Bloomberg News

Canada Breaking Bad Is Pot Grower in Chocolate Factory

October 11, 2013

Marijuana Production

Health Canada says the system of commercial licenses will end the current flawed system that was created to respond to court rulings allowing people with medical permits to grow their own marijuana at home. Photographer: David Paul Morris/Bloomberg

An abandoned factory once owned by Hershey Co. in Canada may soon be making products that offer a bigger buzz than a chocolate kiss: marijuana, under license by the government of Prime Minister Stephen Harper.

Bruce Linton, chairman of Tweed Inc. -- one of 185 companies seeking a permit to start producing pot next year-- said finding a location was one of his biggest obstacles because landlords shun even sanctioned drug production.

“Five years ago your parents would have disowned you if you thought about doing this,” said Linton, 47. “It’s like saying ‘poop’ when you are nine or something. Marijuana is like that for adults because it’s a taboo.”

Canada’s health department in June said it would end a system allowing people to grow medicinal pot in their homes and instead have companies supply the drug. The image of pot factories represents a shift for Harper, who says he never smoked marijuana and who has campaigned on being tough on crime.

The licensing of output is a “tightening up versus loosening up” of drug laws because it separates “the legitimate from the illicit use,” said Mark Mander, chairman of a drug panel for the Canadian Association of Chiefs of Police and head of police in Kentville, Nova Scotia.

Home-grown pot has led to “unintended consequences” that hurt public safety and led to people abusing the system, Health Canada said in June when it published rules. The new system regulates marijuana like other narcotics, according to a background paper that says commercial producers must meet strict requirements to be licensed.

Doctors Object

Medical doctors object to the new system, saying there are no standardized dosages or rules to make marijuana safe to prescribe like other drugs.

“We have to make absolutely sure we aren’t creating a nation of addicts,” said Canadian Medical Association President Dr. Louis Hugo Francescutti. “Very few physicians are prepared.”

Many Canadians are deciding marijuana is good medicine, with more than 30,000 people now having medical licenses. Sales may be worth C$1.3 billion ($1.25 billion) by 2024, Health Canada estimates, with prices set in the open market reaching C$8.80 a gram.

Public debate about marijuana also widened when Harper’s rival, Liberal Party Leader Justin Trudeau in August said he smoked the drug as a parliamentarian. The party’s chief financial officer Chuck Rifici is also Tweed’s Chief Executive Officer.

20 Varieties

Tweed’s sales could reach C$100 million a year with prices for its planned 20 varieties ranging from C$6.50 to C$15, Linton said. The company signed an agreement to buy the factory in Smiths Falls, Ontario with a Dec. 2 closing date, and may spend about C$2 million in renovations, he said. Tweed will seek partners to use the 300,000 square feet of leftover space, which includes equipment left behind that could churn out popsicles and dairy products, he said.

The idea of cultivating drugs in an old chocolate factory echoes the popular television show “Breaking Bad,” whose main character -- New Mexico teacher Walter White -- cooks methamphetamine to pay for cancer treatments with the help of a criminal who runs a chain of fast-food restaurants.

Smiths Falls Mayor Dennis Staples said he’s heard only two complaints about the project and the city council is “totally supportive” of it. Tweed will bring employment to the city of 9,000 people about 80 kilometers (50 miles) southwest of Ottawa, which lost 1,700 jobs in recent years -- including those at the old Hershey plant.

‘More Bearable’

The mayor has a personal connection to the issue. He said his brother used medical marijuana as he battled colon cancer. “It made his last days on this earth much more bearable,” Staples said.

“We no longer own the building,” said Hershey spokesman Jeff Beckman in an email. “We are no longer connected to the facility.” The old factory had made products such as Chipits chocolate chips, Cherry Blossoms and chocolate bars.

The location at 1 Hershey Drive has the advantage of being across the street from the local police station, said Linton, who also serves on the boards of engineering firm Clearford Industries Inc. (CLI) and environmental technology firm Thermal Energy International (TMG), both headquartered in the Ottawa area. Linton is also Canada’s representative on a World Bank water sanitation panel.

Canada’s plan for secure, large-scale sanctioned production may be emulated by other countries, he said.

Master Grower

“This government made a good decision -- they said we are going to make it such that this stuff isn’t growing in 36,000 houses, but rather in a controlled structured way,” he said.

U.S. Attorney General Eric Holder said in August he wouldn’t challenge state laws legalizing recreational use. Colorado and Washington last year legalized marijuana for 12.1 million people.

Tweed’s master grower, Ryan Douglas, previously worked for the Remedy Compassion Center in Maine, according to the company’s website.

“I didn’t even know how much a gram cost to be quite frank,” Linton said. “What I was interested in was, is it legitimate medicine or not?”

To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net


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