Bigger fish to fry: Businessman races to become first licenced cannabis producer in Newfoundland

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Bond Rideout Jr., global fish trader, local dog-food retailer and all-round deal maker, was in his mother's basement, looking for antiques to sell, when he got the bizarre phone call that set him on an unlikely pursuit.

"They asked me if I would be interested in putting in an application to grow legal marijuana. My first initial reaction was, 'No, absolutely not'," recalled Mr. Rideout, who was so taken aback by the call, which he assumed came from a government official who knew of his federally inspected fish business, that he did not write down the caller's name, number or title.

"Where I come from, you don't use marijuana recreationally," Mr. Rideout said. "I've never tried it. I was always of the mindset that you didn't do that."

Mr. Rideout, who has a degree in religion, hails from rural Blaketown, Nfld., and is a study in contradictions. The son of a fisherman and a fish-plant worker, he is an insatiable entrepreneur who, in his effort to make a good living while remaining on the island, has dealt in antiques, printing presses, kosher fish products, meat, dog food and more.

Now, having retrofitted his fish factory to grow marijuana, he is racing to become Newfoundland's first federally-licensed cannabis producer. No one seems more surprised about this than Mr. Rideout, who, some days, sounds as if he is still justifying his foray into the business of pot to himself.

"If you want to be wealthy or you want to have extra in your life, this is a tough place to do it," he said. "You need to think outside the box."

In the four years since that strange phone call, Mr. Rideout has done quite a lot of that. He has reversed course on his initial opposition after steeping himself in marijuana knowledge, and waded through thousands of pages of cannabis-related industry and medical research. He has worked his way up from a 12-page application to transform his fish plant into a cannabis-production facility to one that is hundreds of pages and details what Mr. Rideout estimates to be a $6-million investment in a very risky effort.

"It's not something I'd recommend for the faint of heart," said Mr. Rideout, who is currently the only Newfoundlander in the final review stage of Health Canada's approval process (one other local applicant is in the earlier screening stage, Health Canada officials confirmed).

Still, he has grown convinced that legal marijuana production, done right, has powerful, transformative potential for Newfoundland's struggling economy and small communities.

"We need industry in Newfoundland. And I don't mean fish cakes. I don't mean knitted goods or small businesses employing two and three people," he said.

Mr. Rideout's vision, set out in his federal application on behalf of his company, NL Medicorp, involves using his current 15,000-square-foot building to launch the business, which is centred on using all parts of the marijuana plant – from buds to leaves, stems and roots – for a range of products. The 10-acre site plan in rural Fair Haven includes the eventual new construction of a larger, 45,000-square-foot production facility that could generate up to $150-million worth of dried marijuana annually. There are also plans for a separate research facility and lab offsite.

The company will employ up to 80 people with year-round salaried jobs, including researchers and laboratory workers. They will earn about $70,000 per year – a step up, Mr. Rideout said, from the minimum-wage fish-plant jobs that were once coveted in tiny Fair Haven.

"Instead of eking out a life, you'd have a quality of life here," Mr. Rideout said, adding: "This can replace what the fisheries did for outport Newfoundland. In fact this can make a case for outport Newfoundland."

The fact that outport communities are often difficult to get to makes them ideal locations to host grow operations, which must comply with strict security protocols. But there are still many hurdles to cross, not the least of which is a complicated regulatory web that stretches from the federal government, which regulates production licences, to the provinces, which will regulate supply and distribution.

"This industry will make millionaires, probably billionaires," Mr. Rideout said. "But it'll also ruin people. It's a new industry and we don't know it yet."

Neither do the provincial governments that are scrambling to map out plans for their sales and distribution of marijuana, which is set to be legalized as of July 1, 2018. Mr. Rideout had his first brush with the risks that come with navigating this new territory when, in mid-December, the government of Newfoundland and Labrador announced it had struck its first supply deal with an Ontario-based company.

The agreement will see the publicly traded Canopy Growth Corp. supply the province with up to 8,000 kilograms of marijuana a year for two years and allow the company's subsidiary, Tweed Inc., to operate four private retail locations in the province (Newfoundland has opted to distribute cannabis through its provincial liquor corporation to privately-owned retail licensees).

As part of the deal, Canopy, which has locations planned for seven provinces, will build a new $55-million production facility in Newfoundland. It is projected to create up to 145 jobs and produce up to 12,000 kilograms of marijuana annually, some of which will be exported. While the government will not contribute cash directly to the project, it has guaranteed sales remittances to allow Canopy to recoup its initial investment. The province will also match Canopy's five-year pledge to devote $100,000 annually to research and development.

Target opening date for the production facility is 2019; Canopy is billing the facility as "what could be the first licensed production facility in the province."

News of the deal shocked Mr. Rideout, who has nearly completed renovations on his grow facility and is waiting for Health Canada's green light. In doing all of that, he has not "asked for a government handout yet," he said.

"What I don't like is my government using tax dollars to fund my competition," he said. "It's beyond a slap in the face. I have no problem with [Canopy]. Let them come in and compete with me, but on the same level. Let them compete with me business-to-business."

Christopher Mitchelmore, Newfoundland's minister of tourism, culture, industry and innovation said the agreement with Canopy is not an exclusive deal but it was necessary in order for the province to secure a safe supply ahead of next July. The terms of the deal will act as a framework for future cannabis-related agreements, he said.

He went on to say that the province's vision for its cannabis industry includes local players on all sides, including production, supply chain and research and development, but pointed out that Newfoundland "doesn't have any current licensed producers."

"If a company does get to that point where they can clearly offer a secure supply, we're certainly willing to talk to them," he said.

Mr. Rideout is as motivated as ever. He has expedited plans to take NL Medicorp public and is awaiting Health Canada's final approval, which could come any day. Once he gets it, planting will begin.

"My goal now is to get plants in the ground," he said. "Everyone says you've got to be first, the early bird gets the worm. But it's the second mouse that gets the cheese."