Business of Cannabis: The Green Organic Dutchman

Screen Shot 2019-06-26 at 10.35.52 AM.png

By Jason Gorber

As part of our Business Talks with Canada’s top cannabis CEOs, we had the pleasure of speaking with:

Danny Brody

Chief Corporate Officer, The Green Organic Dutchman

Toronto, Ontario

What does your company do? We are the largest cultivator of organic cannabis globally, and we are the largest funded, raising 450 million dollars to date to build out over 1.6 million square feet of facilities globally. We started in 2016, and I’ve been here from day one.

How did the name come about? The original founders started the company in 2012, and we bought it from them in 2016. They were of Dutch descent, and green, obviously, is relative to cannabis and also sustainability for the environment. When the industry was in its early phases, we really didn’t know what all of the advertising restrictions would be like, so we wanted to make sure that we kept a name that kind of encompassed all aspects of the business.

How have you seen the industry change over the last several years? It’s been incredible to watch the change. I started in the business in 2013 when Health Canada had announced new legislation, and we’ve seen a whole slate from those days all the way through ACMPR and now the Cannabis Act. We’re starting to move away from things like funded capacity... [and move to] revenue generation and traditional valuation metrics like discounted cash flow and earnings.

I’ve also seen people care more about what they put in their bodies today than they ever have before, especially the millennial generation. It’s a trend that we see growing and continuing to grow, and that is part of the reason we are organic. In a recent poll, recreational consumers in the 60th percentile prefer organic. We’ve also seen a huge push from traditional cannabis culture to more mainstream higher seasoned management teams focused on consumer packaged goods, consumer products, and the brand vs. the traditional “stoner culture” you would typically see five years ago.

How would you like to see things change further, and how are you and your company contributing to that change? I’d like to see even more of a push towards organic. I’d like to see more happen to create higher standards of growing in our community. We’ve invested a significant amount towards research and development. We’re starting to see some hard evidence coming out that cannabis actually works and it’s not just something that people use to get high.

Non-anecdotally? Exactly. We’re investing heavily in [the] research and development side. We’re also trying to give back more to the community. We had a zoning amendment approved by Hamilton City Council to build a community farm. We’ve donated over 6,000 pounds of vegetables and meat to local foodbanks and charities. The word green in our name goes a lot further than just cannabis.

What do you see as the challenges and roadblocks still ahead? The biggest challenge is there’s still a stigma associated with cannabis use. Canada is kind of paving the way for legalization around the world. People don’t necessarily understand all of the health benefits that cannabis offers, and I think that’s one of the things that will come with time. When I started in the business in 2013, I mean I was even worried to tell my mom that I was work-ing in the cannabis space. Now, my mom’s coming to me asking me for different advice related to CBD!

What’s the biggest misconception? With the big companies, obviously there’s profits and things that matter, but we’re not all evil giants, especially TGOD. Everything we do is geared towards a healthier product and a lifestyle associated with it. We don’t want to just have snake oil comments out there about it; we want to actually invest in it and actually prove that it works.

What is the industry going to look like in five years? We’re starting to separate the winners from the laggards. It’s going to come down to management teams being able to execute on the business front and show shareholders that they can deliver on what they say they can. We’re going to see real value driven from earnings. I think we’re going to see real value driven from different products coming in. We’re going to see real value switching away from dried flowers and more towards products that have consistent flavoring, consistent dosing, and a consistent experience for the consumer. When you smoke cannabis, it’s typically the worst way to titrate a product. You never really see a doctor say, "Take two puffs in the morning and come back and see how you do!" At the five-year mark, I think we’re going to have up to 80% of the market that’s not smoked. It’s going to be through products that are similar to the beer and wine industry [where] consumers know and understand the effects and the experiences of what they’re getting.