By Vanmala Subramaniam Jan 22, 2018
Michael “Dooma” Wendschuh is in his element — suited-up and unafraid, amongst dozens of investors, venture capitalists, and company executives. The venue is a relatively austere corporate boardroom in Toronto’s financial district. The event is a private, invite-only, cannabis summit for high net-worth individuals from around the world.
“We are starting a new brewing tradition, and we are not going to stop until we get it 100 percent right,” he announced, to an equal number of claps and eye-rolls from the audience. “This guy’s a good salesman,” one of the attendees whispered to me. “He knows how to pitch.”
And indeed, Dooma was in full pitch mode, attempting to entice high net-worth investors into a virgin concoction: beer brewed from cannabis.
Province Brands is a Toronto-based startup, one of numerous ancillary weed businesses sprouting up in Canada’s largest city, in the wake of the country’s plan to legalize the use of recreational cannabis this summer. Technically speaking, Province’s main product — beer brewed from weed — will be illegal until 2019, which is when the government has promised to legalize edible cannabis products.
But Wendschuh and his crew are charging ahead. The company’s Chief Marketing Officer, Jennifer Thomas claims that Province is building a brewing facility just “an hour and a half” outside Toronto. A patent for the technology that makes their unique blend of beer has already been filed in Canada, according to Thomas. And, Wendschuh assures me, Health Canada is well aware of this whole enterprise.
“They are actually encouraging us to do research on products that aren’t legal yet because otherwise there will be no new products.”
Province’s potential claim to fame, and indeed, selling point to investors, is the fact that its product is the first of its kind. Marijuana-infused drinks companies are already part of the edible landscape in states like Colorado, California and Washington. General Washington’s Secret Stash, for instance, is an IPA created by a startup brewery in Colorado called Dad and Dudes that is alcoholic, but will not get you high because it only contains cannabidiol, the non-psychoactive ingredient in the cannabis plant.
Wendschuh’s creation flips that script — Province plans to sell a non-alcoholic drink that is brewed like beer but from weed, not barley.
“We would never make a product that would contain both alcohol and marijuana. That’s a very important distinction between us and other companies,” Wendschuh tells me over the phone from his office in Toronto. “Alcohol is poison! The real intention here is to create a safer and healthier alternative to alcohol — a low calorie product that is gluten-free but can compete in terms of its appeal to an alcoholic beverage.”
There’s a degree of irony in that statement, considering that Province has been riding the publicity coattails of last November’s minority stake acquisition by alcohol giant Constellation Brands in Canopy Growth Corporation, the world’s largest cannabis company.
“A month ago, we were the black sheep of the Canadian marijuana industry, and today we are the whitest sheep in town,” declares Wendschuh. “Look, it provides the ultimate validation for a business plan that we created, and for the product class that we are creating. They will get people used to the idea of drinking marijuana beverages — our marketing budget just went down!”
This isn’t Wendschuh’s first foray into the cannabis industry. The Princeton University graduate was one of the founders of Ebbu, a Colorado-based pot company that sells an array of exotic CBD/THC-infused oils and extracts. “We believe in a world where you stay up later, and dream a bit longer,” says Ebbu’s website, with a link to their latest product line, “Feelings”.
Ebbu’s co-founder is Jon Cooper — both Cooper and Wendschuh became pot entrepreneurs in Colorado by way of Los Angeles. In fact, before marijuana was ever in Wendschuh’s career lexicon, he was a name in the video game business, co-founding a production house that is credited with huge successes like Assassin’s Creed and Prince of Persia.
“He sure is one of those science brainiacs. Very smart guy,” Nic Easley of Multiverse Capital, a cannabis venture fund told me at the same cannabis investment summit Wendschuh was pitching at. But, he added, “If I were you, I wouldn’t touch anything that Dooma touches.”
Wendschuh’s relationship with Ebbu came to a bitter end in early 2016 because of an internal tussle involving future ownership and majority control over the company . Back in 2013, Wendschuh had negotiated a future ownership stake in Ebbu, once he obtained his two year residency status in Colorado which is required for majority ownership in the company, according to a legal complaint filed by Wendschuh against one Daniel Clemens, a former friend and colleague who Wendschuh himself brought onto Ebbu’s advisory board.
Wendschuh alleges that Clemens and Cooper conspired to oust him just weeks before he gained that residency status, simply because because they wanted to prevent him from gaining a majority stake in the company. He even alleges that Clemens assaulted and “berated” him in front of employees on December 19, 2015, at Ebbu’s holiday party.
“It’s one of those things you definitely look at as a concern, when you first think of investing in a company,” said Aman Chatha, an early investor in Province. “But I did my own research and due diligence on him and the company. I’m tight with them now.” Indeed, Chatha is a “Dooma” aficionado (Wendschuh is known as Dooma in most circles), so much so that he recently became part of Province’s marketing team.
“Dooma recognizes that he made a mistake [with Ebbu] in the beginning by not having the right residency status for majority ownership. We talked about it, and he even sent me the complaint he filed. It was full disclosure and that makes me really confident in him and in the company,” Chatha says.
Cooper, when contacted over the phone in an attempt to get his side of the saga, declined to comment directly on anything related to Wendschuh for legal reasons. Cooper did however confirm that Wendschuh had indeed left Ebbu in early 2016 and has nothing to do with the company any longer.
Meanwhile, all the right pieces seem to be falling into place for Province Brands.
The Canadian government’s confirmation that edible cannabis products will be legal by mid-2019 has brought a flurry of new investment dollars into Toronto, according to Chatha. “We’re building a whole bunch of new technologies, and not many companies have tapped into this space yet.”
Indeed, one thing Province does seem to have going for it is the lack of competition in the cannabis drinks space in Canada. Besides the Constellation-Canopy partnership, there are almost no other existing Canadian companies, or startups known to be this far ahead in the marijuana-alcohol game. And investors seem to recognizing this first-mover advantage.
“I’ve tried their products twice, and I really like it,” says Lanny Lipson, a private cannabis investor who has poured a “sizeable” amount of money in Province. “It tastes like beer, it has the right carbonation, and it’s just really pleasant to drink.”
In addition to the application Province has filed to patent the technology it uses to turn weed into beer, it is developing a second product that has strong patent potential — a “decelerant” that Wendschuh professes will get the “high” out of your system within 30 minutes. The faster you sober up from the “high” of consuming a can of beer brewed from weed, the more cans of Province beer you will buy.
There are now rumblings in investor circles that Province plans to team up with a big licensed producer soon, which would certainly give it the cash injection necessary for further expansion. “Look we’ve raised some money, but we still need to raise a lot of money and I don’t think we will be able to do this without institutional or corporate investors,” Wendschuh admits.
A recent report from the Cannabiz Consumer Group, a Colorado-based consultancy estimates that legal cannabis in North America has the potential to cost the beer industry up to $2 billion in retail sales. Twenty-seven percent of beer drinkers, says the report, have already substituted pot for beer or would make that switch if weed became legal in their state. In 2016, Canadians spent $22.1 billion on alcohol — beer made up 41.5 percent of total alcohol sales.
“The first disruption is going to be the alcohol industry,” Canopy Growth CEO Bruce Linton predicted at a shareholder meeting back in mid-2017, before his company entered into a partnership with Constellation Brands.
And that’s exactly how Wendschuh sees Province’s role in the cannabis industry — a disruptor, but in fact a more lethal disruptor to alcohol than any other legal cannabis grower could potentially be.
“Other marijuana companies, if they want to get into this drinks space, all they have to do is get a bunch of flavours sent to them,” Wendschuh says. “But that’s not craftsmanship. We’re focused on craftsmanship and we’re going to change the world with it.”