The American Cannabis Report
(C) 2018 Eastman Smith Communications

Exclusive: Q & A with Bruce Linton, CEO of Canopy Growth Corporation

Bruce Linton has an easy-going air about him that probably is a bit unnerving to those who know the kind of risks he is taking. The cannabis and hemp company he co-founded in 2014, Canopy Growth Corporation, made history by being the first cannabis company to be listed on the New York Stock Exchange in May (“They didn’t let me ring the bell, but that’s OK,” he says of that moment). As CEO, Linton is the public face of Canopy.

 

The company is huge and growing. Canopy has operations in 11 countries across five continents, including ten licensed cannabis production sites and 2.7 million square feet of production capacity.

 

It's one of one of the top cannabis companies that the whole world is watching right now as he continues making deals – the $4 billion deal with the Fortune 500 alcohol leader Constellation Brands, makers of Modelo and Corona beers, that just got final shareholder approval, and a more recent deal with Hiku Brands that expands Canopy’s brand offerings.

 

Canopy’s stock has rocketed up 500 percent over the last year. But along the way, Linton’s prudent and level-headed management style in a business full of trapdoors has served him well.

 

David Hodes of the American Cannabis Report sat down one-on-one with Linton for an exclusive interview at the 2018 CanEx Conference in Jamaica in September to discuss the current events related to Canopy Growth; his business philosophy; and developments in the cannabis industry.

 

THE BRUCE LINTON INTERVIEW

 

 

American Cannabis Report: How are things going for Canopy Growth right now?

 

Bruce Linton: It’s kind of the same every day, which is a weird thing to say. But it’s just we are working everywhere. We try to create a culture with a work ethic. But when someone says congratulations on what we have achieved we almost shiver because we don’t want to be congratulated... because we just started. And so the mentality of the place has some issues in that every time we get something done we say 'OK that was really good but now there are six more things to do'.

 

I would say that that culture works in a crazy environment of rapid evolution. Part of the thing that is working for us is we have been very clear that when you exit prohibition you have to jump out. You can’t break some laws and follow some laws. And so the effect has been that we have massive U.S companies that want to work with only one company in the industry and it’s us. 

 

ACR: There have been investors circling this industry for years in the U.S. who are now seeing opportunities in Canada. So now we are seeing a lot of big investor money from the U.S. going to Canada. Are these investors really prepared to get into this tricky industry?

 

BL: The really smart big money is saying 'I don’t want to be breaking the law'. The U.S. stock exchange says 'You guys (Canopy Growth) follow the rules'. Constellation says 'You guys follow the rules'. The big money says 'You guys follow the rules', which means big landlords and big companies that have things they think could be part of our solution only call one place now.

 

ACR: Are we in phase two or phase three of this industry’s development as more people start paying attention to what is happening now? We are seeing a lot more stock activity but there’s a lot of volatility. For example, stocks like Tilray hitting huge highs then crashing as part of a sort of second green rush now.

 

BL: There is a bunch of stuff. I would say Tilray has very, very, very limited shares to trade. They need more stock in so that more trade can happen. I think that they will cut their price by a third or a half. When there is a limited amount of stock, the mechanics of the market don’t work. If you have 2 million shares trading but actually 20 million shares trade a day, that means it’s like ten times a day the stock sells. That is a very unusual instrument.

 

ACR: In the phase that we are in now, how important is the rise or fall of a stock to the health of a company?

 

BL: I think anything too fast or too slow is bad. We have substantial assets in production. To your question 'Where are we?', I think we might be exiting phase 1A which is the medical adoption in one major market. And we are at phase 1B which will be medical adoption across a global group of countries that are relevant, like Germany and others.

 

But you are not even at phase two, which is when the normalization of consumption happens in a regulated way in more than one Canadian market. And it’s not even going to be normalized in the Canadian market for the first year.

 

When you start getting into phase three is when you actually turn the ingredients into finished goods that are not currently available for medical and rec. And so when you start to have unique products created by cannabis as an ingredient in a stabilized way for med or rec, that is when you have phase three. Now you have brands that can go global. And we are not there yet.

 

ACR: What is going to happen on October 17?

 

BL: In Canada, every place that has cannabis will sell it.

 

ACR: Is there too much cannabis available, like some media outlets are saying?

 

BL: No there is actually too much media! Like in Canada, you cannot run a news program in any format – radio, print or TV - if you don’t have at least three stories per hour on cannabis. And so the effects are going to be, because it is federally sanctioned and state sanctioned and it’s fully legal, everyday people can go to a store and buy stuff and talk to their neighbors about it. And so I think it’s going to go crazy. The amount of cannabis available is far too little to start. And I say that because I know what the inventories are. I think you are going to probably find that it is too little for about 12 to 18 months, then too much.

 

ACR: You strike me as a sort of dyed-in-the-wool entrepreneur who is taking risks but is happy about it because you know that success will follow. You have probably had a plan all along, but you can’t know what’s going to happen in a business centered around an illegal narcotic. How do you like to operate?

 

BL: I say plans are OK-to-bad. Culture and philosophical underpinnings of how you react to the absence of a plan and the circumstances - that changes things.

 

So 100 percent of the people who work in our company have stock options. That includes the people that answer the call center phones. Everybody. And we tell them to behave like an owner. That means make a decision that you would be happy to show up in a newspaper. Make a decision that if you own this stock for ten years and don’t get to take any money out, you will be happy in ten years.

 

And we have very bright people. Sometimes the problem with very bright people is that they have been told from a very young age that they are bright. And they get patted on the head. And then they become kind of jerks when they get older. So if you are a really bright jerk and you isolate groups by being nasty, we fire you. That is when the culture matches our continuous plan.

 

We think longer term, act like owners and have a collaborative environment with really smart people who are really nice.

 

NOTE: This interview was done in the lobby of the main meeting room for the CanEx Conference in Jamaica on Friday morning, September 28. Mr. Linton gave David Hodes time while he was waiting for the Minister of Industry, Commerce, Agriculture and Fisheries, The Honorable Audley Shaw, who presented that morning and and talked about Jamaica exporting ganja to Canada. The interview abruptly ended when the minister entered.

 

The day before, David moderated a presentation, "Cannabis and the Capital Markets - Investing in Cannabis", featuring John McMullen, Karel Janecek, Bill McCarthy and Wayne Isaacs.

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