Soda, vapes and sweets are about to supersize Canada’s legal cannabis market. Chuck Rifici wants a slice of the action
Chuck Rifici, a 45-year-old CPA, is the co-founder of Tweed, one of Canada’s first legal cannabis companies. Today, Rifici no longer works at Tweed: he was kicked out before it became Canopy Growth, now the largest cannabis company in the world. Instead, he is chairman and CEO of Nesta Holding Co., a private equity firm he founded to invest in the global cannabis industry. (Photos by Guillaume Simoneau)
Who is Chuck Rifici
In 2013, Chuck Rifici bought a chocolate factory. The building—a half-million-square-foot facility in Smiths Falls, Ont.—had been sitting vacant since Hershey left town five years earlier. There were still remnants of its glory days: a faded marquee inviting visitors into the “chocolate shoppe”; a lone factory manager who strolled the premises twice a day, keeping the place in working order should another chocolatier come along. But Rifici didn’t want to make chocolate. He wanted to grow marijuana.
Rifici, a 45-year-old CPA, is the co-founder of Tweed, one of Canada’s first legal cannabis companies. He envisioned the factory as ground zero not just for his business, but for an industry on the brink of the big time. So, he and his co-founder, Bruce Linton, paid $5 million for the property, plus millions more to turn it into a weed wonderland, complete with climate-controlled growing rooms and pristine storage vaults. When press toured the operation, they couldn’t resist dubbing Rifici the Willy Wonka of Weed.
Today, Rifici no longer works at Tweed: he was kicked out before it became Canopy Growth, now the largest cannabis company in the world. Instead, he is chairman and CEO of Nesta Holding Co., a private equity firm he founded to invest in the global cannabis industry. Still, seven years after the fact, his decision to buy the factory seems prescient, because the plant is making chocolate again—this time, infused with tetrahydrocannabinol (or THC, a natural compound found in cannabis that causes the high) and cannabidiol (or CBD, which has a calming, non-psychoactive effect).
On Oct. 17, 2019—exactly a year after the federal government legalized recreational marijuana—Canada lifted prohibition on a raft of alternative cannabis products: edibles, beverages, concentrates, topicals, tinctures and more. In addition to smoking dried flower, Canadians can now legally eat cannabis in a gummy, drink it in a tea, ingest it in a capsule or rub it on their ailing muscles in the form of a lotion—uses that are more discreet and carry less stigma than, say, smoking a joint. Canadians can now vape cannabis, too, though restrictions may be imminent; following a staggering number of deaths and hospitalizations linked largely to black-market vape cartridges, some provinces have banned certain vaping products and advertising, and Health Canada is monitoring the situation.
Canadians can now legally eat cannabis in a gummy, drink it in a tea, ingest it in a capsule or rub it on their ailing muscles in the form of a lotion—uses that are more discreet and carry less stigma than, say, smoking a joint
The arrival of these products, known in the industry as Cannabis 2.0, represents an even bigger business opportunity than the first wave of legalization. People like Rifici are betting that 2.0 products will appeal not only to those who already use cannabis, but to the 83 per cent of Canadians who don’t. If they’re right, they’ll have millions of new customers, many drawn to cannabis as a wellness product rather than a way to get high. According to EY, 2.0 products will account for more than half of Canadian cannabis consumption by 2025, and Deloitte estimates 2.0 sales will total $2.7 billion annually.
Cannabis entrepreneurs eyeing that prize face a dizzying array of obstacles, including strict regulation, fierce competition and an unenthused investor landscape. But Rifici bets he can hit the jackpot again, this time with Nesta, through which he owns, influences or otherwise has his hands in every aspect of the cannabis value chain: cultivation, extraction, research, development, retail and beyond. The companies under the Nesta umbrella may not be behemoths—the largest, Auxly, has a market cap of about $375 million, small fry next to Canopy Growth (more than $8 billion) or Edmonton’s Aurora Cannabis (more than $3 billion). But for many of Rifici’s brands—vape pen companies, edible manufacturers and other businesses designed to compete in the 2.0 world—it’s finally show time. “That’s what I’m excited about: being able to wake up knowing we’ve created a lasting brand,” he says. “It would be nice to see one of them become the Johnnie Walker of cannabis.” It doesn’t have quite the same ring as the Willy Wonka of Weed, but it’ll do.
The first thing you notice about Chuck Rifici is his bushy copper-and-grey beard. He’s a father of two who favours inconspicuous clothing—jeans, T-shirts, hoodies—and cars that are anything but: this past June, he drove his Ferrari in the Gumball 3000, an extravagant motor rally from Greece to Spain. On a brisk October afternoon, it’s his other ride, a black Lamborghini, that’s parked outside the Nesta office in Ottawa. The space is startup chic: glass walls, whiteboards, 20 youthful employees hunched over laptops. Inside Rifici’s office, a tongue-in-cheek poster warning of the hazards of “reefer madness” is the lone giveaway that you’re at a cannabis company.
Rifici never thought this is where he’d end up. Growing up in Ottawa, he watched Cheech and Chong movies—Up in Smoke, The Corsican Brothers—but didn’t actually smoke pot, put off by stigma and stoner stereotypes. In the 2000s, he earned a computer engineering degree at the University of Ottawa and an MBA from Queen’s. Ian McKay—a Queen’s classmate who is now CEO of Invest in Canada, an agency that solicits international investment—remembers Rifici, who earned his professional accounting designation in 2008, as an especially gifted student. “Not only was Chuck the smartest guy in the room, he was really good with understanding numbers and how they led to business planning,” he says. “He was generous with his time and proactive in demystifying accounting to those who had challenges with it.”
Rifici favours inconspicuous clothing—jeans, T-shirts, hoodies—and cars that are anything but: he parks his black Lamborghini outside the Nesta office in Ottawa
Rifici worked a string of CFO jobs at Canadian tech firms, including the internet service provider TekSavvy and the mobile company Select Start Studios, which was acquired by Shopify in 2012. “I always joke that I was a terrible CFO,” says Rifici. “In retrospect, I wasn’t risk-averse enough. I had a taste for volatility.” On weekends, he played poker—he loved the thrill of betting with imprecise information. “I’m an optimist, but you usually want your CFO to be the least optimistic person in the company.”
That appetite for risk made Rifici the perfect candidate to become a pot trailblazer. In 2011, McKay, then the CEO of the Liberal Party of Canada, asked Rifici to volunteer as his CFO, in large part to overhaul the financial management of the party. The unpaid gig put Rifici in the right place at the right time: the following year, the party voted to endorse federal cannabis legalization.
By then, Rifici had come around to cannabis. In 2011, while reaching for something across a counter, he pulled a muscle in his back, collapsed and passed out in pain. Doctors prescribed hydromorphone, an opioid more than twice as powerful as oxycodone, and he found himself counting pills. He says the incident helped him realized how addictive opioids were, and how cannabis could be a viable alternative for pain relief. “It was the event that made me a little less judgmental,” he says. From then on, “I told myself if I could legally get into the weed industry, I would.”
Ousted from his own company, Rifici was nevertheless bullish on the cannabis industry. “He could have gone into a corner and disappeared,” says McKay. “But he still had the skill, the knowledge, the reputation, the experience. He knew the sector was bigger and broader than just Tweed or Canopy.”
The Nesta office space is startup chic: glass walls, whiteboards, 20 youthful employees hunched over laptops. Inside Rifici’s office, a tongue-in-cheek poster warning of the hazards of “reefer madness” is the lone giveaway that you’re at a cannabis company
Today, Rifici lives in a very different cannabis industry. In 2013, the year he cofounded Tweed, you could count the number of legally licensed cannabis producers in Canada on your fingers. Now, there are more than 200. Rifici may face stiffer competition, but he also has more horses in the race. After Tweed, Rifici sold his remaining stake in Canopy Growth and used the windfall to found Nesta (Nesta is Bob Marley’s middle name), which owns or has a stake in five distinct cannabis companies. Its portfolio includes Wikileaf, a leading cannabis price-comparison website based in Seattle (“every industry has an Expedia,” he says); Feather, a vape pen company that he founded; Burb, a B.C.-based retailer that sells cannabis products, apparel and accessories; as well as Dixie Brands, an American business that already sells chocolates, gummies, mints, topicals and other cannabis-infused products in the U.S. Nesta’s crown jewel is Auxly Cannabis Group, itself a sprawling family of cannabis brands that grow, sell, research and develop products including edibles, beverages, gel capsules, vape cartridges and old-fashioned flower. Auxly’s network of cultivation facilities, which the firm either owns outright or has partnered with, has the capacity to produce 100,000 kilograms of marijuana every year—that’s about 2.5 grams for every Canadian.
In 2018, pot stocks like Auxly soared. “If you had the word cannabis in your company title, people were throwing money at you. It was investing in a dream,” says Trisha LeBlanc, a CPA who leads Grant Thornton’s national cannabis practice. But since the summer of 2019, cannabis stocks have tumbled—the largest ETF in the cannabis sector, for instance, lost half its value in the year after legalization.