East Coast organic marijuana producer ramps up to serve vast legalized market

MONCTON, N.B. – Denis Arsenault hosted an important visitor the other day at his Moncton offices, a moment that revealed much about his company’s grand ambitions.

Arsenault is CEO of OrganiGram, producer of Canada’s only organic medical marijuana, and the only licensed grower east of Ontario.

His visitor was Brian Gallant, the boyish, 33-year-old premier of New Brunswick, who came to offer wage subsidies to help the company expand.

Arsenault, whose company aims to get a running start on a legalized recreational marijuana market, did not miss the irony of Gallant’s visit.

The premier is supporting marijuana production just 30 years after one of his predecessors, Richard Hatfield, was arrested and put on trial for marijuana possession.

“It’s clear society has evolved,” said Arsenault, a tall, clean-cut executive who looks like he would be comfortable in any corporate boardroom in the country. “Seventy to eighty per cent of the Canadian population is in favour of some form of legalization.”

Last Wednesday, Health Minister Jane Philpott announced that the federal government will introduce legislation to legalize marijuana next spring.

Arsenault said he expects Health Canada will have to license more producers across the country to be able to meet the demand for recreational marijuana. He expects to carve a portion of that market, and is preparing for the day.

OrganiGram Holdings Inc. — publicly traded on the TSX Venture Exchange — already owns a neighbouring building and land where it can expand.

“I’d say we can get to 25,000 kilograms production capacity, which would take us in the vicinity of $200 million per year in annual production,” Arsenault said.

OrganiGram – which opened in 2014 and had its first sales last year – is one of only 30 producers licensed by Health Canada.

Behind barbed wire at its offices in an industrial park, prescribed marijuana is packaged and direct mailed to patients across the country.

“In terms of sales we’ve posted our last quarterly results at about $1.4 million for the last three months,” said Arsenault. “Things are going in a very nice direction.”

Arsenault said the current expansion will give OrganiGram a sales capacity of about $25 million, a level he expects to reach sometime in 2017.

The expansion – which is strictly for medical marijuana – is adding new areas where different strains of marijuana will be grown, processed and stored.

“There are two main ingredients in marijuana. You’ve got THC which is psychoactive ingredient. You’ve got CBD which is really the medical compound in it, and when we talk about children with epilepsy, it’s really the product in there that helps with those seizures,” he said.

“You grow different strains because not everybody wants a product that is very high in THC or high in CBD, so there’s a very wide variety of products that we grow.”

Marijuana is also prescribed to deal with pain and the symptoms of MS, Parkinsons, PTSD, sleep disorders and anxieties.

Security at the Moncton facility is tight. Staff and visitors must don white lab coats and hair nets while high-tech equipment monitors environmental conditions, and an untold number of security cameras track every movement.

Travelling from room to room, you see horticulturalists tending to plants at varying stages of growth, all bathed in a surreal pink glow from special lighting.

“Our climate control is very important,” said Nico Nache, OrganiGram’s director of operations. “The temperature, humidity, the airflow, and light intensity is all controlled via computer according to the plant needs.”

The company currently has about 47 employees, but that will grow quickly. Gallant’s announcement last month means the province will provide a payroll rebate of about $8,800 for each of 113 new jobs.

OrganiGram’s potential is being watched closely by the province.

Since it was legalized there, the state of Colorado has seen tax revenues from marijuana equal to what they had been collecting on alcohol.

Stephen Horsman, New Brunswick’s minister of Justice and Public Safety, said he has met with the governor of Colorado and reached out to Oregon and Washington State to find what lessons have been learned since those states legalized marijuana.

Horsman – a former police officer – said he’s keeping an open mind on the issue and adds that New Brunswick could use the extra revenue to help pay for services like education and healthcare.

Arsenault said revenue for the province could be significant.

“When you look at how much tax or remittances that NB Liquor provides the province on an annual basis, you may get a situation where you can double that,” he said.

Note to readers: Corrects name of New Brunswick’s justice minister in para 25.