lift Expo (Toronto): May 26-28
• World Cannabis Conference (Los Angeles): September 13-15
• MMJ Biz Conference (Las Vegas): November 13-15