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Part of cannabis and investing

Nicholas Reichenbach, CEO and founder of Flow Water Inc., has run into some difficulties while trying to boost the number of staff at his three-year-old spring water company. The Toronto-based company has doubled its work force to 50 in the past year, but as with many companies in the food and beverage industry, he’s found himself in a fierce battle for talent with the nascent legal cannabis sector.

“One of our largest challenges is talent acquisition,” he said. “There have been numerous occasions where, specifically in marketing and sales, we have lost candidates to marijuana companies.”

As Ottawa prepares to make recreational marijuana legal in October, cannabis companies with deep pockets are on the hunt for talent. For many, the obvious place to go to poach talent is the food and beverage sector.

Examples of the cannabis sector poaching talent from the food and beverage space aren’t hard to find. Vancouver-based Harvest One Cannabis Inc. named Grant Froese as its chief executive officer on July 4. Mr. Froese took the job after a 38-year career with Loblaw Cos. Ltd., where he last served as chief operating officer. Kelowna’s GreenTec Holdings Ltd. recently wooed two high-level employees from Kelowna food and beverage manufacturer Sun-Rype Products Ltd. – former president and chief executive officer David Lynn and Stefan Sarachie, who was Sun-Rype’s food safety and regulatory affairs specialist.

Jay Wilgar, CEO of Up Cannabis Inc. in Oakville, Ont., says people who have worked in the food and beverage sectors are a natural fit for the recreational cannabis space. “When you think about food and beverage, it’s highly regulated, dealing with the government, dealing with taxation and distribution – all the things we have to deal with,” Mr. Wilgar said.

He says Up Cannabis expects to have close to 200 employees by the end of 2019. The company currently has about 80 staff members.

Canopy Growth Corp., one of Canada’s largest cannabis companies with about 1,000 employees, also views the food and beverage sectors as fertile ground to find staff, particularly at the executive level. “There isn’t a deep pool of executive talent that comes from the cannabis industry because it’s so new,” says Jordan Sinclair, vice-president of communications for Canopy Growth. “We look to industries like the beer industry, food production or the pharmaceutical industry because they all have complementary skills sets that you can apply to cannabis in various ways.”

Based in Smith Falls, Ont., Canopy Growth’s leadership team includes beer industry veteran Dave Bigioni. Before he took on the role as the company’s chief marketing officer in August, 2017, Mr. Bigioni was vice-president of marketing and sales for Molson Coors Brewing Co.’s Canadian operations.

“Dave understands regulations that have to do with products that are meant to be marketed to consenting adults rather than the general public,” Mr. Sinclair said. “Understanding those laws, because it’s the most similar framework you can find, provides a competitive advantage.”

Despite the interest from cannabis companies, Miriam Groom, vice-president of Montreal staffing agency Groom & Associates, says some job seekers are apprehensive about joining the industry. That’s because there is still a negative stigma attached to it because it was an illegal drug for so long.

Ms. Groom says for companies in search of candidates to round out their C-Suite, it can be tough to get them to move to the cannabis sector because they are already enjoying high salaries and benefits at their current employers. “Usually [cannabis companies] will have to pay an extra premium over the salary to compensate somebody,” Ms. Groom said.

Those premiums can take the form of stock options or other forms of equity. But it’s not just generous compensation packages that are attracting people to the sector.

Alison McMahon, CEO of the human resources consultancy Cannabis at Work, says the chance to be part of a new and exciting industry is also a draw for people in the food and beverage sectors. “They just find that the [alcohol] industry to be at a point where it is a bit stagnant,” Ms. McMahon said.

As cannabis companies prepare for legalization, she thinks the food and beverage sector will be under even more stress to retain and attract talent. The legalization of edible and drinkable cannabis products, expected in 2019, will likely accelerate the trend.

Ms. McMahon says while losing key talent may not be fatal for food and beverage companies, it certainly will put pressure on them. Losing a top-earning salesperson can leave a sizable hole in a company, particularly for small and medium-sized businesses. Sometimes, losing key staff in a role that doesn’t generate revenue can be as big a blow. “We bring a lot of people in quality assurance roles over from the food production sector. You could have someone who has a lot of institutional knowledge, a lot of relationships in the organization and that is walking out the door,” she says.