Joint venture: Manitoba cannabis producers team up to package, distribute their own products

Jesse Lavoie wanted to sell Manitoba-grown cannabis in his home province, but first he had to ship it away. 

Working with seven local companies to produce not-for-profit joints to help fund a legal challenge to the province’s pot laws, he soon found the process to be needlessly complex and expensive, taking a big bite out of the funds he was trying to raise.

Lavoie said the price of shipping two kilograms of flower to Ontario to get it processed and sending it back to individual cannabis shops in Manitoba was roughly $1,000 … and that didn’t include the cost of processing.

“That’s when we all decided — instead of us all doing this separately through other means, let’s come together. Let’s form a syndicate,” said the Winnipeg entrepreneur. 

Starting next week, five independently-owned Manitoba cannabis companies will handle the packaging and delivering themselves, and they’ll do it locally. 

The TobaRolling Syndicate will pack the cannabis — into pre-rolled joints and jars, for example — in one facility and deliver it to the province’s cannabis shops together.

Small-batch growers teaming up

It will save each company money, create new jobs and reduce their environmental footprint, they say. 

“We all have similar issues where we’re paying big money for shipping or we’re paying a big corporation to do our processing and maybe it gets deprioritized, maybe it doesn’t,” Lavoie said.

“There’s a bunch of different issues that we’re trying to get rid of by doing it ourselves, and I couldn’t think of better partners to do it with.”

His venture, TobaGrown, is joined by four independently-owned cannabis producers: Alicanto Gardens, Cypress Craft, Kief Cannabis and Natural Earth Craft Cannabis.

Prior to this arrangement, “when you ship to a dispensary, you need to ship to each individual dispensary,” Lavoie said. “There’s over 150 in this province. If you think about 150 packages leaving Ontario to come here, that’s crazy money.”

Before cannabis can be sold in retail stores, it must be processed by a licensed company that will weigh the product, label containers and apply the tax stamps, among other duties. (Richard Vogel/The Associated Press)

Lavoie anticipates the shops will appreciate making one order and getting product from five companies.

Alicanto Gardens, based in the Morris area, considered becoming a licensing processor to save time and money.

But it wouldn’t have been cheap, said co-owner Waldemar Heidebrecht. 

“Just to make this processing room and all the licensing … we’re talking about $10,000, $20,000, $30,000 right there, without even blinking an eye.”

In fact, he once quipped to his family Lavoie should create some kind of a processing and distributing co-operative with other small-scale producers.

“It was kind of a in-house joke and never thought about it again, but then Jesse called me up and said, ‘Hey, we have this idea,'” remembered Heidebrecht, who jumped on board right away. 

Lavoie is well-known in Manitoba’s cannabis industry. Under the TobaGrown banner, he took the province to court for banning the production of homegrown recreational cannabis, even though the federal government allows it. He is awaiting a ruling from the Court of Queen’s Bench.

Natural Earth Craft Cannabis owner Tim Doerksen, left, and Alicanto Gardens co-owner Waldemar Heidebrecht share a laugh while speaking with the founding members of the TobaRolling Syndicate. (Ian Froese/CBC)

Lavoie said this latest collaborative effort is a vote of confidence in Manitoba’s cannabis industry.

“It symbolizes our commitment to this province, the cannabis consumers in this province, the dispensaries in this province and the brands in this province,” he said.

Focusing first on Manitoba

“Of course, our partners have aspirations to go beyond here. Manitoba will be our focus, but we will go there eventually.”

The local market is driving Natural Earth Craft Cannabis, a Winnipeg-based processor which was initially producing cannabis for other companies to sell elsewhere, before getting a sales licence to sell under its own branding.

“We wanted to be a part of the local cannabis community, which means having our products on local cannabis store shelves,” director Tim Doerksen said.

He said the TobaRolling opportunity was “almost impossible to say no to.” By aligning with other producers and minimizing or sharing costs, he expects a 20 per cent savings on that portion of his business.

The extra revenue will help businesses like his expand, and support the hiring of eight new workers to handle the weighing of flower, the rolling of joints and the labelling of containers, among other duties. Lavoie said the syndicate could hire more people if more businesses sign on. 

Cypress Craft Cannabis, run out of the Municipality of North Cypress-Langford, is hopeful the new relationship will bring their products to more Manitobans.

As a small business run out of the family farm, master grower Bryce Oliver said there’s sometimes little time to focus on the distribution part of owning a company when you’re busy producing it.

“One of our problems is we don’t get off the farm too often. So if (TobaRolling is) making a lot of relationships across the province, that’s going to help us out.”

Jesse Denton, founder of Kief Cannabis, said his facility will be the main place where the syndicate will package its cannabis. (Ian Froese/CBC)

This arrangement is possible with the involvement of a licensed producer like Kief Cannabis, which has the authority to be a processor. The Selkirk-based producer has one room set aside for packaging, and another room in case of expansion.

But Jesse Denton, Kief’s founder, said TobaRolling couldn’t have come together without the five parties. 

“From my understanding, we’re the first of its kind,” Denton said.

“I think it speaks volumes into how well-connected we are as a province and how well-connected we want to be as an industry, especially locally.”

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