Alison Gordon lives in a nice home in Toronto’s Forest Hill neighbourhood with her two teenage sons. I first met her in late August at the Good:Farm, a 100-acre organic cannabis farm that she acquired when purchasing Good & Green, a company led by Jeannette VanderMarel. Jeannette, Alison and I smoked 48North’s Power Plant in Jeannette’s palatial backyard just outside Hamilton, and the two women shared their plans for the brand: “The outdoor grow is a huge opportunity for us because it’s where you can make margin,” VanderMarel said. “You’re never going to grow for much cheaper than we are.”
On Sept. 10, 48North announced that Ms. VanderMarel was leaving the company for personal reasons.
So, I went to Ms. Gordon’s house – and we smoked again.
Alison Gordon: Grandaddy Purple is an indica – and we’ve sold out of these pre-rolls in a lot of different places. It has a good amount of THC.
Ben Kaplan: It’s good to get mellow in what has to be a crazy time. What happened?
AG: Jeannette is still a major shareholder of the company. She’s a board member and a big part of what we’ve been able to build – and the truth of the matter is this is something companies go through; they ebb and flow and they’re organic, living things, they don’t stay static. Everything has its moment.
BK: You don’t regret making her co-CEO?
BK: What did you learn from the experience?
AG: A ton. Jeannette’s a cultivator and has been a trailblazer in organic cannabis, and having her be there on the ground was what enabled us to do what we did on the farm.
BK: Would you ever co-CEO again?
AG: Ummmmmmmmmm. [Gordon inhales.]
BK: Yeah, give it a think.
AG: We were at a critical juncture of the company and the farm and it [being co-CEOs] helped, but as fast-paced as things in cannabis move, you need to make decisions quickly. It’s obviously easier for people when decision making rests with a single person.
BK: Did you fire Jeannette?
AG: No. I can’t do that. The CEOs are hired by the board and we report to the board who report to the shareholders. This was Jeannette’s decision. This was from Jeannette.
BK: So what now?
AG: Nothing stops. Everything just moves forward. Business as usual.
BK: You won’t miss a beat.
AG: You can’t miss a beat. The market doesn’t miss a beat.
BK: Talk about the market and where it’s going. You just spent $2-million acquiring Quill, a U.S.-based vape manufacturer.
AG: It’s one of the first acquisitions like this on the TSXV versus the CSE [Canadian Securities Exchange]. The difference between the TSX and the TSXV [TSX Venture Exchange, where 48North trades] is that the Toronto Stock Exchange doesn’t allow assets in the U.S. that touch the cannabis plant. Canopy is on the TSX and they did a deal in the U.S. with Acreage, but they don’t actually take ownership of the company until it becomes federally legal [in the United States]. The CSE does allow for people to have U.S. assets. This was the first deal of its kind [on the TSXV] because Quill sells hardware, they don’t actually fill the pens themselves.
BK: So market share in the United States is still a priority for Canadian cannabis brands?
AG: The U.S. is very exciting to me. I’ve always felt like we needed to be in both markets, but the U.S. market – if Canada is going to be an $8-billion market, the U.S. is something like a $200-billion market, so there’s that.
BK: These pre-roll packages are pretty cool. For $17, three joints. And your joints aren’t big enough to tranquilize a rhinoceros.
AG: Some people do half grams or grams in their pre-rolls, but even though I smoke regularly, I’m a lightweight. I light the joint and I put it out, and – like I’m doing now – I save the roach. So we did 0.3 of a gram. We’re not smoking big cones. And it’s like, who wants a stinky roach?
BK: The smoke is mellow, it feels relaxing. But I do appreciate having this wine to help me manage my high.
AG: I’ve never been a big drinker. I’m not judging you, but what do you need it for?
BK: It brings down the pot buzz.
AG: And that’s what you like. For me, I’m happy to be up.
BK: Yeah, but you smoke indicas because you’re already up.
AG: Exactly. And it’s really nice.
BK: Can the CBD market still grow?
AG: The CBD market is huge.
BK: You don’t think it’s a little bit snake oil?
AG: Because CBD is so hot? Absolutely not.
BK: Are we’re beginning to see the demise of the vape pens with all the issues in the U.S.?
AG: What’s happening in the U.S. is that … people add a lot of chemicals to [vape products]. What you see now in the world of vapes is about what they put into that oil. The mixing agents.
BK: Quill doesn’t use mixing agents?
AG: Quill has figured out how to create 100 per cent hemp-derived CBD pens where there’s nothing in the pen but hemp. It’s cannabis and it’s still less than .3 per cent THC.
BK: Last time we met you said you were one of the few cannabis brands that are profitable.
AG: We’re EBITDA positive, that’s different than cash in the bank, but even 48North has to spend money. The difference is we’re not running twelve facilities with $50-million-a-month in overhead trying to catch up to a bazillion-dollar market cap.
BK: Making deals for the sake of making them to send out a press release in the hopes of boosting your stock price.
AG: We’ve held strong through this downward spiral so oddly enough I feel proud of that. I always thought, ‘If you’re doing crazy deals, where’s that going to lead you?’
AG: That’s 100 per cent how you get CannTrust.
BK: Have you ever grown weed in an unlicensed room?
AG: Absolutely not. All of us that run licensed companies can understand the frustration of waiting on Health Canada when you’re sitting there looking at identical rooms and counting dollars going out the door because nothing is going on in them, but you can’t. You’re breaking the law.
BK: People feel like, well, it’s weed stocks. Everybody breaks the law.
Compliance is everything. The CannTrust story was shocking to me and the level of it with fake walls is sad because part of what’s going on in the markets is a lack of trust and the fact that people say, ‘Everybody is doing it.’ No! Why would you risk something so valuable?
AG: No! Maybe I’m naive, but compliance is everything. The CannTrust story was shocking to me and the level of it with fake walls is sad because part of what’s going on in the markets is a lack of trust and the fact that people say, ‘Everybody is doing it.’ No! Why would you risk something so valuable?
BK: Maybe it’s a guy thing. Maybe it’s greed.
AG: Do you think being so brazen is male? I don’t know, it’s interesting.
BK: Do you think women make more honest CEOs than men?
AG: I think women are more comfortable with collaboration.
BK: Are they more honest?
AG: Women are perceived to be more honest, but does that mean they are? I think you could find women doing any of these things.
BK: You being a female CEO certainly differentiates 48North.
AG: Which is good because when sixty things launched on the same day, ‘Oh, that’s the woman.’ Women CEOs in cannabis is not something you really see. My friends and I joke that the hardest part of my job is figuring out what to wear.
BK: On my way over I feared you’d be distraught [about Jeannette’s departure].
AG: I’m not distraught. This is work.
BK: A setback at work?
AG: I remember being in California and selling the dispensary to MedMen and we were having issues with the license. That felt life or death. You had taken shareholders money, you had acquired really good assets – one of four legally permitted licenses and you’re on Santa Monica Boulevard in West Hollywood. A crisis of epic proportions. Since then, not the past six months or eight months, but let’s go back five years, I can give you hundreds of those.
BK: Is this one?
AG: Not at all. The timing made sense. The acquisition made sense. It made sense to co-CEO with Jeannette and our story has been amazing, truly. This is just another phase.