As the cannabis industry continues to evolve and mature, so too are consumers. Some, especially in established West Coast markets, are getting more sophisticated, while Midwest cannabis companies are learning what products are resonating in their areas and starting to fill education gaps with detailed packaging, online resources and in-person conversations.
Cannabis consumers are a varied group. As William “Beau” Wrigley Jr. notes in The Last Word interview, a key challenge for cannabis companies is, “… How do you reach your consumers? And in our case,” he says, “we have multi-generational consumers who are 21 to 80 [years old], and it’s all about really unlocking the code to how do you do that.”
Throughout this issue, CEOs and contributors offer many strategies for unlocking that code and reaching wide and niche audiences alike.
For example, Melinda Rombouts, founder and CEO of Ontario-based cannabis cultivator Eve & Co., featured in the cover story, discovered through internal market research a key demographic other Canadian cannabis companies were missing: women. The data showed more women were buying cannabis products than was previously thought. Despite advisers’ concerns, Rombouts realigned her company to better serve women, complete with branding and marketing that would speak to them. A million square feet later, she knows her gambit paid off.
Brightfield Group addresses another missed opportunity—occasion-based marketing—in this month’s Sales Trends. Especially for newer consumers, it’s important to suggest when products might best complement various activities, going beyond just feelings or sleep. Brightfield’s Madeline Obrzut explains that consumers are increasingly pairing video games with cannabis, and very few products are marketed to this varied and engaged demographic that includes a growing number of young women and parents. Products that are tailored to potential activities for which cannabis may be best—for example video games, biking, yoga, parties—could engage the unfamiliar but curious.
While niche strategies can be effective, opportunities to improve education for all, even connoisseurs, is also important, note Robert C. Clarke and Mojave Richmond in their column. Although cannabis companies are increasingly listing primary terpenes on packaging and going beyond the indica/sativa binary, myrcene, linalool and limonene don’t really mean anything to most consumers. Instead, Clarke and Richmond propose easy-to-understand Cannabis Flavor & Fragrance Groups to give consumers a preview of what aromas and tastes different cultivars offer, similar to how beer and wine are marketed.
The main lesson: Investigating niche audiences and discovering what resonates most with consumers can help set your cannabis company apart.
In February, Innovative Industrial Properties (IIP) expanded its real estate partnership with Kings Garden, a licensed cultivator based in the Coachella Valley in southern California. The move followed San Diego-based IIP’s original acquisition of several Kings Garden facilities in 2019, a sale-leaseback deal that turned Kings Garden from owner to tenant, providing Kings with $27.1 million in cash.
The sale-leaseback model has become a steady and consistent feature of the cannabis M&A landscape. It’s a real estate transaction in which an owner sells property with the intention of remaining a tenant and leasing the space, freeing up capital while still running the on-site operations. IIP, founded in 2016, is known as a real estate investment trust (REIT), and is among the most visible companies using this strategy in the cannabis industry, allowing IIP to invest in properties with built-in tenants and cashflow. The company owns properties operated by dozens of licensed cannabis businesses in 18 states, each one structured as a triple-net lease with IIP’s partner on the ground. (A triple-net lease is a property agreement in which the tenant pays all property expenses, including real estate taxes, insurance, maintenance, utilities, etc.)
In the case of Kings Garden, it’s been a symbiotic relationship. The February transaction expanded Kings Garden’s footprint into adjacent land parcels. Because IIP, which invests in medical-use facilities, regards its tenants as partners, the company worked with Kings Garden to identify suitable opportunities, resulting in this case in a $1.4-million purchase, imminent building construction and a new lease. IIP acquires more real estate, and Kings Garden acquires the room it needs to grow.
“We greatly value the long-term relationship we’ve built with our industry-leading partners at IIP over the past years,” said Michael King, Chairman and CEO of Kings Garden, in a press release about the deal. “Between the deal we closed in November 2020 and this one, IIP is expected to provide reimbursement to Kings Garden for construction for just over $76 million. This is significant, as it sets the path to 665,000 square feet of indoor operations and over $300 million in revenue for 2023.”
This latest transaction will supply Kings Garden with another 180,000 square feet of industrial space, building on its goal to produce 140,000 pounds of finished cannabis product annually, according to the press release.
“Our successive transactions with Kings Garden really exemplify the focus of our business model—to be the go-to, flexible, long-term real estate capital partner to our tenants, moving quickly and on their timelines to provide flexible capital solutions as they continue to grow their businesses,” IIP CEO and President Paul Smithers told CBT.
As M&A trends floundered throughout 2020, REITs like IIP offered an alternative way for cannabis operators to raise cash and offload liabilities from their balance sheets.
“In the end,” Smithers said, “the tenant-operator retains full operational control of their mission-critical facility, while at the same time unlocking the real estate capital that was previously invested in their facilities, providing them the opportunity to re-deploy that non-dilutive capital back into their business with the goal of achieving substantially higher returns.”
This is not necessarily an arm’s-length deal. Smithers said that IIP is focused on understanding its tenant partners’ needs, “and then tailoring real estate capital solutions to meet those requirements.” This might include investing in more properties on behalf of cultivation companies over time to increase on-site production capacity, for instance, as in Kings Garden’s case earlier this year.
“We look at each transaction holistically, with specific focus on the tenant and its management, financial profile and track record, while also analyzing specific state market and regulatory dynamics,” Smithers said.
Most of IIP’s properties are specialized industrial (indoor cultivation facilities), though the company does hold greenhouses in its portfolio, which includes assets from companies like Cresco Labs, GTI, Curaleaf and Trulieve.
From January 2020 through February 2021, IIP made 22 acquisitions across 11 states, while also amending 23 existing leases across 10 states. It’s an ongoing process, like just about everything else in the cannabis space.
Eric Sandy is digital editor for Cannabis Business Times.
Whether you’re applying a pesticide to a conventional agricultural crop or to cannabis, the same concepts apply to help ensure the task is performed in a safe manner for the applicator, the public and the environment. Here are 15 tips to avoid putting your employees, and your license, at risk when applying pesticides.
Is a Pesticide Application Needed?
The best way to protect staff from exposure to potentially harmful chemicals is to limit pesticide use. However, if pesticides must be used, integrated pest management (IPM) principles should be implemented prior to applying any pesticide. Consider these steps first to help control pest issues:
1. Establish an action threshold. An action threshold is the point at which a pest population becomes large enough to require corrective action. Seeing one insect doesn’t always indicate a pesticide application is necessary.
2. Take time to identify and understand the pest’s life cycle and habits. Understanding a pest’s biology could allow you to control a pest issue by simply modifying the environment.
3. Implement practices to proactively prevent pest issues, such as removing plants before pests spread, clean room practices and regular scouting.
4. Once it’s determined a pesticide application is needed, identify the least toxic product that will accomplish your goals. For any applications being made to Cannabis, be sure to check with your state lead agency to confirm that the pesticide product you intend to use is allowed for use on Cannabis. States must review each product to determine if it meets state criteria or rules that would allow the product to be legally used.
Making a Pesticide Application
5. Remember to read the label before applying any pesticide because the label is the law. The product label provides important information that the applicator and those who may encounter residues must know, such as:
- Ingredients: Active ingredient(s) in the product.
- Signal word: The signal word will be either: Caution, Warning, Danger or Danger with skull and crossbones. These indicate the product's toxicity level.
- First aid: Information on what to do if the product gets in your eyes, mouth or lungs, or on your skin.
- Precautionary statements: Listed hazards that exist to humans, domestic animals and the environment if exposed to the product. This section provides specific restrictions.
- Personal protective equipment (PPE): Safety equipment that must be worn when mixing, loading and applying the product.
- Directions for use: How and where the product can be applied, at what rates it can be mixed and other restrictions.
- Storage and disposal instructions.
Before You Pull the Trigger
6. Be sure you’ve met all federal Worker Protection Standards (WPS). Cannabis is an agricultural crop; therefore, the WPS applies to certain applications.
7. Choose product formulations and application methods least likely to lead to exposure.
8. Mix pesticides in well-ventilated areas.
9. Mix only what is needed to avoid storing or disposing of excess pesticides.
10. Never dispose of pesticides down the drain.
11. Be prepared for spills. Have paper towels, kitty litter, garbage bags and non-absorbent gloves on hand and easily accessible.
12. Read the first-aid instructions on the label. Know the warning signs of a pesticide exposure and have the number for the Poison Control Center (800-222-1222) available.
13. Make sure the area is well ventilated when spraying indoors. This is especially important in cultivation facilities that have been converted from warehouses (which might not have been equipped with ventilation). Having air scrubbers or portable air movers can help ensure areas are well ventilated.
14. Use the correct mixture rates intended for use on agricultural commodities. Do not use the “non-crop” rates listed on the pesticide label.
15. Always wash your hands after using pesticides, especially before smoking or eating.
John Scott is the pesticide section chief for the Colorado Department of Agriculture.
Editor's Note: This article was previously published in the July 2018 issue of Cannabis Business Times.
Southwestern Ontario is home to some of North America’s largest commercial produce greenhouses.
But Canada’s greenhouse heartland has gained attention lately for a different kind of grower. Eve & Co., a cannabis cultivator in Strathroy, is making waves with more than its 1,000,000-square-foot greenhouse and cannabis crop. Boldly women-centric—from its leadership to its marketing to its product lines—it’s welcoming everyone to come along for the ride.
When founder and CEO Melinda Rombouts applied to become one of Canada’s first medical cannabis Licensed Producers (LPs) in 2013, her decision was practical. Rombouts operated a wholesale greenhouse that grew seasonal flowers, such as bedding plants and hanging baskets, for U.S. and Canadian markets. But the seasonal flower business had grown increasingly unpredictable and competitive. “I had this greenhouse, and I knew that we had to do something different,” she recalls.
When Canada’s Marihuana for Medical Purposes Regulations (MMPR) program launched, Rombouts thought the new crop might keep her greenhouse business alive. The process took more than two and a half years, but Canada awarded license No. 34 to Natural MedCo Ltd., now a wholly owned subsidiary of Eve & Co. The company promotes itself as “Canada’s first female-founded licensed producer of medical marijuana.”
Many applicants struggled with Health Canada’s requirement for a qualified Quality Assurance (QA) person. But Rombouts’ greenhouse had been growing algae, such as spirulina and chlorella, for the nutraceutical market. With that background, augmented by a degree in plant biology, Rombouts qualified as Natural MedCo’s QA person.
“It was kind of a perfect storm between having the greenhouse, knowing that we needed to do something different, and being able to act as the quality assurance person,” she recalls. Rombouts, who was also the company’s original head grower, also wrote the standard operating procedures (SOPs).
At the time, Rombouts says the 120,000-square-foot greenhouse made Natural MedCo Canada’s largest LP—though other companies soon had massive projects underway. A retrofit ensued to accommodate the future medical cannabis crop—particularly in security and processing areas—with most of the work done in-house by staff. Natural MedCo blossomed with the market. A new 100,000-square-foot addition soon followed.
Rombouts says the most difficult thing in the new industry was simply the growing pains—for LPs and Health Canada. “Canada was only the second [country] to have gone with a national program, right after Uruguay. So, there were a lot of growing pains, and we were all learning together,” she recalls. Though Health Canada faced criticism, Rombouts gives credit as well: “The great thing that they did do was they ensured that we had a standard that was respected worldwide.”
A Woman’s Perspective
Look at Eve & Co.’s employee roster, and women comprise a majority. Given the company’s branding, it’s easy to assume Rombouts planned a women-centric company from the start. But she says that’s not the case. As a woman founder, she attracted a higher percentage of women applicants and naturally hired more women as a result. “We get a lot more female applicants just because they’re interested in working for a women-led company,” she says.
Both women and men hold key Eve & Co. positions, but the contrast is evident. “In Canada, the cannabis companies have about 65% male employees. We’re almost the exact opposite with 65% female employees,” Rombouts says. Women account for roughly 70% of department heads and 50% of management. A robust policy of promoting from within perpetuates those ratios.
When Canada legalized adult-use cannabis in 2018, Eve & Co. launched as an unapologetically women-centric brand. Despite the misgivings of some advisers who suggested toning down the female focus, Rombouts and team held their ground. Eve & Co.’s early marketing research revealed an untapped market in women consumers. Rombouts says most cannabis companies were focused on 25- to 35-year-old men. But while men represented more than 50% of cannabis consumers, research showed almost 60% of cannabis buyers were women. “It’s interesting that that demographic could be ignored,” Rombouts says.
With a limited marketing budget and a desire to soar, the women-led team believed they were uniquely qualified to address what they saw as the cannabis industry’s oversight, particularly regarding women who may be less experienced and comfortable with cannabis in the 35+ age group, where Rombouts says they once saw themselves. “We decided we were going to go after women like us and make sure they got from cannabis what they were looking for,” she says.
When Eve & Co. went public on the TSX Venture Exchange in 2018, Rombouts says the eye-opening experience reinforced her track. She made the rounds to pitch investment bankers in Toronto, New York and Vancouver. Out of the 200 to 300 bankers she saw in the financial roadshows, only four were women. “It was very interesting as a female CEO to always walk into a room full of men,” she says.
Though she didn’t fit the norm for the CEO of a public company, that didn’t stop her. “I guess the one thing they noted about me is that I seem genuine,” she says. “This was my company. I was building it, and my heart and soul was in it.” Eve & Co. also listed on the American OTC (over-the-counter) exchange in 2019.
Cultivation Expansion and Automation
Going public allowed Eve & Co. to build an 18-acre, state-of-the-art greenhouse expansion designed specifically for cannabis cultivation. The 780,000-square-foot greenhouse pushed the company’s total footprint over one million square feet. February 2020 saw the first plants moved into place.
The custom-designed facility emphasizes attributes to increase air circulation, control humidity, and optimize the company’s focus on sun-grown plants. With airflow in mind, Rombouts insisted on full butterfly roofs, which open like giant butterfly-wing vents. The diffused glass used in the new greenhouse expansion increases uniformity of light and temperature within.
Director of Cultivation Tom Jobson joined the company in early 2018. Like many Rombouts hires, Jobson came from an agricultural background. While many cannabis companies focused on cannabis growers who had grown in small-scale, indoor grows, Rombouts looked to growers with large-scale greenhouse or ag experience who were familiar with growing at scale. Jobson started as an IPM (integrated pest management) scout and worked his way up.
For all practical purposes, like many commercial-scale greenhouses, Eve & Co.’s greenhouse is one large production space. The older greenhouses, now being retrofitted with new systems, house a clone room and two vegetative rooms.
The 18-acre expansion has north and south “flower rooms” that run 11 acres and 7 acres, respectively, with a combined capacity for 272,000 flowering plants at a time. “We do have it divided into 10 sections, but it is all open,” Jobson says. The emphasis is on natural sunlight, but that is supplemented by high-pressure sodium (HPS) lighting during cloudy weather and short winter days on a limited, as-needed basis.
There’s unmistakable appreciation in Jobson’s voice as he talks about the fully automated facility. Beyond the butterfly venting, additional features include a boiler system that drives environmental controls. A water reclamation system reclaims, treats, and recirculates excess water from a four-zone fertigation system. Carbon dioxide captured from the boilers enriches plants with CO2.
Data is captured and analyzed at every turn. “It’s really allowed us to dial in the nutrients that we’re supplying to the plant. It’s really optimized plant health and really increasing cannabinoids and terpenes and all the things that our customers are looking for,” Jobson says. A high-pressure liquid chromatography (HPLC) machine allows in-house testing to ensure harvests hit optimal levels.
Twelve to 15 strains stay in rotation at a time, with 25 available in the company’s genetic bank. Jobson is always interested in new genetics: “The biggest thing is the big three: yields, cannabinoids and terpene profile.”
“With everything from start to finish, we’re trying to always be proactive with the plants and never reactive,” Jobson says. A strict IPM program of biologicals and spraying focuses on prevention. “From the way we’ve minimalized any problems with our plants, you know it has paid off,” he says.
As the leader of the cultivation team, Jobson prioritizes strict production planning, scheduling and communication. Every strain in production operates on a different schedule, driven by sales and sales channel. Communication within the cultivation team and between the team and other departments is critical to production plans. “We’re making sure we’re not just growing cannabis to grow cannabis, that we have a detailed plan in place and make sure we’re sticking to that,” he says.
Product Lines and Personas
Canada’s first wave of recreational products, often called Cannabis 1.0, was limited to combustible cannabis, oils, plants and seeds. Each province determined what it would allow. Eve & Co. 1.0 offerings include dried flower, pre-roll five-packs, and clones for home growers. Only the province of Newfoundland and Labrador allows clone shipments to date, but the team expects provincial distribution will eventually expand. Careful considerations went into shipping procedures. Eve & Co. designed and created special shipping containers that include a small light to maintain the clone’s vegetative state and ensure its safekeeping during travel.
Canada’s second phase of adult-use cannabis opened the door in 2019 for edibles, beverages and similar products. In November 2020, Eve & Co. launched its first Cannabis 2.0 product and was first to market with what the team says has been a huge hit: bath bombs.
Kelsey Jobson, the company’s director of product management, describes the bombs as a perfect match for Eve & Co. customers. “We were looking for products that specifically spoke to women who maybe aren’t necessarily as experienced with cannabis, who could really benefit from all of the wonderful properties of the plant,” she says.
The single-use bath bombs pack 200 mg of cannabinoids. Kelsey Jobson says most competing products now on the market offer half that. Eve & Co.’s bath bomb SKUs include:
- The Boss – a balanced, citrusy bomb with 100 mg THC and 100 mg CBD.
- The Dreamer – a top-selling lavender and chamomile bomb, also with a 1:1 ratio.
- The Lover – a THC-dominant, cinnamon-peppermint, pre-Valentine’s release that promises to “tingle all of your senses.”
- The Optimist – a CBD-only option set to join the trio this spring.
The personas reflected in the names continue throughout Eve & Co.’s marketing, designed to help inexperienced consumers know what to expect across all product lines. “We converted [strain names] into what we felt were really strong archetypes that represented the desired effect of that specific product,” Kelsey Jobson says. Marketing and product information always includes strain names, as well, for consumers who prefer to identify with those monikers. For example, if someone’s searching for Delahaze on the Ontario Cannabis Store (OCS) website, Eve and Co.’s The Boss branded flower will come up in the results.
Eve & Co.’s fan base transcends women. “The women who get to know and love our brands go into the store. And if they’re thinking of something for their spouse, their partner, their friend, they’re aware of our brand and the quality of it. So a lot of our customers that we hear from are not women,” Kelsey Jobson says.
Eve & Co. products and partnerships must meet certain criteria. “We want to make sure that they’re female-focused. We want to enhance the lives of women through the use of cannabis … We want it to be self-care and not have that guilt or stigma attached to it, because we find that that’s a huge barrier, especially for women,” she says.
Upcoming 2.0 products include a cannabis-infused, non-alcoholic wine substitute developed with Ontario vineyard and winery Colio Estate Wines, maker of Girls’ Night Out Wines. The company is also partnering with U.S.-based Dr. Kerklaan Therapeutics for Canadian “extra-strength” THC-enhanced versions of Kerklaan’s topical formulations.
Inter-Provincial to International Markets
Logistics of the Canadian market are an exercise in diversity. “It’s challenging because every province runs a little bit differently,” Rombouts says. Everything wholesale in Ontario runs through the state-owned OCS, while Newfoundland and Labrador’s privately owned stores operate very differently. That regulatory diversity is proving valuable as Eve & Co. moves beyond Canadian borders.
In early 2020, the company received its European Union (EU) Certificate of Good Manufacturing Practice (GMP) Compliance through Natural MedCo. Out of approximately 600 Canadian LPs, Rombouts estimates only eight or nine have EU GMP certification. The company sent both scientific and commercial shipments to Germany last year.
“We basically have two aspects of our company,” Rombouts explains. On one hand is the Cannabis 2.0 women-centric line. The other side is the flower- and tincture-focused EU market made possible by the EU GMP certification. As a result, the company has a full government affairs, regulatory affairs and quality assurance team devoted to EU shipments.
“It’s a huge opportunity, where Canada is an oversupplied market,” Rombouts says. “So, it really opens a world for us.” And the bath bombs and topicals will be ready as EU markets open to broader lines.
“People have recognized us in countries like Germany as being a female-focused brand. Some Israel companies are very interested in a female-focused brand as well. So, I think that it’s a unique opportunity for us to bring a unique product to the foreign markets. That’s where it becomes really exciting,” she says. Though not part of the EU, Rombouts says Israel requires EU GMP certification or equivalent—and it imports about twice as much cannabis as Germany. Consumer demand in both countries seems to focus on high-THC products now, Tom Jobson adds.
Looking back on the perfect storm that swept her into the cannabis industry, Rombouts becomes reflective. “It wasn’t apparent to everybody how big this was going to become in Canada. They really weren’t sure of how the program was going to go,” she says. “At the time, there was only medical. There wasn’t recreational, so that would have been limited opportunity. But the further we went along, the more we realized that it was a much bigger opportunity than anybody really recognized.” And the perfect storm that is Eve & Co. continues to grow, abroad and at home.
Jolene Hansen is a Minnesota-based freelance writer specializing in the cannabis, hemp and horticulture industries. Reach her at email@example.com.
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