In a legal market awash with low-quality weed, companies are looking at ways to get high-quality legacy market genetics into the legal recreational system.
One approach, being piloted by Robes Inc., involves acquiring rights to strains developed by legacy MMAR and ACMPR home growers, bringing the genetics into the legal rec market through new license declarations, and then branding the products using their grey market provenance.
“We’re the nexus between them and the legal market,” said Max Zavet, CEO of Robes and former president of Emblem Corp.
The business model is premised on a change in how companies can bring genetics into the legal system. In the MMPR and commercial ACMPR systems, the gene pool was largely limited to strains that a small group of LPs moved from the MMAR system into the MMPR system in 2014 and 2015.
The Cannabis Act, which came into effect in October, 2018, opened up the process of acquiring new genetics. LPs are now allowed to make a one-time declaration of illicit genetics when they acquire a new nursery, cultivation or micro-cultivation licence, after which the strains are considered to be legal.
This has opened up a new business model. Robes – which is a brandhouse more than a cannabis producer at this point – is building its first product line around Afghani Bullrider, a strain popularized by Vancouver grower Jeff Tek and championed by Drake’s producer Noah Shebib, who is also known as 40.
Robes secured the right to commercialize Mr. Tek’s Afghani Bullrider strain and to use the BLLRDR brand, which is owned by Mr. Tek and Mr. Shebib. Because it does not have its own cultivation licence, Robes has partnered with the licensed producer MJardin Group, Inc. to actually grow the product.
Think of it as a white-label “plus” approach: Robes, in partnership with Mr. Tek and Mr. Shebib, controls the BLLRDR brand and marketing efforts – similar to how Ace Valley’s white-label model works. The difference is that Robes will also supply the starter genetics, via Mr. Tek’s MMAR operation, that will be used to propagate a dedicated section of MJardin’s growing facility.
Afghani Bullrider, and other strains in Robe’s portfolio, will enter the legal rec market when MJardin gets a new facility licensed, Mr. Zavet said. He expects this to happen early in the new year and expects BLLRDR products to be on shelves in Q2 2020.
Sourcing genetics from MMAR and ACMPR growers has not been easy, Mr. Zavet said. Many growers are not interested in participating in the legal rec market. Of those who are interested, most just want lump-sum cash payments, he said, although some, like Mr. Tek, have become partners and Robes shareholders.
Mr. Zavet, a lawyer by training, acknowledges that there are intellectual property challenges around his business model. It is essentially impossible to make intellectual property claims on strains.
“Until people are genetically modifying genetics, there's not going to be a lot of IP surrounding seeds," he said.
That makes spending hundreds of thousands of dollars for the right to use strains a risky proposition; other producers could find their own versions of “Afghani Bullrider” and transition them into the market.
“I kind of compare it to buying a luxury purse that’s a knock-off... That’s sort of where we have to tread and make the case that these other strains might be available, and somebody may grow them, but we’d be the first to commercialize them. I think we’d have an advantage and I think consumers would understand that we’re the source, or the true iteration or those genetics," he said.
Whatever the IP claims, if Robes can get the product to market, it could have a powerful marketing platform.
“People that are going into stores are generally asking for strains,” Mr. Zavet said. “They’re not asking for Canopy or Tweed or Aurora, they want particular strains they’ve heard about or have seen on social media or what not. So what we intend to do, and what we are doing with Bullrider specifically and with some other strains, is telling the story behind the breeders, the growers, the legacy that consumers can connect with. And with limited of restrictive marketing regime, I think the best way to communicate is to tell those real and true stories about people who are behind the bud.”