2014-03-06

Co.Exist

Is This The First $5 Billion Marijuana Company?

With a sprawling 10-acre maximum-security compound in Canada, a company that sells vitamins and nutritional supplements aims to sell an even better natural remedy.

The conventionally held wisdom is that large tobacco companies are poised to benefit the most from widespread marijuana legalization. They already have supply chains that could take on the task of producing joints or spliffs just as easily as tobacco cigarettes. And these companies also already deal in controversial substances, so they wouldn't shy away from the challenge. While Big Tobacco is reportedly looking into the potential for marijuana sales, there's another, more unexpected sector that's also getting into the act: the vitamin and nutritional supplement industry.

A Michigan nutritional supplement company called Creative Edge Nutrition is branching out into the marijuana space with a 10.3 acre growing facility in Windsor, Ontario, that can generate up to 1.3 million pounds of marijuana worth about $5 billion every year. Unlike almost every other firm in the marijuana industry, Creative Edge is a publicly traded company (though it's only trading at about 10 cents at the moment).

CEO Bill Chabaan first became interested in medical marijuana about a year and a half ago. But as an attorney, he was wary of getting involved in the U.S., where states have varying levels of legalization but marijuana sales are technically illegal on the federal level. So he started with a low-risk venture by licensing formulations for hemp-based products to dispensaries in the U.S. This past April, Chabaan put together a 900-page application to become one of Canada's commercial marijuana growers (the country is transitioning from a system of 22,000 individual growers providing medical marijuana to one where a small number of tightly regulated producers generate all of the country's legal weed).

Chabaan's won't be licensed for growing for at least another few months, but he's already expecting to have his first products on the market in Canada this year. "It's a facility with state of art security measures that replicate a federal maximum security prison," he says. The entrepreneur hired a Canadian police veteran who has worked with the DEA in the past to take over the $3 million security project; a number of attorneys are also on the marijuana team. As part of a partnership, another company called GrowLife is getting 25% of the revenue stream in exchange for financing and grow equipment.

Canada doesn't allow its marijuana growers to advertise, but Creative Edge is planning to launch a medical marijuana educational program for physicians. "We intend on having 50 different strains," says Chabaan. The company is licensing the use of software that allows health care practitioners to enter the qualities they seek (increasing appetite, lowering anxiety, etc.) and find out which marijuana strain is best for their patients. "They aren't going to have street names like 'OG Kush.' It's medical marijuana, not recreational marijuana," Chabaan.

That's not to say Chabaan isn't interested in recreational marijuana. Creative Edge retains lobbyists in nearby Michigan, which already has a medical marijuana program. "They want marijuana to be dispensed in pharmacies. Once [legalization] gets adopted on a federal level, we would absolutely open across the country," he says. In the meantime, Creative Edge plans to export its marijuana to other countries. Israel, for example, has a free trade agreement with Canada as well as a medical marijuana program, so that will be a target nation for exporting.

Chabaan thinks it makes perfect sense for a nutritional supplement company to get in the marijuana business. "I think you'll see a lot more health and lifestyle companies than tobacco companies, he says. "In Colorado, the top two products are gummy bears and chewing gum."

[Image: Marijuana via Shutterstock]

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6 Comments

  • Remember this guy is a lawyer. Allow me to give some insight as to WHY he would want to remove his product from the street names and go with company branded names. The street names of weed/kush cannot be copyrighted or branded, if he were to sell BlackberryKush everyone that sold BlackberryKush would benefit from the money they dump into the market. So he lets say he decided to call Blackberry Kush "Mellarex - a blackberry kush based relaxant". He now completely controls the product and anyone that were going to use that name would be sued and taken to the cleaners. So although street names will prevail because they are commonly used and will be the root of these brand names, companies will rebrand the street name products and include their street name reference in order to control the brand and identity of the product. If you are interested in learning about brand strategy and naming you can come to our site CompanyNamesIdeas.com and learn some brand strategy. Cheers to all!

  • Charles Barnard

    Gee, they've never been able to regulate the use of any easily made recreational drug, but now they're going to be able to control the street names of medical MJ?!

    I doubt it. the names that exist in the market are often indications of plant genetics, not mere marketing labels given by admen.

    The dollar numbers are highly inflated and assume that the market costs will remain high...unlikely. Unlike other drugs, this one is quite easy to grow in your home or office without notice.

  • Audrey Lee

    Dumb, dumb, dumb...ANYONE who really knows what they are talking about wouldn't say half of the stuff this donkey says...he must be repeating what his "people" tell him...and something gets lost in the translation...if you actually look into what he is saying...and his application for the MMPR, you would know it...bigger isn;t better here...and this guy, Chabban, is all about the sizzle...nothing about the steak...caveat emptor.