Canada's New Cannabis Era

By Dan Skye

Well, this is a first: I take off my shoes and replace them with sterilized sandals. I don a lab coat, put a hairnet on -- and then a hardhat over that. I chuckle to myself, just loud enough for others to hear: "Wow, I guess medical marijuana really is dangerous."

Darryl Hudson laughs. He's chief research officer and quality assurance manager for the Peace Naturals Project, one of Canada's first government-licensed medical marijuana producers. "Well, it's medicine," he replies. "We want it to be as contaminant-free as possible."

But hardhats?

"We wouldn't want a light falling on your head," Darryl explains. I've been in hundreds of growrooms in my life, but this possibility never occurred to me before.

Welcome to Canada's medical marijuana program, Version 2.0, in which licensed producers are required to meet the strict security and regulatory standards set by Health Canada. Hence the hardhats -- they're not required, but they reflect Peace Naturals' desire to be hyper-compliant.

Back in 2001, Health Canada, the nation's federal health-care agency, was put in charge of the country's new medical marijuana program -- and it failed mightily. The quality of the cannabis that the government produced was poor; 13% of users purchased their medicine from Health Canada, which ended up covering only 25% of the government's costs. Compassion clubs attempting to serve as additional providers -- albeit with no legislation to protect them -- operated in a "gray area" and were subject to police raids. Meanwhile, Health Canada's bumbling bureaucracy caused a backlog of license applications from patients and growers to mount.

As pot dealers, the Canadian government's performance was laughable. (But also somewhat sobering in light of the United States' current mishandling of its own national health care system. Should we expect a similar legacy of ineptitude in the implementation of Obamacare?) Thankfully, Health Canada got out of the business and has been orchestrating a transition. As of March 31, according to the new "Marihuana for Medical Purposes" protocol, patients will be directed to acquire their medicine from 51 licensed Health Canada producers.

The old system enabled patients to grow their own or buy from licensed, small-scale home growers as well as the government. But government officials stated that the system--which they themselves created -- was "open to abuse." They have now characterized home grow ops as public-safety and fire hazards. To the dismay of many, individual permits to grow at home will become a thing of the past.

In a press release issued last July, Minister of the Environment Leona Aglukkaq provided the rationale: "While the courts have said that there must be reasonable access to a legal source of marijuana for medical purposes, we believe that this must be done in a controlled fashion in order to protect public safety."

In the future, we trust that marijuana will cease to be treated as if it's plutonium or toxic waste. That being said, everyone wants assurance that whatever they ingest -- food, medicine or medical cannabis -- has been produced safely and processed in a clean, healthy environment.

Enter Peace Naturals, situated in the rolling farmland of Ontario's Simcoe County. The company consists of a team of five professionals dedicated to carving out their niche in Canada's new medical cannabis industry -- quite literally.

The primary cultivation and research facility of Peace Naturals is a rustic barn, perched pastorally on a low hillock. How- ever, it's also surrounded by a tall fence with razor wire and outfitted with a high-tech security system, because comprehensive security measures -- including video monitoring of gardens -- are requirements of the new program.

The barn itself is a miracle of innovation. The "carving-out" process necessitated converting what used to be a home for animals (and all that entails) into a lab-worthy garden site. The barn itself is the outer "shell." It's not sealed; old barns need to breathe. But inside, a maze of growrooms on different levels has been erected -- even in the former hayloft. The walls of the growrooms are made of interlocking refrigeration panels, which are pre-engineered to have a specific strength and rigidity. The airtight panels provide insulation and reflection -- plus they're easy to hose down after a harvest.

But the question remains: Why a barn? In an age of prefab farm buildings, why would anyone undertake the construction of a high-tech grow facility in an old barn, an endeavor virtually equal to Hercules cleaning out the Augean stables?

As it happens, the co-founders of Peace Naturals were basically ahead of the curve. The barn's makeover was completed in 2011. Back then, it wasn't legally advisable to set up a warehouse garden. But transforming a barn into a discreet, controlled grow facility -- with the plants designated for legal patients -- was a reasonable risk. The fact is, by the time the Canadian government announced its decision to overhaul its medical marijuana program, the Peace Naturals paradigm was pretty much established.

Ken Langford, one of Canada's first licensed growers, has been a medical marijuana provider for more than a decade. He holds the dual title of co-founder and chief innovation officer. Mark Gobuty, Peace Naturals' other co-founder and its CEO, says Ken always knew that Health Canada would eventually have to cede control of the country's legal cannabis production to genuine professionals. "When I met him," Mark recalls, "he'd say stuff like this, and I'd look at him like, 'You're just high, right?'"

But Ken has always had a unique perspective. "I totally get that some of the social perspective on this new program is that Big Pharma has jumped in -- the big, bad corporations are taking over, and Darth Vader is here," he says. "But what about the young Jedi out there fighting the good fight? Why not be the one to step up, focusing on the patient and providing stable medicine?"

And Ken is very serious about that "providing stable medicine" part: "The worst thing for my patients was having them say to me, 'Why did you change the strain? I liked that strain!' But I hadn't changed the strain -- I'd changed the food. I'd changed the way I fed the medicine, and that changed its profile and changed the experience of the medicine. I found techniques that were best for keeping the overall health of the plant and the overall production of the plant consistent. My goal was to maintain standards -- meaning no mold, no pests, no contaminants. I just don't understand doing it any other way, because I do enjoy the medicine myself and I'm passionate about what it can do for people. I don't understand dropping it on the floor and saying, 'Oh, we'll just dust that off. Here you go.'"

From the moment he met Mark, a successful entrepreneur in the "functional foods" industry (i.e., those related to health promotion or disease prevention), Ken continued to beat the drum, envisioning a future partnership.

After his mother contracted a blood disease, Mark was appalled at the volume of prescription drugs he found in her medicine cabinet. The impetus for converting the barn into a medical garden was at hand. He and Ken went to work, complying with the old regulations and allowing total transparency for local law enforcement. When Health Canada announced a licensing program for medical growers, the Peace Naturals Project was well underway.

Ken is the resident grow guru, and he and Darryl Hudson manage the garden operations. Darryl holds a Ph.D. in molecular biology and genetics and is consumed with the plant's medicinal possibilities.

"We need to really understand what the ratios of THC to CBD are doing," he says. "There are some illnesses where THC is what works, but not CBD. So CBD is not going to be good for everyone -- but THC isn't going to be good for everyone, either. A 1-to-1 ratio may be good for some people, but we're talking about standardizing: Can we have a 14-to-2? Can we have a 21-to-1? Can we standardize different ratios in either direction and create a medicine that we know will work for appetite or for mood every time, based on the terpene profiles as well as the cannabinoid ratios?"

The company relies principally upon hydroponics, and it's focused on the transition to a commercial production system according to Henry Ford's philosophy: Grow your business by offering better quality -- and get the product right before you begin manufacturing.

"We closely manage our inventory from clones to cutting to getting them into veg," Darryl says. "We've set up different zones in our veg room that the plants flow through, getting different food and different treatments as they go. Two of the flowering rooms are set up to do one individual strain. They're basically on large reservoir feeds so that we can feed the same nutrients to the entire room. In other rooms, we use individual trough systems so that we can experiment with genetics that have different characteristics.

"We experiment constantly with different genetics and different feed systems. I know that you can actually fluctuate how the genes are expressed and how the plant handles different nutrient balances. We watch what nutrients add stress or take stress away. Some stresses actually increase the production of defense-type molecules like THC. My role here is to figure all this stuff out. We look at how to potentially change gene expression in the plant and get more or less nitrogen or more or less phosphorous. We actually give them nutrient solutions to alter their gene expression, then check the combination of nutrients and genetics. We see very interesting results, for sure!"

The grow team is also focused on producing zero-THC strains, since CBD delivers many of the medicinal properties that patients seek. Those unfamiliar with the marijuana "high" want to be able to function clear-headed, but still take advantage of the plant's painkilling properties.

Maximizing production isn't the goal of Peace Naturals; rather, it's standardization of the crop. Instead of jamming plants into a room -- which prevents thorough manipulation or inspection for pests and other problems -- the plants are spaced apart to permit full access. As a result, they bend in different directions. Rather than one giant cola and many immature buds further down -- which may have drastic differences in their cannabinoid and terpene content based on how finished the product essentially is -- the plants get maximum exposure so that all of the buds across the stem finish more evenly, which results in a very consistent profile.

As Darryl explains: "We want to make correlations between the profile of the finished product and how it's making people feel -- which leads us back to our breeding program that allows us to select the genetics that give us those profiles."

Naturally, the most critical component of the Peace Naturals operation is its outreach to the public. Jeff Jacobson, vice president for corporate operations, handles everything outside of the production area, including the development of marketing and public-relations strategies. He's also working alongside Jennifer Caldwell to develop a call center. Although the Peace Naturals call center isn't mandated by the government, "for us, it's an integral part of our business," Jeff says. "Providing the best medicine possible is foremost, but being able to provide the right experience for clients is extremely important for us.

"The call center is how we intake new clients. There are plenty of people who've been growing medicinally for years -- who are masters with plants." But the challenge that confronts every new business, he adds, "is the face of their company and customer service. There's a big level of education that goes into what we're doing -- not just for potential clients, but for physicians and health-care practitioners as well.

We want people to understand the new program and how it affects access to medicinal cannabis."

Peace Naturals has gone so far as to hire a PR agency to help it work on a strategy for that. As for the call center, it's housed in the company's headquarters, a modern farmhouse adjacent to the barn. Caldwell, a relative newcomer to the medical cannabis industry, oversees the center, a spacious room with twelve cubicles for operators. Who's on the phone when a patient calls is her first and most basic concern.

"We don't want to be just a number to call and place an order, then we take their money and that's the end of it," Jen says. "We want relationships with our clients. We want to understand their lifestyle, their diet, their illness -- to be concerned with their well-being in its entirety."

She expects call-center employees to be on the phone with clients for as long as 20 to 30 minutes. "The people calling us are going to be sick," she says. "They want to talk to somebody. They want somebody to listen. They want ideas to improve their health."

There's no clearer sign that a new era of cannabis has dawned in Canada than the fact that Peace Naturals held two job fairs in the surrounding communities and received an overwhelming response. "I think this is an idea whose time has really come," Jen says. "People are ready for it and willing to embrace it. They're excited about a new industry here, a new growth opportunity where they can get in on the ground floor and grow with the company."

But Peace Naturals' plans hardly end there. In time, Mark Gobuty expects to employ more than 150 workers. At present, the company's estimated client base is 1,000 people, with 1,500 more projected to be added with every new greenhouse that it builds. Five more greenhouses are currently being planned.

"This is a rural property," Mark says. "We're on a farm. We have very low taxes and a free water source -- our water table is beautiful here. We have a very good energy rate. We have a five-phase permaculture project in place that will be developed over the next two years. When we erect a greenhouse, we'll plant 100 new trees. As we put in new structures -- staff quarters and expansions to the office space -- we'll offset that with orchards, wetlands and number of organic gardens. This is agriculture, and we have an environmental commitment to our community."

Mark is also thinking about the international marketplace. "I see a global play here," he says. "I'm in the functional, healthy food business, and there are a lot of great Canadian products that I've exported as organics and gotten a premium for. I sell them for more around the world than I do domestically. I'm absolutely certain that that's going to be a factor with cannabis."

In Canada, he adds, "we're known for our clean air and fresh water. The next generation that will be consuming cannabis as a medicine -- or buying it for their parents who are ill, God forbid! -- are going to want the best of the best, the cleanest and the healthiest. And I'm certain that we represent that and will produce it.