Darcy Bomford: Acquiring a Cannabis License in Canada

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Darcy Bomford is the CEO of True Leaf Medicine International, a Canadian company with one department in the national medical cannabis program and another that manufactures hemp-based wellness products for pets.

In this interview, Ganjapreneur.com podcast host TG Branfalt talks with Darcy about Canada’s medical cannabis program, the strict licensing process that producers undergo there, and what the country’s impending adult-use marketplace is expected to look like. Darcy, a career entrepreneur who launched his first company in the pet supplements industry, also explains how he has applied his experience in the pet products industry to the cannabis space and how he was inspired by the devotion of pets to “return the love” by creating wellness products for both people and their four-legged friends.

You can listen to the interview via the player below, or scroll down to read through a complete transcript of this week’s Ganjapreneur.com podcast episode!

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Read the transcript:

TG Branfalt: Hey there, I’m your host TG Branfalt and you are listening to the Ganjapreneur.com podcast where we try to bring you actionable information and normalize cannabis through the stories of ganjapreneurs, activists, and industry stakeholders.

Today I’m joined by Darcy Bomford, he’s the CEO of True Leaf Medicine International. He’s from Canada, who are ready to nationally legalize cannabis, a move that advocates and entrepreneurs here in the states are and will be watching rather closely. But before we get into all of that I want to thank you for coming on the show Darcy, how are you doing this morning?

Darcy Bomford: I’m doing great. Thanks Tim, it’s a pleasure being here.

TG Branfalt: It’s great to have you, we have a lot of stuff that we’re going to have to hash through. But before we do, I want to get to know you, man. What’s your background? How’d you end up in the cannabis space?

Darcy Bomford: It’s interesting actually. My background is primarily in the pet industry, which is a little different. When I was a kid I always loved pets and I worked for a vet and decided early on, I think 18 years old, to be an entrepreneur and not a veterinarian because I liked the business side of things better than the medical side.

I started a little pet supplement company, which morphed into a pet treat company, and I eventually built that into a fairly large company. Not huge, but we were doing somewhere around 7, 8 million a year. And we had a nice little plant in Canada and we had two plants in the U.S. that primarily made natural baked dog biscuits. And it was a great business.

Unfortunately I lost that to investors — sometimes high finance goes good, sometimes it goes bad. And unfortunately I ended up losing it to a group of investors who then took over the company and went their own way with it. And at that point in time, which was 2012, I had actually one year non-compete. So there I was with 25 years in the pet industry and couldn’t go back into it, and at the same time the federal government in Canada announced these new rules around the production and sale of medicinal cannabis. And I thought, wow, with my manufacturing background and I knew how to make and market product, I knew about quality control.

And in the back of my mind I always thought that hemp and cannabis could be a very unique ingredient for pets as well as people. So I kind of paid attention to that, but I ended up being one of the very first applicants in Canada under the folks called the MMPR program at that time. We were number 48 to apply. And so we got going that way and ended up getting into the queue with a bunch of other companies. And unfortunately the prime minister at that time was very anti-cannabis, and there’s so many applicants that the system kind of got carried away so they slowed down the entire approval process and we ended up stalled. We had no idea when we were going to get our license and we ended up at that point in time, about a year and a half in, going back into the pet industry. That’s how we launched True Leaf Pet. So we launched hemp supplements for pets while we were waiting for our medicinal cannabis license to come through.

And here we are today. We have two divisions; True Leaf Pet, which still markets hemp based supplements for pets using hemp seed. And then we have …  we have on the medicinal side, our license from Heath Canada is now really going through the stages because of our new prime minister and we’re getting close to approval.

TG Branfalt: So, do you guys, you said that you use hemp seed and stuff for the pet treats, are you allowed to or do you use CBD?

Darcy Bomford: No, I know. Early on we realized that any kind of the leaf material from hemp, we were going to run into regulatory issues on the pet side. But we also recognized that hemp seed by itself is really, there’s a ton of value there, and it has some active ingredients that still support some of these functions that are really popular with pets. Like for example, Omega-3, -6, and -9 and some other ingredients in hemp seed oil help support the body’s fighting inflammation, so they’re being used for hip and joint product. And we also have another formula that’s for calming and another one for immune heart support.

So we use hemp seed as the base active ingredient but we also add other well known active ingredients like tumeric and some other hip and joint products and calming ingredients to support the hemp. And the big reason for that, Tim, is that we wanted to be 100% legal in everything we do. And in the pet industry, there’s a ton of regulation there. It’s not easy just launching just a regular product even without hemp. So we have to comply to all these state rules and sort of an overarching body that manages the pet industry called AVCO. So we specifically developed our formulas with hemp seed so that we could find a legal pass to market from the beginning.

TG Branfalt: And can you briefly tell me about the hemp laws in Canada?

Darcy Bomford: Yeah, as you know in the states there’s a lot of CBD products that are being sold online and in, sort of, I guess hemp friendly states or medicinal cannabis friendly states. But in Canada, CBD is a controlled substance. It’s right along with THC. And it’s unfortunate because, of course, CBD is non-psychoactive. But it’s more strict up here, you don’t see a lot of online sales of CBD products. CBD products from the U.S. were initially coming through but now they’re being stopped at the border from the U.S., and they’re still very strict about it. You see the odd dispensary with CBD products but it’s sort of in the gray area.

TG Branfalt: What about, are you allowed to grow hemp itself throughout the nation? Because here it’s state by state and it’s very, very limited.

Darcy Bomford: Yeah, well Canada’s actually the number two country in the world for hemp seed production. And you are allowed to grow it but you have to destroy the leaf and you can’t use the bud, of course. It’s easier, like you can apply to Health Canada for a license to grow hemp outdoors, you still have to go through a security check and a few other issues, right. But it’s relatively easy, especially compared to the U.S. where it’s technically it’s, at a federal level, it’s still difficult to grow hemp as a hemp farmer.

TG Branfalt: And now, for those of us that are unfamiliar, can you sort of explain Canada’s medical cannabis system as it exists right now?

Darcy Bomford: Currently, it’s now called the ACMPR, which is the Access to Cannabis for Medical Purposes Regulations. And it allows applicants once they’re approved to actually grow cannabis under strict regulatory conditions, so you have to provide security and have security on your site, you have to have a vault, all your personnel that touch the final product have to have high level security clearance. And then you’re allowed to actually sell online to consumers that have a medical document, so like they have to have a physician or a healthcare, like a nurse practitioner sign a document that lays out the indication and the amount of product the can use on a daily basis. And then licensed producers, once they accept this medical document, which I guess you could call a prescription although it’s not technically called that, then they can actually ship dried cannabis or cannabis oil directly to your house. And I think that’s probably the only way, actually, that it’s available for sale right now. Or through a-

TG Branfalt: So is that why you see police raiding dispensaries, because they’re technically not legal?

Darcy Bomford: Yes, because the source of the material in a lot of these dispensaries is questionable. A lot of them are being supplied by people that had a prescription or an agreement under the old program that allowed them to grow cannabis for their own personal use. Technically you’re not allowed to sell it. So there’s sort of a gray area there where we have all these old licenses under the old medicinal cannabis program in Canada, that people are growing product and then they’re technically selling it to the dispensaries and then the dispensaries are selling it to consumers. And it’s all outside of the current license producer program, which technically makes it illegal.

But, you know, we’re in this state of flux now where we have this little program, and then you have the new program, and then you have recreational legalization coming around the corner in July. So for that reason I think law enforcement is really, you know, they’re not cracking down on a lot of the dispensaries although they have shut some of them down, but they’re not being overly onerous and charging people. They’re just simply … The bad ones are out of business at this point in time, I guess.

TG Branfalt: So before we get into some of these details of the forthcoming legalization effort, is there, what’s the opinion of your current operators? How will this regime, how might it affect the current medical cannabis system?

Darcy Bomford: Well that’s a good question because federal government now has basically said that licensed producers, under this new regime, will be the suppliers of both markets. So as a licensed producer, you’ll be able to grow and sell product in the medicinal space or in the recreational space. And they’ve also applied the same level of taxation to both products. So you’ve seen in the U.S., some states had both programs running at the same time, then they would tax medicinal at a lower rate. And then of course all the rec users ended up going to the medicinal space and then the whole thing kind of didn’t work very well.

So Canada, in some respect, they’ve gone around and they learnt from America and I guess Holland and stuff. And they’ve come back to Canada with a system that they think will work better. So they are basically treating medicinal and recreational the same, from what we can tell. There’s still some rules that have to come out but that’s the way it appears it’s going to happen.

TG Branfalt: I want to get into some of the details of what has been announced, but before we do that we gotta take a break. This is the Ganjapreneur.com podcast, I’m TG Branfalt.

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TG Branfalt: Hey, welcome back to the Ganjapreneur.com podcast. I’m your host TG Branfalt here with Darcy Bomford, CEO of True Leaf Medicine International.

So, before the break we were talking about how the pending legalization could affect the medical cannabis industry in Canada. So some of the rules have already been released, so I sort of want to start with the price point that the government has set. They’re talking about what would be $7 Canadian, $10 a gram American. How does having this potential cap on prices impact the legalization from an operations standpoint? From a business standpoint?

Darcy Bomford: Yeah, they’ve been talking about capping it, and I think that was one or two provinces were talking about that, and I hope it doesn’t happen. And some of these announcements have come out and then as they get feedback from people in each province they change them, so I hope that’s the case now because ideally the market should decide the price. They have talked specifically about the level of taxation, which some people may be confusing both as the same but it’s $1 a gram and/or 10%. So whatever is higher. So for example, if all the feds have said if it ends up being $15 a gram retail, well they’re going to take $1.50 a gram as a tax or a minimum of $1.

I don’t think they’re going to actually cap the retail price, and from the producer’s point of view it’s good, obviously, because you have to be able to produce the product and distribute it efficiently.

TG Branfalt: So at that price point … And if that were the price point in U.S. states, for example, I can tell you that it would have an impact on the black market, that’s roughly half of what the illicit market prices are, especially on the East Coast where I’ve spent most of my time. Do you think that that price point, will it help stem the illicit market in Canada?

Darcy Bomford: Yeah, I think our prices must be less than yours because $10 a gram, I think even on the black market side, is fairly high. So I don’t think it’ll hurt because, yeah. Cost to produce, we’re projecting somewhere around $2 a gram, which is high because we really have to be focused on quality control and security. So our cost to produce are higher and we don’t have a huge footprint. The black market, we’ve heard indications of somewhere around $1 a gram or less for a quality grow operation. So even at $10, there’s still good room there for margin. The retailer’ll take half and then the distribution cost to get it to the retailer. So even at $4, if we handed out $4 to the manufacturer, that’s still a 50% margin, which is pretty good.

TG Branfalt: Okay. Much like in the states there’s, you know, the federal rules, which cannabis is federally illegal, we don’t have a medical program. There’s also the state rules, which is why we have legalization in Colorado and Massachusetts and so on and so forth. So you guys also have some proposed federal rules and also provincial rules. We’ve gotten some here and there, we don’t have all 13 yet, but what are the ramifications of allowing the provinces to create their own regulations? From an operator’s standpoint, is that a good or a bad decision?

Darcy Bomford: Yeah, good question. It’s a little different in Canada. If you can imagine Trump saying to all the states, “Look, we’re going to allow recreational nationwide whether you like it or not. So it’s up to every state to decide how they want to distribute.” That’s basically what our prime minister is saying to the provinces.

So he’s saying, “Look, we’re going to allow the national sale of recreational cannabis, and by the way, that also means online sales. And/or each province has to decide on their own how they’re going to distribute and provide their own tax structure.”

So from our point of view as a producer, we’re going to be focused on building our brand online so the minute that recreational comes around, we’ll be able to sell nationwide online. So there’s no restrictions there. However, at the provincial level, you’re right, every province is unfortunately sort of customizing their regulations.

B.C. is kind of like California, you know, it’s sort of the bellwether province, a lot of trends start here. People are more relaxed, laid back, it’s the west coast lifestyle. There’s a ton of dispensaries in B.C. already, I think there’s 12 in my little town of 40,000 people.

TG Branfalt: And they allow them?

Darcy Bomford: Well, they’re still under this sort of gray area. Technically, they are illegal. But I think what’s going to happen is our province, they’re going to allow a private and public model, so the distribution of cannabis will most likely be controlled by the liquor board. And the liquor board will then sell product to either their own government run stores or to dispensaries or private model. So we’ll have probably a combination of both, a hybrid model.

Ontario, unfortunately, has chosen to just do government run cannabis dispensaries, which is crazy. I think they’re talking of only 150 for the entire province. So we’ll see what happens. It’s a brand new industry, first in the world really to do this, so there’s a bit of a learning curve, but I’m confident that Canadians will be able to figure it out.

TG Branfalt: If you were to sell online, for example, you said that you were at maybe a $2 a gram price point and you’re able to sell online, that’s going to … Right, you’re not going to have to distribute it, you’re not going to have to send it to a liquor-run distributor and then put it out there, you’ll be able to sell directly to consumers that way.

Darcy Bomford: Exactly. Exactly. And that was a key point of Prime Minister Trudeau’s strategy is, you know, he’s not going to hamper the industry even if the provinces technically don’t get their act together. We’ll be able to sell online immediately, as soon as recreational comes around. And under the current program, under the medicinal program, that’s primarily how it’s distributed, directly to the patient.

TG Branfalt: That’s really interesting. Because that’s gotta be sort of exciting because you cut out three middlemen with one swoop.

Darcy Bomford: Yeah, exactly. That’s where the most margin is. And you know what? The whole world is going online, right? Even in the pet industry. I’ve been saying this for years. The pet industry is in a pivotal moment of change right now because the consumer is going online, and they’re buying their pet products and getting them delivered directly to their house. And it’s the same with other industries, and for sure cannabis is going to be a big one because it doesn’t weigh a lot but it’s very expensive. So it’s perfect for the online model.

And the guys that are killing it in the industry right now have a good online brand, a website, and they have influencers that follow the brand and talk about it and believe in it. They have quality product. And that’s where we’re heading with True Leaf.

TG Branfalt: So I want to talk to you a bit more about the regulations and how you’ve taken this experience, an entirely different industry, and applied it to cannabis. But before we get into that, we gotta take our last break. It’s the Ganjapreneur.com podcast, I’m TG Branfalt.

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TG Branfalt: Welcome back to the Ganjapreneur.com podcast. I’m your host TG Branfalt, here with Darcy Bomford, CEO of True Leaf Medicine International in Canada.

So before the break, you had mentioned the decision for some provinces to begin to use liquor boards to control the supply. And some provinces are going to allow private retailers, you mentioned British Columbia, there was another one that I can’t think of who it was off the top of my head. But the majority that I had seen was they were going to do a state-owned retailers of cannabis. What’s your opinion on these two models? I know earlier you said the free market should sort of run this thing, you know, so … Just kind of, what’s your opinion on these two models?

Darcy Bomford: Well I think the most important thing is that the supply to these two models should be a quality, standardized supplier, meaning licensed producers. Because Canada’s system, the one that we’re going through, it’s unbelievable how strict it is. The quality control is absolutely key and the most important thing is we have to test for pesticides before the product’s shipped. We have to test for CBD, for THC, mold, E. Coli, salmonella, moisture. So because of these requirements, it ensures that the absolute highest quality product goes into the market. So, that’s the first part. So, whoever’s selling the product should have to buy it from a supplier that has to go through these strict quality control measures.

The second part is, you know, liquor and marijuana probably shouldn’t be mixed, so selling both in the same store I think is a big mistake because your really sending the wrong message to people that are drinking. So if the government feels they can do a better job at retailing it, well I guess that’s their prerogative. But I still think the government should provide some overarching regulatory control on the supply and the retail of it, well I think the private model probably makes more sense. Whether that being dispensaries or, you know, what we’re focused on really is the naturopathic doctor clinics. We’re focused on marketing the product to them so they can provide it and natural alternatives to some of the harsher NSAIDs and pharmaceutical drugs that people are taking. That’s our focus.

TG Branfalt: There’s been some stuff that I’ve read, some conservative lawmakers in Canada are seeking to push back the legalization, claiming that they need more time to debate the bill. Do you think that this is something that could happen? Do conservatives have enough stroke in Canada to be able to derail this legislation?

Darcy Bomford: I don’t think so. I think they’d be crazy to do that because clearly the Canadian population is in support of legalization. And I don’t think they can actually block it at the senate level. I doubt that’s going to happen, you know they’re talking about it now but I think it would be suicide on their part.

TG Branfalt: Interesting. And then briefly I just want to back up way, way back a little bit. How did you sort of leverage your experience in the pet industry into the cannabis market? Because there’s so, I mean you don’t think … it’s just not something you sort of put together, right? So how’d you leverage that experience, man?

Darcy Bomford: Well I’m an entrepreneur, and what I’ve learnt with my career, well first of all you never give up. That’s what it’s all about. And second of all, you have to get the right people on the bus. And I may not be a cannabis expert, but if I can find people that believe in the vision and can share it, that’s totally key to creating something that has value.

And our values are unique in the fact that what we brought to the company, it sort of relates to pets, too. Our tagline for the company is ‘return the love.’ So on the pet side it’s all about returning the love that you get from your pet. And I don’t know if you have a dog or not but, I mean, that is the best thing about having a dog is the unconditional love that you get from them every second. And that’s our tagline for the pet side of the business and you know what? On the medicinal side it’s the same thing. It’s returning the love to yourself for quality of life. We need to treat ourselves better; natural products instead of pharmaceuticals. Treat mankind better. So it’s an overarching, bigger message that we’re really trying to get across. It’s a long term vision about unconditional love and returning the favor, the golden rule, right?

So we’re pretty excited about what we’re doing and I’m confident that we can bring some, or we are actually bringing in some unbelievable talent to our company. We’re creating a brand that really is going to resonate with our target market, so we’re pretty excited.

TG Branfalt: That’s a really cool mission, man. I admire your passion for helping others. But you know what they say about Canadians, right? That you’re all super nice and …

Darcy Bomford: I didn’t say “eh” during our interview.

TG Branfalt: I was hoping. I’ve been waiting here the whole time just …

Darcy Bomford: I’ve been training myself for years.

TG Branfalt: So before we go, man, what advice would you have for entrepreneurs? Maybe those not even just looking to enter the cannabis space but, you know, just entrepreneurs in general.

Darcy Bomford: Yeah, you know what, never give up and really believe in your passion. And probably more importantly is you gotta ask yourself why you’re doing it. Why are people buying your products? They’re not buying what it is, they’re buying your products because they want to believe in your passion, they want to share your passion and what you’re doing. And unless you can really communicate that with everything you do, your product’s probably not going to work, it’s not going to resonate. If it’s all about money or selling the cheapest or doing something one better than the competition, you’re just another ‘me too’ company. But if you can really create a reason why people should buy your products, you know what, I buy this, I buy Apple because it’s cool. I buy this because, man, the person behind it, that person’s a cool person. I believe in his values and what he stands for. It’s not about money it’s more about passion and belief and you gotta believe in yourself. Never give up. That’s the biggest.

TG Branfalt: And then, where can people find out more about you, man? Where can people learn more about your passion?

Darcy Bomford: Trueleaf.com. Yeah, it’s all there. True Leaf Pets are different division but you can find it all there.

Another thing we’re doing right now that’s really cool is we’re the first company from Canada to do crowdfunding, equity crowdfunding in the U.S. We’ve been working on this for 11 months and we’re now able to sell equity in our company to the same people that are buying our pet products. You can buy as little as $350 Canadian, eh, worth of equity in our company. And we talked about online, right? The capital markets are going online too, and this is the beginning of it, this regulation A plus crowdfunding allows anybody to click on a website and buy equity. You don’t have to go through a broker, you don’t have to talk to anybody else, you just have to believe in the brand. And you can own a piece of a company.

So, pretty cool. We’re just doing that now, we’re hoping to close next week on ten million bucks. That’s our goal and that’s going to allow us to continue our vision on both the cannabis for people and pets.

TG Branfalt: Awesome, man. Congratulations. We’ll definitely have to check back with you in a week and see how that panned out.

Darcy Bomford: For sure. Yeah, we’re going to hopefully close it soon. We might be halfway there before Christmas and we’ll finish it off in January, but the response to our whole crowdfunding thing has been unbelievable and we’re just so blown away by it. And it really shows that people love pets and they believe in cannabis. It’s here to stay, that’s the big message for everybody. All the big regulators out there, it’s here to stay. People believe in it, it’s not going away. So it’s pretty exciting times we’re in right now.

TG Branfalt: If you’re in Canada and the U.S., we’re all about to get shut down by Jeff Sessions, every single one.

Darcy Bomford: You know what Tim, it’s going to work out. I have confidence. They’ll see the value there eventually.

TG Branfalt: Oh, you friendly Canadians. So, dude, I want to thank you for taking the time coming on the show. Super cool guy, I’m going to probably check out this equity website as soon as we hang up here. But definitely, keep me in the loop on what you guys are doing, it’s really cool. And thanks again for being on the show.

Darcy Bomford: Absolutely, my pleasure, Tim. Thank you very much. Take care.

TG Branfalt: You can find more episodes of the Ganjapreneur.com podcast in the podcast section of Ganjapreneur.com and the Apple iTunes store. On the Ganjapreneur.com website you will find the latest cannabis news and cannabis jobs updated daily, along with transcripts of this podcast. You can also download the Ganjapreneur.com app in iTunes and Google Play. This episode was engineered by Trim Media House. I’ve been your host TG Branfalt.