Meni Morim, Namaste Technologies CEO, explores the challenges and opportunities that lie ahead for one of history’s fastest moving industries in this Q&A with Baker Tilly International’s Cannabis sector lead John Sinclair.
Q: Cannabis has a long way to go before it has the same retail experience for consumers as other consumables. What role do you see technology playing in the cannabis industry? Does an emerging technology like blockchain have a place?
Meni Morim: There are so many ways that technology can accelerate the cannabis industry. It really is not that cannabis is so unique — technology is accelerating everything.
But there are challenges.
We’re lacking a centralised and unified system for strain data. I want to be able to use an application programming interface to ask a central database. What is the certificate of analysis? What’s the THC percentage? What’s the CBD percentage? What’s the overall chemical composition so that I can provide that information to my consumers?
We still have to run tests independently every time.
So what I’m really focused on right now — and what our entire company is focused on — is using technology to delight the customer online. And that is because cannabis e-commerce, specifically in Canada, is unfortunately still lagging. More than 50 per cent of cannabis purchases in Canada still happen on the legacy (black) market because legal e-commerce for cannabis in Canada is still broken.
For example, in Nova Scotia you can only buy cannabis from the Nova Scotia Liquor Corporation (NLSC) — the only authorised retailer of recreational cannabis. In order to do so online, you have to drive to an NLSC store, get a physical card, come back home, scratch that card, and punch in a code to the website, before you can buy online.
So there’s so much to do to get the fundamentals of cannabis e-commerce right: user generated content, guided buying, etc. We are focused on doing a lot of those.
One of the other challenges or opportunities that we see is enabling a marketplace experience. There is no real Amazon-style, end–to-end experience for cannabis. That is something we are right now really focused on with VendorLink, our marketplace platform. We’re hoping that through VendorLink and the other technological elements that I’ve mentioned, we’ll be able to accelerate the growth of cannabis in Canada and beyond.
In terms of blockchain, if I could get $1000 for every time I’ve reviewed blockchain technology within cannabis, I would be able to buy a couple of companies now.
Blockchain is very interesting technology but there is a lot of hype around it. People used it in places that it didn’t really make sense to use blockchain — they just wanted to say they used it. But in many cases, I can achieve the same goal with less complexity and without blockchain.
Over the past few years, the number of countries welcoming cannabis as an industry has grown. Just recently, we saw that Greece is now considering cannabis cultivation. What are your thoughts on Europe’s emerging cannabis industry and what the future holds?
Many companies, especially from the US, completely ignore Europe because they don’t really understand it. It’s multiple languages, it’s multiple cultures and the whole VAT thing is confusing. They don’t want to touch Europe but it’s a huge opportunity. The population of the EU is around 450 million people with free cross-border trading.
I’m personally very much looking forward to regulatory changes in the EU that would make it more attractive for companies like ours to expand. Cultivation is less interesting for me, but the reality is that at some point cultivation of cannabis will be commoditised and it’s already started.
There is a reason that we don’t grow coffee in Canada or in France because it’s not supposed to grow here and it’s way too expensive. Once cannabis becomes more accepted, and legalised globally, it will be grown where it’s supposed to be grown.
There’s already talk in many countries around legalizing cannabis to handle the economic impact of COVID-19. The United Nations still includes cannabis in the illegal substances list, which means that countries that are reliant on UN aid where cannabis is supposed to grow, can’t grow it.
It’s another example of the many things that need to change in this sector and just one change could create this ripple effect that will accelerate this growth and then unbelievable velocity. I think that it’s very interesting that Canada is positioned to take advantage of this potential growth in the future.
Mexico also just introduced legislation to legalise recreational cannabis. Do you see that changing the North American market?
I’ve had a lot of questions about Mexico from investors and partners. It’s definitely an interesting development. But to be completely honest, my personal view is that I don’t see any immediate impact from that.
Specifically, if we look at the North American side, currently Canada allows almost no import, so we won’t be able to really import from Mexico and take advantage of the lower cost of production. The US, mainly California, currently grows more cannabis that they can sell and they need to start destroying crops.
So, the import or the export avenue from Mexico is closed from an expansion perspective for us. We don’t know yet what the legal cannabis realm in Mexico is going to look like. What we’re doing is we’re keeping a very close eye on the developments there.
We are very excited about our expansion potential and that of other Canadian cannabis companies because Canada is pretty much the only G20 country to legalize cannabis, on a federal level effectively. And everyone is looking at us and the model that we’ve built here.
Israel is now starting to look at the full legalisation of cannabis from a recreational perspective as well, and reporters are saying they should look at the Canadian model.
It’s an amazing place for us to be in because when these things start to change, everyone is going to come to us and say, tell us what you did, and where you failed? How can we avoid these failures? How can we learn from your mistakes? Opportunities for joint ventures, technology, licensing, and consulting will be massive.
What were the main challenges facing the cannabis industry and how have we dealt with them in Canada?
I think that the biggest challenge is how to mature — how we, as an industry, move from pie in the sky speculation to genuine business. How do we look at metrics like profitability, return on investment, stability? How do we mature as an industry?
I know what we’re not good at and what we never want to do, and what our strengths are and what we want to achieve. And why is that important? It’s because a lot of companies looked at the Aurora and Canopy model and tried to be everything for everyone. They tried to be cultivators, extractors, B2B distributors, online medical distributors, and owning retail facilities. It’s the only industry on the planet that I know that all the companies try to do everything.
We started that process a while ago and employed extreme focus on that. We have a very clear goal: to grow our company responsibly, towards profitability, and gain as much market share as we can throughout the process.
I think that that was one of the key challenges that everyone had and we’re all dealing with it. We’re seeing great results, at least from our side, and we’re hoping to see further improvements as we go along. It’s a testament to what focus can do for your business.
Finally, what do you say to investors and advisors in countries that have yet to accept cannabis as a product?
The first thing that everybody needs to do is to shed their bias.
Legal cannabis is not sold in a dark corner where you don’t really know what you’re getting. This is a medical grade product that is highly regulated and controlled.
We must remember that cannabis is not for everyone but that doesn’t mean that people should be denied access to it. It’s a plant that has so much history, it has so many benefits and has done so much good for so many people if it’s consumed responsibly.
So my view is, don’t let biases affect your decision making, do your own research and make your own decisions. Visualize yourself 20 years from today.
Looking back, would you want to say, ‘Hey, I helped build this industry?’ Or would it be, ‘Yeah, I thought that wasn’t going to amount for anything, so I tried to block it’.
These are the choices that people need to make.
See the full interview broken down by topics in this playlist.
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