Interactive Chart: Are Canadian Cannabis Growers Building An Enron Style Bubble?

On Thursday afternoon, officers from the Toronto Police Service swept into 43 marijuana dispensaries in a massive raid on both sides of the city. The cops arrested 90 people, issuing a total of 257 charges. About $160,000 in cash was confiscated and a few hundred kilograms of cannabis-based products- including marijuana, resin, oil, chocolate, cookies, and candy.

Investment analyst Aaron Salz, an expert in the Canadian cannabis industry, was quoted saying “there’s definitely some effort” by licensed growers to get the police to shut down their unlicensed competitors. Curiously, the raids were conducted on the very same day industry leaders gathered for their annual Canadian Cannabis Business Conference in downtown Toronto.

Licensed growers have an impressive list of politically connected executives; including a board member of the Liberal Party of Canada, a former Ontario Liberal cabinet member who worked on a radio show with mayor John Tory, and a former director of the Young Liberals of Canada. Was it only a coincidence that Thursday’s raids were perfectly timed for the largest Bay St industry event of the year?

Yesterday I decided it was time to learn more about the cannabis industry, their executives, and how they’ve structured their business models. My first step was to dig into the people who gathered at this week’s Cannabis Business Conference. I’ve entered each of the listed speakers into the interactive chart posted above- it was a fascinating exercise.

The growers are only the tip of the sensimilla bud. Industry stakeholders include a long list of lawyers, investment bankers, academics, and people building “shovels” for the marijuana gold rush. But while Bay St executives and Liberal apparatchik are looking towards an enormously wealthy future, the only stake offered to the activists who made legalization a possibility was the one shoved up their arses during Thursday’s Eliot Ness style raids.

One thing that stuck out to me most researching this chart was the parallels to what I saw working as a management consultant in the years preceding the great telecom bubble of 2000. Like the telcos, the cannabis growers are using the same philosophy of “build it and they will come”. Switch the phrases “data centre capacity” with “grow room capacity” and “Health Canada licenses” with “rights of way”, and cannabis grower’s business plans sound eerily similar.

But there’s one major difference, the corporatization of Mary Jane is based on an idea so outrageous it couldn’t possibly succeed without the industry’s political connections (and the ineptitude/corruption of Bay St financed media). I can’t help but sense a feeling of deja vous, reminders of past consulting engagements I worked on at Enron and Worldcom.

Today’s posting is only a teaser, stay tuned for the full story early next week. Until then, have a look at the interactive chart, you can find a larger version of it here. And if you’re wondering about what the industry’s outrageous idea is I’ll leave you with a hint- switch the word “cannabis” with “tomatoes” in their business plans, and think about exclusivity in the context of recreational sales.

Permanent link to this article: