Pubdate: Mon, 22 Dec 2014
Source: Windsor Star (CN ON)
Copyright: 2014 The Windsor Star
Contact:  http://www.canada.com/windsorstar/
Details: http://www.mapinc.org/media/501
Author: Doug Schmidt
Page: A1

THE NEW CASH CROP

'There's No Stoners Here'

Long-time greenhouse grower Cole Cacciavillani, his family a pillar 
of the Leamington community, jokes about acquaintances made during 
nearly three years of personal research into growing marijuana.

The challenge in expanding from geraniums and poinsettias for retail 
chains like Costco into marijuana for medical patients was most of 
the existing expertise was built up around a crop still largely illegal.

"The problem with this whole industry is it's been mostly 
underground.... We have to make it legitimate," said Cacciavillani. 
He insists he's never ingested the new product he's now licensed to 
grow and sell.

"There's no stoners here," the suited business entrepreneur and 
greenhouse pioneer said when asked about what might make local 
farmers keen on growing pot.

But Cacciavillani, the founder and co-chair of Aphria Inc., suggests 
it's probably a different story for some of the pot professionals he 
consulted along the way.

MASSIVE SECURITY TO PROTECT POT

Located on the town's urban edge and surrounded by acres of potted 
flowers under conventional greenhouse glass, are three sections 
dedicated to growing Essex County's newest agricultural crop. They 
are distinguished by the barbed wire and towers sporting video 
cameras, lights and motion detectors that surround them.

"You'll be blown away by the security.... It's simply massive," said 
company CEO Vic Neufeld, who moved to Aphria earlier this year after 
retiring as president and chief executive of vitamin giant Jamieson 
Laboratories.

The unusually tight security and oversight at Aphria came into sharp 
focus during a recent tour when Cacciavillani accidentally knocked a 
single leaf off a pot plant.

Probably a handful of video cameras spied that leaf falling to the 
greenhouse floor amid the countless leaves on hundreds of other potted plants.

"That should be logged," Cacciavillani said of this tiniest of 
incidents. He then reconsidered, but not without a small concession 
to the cameras - with a sigh, he bent down, picked up the tiny fallen 
leaf and delicately placed it back on the mother plant.

About 50 video cameras with better resolution than those capturing 
the action from above the Caesars Windsor blackjack tables record 
everything, all the time, with a huge 500-terabyte hard drive that 
ensures all that footage can be stored up to two years.

Police-screened employees log in and out when entering and exiting 
the various work areas, some behind doors that only open with the 
scanned fingerprints of specially permitted supervisors. Motion 
scanners detect and record the slightest movements around the 
complex, and Cacciavillani said there are additional security 
measures he won't divulge. Every plant movement must be logged, and 
Health Canada inspectors randomly drop in for unannounced inspections.

The harvested pot that is trimmed, packaged and prepared for shipment 
is further locked away in the "vault" - a 60-by-100-foot storage area 
behind steel-bar reinforced concrete walls surrounded by a further 
array of detection devices and security features.

It's all for good reason. By the time Aphria got its licence to sell 
at the end of November, it already had 100 kilograms of rich medical 
marijuana bud ready to ship - at a low-end average sale price of $8 a 
gram. That's $800,000 of legal weed.

LEAMINGTON BUD WORTH MILLIONS

The company business plan sees Aphria shipping 1,600 kilograms of pot 
on an annualized basis by the end of next year - enough to supply 
about 3,500 patients. Its licence allows for 8,000 kilograms of 
annual production. That's an estimated $64 million in potential yearly sales.

The high security - a sizable portion of Aphria's $6-million startup 
costs - is to assure Health Canada that not a single gram of pot gets 
diverted from its intended use, which is bringing medical relief to 
the growing number of patients being prescribed marijuana by doctors.

Despite all the security, which includes giant carbon filters to 
ensure that distinctive marijuana odour doesn't escape to the 
outdoors, Aphria's operation looks a lot less imposing than the 
typically brick-enclosed, windowless and bunker-like appearance of 
the cannabis competition.

 From the outside, this still largely has the appearance of any other 
greenhouse business. Aphria's 22,000 square feet of growing area is a 
small footprint inside the 450,000 square feet of space dedicated to 
growing flowers, spread across 10 acres of greenhouses that CF 
Greenhouses uses to produce an annual crop - marijuana excluded - of 
6.5 million plants.

As one of only two new producers granted approval to sell since 
Health Canada's regulations changed in the spring, Aphria's 
principals believe it's going to be much tougher now for others to 
enter the scene. They also feel that, going forward, their experience 
and local skill sets acquired over decades in the farm and pharma 
sectors will put them at a competitive advantage as the medical 
marijuana market expands.

"No one's been down this path before. We're the first in this new 
process," said Neufeld.

"All the others are box growers, we're greenhouse growers," said Cacciavillani.

Whether it's for security or due to the sketchy roots of marijuana's 
recent past, all the other growers approved so far operate in what 
the Aphria partners dismissively describe as "boxes" - windowless 
structures that rely completely on artificial lighting.

The newness of the industry and relatively low level of competition 
that currently exists might allow for a wide range of growing 
conditions and pricing, but Cacciavillani said the market will 
tighten up soon enough. That's when Aphria, operating under the 
meticulous scheduling, yield-boosting and growing guidelines 
developed for the greenhouse industry, will have the advantage, he 
and Neufeld said.

Energy costs alone, Cacciavillani said, are about 75 per cent lower 
in a greenhouse environment. "Those other box producers, they can 
afford to do it their way now, but not in the future," he said.

The Aphria growing area is very high-tech, with plants in five stages 
of growth - from tiny cuttings to bushy mother plants - on movable 
steel trays, fed a controlled diet of liquids and given strict 
dosages of daylight and lamplight.

Cacciavillani, who co-chairs Aphria with fellow longtime grower John 
Cervini, runs CF Greenhouses, pioneers of a high-tech agricultural 
sector that now boasts more than 2,000 acres of greenhouses in the 
Leamington and Kingsville area - the highest concentration in North America.

Before Aphria, Neufeld headed Windsor's Jamieson's Laboratories and 
grew it into a globally recognized brand name and Canada's largest 
manufacturer and distributor of products such as natural vitamins and 
botanical medicines. He moved to Aphria after Jamieson's sale in 
January to new private-equity owners.

After two-and-a-half years of mostly hush-hush development and 
preparation, Aphria - now publicly traded but 52 per cent owned by 
the three principals: Cacciavillani, Cervini and Neufeld - got Health 
Canada approval to sell pot on Nov. 27. Without even having started a 
marketing strategy, the counselling service hired by the company to 
service client questions fielded 25 calls on that first day, and 
there are already times when "it's a zoo" with eager potential 
clients. The first client shipment went out Dec. 10.

"We understand scale and we understand production," said 
Cacciavillani, adding his new company, barely out of the starting 
gate, has already fielded several buyout offers from bigger companies.

With medical marijuana now being legally produced and sold, Neufeld 
is convinced it's only a matter of time before recreational pot is approved.

"Right now, we don't need any potheads in a suit. None of us are from 
that culture," said Neufeld.

"But if it goes recreational, there's no doubt we'll need people like 
that, although I don't think we'll have a problem finding them."
- ---
MAP posted-by: Jay Bergstrom