Peace Naturals, located in Staynor, Ontario was the first new cannabis producer in Canada to receive their full licensing under the MMPR back in 2013. In 2016, Peace Naturals was acquired by the Cronos Group and represents the firm’s flagship company.
Cronos Group also owns 100% of In The Zone situated on 31 acres of land in the Okanagan Valley as well as partial ownership of Whistler Medical Marijuana Company and strategic investments in ABcann, Hydropothecary and Evergreen Medical Supply. On May 23rd, 2017, Peace Naturals broke ground on what will be the world's largest purpose-built indoor cannabis facility.
As Mike Gorenstein, CEO of The Cronos Group explains, the company started out as a holding company with investments in Peace Naturals before taking over the reigns. “It was initially an investment vehicle but we wanted to change the strategy. So, we went from being a passive investment vehicle to actively managing the company. This [Peace Naturals] really is the crown-jewel of our portfolio.”
One of the first bottlenecks that was addressed when The Cronos Group took over was the power supply. Production was mainly coming out of an old barn and there wasn’t any electricity to power any auxiliary grow rooms. A mere $60 000 investment later, yields have roughly quadrupled and there is now enough power to supply all three buildings with enough left over for the new 315 000 sq. ft. expansion.
The Cronos Group and Mike Gorenstein had several reasons for investing in, and later acquiring, Peace Naturals. “There’s a massive genetic bank here and that was a big advantage. Second, there’s access to free, fresh water from Wasaga beach. So, that’s a large cost we don’t have to worry about. Third, there’s a main methane line that runs right across the street so we can do natural gas generation. Fourth, having over 90 acres of flat land was big for us. And being close to Toronto metropolitan area and having an airport nearby made this acquisition a no-brainer for us.”
The current setup sees two 15 000 sq. ft. auxiliary grow rooms and a retrofitted barn mainly used for storage and processing. Within each grow room, separate rooms are partitioned depending on various stages of growth. Lighting fixtures also vary depending on the specific needs of the plants. Peace Naturals places great emphasis on innovation and research and are constantly experimenting with different LED wavelengths in the hopes of finding the perfect combination. Any refinements to the growing process discovered here can benefit its other wholly-owned LP in the West Coast and will be directly integrated into the new 315 000 sq. ft. expansion.
The new expansion will see an additional 315 000 sq. ft. facility comprising a 286 000 sq. ft. production facility, a 28 000 sq. ft. greenhouse, and an additional 1 200 sq. ft. extraction laboratory. The new facility will be designed to Good Manufacturing Practice (GMP) certification standards allowing for distribution in European markets such as Germany. Expansion completion is set for November 2017 and they expect to be fully-operational by summer 2018. This new expansion will increase Peace Naturals total annual production capacity to 40 000 kg.
In the press release, it is interesting to note how the new facility will be used. There is significant emphasis on research and development, with large areas earmarked for proprietary genetic breeding, cannabinoid and terpene extraction, identification, and formulation, analysis of metabolite enhancement and new lighting technologies and even an industrial-grade kitchen. Mike provided some further insight into how he sees Peace Naturals evolving into the future. “We got a staff that’s pretty focused on formulation and R&D. I think that’s where the future is. Genetic breeding, separation and identification, reconstruction and formulation and ultimately delivery systems. I think especially from the medicinal side, we are going to want a delivery system other than combustion.”
Peace Naturals and Mike Gorenstein pride themselves on seeking out the best talent to join their business. In fact, he recruited many professionals and leaders from top companies such as Pepsi, Deloitte and Merck and convinced them to forego their large salaries and move into a shared 5-bedroom house in Staynor, Ontario all to cut down on costs and build a company they would be proud of. With more and more LPs entering this sector, competition will increase and, according to Mike, it will be the individuals within each LP that will be the difference-maker. “Regardless of market caps, every licensed producer in Canada is a start-up right now and the most important thing in venture and start-ups is the people.”