Alberta cannabis company sets sights high on Europe

A Calgary-based cannabis growing firm is taking aim at the medical marijuana market in Europe.

“High Ground is unique as we founded the company targeting the largest potential medical market being Europe; securing customers to match our production; then scaling up as we secure more demand through distributors,” said the company’s president and CEO, Jeff Callaway.

“Most in the industry initially pursued a ‘Field of Dreams’ strategy: Build it and hope the customers will come.  That didn’t work out so well.”

High Ground was founded in 2019 and has built a massive 133,000 sq.-foot facility just outside the small southern Alberta town of Oyen.

It uses an aeroponics growing method, a plant-cultivation technique in which the roots hang suspended in the air while nutrient solution is delivered to them in the form of a fine mist.

Callaway said aeroponics is well suited to be used for the product for the medical market.

“Our process removes as many factors as possible that lead to reduced potency. Every part of the growing process is controlled.  As there is no soil, even soil variability from pot to pot is eliminated.  Nutrients are dosed to the decimal.

He said the company’s indoor facility in Oyen is 133,000 sq-feet so the lighting cycle is fine-tuned to the plant maturation cycle: no clouds, seasons, temperature changes, etc to react to. This allows High Ground to get six crops per year versus greenhouses at three and outdoor operations at one.

The facility is able to produce 2,000 kg. of medical-grade marijuana a year in phase one, but at maximum capacity, it is over 40,000 kg.

Callaway said the business’s plan to sell not in Canada, but in Europe, makes good sense.

“In business there are some fundamental truths: maximize revenue, minimize costs, enhance quality and value,” said Callaway.

Callaway said there were two factors that showed the company should focus on Europe. In Europe, it is two-to-three times for wholesale versus what it is in Canada, and the second is Europe is more than 14 times the size of the Canadian market by population, but with a fraction of the competitors. 

He said much of the reason for making the move is the lack of qualified Canadian production of dry flower that can’t be changed without major capital investments.  Some product can be refined to meet those standards, but dry flower can’t be refined.  It is what it is, and dry flower still makes up over 50% of the market.

The company is setting up an EU-GMP certified operation in Malta which will process and package their product.

 “Malta has been wonderful to work with given their business-friendly foundation, their well-established pharmaceutical sector, and the government and the civil service have been very supportive,” Callaway said.

Callaway said in Germany alone there are over 80 distributors who don’t have a secure supply and over 19,000 pharmacies to service.

“I actually stopped calling after talking to three distributors as one group told me: “We will buy everything you can supply us,” he said.

“That’s just Germany.  Then there’s the Czech Republic, Poland, the UK, Portugal, Italy, the Netherlands, France, Spain, Luxembourg, and of course, Malta all within the EU. ”

Callaway noted in Germany and the Czech Republic the government health insurance programs pay for cannabis prescriptions.

He said legalization is just around the corner in Malta, Portugal, and Luxembourg, and if the German Green party holds their strength in this September’s election, that could put that country on the path to full recreational legalization.

“As such, I’m expecting the next investment wave will be on European companies and we are already seeing that. One of the top two US cannabis companies just bought a European-based competitor that is a little ahead of ourselves for US$286 million. The big players in the sector know they need to be there. We already are,” said Callaway.

Callaway said European costs to grow crops are high, which makes sense to do it in southern Alberta.

“We also have some unique product forms that we will be releasing at the appropriate time, and hopefully in conjunction with the marketing authorization of alternative delivery formats in Europe,” he said.

“High-Ground.ca has a focused and simple business plan. We secure sales first, ensure our production meets medical-grade requirements, and are positioned to serve the largest growing markets of Europe.”

Callaway credits his “committed and invested” team with making High Ground a growing concern. Itsr VP Operations is a Ph.D. from McGill specializing in cannabis and aeroponics. Partners in Malta have deep connections across the European cannabis sector and within Malta.

“The support around Oyen from government to trades to locals, has been invigorating,” he said, adding the company is also active on social media on Twitter and as well its website where a plethora of information in available..

“We are looking at options to accelerate our growth which means we should raise more capital but I’m confident the returns on that extra capital would be very rewarding. As Wayne Gretzky said, “I skate to where the puck is going, not where it has been. That’s High Ground Medica.”