After reviewing a bunch of press releases issued by True Leaf Medicine International, CBE interviewed CEO Darcy Bomford recently and learned a lot about his company and strategy, Health Canada and the race to become one of its new licensees.
As a kid, Bomford already had the entrepreneurial bug. His career started renting beach chairs in the summer. As a dog lover, he worked for a vet believing, at the time, that was his calling in life.
For three years, he worked for veterinarian Terry Quesnel who bred and competed in dog sled races before deciding that a vet career wasn’t for him, but he had taken notice of the pet treats & supplements business. So, at 16 years of age, he decided to launch his own line of pet products.
When he graduated from high school, he started a dog biscuit company, ‘Darford’ (combining his first and last names) Industries in Vernon, BC with a loan from a local bank. He ran it and built it for 25 years, ultimately taking it public in 2010 on the Toronto Stock Exchange (TSX). The company was growing fast, but losing money and short of capital to keep the momentum going. Unfortunately, he finally bowed out when a group of investors paid off his debt in 2012 and secured the assets with their new company. One of the conditions at the end was that Bomford had a one year non-compete. Bomford referred this experience to his “school of hard knocks” during his discussion with CBE.
Canada began its medical marijuana program back in 2001 with the formation of the Marihuana Medical Access Regulations (MMAR). According to Wikipedia and information on the Health Canada site:
The MMAR program was intended to clearly define the circumstances and the manner in which access to marihuana for medical purposes would be permitted. It contained three main components: authorizations to possess dried marihuana; Licences to produce marihuana, which include Personal-Use Production Licences and Designated-Person Production Licences; and access to supply of marihuana seeds or dried marihuana.
MMAR was replaced by The Marihuana for Medical Purposes Regulations (MMPR), a set of Canadian regulations enacted in July 2013 concerning the production, distribution and use of medical marijuana. Portions of the law become effective on October 1, 2013, March 31, 2014 and March 31, 2015. The law was struck down as unconstitutional by the Federal Courts due to the inability for patients to grow their own medicine. The new act put forward and run by Health Canada is the Access to Cannabis for Medical Purposes Regulations (ACMPR) which went into effect in August of 2016.
According to Health Canada, the ACMPR are designed to provide an immediate solution required to address the Court judgement. Moving forward, Health Canada will evaluate how a system of medical access to cannabis should function alongside the Government’s commitment to legalize, strictly regulate and restrict access to marijuana.
Overall, the ACMPR contain four parts.
Part 1 is similar to the framework under the MMPR. It sets out a framework for commercial production by licensed producers responsible for the production and distribution of quality-controlled fresh or dried marijuana or cannabis oil or starting materials (i.e., marijuana seeds and plants) in secure and sanitary conditions.
Part 2 is similar to the former MMAR regime. It sets out provisions for individuals to produce a limited amount of cannabis for their own medical purposes or to designate someone to produce it for them.
Parts 3 and 4 include:
- Transitional provisions, which mainly relate to the continuation of MMPR activities by licensed producers
- Consequential amendments to other regulations that referenced the MMPR (i.e., Narcotic Control Regulations, New Classes of Practitioners Regulations) to update definitions and broaden the scope of products beyond dried marijuana
- Provisions repealing the MMPR and setting out the coming into force of the ACMPR on August 24, 2016
- As of August 24, 2016, Health Canada began accepting applications from individuals who wished to register to produce a limited amount of cannabis for their own medical purposes or to designate someone to produce cannabis for them.
- Under the ACMPR, Health Canada will continue to accept and process applications to become a licensed producer that were submitted under the former MMPR. Further, all licenses and security clearances granted under the MMPR will continue under the ACMPR, which means that licensed producers can continue to register and supply clients with cannabis for medical purposes. New applicants can continue to apply for licenses to produce under the ACMPR.
Late in 2012, Bomford began exploring the opportunity to pursue a cannabis production license under the evolving Health Canada regulations summarized above and he formed a private company with his last $100k
from the Darford years as seed capital. The licensing process included the application and phased steps for approval and Bomford found his experience with quality assurance (QA) and years following US regulatory guidelines helpful. He filed an application under the MMPR rules (according to Bomford his new company was 48th in line out of 1000 applicants) and began the phased steps to be granted a license. After following the quality assurance steps, he found a site to build True Leaf’s cannabis cultivation facility in Vernon, BC.
After the first 12 licenses were granted in Canada between 2013 and 2014, Bomford told CBE that the conservatives in power replaced the health minister with a more conservative-minded Rona Ambrose who promptly slowed the approval process to a trickle.
Unfortunately, Vernon wouldn’t provide municipal zoning approval so Bomford subsequently had to resubmit his application and start from square one. With money running short, he scraped enough together to find a new location within 30 days. He found a willing town and property twenty minutes from Vernon in Lumby, BC which had been devastated economically from the lumber industry downturn. The new application went in April of 2014 and at 498th in the queue.
After conferring with his less than optimistic advisors in Ottawa, Bomford made two key decisions. In 2014, he began talking to investors to raise additional funds and pivoted back to his roots to focus on the launch of the True Leaf Pet (TLP) subsidiary until the licensing mood shifted and he had re-capitalized. In early 2015, with two subsidiaries, including True Leaf Medicine Inc. (TLM), True Leaf Medicine International Ltd (TLMI) went public on the Canadian Exchange (CNSX: MJ) and after going out at $.15 CN a share, had nervous moments as the stock lost 33% of its value before rising to $.21 CN a share allowing the new entity to survive. The stock after reaching a high of $1.77 CN this past January is currently trading around $.55 CN a share.
With the delay in licensing, revenue generation with medicinal cannabis is on hold until they complete the licensing for TLM. According to Bomford, TLM is in the final stages of Health Canada’s ACMPR process as it builds out its 25,000-sf facility to cultivate cannabis and bring a line of medical cannabis products for people.
The launch of TLP in Canada in 2015 centers around bringing a line of hemp -based pet products to market in the US, Canada, New Zealand and select European countries. The hemp seed based formula is marketed as a supplement and meets US and Canadian guidelines allowing TLP to establish a distribution network that includes over 1800 stores globally, plus Amazon as well. The product line, although limited, was launched at the Global Pet Expo in March 2016 and a couple months later at the Interzoo exhibition in Nuremberg, Germany.
The formulations were created with veterinarian support and includes other plant-based holistic ingredients. Bomford assured CBE that the products were federally legal in both the US and Canada and are part of a broader strategy to brand TLMI as a global, plant-focused quality of life brand for people and pets.
They are currently working with a Vancouver branding firm to solidify this strategy across both company divisions and plan to bring more sku’s to market later this year. This will align with another capital raise after legalization in Canada later this summer. The funds from the raise will be used for working capital to grow the business and also for potential acquisition targets in both the pet and human health and wellness space. TLP generated $375k in 2017 sales, they are projecting over $1M CN in 2018 sales, with March YE results to be announced soon.
Bomford sees the mixture of hemp seed oil-based products and the pending cannabis products positioning TLMI as a naturopathic solutions provider which seems to make sense. CBE believes that once the federal government ends prohibition in the states, US cannabis providers will morph their medicinal lines in that direction since the FDA will require expensive clinical trials to determine the efficacy of cannabis-based treatments for specific maladies.
TLM’s license pursuit has gained traction since it passed its security review in April 2017. They have raised additional funding through Regulation A+ crowdfunding based on the US Jobs Act. Canada is the only country outside of the US allowed to participate in this exemption and Trueleaf was the first Canadian company to do this. Bomford tells CBE that TLMI received US SEC approval for the RegA+ raise and is well positioning for an eventual move to listing on the TSX, NASDAQ or NYSE. Their crowdfunding efforts raised an additional total of $14 million CN to build the TLM cannabis cultivation facility on the 40-acre campus in the middle of Lumby. After breaking ground this year he anticipates completion in the fall of 2018, receiving a license from Health Canada to grow and bring cannabis product to market by mid 2019.
Health Canada has awarded roughly 91 licenses to date since the Trudeau Administration took over. Bomford
and the TLMI team are focused on using the capital they have raised to complete the TLM start-up, build out the pet business and to raise additional capital for additional Health and Wellness acquisitions to fuel both top and bottom-line growth. They have a solid team, including Chairman Michael F. Harcourt, former Premier of British Columbia from 1991-96 and, with the addition of Don Chisholm as VP of Global Branding, , the branding expertise to hopefully fulfill the promise of becoming a global “Quality of Life” wellness brand for people and pets.
At the end of the day, with a degree from “the school of hard knocks” Bomford, the entrepreneur from Calgary, is still alive to fight another day and he and his team will have to find their niche through execution of their strategic plan in the already hot but still heating up Canadian cannabis market. We can’t wait to see how his story plays out.
Cannabis Business Executive Background Information
Company Name: True Leaf Medicine International Ltd.
2013 – True Leaf Medicine Inc.
2015 – True Leaf Pet Inc.
Ownership structure/operating entities:
True Leaf Medicine International Ltd. subsidiaries:
True Leaf Pet Inc.
True Leaf Medicine Inc.
Owner/CEO E-mail address/Contact Information:
Darcy Bomford, CEO, Michael F. Harcourt, Chairman, Tenzin Khangsar, Executive Vice President, Susan Lucas, VP Finance, Don Chisholm, VP Global Branding, Jeff Nice, General Manager, True Leaf Pet
Headquarters: Vernon, British Columbia, Canada
Industry Segment/Category: Producer, Processor, Retailer
- True Leaf Pet – True Leaf produces hemp-based pet supplements that are currently sold in 1,800 stores worldwide and online on Amazon and WholesalePet.com.
- True Leaf Medicine – True Leaf is in the final stages of Health Canada’s Access to Cannabis for Medical Purposes Regulations (ACMPR) licensing process. When True Leaf receives its license to produce medicinal cannabis from Health Canada, it will grow/cultivate medicinal cannabis and produce and market medicinal cannabis products for people.
Current Markets/States Served: True Leaf Pet products are available in Canada, United States, Europe, and New Zealand.
Number of Locations: Currently building cannabis cultivation facility in Lumby, Canada, True Leaf Pet products in more than 1,800 stores worldwide.
Number of Licenses by State: 0, awaiting Canadian license from Health Canada
Current Number of employees: 12 in North America (not including the service providers like the Cultivation Team), one full-time employee in Europe, and six part-time/contract.
2015 Revenues: Nil, Launched True Leaf Pet
2016 Revenues: $37,330
2017 Revenues: $374,895
2018 Projected Revenue: $1,000,000 +
Company Revenue Mix:
- True Leaf Pet products provide all company revenue at this time.
- True Leaf is currently building a 25,000 square foot cannabis cultivation facility (True Leaf Campus). The facility is on a 40-acre site owned by True Leaf so the company is well positioned to expand its grow operations to meet demand.
- True Leaf will bring to market a line of medicinal cannabis products for people upon approval by Health Canada.
- Earlier this year True Leaf raised $10 million (CAD) in the U.S. through a Regulation A+ public equity offering. It raised an additional $4 million from Canadian investors via a private placement.