Plugging the cannabis knowledge gap


The legal cannabis industry is a unique prospect for those looking for a potentially lucrative investment opportunity. In 2017, sales in the US state of Colorado reached $1bn in just eight months, a 21 percent increase from the same period in the previous year. According to Statistics Canada, Canadians spent around CAD 5.7bn ($4.5bn) on both medical and non-medical cannabis in 2017, with numbers expected to swell when the latter is legalised in July this year.

Given the lack of significant cannabis management expertise in the industry, having an experienced team really sets MJardin apart

Canada being the first major economy to make cannabis federally legal is huge news for this high-value commodity. A 2016 report by Deloitte estimates that the market, which includes tourism revenue, licence fees and business taxes, will be worth in excess of $22.6bn once the legislation comes into effect.

While the potential opportunities are obvious, the realisation of them is complex. This is particularly the case in the US, where cannabis is legal in a number of states but rules differ from one to the next. Adhering to a stringent regulatory framework, given the variance across the country, is why a rising number of growers and dispensaries are seeking the help of a third party.

Cannabis management companies can help such firms achieve maximum yield of top-quality products, all the while staying within the necessary legal parameters. In light of the market’s continued expansion expected over the coming year, World Finance spoke with Rishi Gautam, Chairman and CEO of MJardin, a leading cannabis management company.

Jump-starting success
MJardin manages licensed cannabis cultivation and processing facilities, together with retail dispensaries throughout the US. It also manages services, such as compliance, finance-related services, human resources software and intellectual property. “We don’t touch licences directly in the US, as we have separate licence holders who deal with that side of things. In Canada, however, we [attend] to our own licences and operate facilities as well,” said Gautam.

James Lowe was a pioneer of the cannabis management business when cannabis became legal in Colorado around 10 years ago. He and his team formed an initial management company to provide design services, and eventually cultivation management services, for newly licensed facilities. “In 2013, I met Lowe, as well as the other founders of MJardin, who were working in this management company format in the Denver area. We created the MJardin platform to basically institutionalise the work that he had started in the area of cultivation expertise,” said Gautam. “MJardin started officially in 2014; fast-forward four years to today and we are managing more than 30 cultivation, processing and retail facilities in five US states, and we’re making a large, aggressive push into Canada as well.”

In 2017, Gautam decided to become fully active in the business, taking the position of chairman and CEO. With a background in investment management, one of his first moves was to create a capital vehicle for the company to make strategic investments and take ownership stakes in various assets. “It’s a fairly new subsidiary but it has already proven to be quite effective, because the combination of capital combined with MJardin’s operating expertise allows us more powerful ownership in our managed assets.”
This permanent capital vehicle is a crucial part of MJardin’s strategy to both operate and invest in infrastructure assets in Canada, which will be facilitated further by its recent partnership with Bridging Finance, a leading private credit fund in the country. “We’re looking at Canada and other federally legal markets to make such owner-operated positions,” Gautam added. “A couple of years down the road, we see MJardin playing an integral part in the development of new markets.”

Knowledge is power
Another key thread to this strategy is maintaining a high level of expertise. “We have a team that has dealt in the production of legal cannabis for many years, and we’ve also created proprietary software and standard operating procedures, as well as other techniques, that have proven to be quite effective in numerous facilities across many different operating environments,” Gautam explained to World Finance.

Given the lack of significant cannabis management expertise in the industry, having an experienced team really sets MJardin apart from others in the space. There are states in the US, for instance, that have only been growing cannabis within a legal framework for less than five years. “MJardin has a head start, so to speak, because our senior operations team has been operating within a legal cannabis framework for a lot longer than five years, so they’re very familiar operating within a regulated environment,” Gautam explained.

As senior operators at MJardin have worked in the regulated environment for numerous years, they know exactly how to follow protocol and how to pass testing requirements. “This is crucial, because growing this plant in a very large-scale facility is not easy,” Gautam noted. “There’s always considerations to be made about the environment, the structure of the facility, plant health and so on, so we’ve created a solid system through training, software and standard operating procedures to minimise the risk of facility operations as much as humanly possible – that has been our goal since day one.”

Thriving through technology
Constant progress and innovation is vital for any high-value product, and this is certainly the case for cannabis cultivation. “We have a full-time research and development [R&D] team that focuses on improving and advancing cultivation techniques – from lighting systems to different soil media – in multiple facilities,” said Gautam. It’s important to note that MJardin’s R&D is production-focused, as opposed to being therapeutic or medical-focused. Gautam added: “This type of R&D has proven helpful because it allows us to retool and optimise our existing processes in a live facility – as opposed to a lab or some theoretical model. We’re fortunate to have several active facilities that produce and harvest plants – all within a cultivation R&D mindset.”

In a bid to further improve its systems and processes, MJardin is making ardent use of data tracking. “We have compiled what we consider to be the largest database of cannabis production history out there, which is all stored within a single server – and that data is very powerful,” Gautam explained. “We have thousands and thousands of harvest data, including different strains of the plant, the different performance of each strain, production metrics like grams per square foot, etc. We have all of that plus raw data.”

At the centre of this is MJardin’s proprietary software, GrowForce, a cannabis management platform that tracks, corrects and analyses all of the data collected. “We continue to automate more and more of our processes through mobile applications and other digital forms.” He continued: “We’re in the process of digitalising our facilities so that everything is done through the app or the software; all that data is then fed into the server, which provides analytics across all of our facilities and hundreds of thousands of pounds of production of cannabis product, in a very robust framework.”

MJardin University
Given MJardin’s inclination to use technology to continually improve its processes, it comes as little surprise that the company has developed an innovative training platform for its employees. “MJardin University is a proprietary online learning management system that we created to help support the development and continuing education of all individuals within the organisation, from the hourly facility positions all the way up to senior operations managers,” Gautam explained. “We also have fast-track programmes to bring on managers who come from different industries, but have no cannabis experience. The online learning system complements on-the-job training; once you do a particular course online then you have to perform such tasks in front of a supervisor in the facility.”

Gautam added: “MJardin University is something that we’re very proud of. It’s a testament to the strength of the team we have, but also to our continuing development. As the space develops and new techniques emerge, we’re very much on top of all the advancements in the industry, and we have a scalable system internally to educate and train everyone.”

When asking Gautam what he considers to be the most important factor for investors looking into the space, the theme of having the right expertise again arose. “It’s obviously a very bullish market – there are plenty of companies taking themselves public, plenty of licences being acquired, facilities being built; there is a lot of activity in a very early stage of this fast-growing industry. New markets are opening up and cross-border deals are happening, but I think the most important thing for investors to realise is that the production of this plant today, on an ongoing basis, is not a commoditised process like tobacco, tomatoes or other cash crops.”

Indeed, cannabis is a speciality commodity: the production of this plant on a mass scale and in a regulated environment takes a lot of experience, and a lot of skilled labour. “More large-scale facilities are being developed, but skilled operators need to be used to minimise the risks involved. Indeed, that skilled operator needs to not only have the knowledge, but also the right people to manage these facilities.”

Print Friendly, PDF & Email

Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

Share This Post On

Submit a Comment

Your email address will not be published. Required fields are marked *