|Seeking a cure for severe migraines inspired a company facing exponential growth|
|“I liked it so much, I bought the company.” Victor Kiam’s 1979 pitch for Remington is absolutely a cliché in the marketing business – but then you encounter a case where it is true, and then topped.
Thus it is with James E. Wagner Cultivation (JWC), the Kitchener company that has been producing medical marijuana for years, and now is poised to big and go public in the recreational marijuana market.
The company founder is Nathan Woodworth, and his story is the cliché, writ large. He didn’t just like the product – he says it has taken him from severe disability to being able to start and lead a cutting-edge company. And he didn’t just buy the company – he founded it and has led it through significant growth.
Woodworth has been a medical marijuana user for more than a decade. He suffered from severe intractable migraines, so debilitating that they derailed his university career. He never completed his degree in philosophy.
That difference is their aeroponic system of growing marijuana plants – which Nathan says produces very high quality product at low production costs.
But he discovered, after a couple of years of trying various varieties and strengths, that marijuana offered significant relief from his symptoms.
He has improved from suffering constant migraines, all day, every day, to occurrences every couple of weeks – which he continues to treat with medical marijuana.
In the beginning of his treatment regime, “illegal sources were the only sources,” he says, but under Canada’s Medical Marijuana Access Regulations (MMAR), enacted in 2001, Woodworth began growing his own supply, legally. He recalls, “I sought alternative treatments, and I found cannabis was effective…. I got a license to grow.” In fact, Woodworth says, “I was the first patient under that regime.”
And therein is the genesis of the company called James E. Wagner Cultivation – which has never actually involved James Wagner, directly. Wagner was Woodworth’s maternal grandfather. Woodworth – and the other four Woodworth family members, including Nathan’s wife Krysta, involved in the company – recall their summer days spent on Wagner’s tobacco farm, north-east of Tillsonburg, where they learned a lot about agriculture.
They decided to honour their grandfather by naming the new company after him. Woodworth says it is particularly poignant that James Wagner passed away in late 2017, just as the company bearing his name is poised for exponential growth.
The second step toward the development of JWC came in 2013, when the MMAR program was replaced by MMPR (Marijuana for Medical Purposes Regulations), which opened the door to larger producers.
By that point, JWC was operating as a collective of producers and growers, growing the product at a number of facilities. They hesitated, briefly, when the new scale of operations became apparent.
Woodworth describes that time as “a crisis.” But he and his handful of colleagues decided that, “we had all the building blocks we needed. [The new environment] didn’t have to exclude us – it could be us!” They plunged into the newly defined industry.
And now Woodworth points out that JWC’s long history in cannabis production gives them a head start. That head start is boosted by a key resource at JWC – Woodworth’s brother, Adam, a PhD candidate in plant biology.
Their experience and commitment to research and development has led to the creation of what they believe will be the difference-maker in an industry about to explode, with government legislation allowing the production and sale of recreational marijuana to adults, across Canada. That difference is their aeroponic system of growing marijuana plants – which Nathan says produces very high quality product at low production costs. It differs from traditional hydroponics in that the plants’ root systems are not in water – they are in air, misted with exactly the right nutrient and moisture mix to optimize growth.
He points out that growing marijuana is not a simple process. “It’s different from growing tomatoes,” at a complexity level “at an order of magnitude” much higher than any traditional vegetable production.
JWC’s experts – most named Woodworth – have determined that hybrid marijuana plants that have a 28-30 day vegetative cycle, followed by 55-65 days of fruiting, are “optimal for our system.”
JWC is very committed developing and leveraging the best techniques and technologies for their operation – and at this point, while they may choose to sell the system – trademarked Growth Star – to other marijuana producers, they are not sharing their secrets – their technology is owned under proprietary rights. They believe they have a significant advantage over the many marijuana start-ups that the impending Canadian legislation has sparked.
They also believe they know as much or more as anyone about the marijuana plant, itself. They have spent countless hours working to understand the plant’s life cycle, and the optimal conditions for producing the best cannabis.
Woodworth notes that their research does not precisely mimic academic studies, because “we weren’t looking for publishable results, we were looking for real results.”
Well, “real results” are evident, not just measured in healthy plants and good production, but in the current state of the company.
JWC has been operating out of a 15,000 square foot facility. It will continue to use this building, but JWC will also be occupying 360,000 square feet of building that once was the Lear Seating factory, on Manitou. They took possession of that facility February 1. Production, now about 63 kilograms a month at the current location (which, only about five minutes from the new plant, will continue to operate), will leap to about 80 kilograms a day.
That’s as they prepare for a huge leap into the adult recreational marijuana market.
And to fund this explosive growth, the company is going public, with a share offering planned for early spring. Woodworth says they hope to raise another $10 million in capital, matching a previous $10 million raised in private placements.
Woodworth told Exchange that the company’s growth plans have never rested on the legalization of marijuana as a recreational drug. Instead, “We anticipated that there would be a greater depth of need for our product, even in the medical area.”
By January of 2018, there were 38 employees. When the new facility is fully operational, Woodworth anticipates between 400-600 employees.
The company began 2017 with five employees – all family members. By January of 2018, there were 38 employees. When the new facility is fully operational, Woodworth anticipates between 400-600 employees.
Nathan Woodworth is reluctant to spend much time looking into a crystal ball. His industry is in tremendous flux, and he feels it’s more important to keep an eye on the ball, instead of peering into it. He says, “I look at the next steps, next. I’m a pragmatist.”
But he does acknowledge that, “the future holds a lot of growth for the cannabis industry.”
He points out that while cannabis is legal in some American states, it is not legal according to federal law there, so there are still no clearly defined regulations.
In contrast, in Canada, something new is about to happen. “We have never seen an entire country” undergo this kind of change. “As this produce becomes marketized… we find ourselves at a unique point. A vast, unknown marketplace is accessible to us.”
Despite his reluctance to be a prophet, he says that five years from now, Canada will be a marketplace where adult recreational marijuana use is normal.
Woodworth says that JWC has two goals – first, to be a producer of ultra-high-quality cannabis, and second, to be a tech company that can market their state of the art system. Regarding the second goal, JWC is applying for research and development credits for the work they have done, to date.
Marijuana is not yet legal in Canada. The target date for the legislation to pass is July 1, but there are a lot of legal and procedural challenges to get through to make that deadline. We've last heard it will now be mid-August.
At this point, it is not clear that JWC – or any other marijuana producer – can ramp up ahead of that date in order to have produce ready to deliver to sellers for the date the product is legal. Only a few months ahead of the open market, there are still a lot of questions.
But Woodworth also knows a lot of answers. “We will be shipping all across Canada,” he says.
“We are happy to take our place in the community… happy to let people know where we are.”
Their products will include a variety of strains of cannabis – Woodworth compares it to varieties of wine; “some people are going to react better to one product that to another.”
“We will specialize in extremely high quality flower tops, and also resins and oils…. I want to make available to the citizens of Canada a high-quality product that does not require an ultra-high price tag.”
Woodworth says that each single-plant unit in their facility costs $40, and is reusable at very little additional cost. One gram of cannabis is worth between $9 and $11. “A plant can produce any number of grams,” he says, “but we target plants which produce 200 grams.”
Oddly, there will be no initial public sale of cannabis edibles – brownies, cookies and the like – because those are food produces. Woodworth says it will be at least another year before they are approved by federal regulators.
Not surprisingly, security is a significant issues for marijuana producers. But Woodworth says that JWC far surpasses any security regulations enacted by the government.
Legalizing adult recreational marijuana changes everything for marijuana producers. As a medical marijuana company, JWC has been entirely legal, but nonetheless, a bit in the shadows. With the enormous new operation on Manitou, “we are happy to take our place in the community… happy to let people know where we are.”
One irony in the legalization of marijuana is that a significant number of users will smoke the product – and studies suggest that this can cause harm to the lungs. Woodworth is extremely cautious in discussing this; in the end he acknowledges that, “vaporization is a method with a long history."
But when it comes to smoking marijuana, he finally says, “I’d like to see a recognized government body make recommendations… it’s not up to me.”
He agrees that some “baby boomers” who remember smoking “grass” in their youth may be surprised by the changes in the product, if they come back to it as a legal, recreational drug. He says its potency has increased by about 300% since the 60’s; people will need to “exercise a little bit of caution.”
When it comes to the question of driving, stoned, he again reverts to asking for more consideration. He argues that the affects of marijuana are not identical to the affect of alcohol. “Trying to impose the same standards as we use for alcohol will have a negative affect.”
“Trying to impose the same standards as we use for alcohol will have a negative affect.”
He adds, “We need to have an open dialogue about this issue… we need a lot of education, a lot of conversation."
He acknowledges that there are studies that seem to show marijuana use altering brain patterns in users under the age of 25, but he points out that many people in the younger age group are already using marijuana, illegally.
Woodworth believes that the heady first days of legalized marijuana will be the start of a new era. It won’t be good for everyone – “as in any new industry, not every effort will be successful.”
But it will, he believes, bring a new level of success to the business named for his grandfather; a business Woodworth admits he could never have imagined in those early days of growing a few plants to ease the pain of constant migraines.