Cannabis shipped to five provinces and territories from Niverville

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This article was published 22/12/2023 (494 days ago), so information in it may no longer be current.

A Niverville company is earning a reputation as a great distribution hub for a wide swath of Canada, and maybe soon the world.

Lineage Distribution — formerly Rogue Processing — doubled the size of its warehouse and distribution centre in Niverville to meet the growing demand from cannabis growers and processors to get their products to retailers in Manitoba, Saskatchewan, Yukon, Northwest Territories, and Nunavut.

The federal approval for doubling its physical size in Niverville came Nov. 28, after the application was sent in August.

“We had a bunch of clients that were teed up and just waiting essentially for space to become available, so it was kind of a mad round of communications to our clients: send us those pallets,” said president and CEO Graham Taylor.

And as it was bringing in all that new product to the new space next door, Lineage got the news Dec. 15 that it was approved for a distribution agreement with Manitoba Liquor and Lotteries Corporation (MBLL). It will get a Manitoba distributor’s licence from the Liquor, Gaming and Cannabis Authority of Manitoba (LGCA) to go with the federal one it already has, which Taylor believes will help drive more business his way.

“The MBLL will promote us as a distribution partner. Until now we had sort of been unofficially getting referrals from the MBLL because they knew that we were doing a good job, so those among the ranks of the MBLL had been referring brands to us,” said Taylor.

Those brands may also feel more confident dealing with Lineage now that it has two pieces of paper from two levels of government saying they can distribute in the province.

With Lineage already humming along, the Manitoba licence can also make it easier to expand even further as Taylor sets his sights on continued growth in Canada and abroad.

“It may allow us to grow much quicker because if it can be transferred or extended to cover additional land and buildings that we acquire over the next year, then it would allow us to become licensed and be operational much quicker because the process with Health Canada is at least a year to license a new property,” explained Taylor.

Lineage received its federal cannabis processing licence in September of 2022. The company, then Rogue Processing, got municipal approval in August 2021 and finished its initial facility November 2021 before applying for the federal licence in January 2022 — an indication of how long the federal process can take.

The switch in name to differentiate itself from cannabis producer and partner Rogue Botanical is part of Lineage’s focus on bringing cannabis flower, gummies, extract, and more to the local cannabis shop.

“We did that for several months before I realized it was a terrible business model. A lot of the cultivators that we were supporting were struggling to get traction in the market, and if we were to remain successful or remain viable, we were going to have to pivot,” said Taylor on the name change.

He insisted not being vertically integrated is a competitive advantage. Lineage does not grow the cannabis, nor process it into other products, and it is not a product brand bought in stores.

Lineage helping business across Canada

That means no direct competition with all the brands jumping on board with Lineage. That makes it even easier for them to express the love they have for their distributor.

“Just like working with family or friends. They’re good, very comfortable with everyone of their team,” said Trent Emmel of T8C out of Saskatchewan.

T8C signed up with Lineage in October.

“They want to be successful like I want to be successful, and everyone else in this industry was just wanting to take our money,” added Emmel.

He said expansion into Manitoba had been made easier with Lineage, with delivery cut down from 10 to seven days, to now three days. Shelves are always stocked, and Lineage keeps them and other clients apprised of what is selling and what needs restocking.

Bud Mountain Aeroponics is a craft cannabis producer out of Calgary that has been dealing with Lineage since it was called Rogue last year.

“Were great at growing cannabis, but we’re not great at marketing and selling it. It’s a whole different part of the business, and they specialize in it. They’re really good at getting our product out to market and to the public,” said CJ Cowan, dubbed the master grower from Bud Mountain.

“Without them, we’d really have a hard time accessing the Manitoba market especially,” he added.

Bud Mountain has not been able to get into its own province’s market, with smaller companies having a hard time having success in Alberta’s regulatory market, according to Cowan. But with Lineage’s help, they have plenty of other places to sell their lab-tested, medical grade flower to recreational retailers.

“They’re really good at getting access into other markets that we can’t get into here in Alberta, such as Nunavut and Saskatchewan. We actually have a pretty good market in Nunavut,” said Cowan.

And that is another advantage Taylor highlights. The big guys are focused on places with big populations like Ontario and BC. That leaves the door open for a well-run distributor to take the reins in the smaller markets of the prairies and far north that can be higher maintenance for lower populations.

Taylor pointed to Ontario-based Motif Labs, which holds a nation-leading 21 percent share of the cannabis vape market according to business data and media company Benzinga.

“We go to these big companies in a real high maintenance market like Manitoba and we say, ‘Hey, we would like to take your Manitoba distribution off your hands.’ And they’re like, ‘please,’” said Taylor.

“So the concept has been an easy sell. Then we put in a lot of work transitioning from a small co-packer evolving into a warehouser and a distributor.”

MB licence double-edged sword

While Taylor insists his focus is on being the best distributor, not necessarily the cheapest, keeping things efficient and as low-cost as possible has helped in a cannabis market all the brands, growers and producers that spoke with The Carillon on and off the record admitted was over saturated.

The new Manitoba licence and agreement may affect that efficiency, according to Taylor. He felt that he was covered to sell in Manitoba with his federal licence, directly quoting the part of the Cannabis Act that seems to indicate that. But after the MBLL said it intends to award Lineage a provincial agreement and said it will be responsible for obtaining the LGCA licence, Taylor will wait to see how his business model may be affected in Manitoba.

“It’s great that we got it because we [will get] the licence they want us to have, but this sort of allows it to regulate us the way that they want to. So like right now because we’re also a supplier, we have the ability to register SKUs (stock keeping units — the packaged amounts of product to be bought) under our catalogue, which has some benefits. If it’s a smaller company, it allows us to manage their SKUs, it allows them to reach our well established buyers in our pipeline; and shipping efficiencies because if we get a purchase order it will include multiple brands which can be delivered or ship out together. Or we could also provide distribution kind of in the background where our client would remain the official supplier and there buyers would order from them, but it would ship from our warehouse,” explained Taylor.

“And with the (Manitoba) distribution licence it sort of favours or demands that all the brands, the clients, be their own independent supplier. And that would sort of separate them from the MBLL’s catalogue, not be beneath this growing Lineage catalogue.

“But it also means all those orders would come separately. So instead of having one large order that we can ship efficiently and keep costs low and reduce carbon, we’ve got to split these orders up into these smaller orders, and I’m not into why the Province wants it that way. But we shall see,” said Taylor, who is waiting on the official contract with all the details.

International aspirations

While his team works out the new Manitoba licence, Taylor is looking to a broader future beyond Canada that could push local staff numbers beyond the 16 currently hired.

“I think it’s (over supply) still the greatest struggle for cultivators because there is a large supply of bulk. Part of the answer to that is in the growing export market, which is something that we’re very interested in as well. We already have our Lineage Exports logo,” said Taylor.

“There’s a new country legalizing cannabis medically every other month.”

He said Lineage’s team is working on global opportunities for 2024, including head of business development Andres Bazin.

There are Canadian regulations, but then there are international buyer regulations to navigate as well. Taylor said the gold standard is EU GMP (European Union good manufacturing practice), of which Lineage is investigating requirements.

“There are only a handful of EU GMP producers in Canada, but there are opportunities to broker a lot of deals for exports because we have access to the Canadian Cannabis Exchange, which is one of the largest bulk cannabis exchange markets. So we can see what is available and we can help tee up deals,” said Taylor.

While it may seem like he is trying to conquer the cannabis world, Taylor said he tempers his drive for growth.

“We don’t take on more than we can fulfill. We don’t want to build a house of cards here. We’ve been taking time to really build a solid foundation for what we’re doing because we have seen other players go out and be very aggressive in snapping up additional business and then seeing things unravel because they don’t have the foundation to handle it,” said Taylor,

But the self-described “creative perfectionist” does not like to get comfortable. It is why the former franchise owner of three Booster Juice locations and a Freshii moved into the cannabis world, starting with some shares in Rogue before moving into the leadership role.

“The reason I got out of the industry I was in before was just because I was looking for a new challenge. I wanted a new set of problems to deal with. I know the grass is always greener on the other side, and every industry has its challenges, but the most thrilling part of entrepreneurship is managing ascent. And there’s been a lot of assent with the company recently,” said Taylor.