Pic: Bruce Linton (Supplied)
Health & Biotech
Creso just recruited the biggest name in the global cannabinoid game.
Creso Pharma’s (ASX:CPH) new star non-executive director Bruce Linton was off to play ice hockey in his native Canada when he spoke to Stockhead.
Linton, regarded by many as the Wayne Gretsky of the nascent medical-cannabis sector, is now focused on a different kind of goal – building Creso into the kind of CBD giant his name has become synonymous with.
Linton co-founded Canopy Growth, leading it to become the first cannabis producer listed on the New York Stock Exchange (NYSE) – with a peak market capitalisation of US$15bn.
He also secured market support for 16 funding rounds, raising US$5 billion and executing 30 successful M&A initiatives.
As a director of leading psychedelic medical company Mind Medicine Inc, Linton oversaw growth from a ~C$75m market capitalisation to over C$1.5 billion in a few short months from late 2020 to May 2021.
Joining the company’s board was a natural progression after acting as a special advisor for the company.
“I first discovered Creso and wanted to find good partners for them because I thought they had terrific science coming out of Switzerland,” he said.
“After about a year of doing that, they made me a special advisor which means I continually look for connections which might result in them becoming a bigger, stronger company.”
The Canadian also became a board member to support Creso’s new managing director and CEO William Lay along with expanding its access to larger markets, like the US.
Linton had a large part to play in shaping the capabilities and career of Lay, a former investment banker. Lay worked his way up to be associate director of M&A at Canopy Growth.
He led transactions locally and internationally, while progressing corporate strategy initiatives for Canopy Growth.
“I’ve worked very closely with William Lay and thought he was a very confident young person, and I would like to be at the board meetings, so everyone appreciates his approach,” he said.
“I’ve also been very active with a number of American companies so thought I might as well join the board to help them conclude transactions.”
The entrepreneur has a long history with Australia visiting the headquarters of Telstra and Optus when he was more focused on the technology sector.
“They were both very aggressive participants in the data communications marketplace with Australia due to distance super practical about the need to move data bits fast,” he said.
It was his background in technology and solving problems which led Linton into the cannabis sector, describing himself as a “hybrid of technology and public policy which leads you to these types of businesses”.
He said when applying for licences to grow or sell cannabis is a hugely technical area to navigate.
“Part of the discussion I have with the (Creso) board is we have operations in multiple countries and have to focus on how we integrate those on a commercial platform called an ERP, which is essentially a broad-based finance system,” he said.
“I started the cannabis company because I analysed the data and could see there were a lot of people who liked cannabis and pressure in countries like Canada and Australia to amend the rules.
“Society was accepting cannabis far more than the rules were so as soon as the rules changed to catch up with society, it’s like catching a big wave and you just ride it.”
Linton said the challenge of working in the emerging sector globally is what really grips him.
“I started talking to people in the last three months of 2012 and several people who I asked to join me said I come up with a lot of ideas, but this is the worst and most dangerous one and I should not do it,” Linton said.
He said friends feared it could scuttle his reputation, telling Stockhead nevertheless, he could instantly see the common sense beyond the cultural bias against cannabis.
“I thought if they’re that biased against it that means there’s a lot of really competitively capable people who probably won’t do this so it should be easier to win because you’ll have fewer good players on the field,” he said.
“Cannabis is an economic driver, it’s a medicine, it’s a recreational product people buy illegally and should be legal if they want to buy it and I like environments where there’s a bunch of variables to navigate.”
While he likes playing the cannabis game, Linton doesn’t like being on company boards making his appointment to the Creso board even more of a coup for the company.
“I hate being on boards and turn down one or two a week so it’s spectacularly unusual that I said yes and want to be on the Creso board,” he said.
“I find boards in many organisations assume this nobility and the horn should blow when they assemble but it’s not true.
“The entrepreneurs and working people should get the accolades and the board should be a shadow not the pinnacle there for advice and governance.”
Building valuing for Creso has been just what Linton has been doing with the company making its first play to enter the giant US CBD market via a strategic acquisition of private company Sierra Sage Herbs (SSH).
The all-female founded US$5.7m per annum revenue CBD specialist has built a strong sales footprint in the US, with plant-based and CBD products under memorable brand names Green Goo, Southern Butter and goodgoo.
The up-front purchase price for SSH is US$21 million, with additional future payments based on SSH achieving US$10m of sales in 2022, and US$20m of sales in 2023.
“They came from many different floral ingredients and evolved into hemp and they’re a B Corp which means they have a diversified perspective on how to create community and profit,” Linton said.
“An acquisition like that and a few more I think we can make will really help grow the company.”
Linton said he is impressed with Creso’s scientific approach to the cannabis sector and products, particularly research work it has been conducting in Switzerland.
“In my opinion they have the best scientific driven method for delivering cannabinoids to humans and animals that I have ever encountered,” he said.
“The special delivery processes that Creso has is much more likely to get into your bloodstream and be effective and doesn’t look like a kid’s plaything (referring to cannabis-derived gummies).”
He believes there is great potential for Creso in both the human and animal delivery of cannabinoids.
“I believe the veterinary market is the biggest, least served market on the planet for cannabinoids,” he said.
“You have to be in the game so when you get the right cards you can push a big bet out and I think the fact they’ve been doing their research, got some currency now they can start pushing.
Linton said he believes in creating quality businesses is like swinging through a jungle on a vine or being in a team relay.
“If you’re ready and at the right place when the baton is handed to you then you can go a long way in a short time to build a big advantage for your team,” he said.
“Don’t mistake me, I’m not like this weed guru.
“I just happened to be someone who was aware of policy, comfortable in the topic of cannabis and understood how to put together capital to buy companies.”
Linton said Creso has its next steps mapped out for each of the products with plans well advanced for more sales and delivery.
He said the company’s wholly-owned Canadian subsidiary Mernova Medicinal Inc is a great production asset which is turning up its ability to be a medical supplier.
Furthermore, Creso’s other wholly-owned Canadian-based psychedelics subsidiary Halucenex Life Sciences has been given the green light to provide psychedelic compounds to researchers and patients under Canada’s Special Access Program (SAP).
“Those folks in Canada know Mernova and when its products hit the store and get quite excited, so you are building reputation based on quality,” Linton said.
And while Creso’s share price, like much of the cannabis sector has taken a recent battering, Linton is not worried.
He said as an emerging sector there’s been a trend where newly listed cannabis stocks on the ASX would rally early on, while North America markets have also not been kind.
“In North America cannabis stocks are down, down, down waiting for legislation but that doesn’t mean you can’t double, triple, quadruple over short terms if you take the fact, you’re in the game, have assets and move with certainty.
He said Creso has played its cards right, invested in science and created value.
“My job is to make it go up and not stay where it is,” he said.
At Stockhead we tell it like it is. While Creso Pharma is a Stockhead advertiser, they did not sponsor this article.
Health & Biotech
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