Largest Canadian Cannabis Grower Calls for Focus on Quality and Professionalizing of Industry

Largest Canadian Cannabis Grower Calls for Focus on Quality and Professionalizing of Industry

Torsten Kuenzlen, CEO of Sundial Growers, delivered a keynote address at MJBizCon in Las Vegas in November. Photo by Marijuana Business Daily.

Torsten Kuenzlen, CEO of Sundial Growers in Canada, was a keynote speaker at MJBizCon, presented by Marijuana Business Daily, in November, and said the opportunity in cannabis is unmatched, as long as the industry’s focus is on quality, not just filling demand.

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With 27,600 attendees; 1,027 exhibitors; 158 speakers, MJBizCon 2018 in November was the world’s largest cannabis business conference, and it’s only going to get larger and longer in 2019. The city of Las Vegas and Clark County have designated a full week next December for MJBizCon Week. With more attendees and exhibitors expected, the conference will be expanded from three days to five days, December 13-19, 2019.

Industry Just Out of the Starting Blocks

Kuenzlen, who leads Sundial Growers, Canada’s largest cannabis producer, has an extensive background in consumer products, specifically in the beverage category, having worked for years in high-level positions at both Coca-Cola and Molson-Coors. He said the cannabis industry in Canada is entering its 2.0 phase with legalization in Canada and many states in the U.S., and is literally just “out of the starting blocks” in terms of its potential.

While some are saying the medical cannabis market is maturing because sales are slowing in states where recreational use of cannabis has been legalized, Kuenzlen said that notion is “not even funny it’s so funny,” as sales “slowing” to 15% growth is a figure that most companies and industries would love to see.

Compared to the more than 200-year-old beer company Molson-Coors, the cannabis company Canopy has grown so quickly in the past two years that its current financial value matches Molson-Coors. And the financial value of Tilray, a medical cannabis research, cultivation, processing, and distribution company founded six months ago, is already outpacing Molson-Coors, Kuenzlen said. Contrary to those who forecast that Big Pharma, Big Ag, Big Tech, Big Tobacco, and other large and established industries will take over cannabis once fully legalized, he said perhaps it will be the other way around.

“What if the cannabis companies buy the beverage companies and the pharmaceutical companies and the tobacco companies?” Kuenzlen asked. “If bigger, faster growing companies traditionally have bought smaller, slower growing companies, why can’t it be cannabis companies that acquire? Who says we can’t take on Big Ag, Big Tech, Big Pharma? To do that, it’s going to take all of us.”

MJBizCon 2018 increased by more than 10,000 attendees from 2017. The Las Vegas event drew 27,600 attendees and more than 1,000 exhibitors. Photo by Marijuana Business Daily.

Quality, Professionalism Required

Addressing the supply issue on Oct. 17, the first day of federal legalization in Canada when sales and demand outpaced inventory, Kuenzlen said it’s “not a bad thing” that there wasn’t enough supply.

“Nothing ever goes perfectly on Day One,” he said. “It’s an opportunity to improve.”

Legalization benefits far outweigh the risks, and the economic opportunities abound where cannabis is legal, Kuenzlen said. While he said he’s not sure how cannabis will add to Canada’s GDP, “it will allow Canada to get into the passing lane,” as the first G7 nation to federally legalize cannabis.

Meanwhile, there is emerging momentum for professionalism in the industry, and the future is bright.

“It’s not bad to work hard. You’re not working hard when things are good, demand is high, and sales are growing. Working hard is actually when you don’t see growth for 20 years,” Kuenzlen said.

While needing inventory is a good problem to have, Kuenzlen said, growers have to be able to match what the Canadian provinces have contracted them to supply, and there are hundreds of companies that need revenue to pay back the bank loans and venture capital investments so they can continue to exist.

In addition, significant research restrictions prevail, despite hundreds of years worth of research left to be done. To our knowledge, there are 113 cannabinoids, yet we can only name a few (CBD, THC), not to mention what they do, how they work, how they interact with one another, and other unknowns, Kuenzlen said.

The industry needs to address the quality issue and play to its strengths in the right way, not just focus on quantity production to meet demand. To add to this, current branding of cannabis strains with racy names, calls into question, “Is that the industry we want to be?” Kuenzlen said. The cannabis market going to need to figure out the best way to professionalize, while also not taking the spirit out of the industry.

Quality and traceability of professionally grown and processed brands will be attractive to those currently buying from the black market, Kuenzlen predicted.

“We’re going to stomp out the black market when we get better quality,” he said.

Meanwhile, the whole nomenclature of cannabis products need to change to allow those not familiar with different strains to buy products based on what they want the product to do. Kuenzlen said it’s the industry’s job to make sure consumers get quality product and help tell the story to allow consumers to understand what they want and how to get it, whether their need is to heal, improve general wellness, or to play.

Supply Won’t Outpace Demand

The supply/demand overlap myth is a “very unsophisticated view of a sophisticated industry,” Kuenzlen said. “When will supply and demand overlap? Never.”

The industry needs only to look to what it can learn from industries like wine and whiskey, he said. Consumers want variety. The price of wine and whiskey never goes down – there’s room for a scale of quality, and a scale of prices based on quality.

Producers must look at what’s best for the industry in terms of producing cannabis to meet demand, Kuenzlen said. Growing to fill quantity demands will be a race to the bottom. Irradiating product won’t set it apart from what’s available on the black market. Instead, the industry needs to create brands for selection and choice.

Finally, he asked the audience what it will take to get to the Cannabis 3.0 phase. Right now, the industry is “built for speed, but it needs to recalibrate.”

To bring the cannabis industry to the next level, which he suggested could mean up to a $2 trillion global market by 2050, Kuenzlen challenged professionals to “think and act beyond the current day-to-day; focus on safety, quality, and trust, build holistic stakeholder partnerships; play to healthy industry dynamics; and recognize that with great opportunity comes great responsibility.”