“One is only as productive as one’s last inspection” With Hamish Sutherland & Fotis Georgiadis

Fotis Georgiadis
Apr 24, 2019 · 13 min read
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One is only as productive as one’s last inspection. In the first three years, Health Canada paid us unscheduled visits with surprise inspections about once a month. When they arrived, they required our full attention so all other activities for Compliance and the COO had to stop, and the day was shot. A failed inspection would be a huge setback and possibly shut down operations until compliance was reestablished (by another surprise inspection). It kept us on our toes and inventory was always up to date but, as a result, I have had more inspections — as a person — than any other person in the Canadian industry not employed by HC (and we passed all of them). The other thing that arose from these inspections is that the HC inspectors became VERY knowledgeable. They are very smart people tasked with improvised responsibility.

part of my series about “5 Things I Wish Someone Told Me Before I Started Leading a CBD or Cannabis Business” I had the pleasure of interviewing Hamish Sutherland. Hamish is Founder and Co-CEO of White Sheep Corp, a cannabis company based in Toronto which is building the largest global footprint of low-cost cGMP cannabinoid production capacity in the industry. Hamish’s Scottish ancestors (highland shepherds) have served him well in being a custodian of hundreds of millions of investor dollars over the last three decades. A hands-on team builder, operations and marketing executive, Hamish is one of a rare few who has actual plant-touching experience in building a successful cannabis company, having passed more than 50 surprise inspections led by the excellent specialists at Health Canada. As the founding COO for Bedrocan Canada, Hamish delivered over $1.5 billion in returns for shareholders. He was responsible for the first legal international transfer of live cannabis plant material across any international border, as well as the “greenfield” construction and commissioning of the first large state-of-the-art automated facility (52,000 sq. ft.) in suburban Toronto. The facility, subsequently acquired by Canopy Growth (the largest cannabis company in the world), was the most reliable production facility in the Canopy family. Hamish has built start-ups on three continents and consulted to established brands including: Upper Canada Brewing Company, Bid.Com, Coopers & Lybrand, and ResearchNow. In addition, while working with the Australian government, he was responsible for establishing 17 offshore companies entering North America for the first time and guiding over $100-million of direct investment and acquisitions between Australian and Canadian companies. Hamish is a Professional Engineer (Engineering Physics) in Ontario, earned his MBA from Schulich School of Business, and was the Chair of the Little Geeks Foundation. He loves basketball, sailing and helping everyone achieve their potential.

Thank you so much for doing this with us! Can you share with us the story about what brought you to this specific career path?

Before cannabis, I was a marketer and strategic business developer in the tech industry where I delivered a few decades of professional international sales, marketing and operations experience. Nothing specific to cannabis. As a family guy who is passionate about basketball, I befriended the families on my son’s basketball team and met Marc Wayne, the founding CEO of Bedrocan Canada and a true medical-cannabis advocate. At our quarterly breakfast meeting catch-up, when Marc was close to earning a license, he found himself in need of a “person in charge” (PIC) to cover the gaps while he had to travel. It was a great fit with my engineering, consulting and international experience so I offered to help. Ultimately, helping a friend in need lead to my role as founding COO at Bedrocan. Working with and building the team there has been a highlight of my work-life with a terrific opportunity to learn so much, build exceptional teams with exceptional people, and contribute to a regulated system that brings real benefits to patients across Canada, and now the world.

Can you share the most interesting story that happened to you since you began leading your company?

When the industry was new, and we were the only facility in operation, there was interest from media in having a look around. During one visit, a journalist reached into her pocket to reveal some “product” she has purchased the day before at an illegal dispensary (for media research!) to investigate its quality and similarity to our cannabis. This was a huge problem for two reasons: 1) All cannabis in my facility was properly recorded and located — this was extraneous and could have led to a serious inventory issue and, while unlikely, a license suspension; and, 2) Contamination is the biggest concern in a cannabis facility and pollutants of any kind (especially on “dope”) could jeopardize an entire operation. Note to self: beyond hairnets and shoe covers, ask people if they have dope in their pockets before you let them in to your facility!

Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?

When we built this state-of-the-art facility, we underestimated that geese are heavy, ungraceful birds that look to land on flat surfaces with water accumulation, like, say, a roof of a large cannabis factory, no matter the time of day or night. So, a gaggle of 20-pound birds, landing on your roof that is outfitted with vibration sensors can trigger an alarm at 3:00 am. (I have no idea what party the geese were leaving when they arrived so late in the dark, or perhaps they just wanted cannabis!) Alarms blaring, the security company reported a roof break-in underway — at a cannabis facility — which generated notable concern from the police. Within minutes they arrived to investigate in those wee hours and we made great haste to be there to greet them. The police wanted to go in, and we wanted to know the cause of the alarm, but because contamination is our greatest concern, we have to minimize and document all entrants into our facility. Ultimately, we acquiesced and showed them around, only to discover the honking bandits on the roof. It was funny, but only after we assured the security of the building and prepared our report to Health Canada. If there is a lesson, it would be that unexpected stuff happens in every industry, but in cannabis, with high security and compliance, one has to plan for as many contingencies as one can imagine. Also …geese are not light, nor graceful.

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Are you working on any exciting projects now?

At White Sheep, our focus is on building compliant-friendly facilities in low-cost global areas where infrastructure (mechanical, power water and human) is inexpensive and readily available. Our global analysis guided us to southern Africa — with a benevolent climate, experienced work force, and access to licenses and land. The prior experience of our executives in Africa led us to identify a superlative — not just competent, but exceptional — regional team that provides us with a dominant land assembly and excellent local partners. Through this team, we identified a strategic group in another jurisdiction with whom we are expanding our proposed footprint in a second country in southern Africa. We have major global projects in four countries that are specifying, building and growing cannabis at scale — 3,500,000 sq. ft. (35 ha) in Eswatini, 300,000 sq. ft. in Lesotho, 4,300,000 sq. ft. (43 hectares) in Brisbane, Australia, and 300,000 sq. ft. in Trois Rivieres, Canada.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story?

Absolutely — the success of a cannabis operation is largely dependent on its quality assurance program. Cannabis is for human consumption and improves the quality of life for many patients and consumers. Doing this efficiently saves money, and time. My personal mentor at Bedrocan was our QAP, Judy Magner, of Draco Associates. The key to Judy’s magic was her professionalism, patience and deliberate approach, teaching a novice team about the critical importance of documentation and records to achieve compliance. Having had the best teacher, we ultimately added her daughter to our Bedrocan compliance and quality team — again, without whom, we could not have been as successful. The infamous story is that in the very early months, Judy proposed a series of documentation requirements which, at the time, and in the absence of compliance training, seemed absurdly detailed. Initially I responded, “That’s not happening …,” and of course, we needed all of this documenting. The key is to hire people smarter than you, and then listen to them.

This industry is young dynamic and creative. Do you use any clever and innovative marketing strategies that you think large legacy companies should consider adopting?

Yes, but I am not giving them away …Ha!!! Look, every jurisdiction permits different levels of communication with the target audiences, but there is a real difference between advertising and marketing. And we also have the nuanced category of education. The key is to assess how your target audience is prepared to respond to messaging and work on their level, not necessarily yours. The other consideration is that the regulators, who may be perceived as constraining your communication efforts, are also doing the best they can with new, unproven, untested regulations for a new industry and new consumers. They are not the enemy, but rather another target audience for the “how” of your messaging — and their buy-in and support can affect your success. Consider strongly their priorities and rationale — be creative and mindful.

Can you share 3 things that most excite you about the Cannabis industry? Can you share 3 things that most concern you?

Excitement:

1) As a Canadian, and a patriot, I marvel at the initiative taken by the intrepid pioneers of our sector, forging an entire industry that was created by a legal decision rather than designed policy (Supreme Court). The ability of Canadian companies to lead global regulation, compliance and capitalization, and to destigmatize an historically misunderstood plant, serves as a fine example of true entrepreneurism. The US leads on CPG products, branding and retail, but Canadian companies have the advantage in capital and regulation as new jurisdictions become legal around the world;

2) In Canada, it will be tremendously exciting on the day that patients and consumers are able to buy cannabis from sites where it is cultivated (“Farmgate”). Consumers see legalization only through a lens of accessibility. The closer the access, the greater the convenience. The excitement will come from the certain development of farmgate dispensaries for small licensed producers in Canada where consumers will have a real up-close and personal contact with passionate, sincere and devout cannabis cultivators and service professionals;

3) For those in capital markets and who revel in deals, there is great excitement about the almost-certain imminent consolidation, aggregation and acquisition of smaller companies and assets. As financial challenges greet companies in myriad circumstances, this will provide a treasure-trove of mergers and acquisitions. It will be a very exciting time — and will likely include aggregation of US companies that will treat Canada as the 51st state, as a few US MSOs have already.

Concerns:

1) The supply/demand gap in every global jurisdiction may be wider than currently perceived because the apparent “funded capacity” as we know it today may not be realizable due to the challenges facing cannabis cultivation. Crop losses, contamination, pathogens and powdery mildew management are serious factors which can hinder supply. Figures to date are only estimated predictions. It is a lot harder to grow cannabis (legally, without the use of banned supplements and pesticides) than all but the most inside of insiders can fathom;

2) How sustainable are the small-cap companies, given the fickle nature of the capital markets to continue to fund them? Regulation and licensing in many jurisdictions can create distribution challenges that stress cash flow management, and this is taxing on investors;

3) Governments are prone to move the goal-posts. Elections in Canada and the US over the next 16 months, as well as elections in international markets, can all throw curves at the executives of our industry. From regulation to standards, from cultivation to distribution, from marketing to labels, everything can change.

Can you share your “5 Things I Wish Someone Told Me Before I Started Leading a Cannabis Business”? Please share a story or example for each.

1) Compliance is hard.

Our compliance team assumed fantastic responsibility for our tasks and reporting protocols, and it has led to my belief that I hold my company and my teams to today: cannabis is a compliance industry, not an agricultural industry that suffers compliance. Detailed, comprehensive, and specific. Cannabis companies will only be successful with a corporate culture that fully adopts meticulous compliance without cutting corners.

2) The marijuana community is uncommonly passionate.

At one point in the early days of the legalization, an individual made social media attacks on several of our managers. We decided to meet him at a Starbucks where he berated us on our product quality and how “the man” was taking over the industry. He was an honorable guy, passionate about his weed, but not at all satisfied or supportive of good people trying to do good in a formal corporate organization.

3) There is a lot of pressure on being a Person In Charge (“PIC”).

For about a year and a half, we had only 5–6 PICs. By law, they must be present in each room where cannabis is present when work is being done. So, with multiple rooms, and only a few PIC’s, this resulted in all day shifts, 6 days a week, and no days off. A violation of having no PIC in-room (with full video coverage), or a mistake during cultivation, could jeopardize the success of an entire lot. The pressure was intense. I am eternally grateful for the stamina of my team, (particularly Steve and Cailey!). The industry is relieved that HC recently identified the genuine risks in a facility, versus the previous concerns based on unfounded fears — this has led to more rational and reasonable PIC requirements.

4) One is only as productive as one’s last inspection.

In the first three years, Health Canada paid us unscheduled visits with surprise inspections about once a month. When they arrived, they required our full attention so all other activities for Compliance and the COO had to stop, and the day was shot. A failed inspection would be a huge setback and possibly shut down operations until compliance was reestablished (by another surprise inspection). It kept us on our toes and inventory was always up to date but, as a result, I have had more inspections — as a person — than any other person in the Canadian industry not employed by HC (and we passed all of them). The other thing that arose from these inspections is that the HC inspectors became VERY knowledgeable. They are very smart people tasked with improvised responsibility.

5) The proof is in the paperwork.

One of the most compelling learnings was not so much a particular event, as a series of small educations from my QAP. The central lesson, and the one I take forward, is that regulated or medical cannabis (not marijuana or weed or dope) is all about compliance. The simple practice is, “If it is not written down, it didn’t happen”.

What advice would you give to other CEOs or founders to help their employees to thrive?

Common to almost every business — hire engaged workers who are able to fully participate and respect the documentation and records processes. I don’t mean they have to be passionate about documentation, but they should be sufficiently passionate about the product or service to care about the entire business. The critical success factor is the ability to do what is necessary, even if it is a little tedious at times. For many, the rigors of compliance are very hard to accommodate. The fact is, every employee is responsible for operations and compliance, because every mistake matters. It is not just up to the compliance officer. Every employee has the physical ability to destroy a crop or batch through malice or accident. And every employee likewise has the ability to compromise inspections by recording things inaccurately and improperly. Leadership actually arises at all levels in a cannabis organization — nurture those leaders throughout the organization with the necessary business-culture priorities.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I commend those people who are leading clinical research efforts, and other noble causes, but I am most looking toward those who will focus on the consumer market and recognize that dosing is a deeply misunderstood part of the consumption process. For example, most of the time, when we open a bottle of wine or liquor, we keep the lid so there is no pressure to consume the whole thing. With a joint, however, the practice is for individuals to smoke the whole thing, not to save some for later. For medicinal purposes, consuming a whole joint may not be necessary, but as a social process, this is the norm. Mini-(not necessarily micro)-dosing using vaporizers or precision distillates, is an alternate way to get an appropriate quantity of cannabinoids to a patient without wastage or excess. For edibles, there is the very real risk that consumers who do not experience immediate effects, due to a delay in onset, can end up taking more before realizing the initial impact, which leads to surprise and sometimes negative outcomes. Consumption is also very specific to each individual and it is hard to predict quantities and effects. We need more conversations and information about dosing. Go slow (especially with anything you haven’t tried before) until you figure out what works for you.

What is the best way our readers can follow you on social media?

On twitter at @Hamish_S and @whitesheepcorp

This was very inspiring. Thank you so much for joining us!

Authority Magazine

Leadership Lessons from Authorities in Business, Film…

Fotis Georgiadis

Written by

Passionate about bringing emerging technologies to the market

Authority Magazine

Leadership Lessons from Authorities in Business, Film, Sports and Tech. Authority Mag is devoted primarily to sharing interesting feature interviews of people who are authorities in their industry. We use interviews to draw out stories that are both empowering and actionable.

Fotis Georgiadis

Written by

Passionate about bringing emerging technologies to the market

Authority Magazine

Leadership Lessons from Authorities in Business, Film, Sports and Tech. Authority Mag is devoted primarily to sharing interesting feature interviews of people who are authorities in their industry. We use interviews to draw out stories that are both empowering and actionable.

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