Your Royal Highness - Royal City Cannabis' Employee-First Culture Gets Bought out by Entourage Health Corp


Royal City Cannabis Company Employee First Culture Bought out by Entourage Health Corp - Stashmagazine.ca Volume 3 - by Will Zorn with quotes from Buck Young, Jeff Scanlon and Geoff Webb


This story first appeared in Volume 3. Read the whole issue here.

 


Being Editor for Stash has been an amazing opportunity. In May I interviewed Buck Young, Director and Co-Founder of Royal City Cannabis along with Geoff Webb, one of Royal City’s amazing sales staff. We chatted, discussed the industry and had a nice laugh. Afterwards, I settled into my desk and began the arduous process of transcribing quotes. Two hours later I was done. A beautiful two pages praising Royal City in large part for being employee-owned. I saved my draft, closed the tab and opened Reddit to this:


Royal City Cannabis Company Employee First Culture Bought out by Entourage Health Corp - Stashmagazine.ca Volume 3 - by Will Zorn with quotes from Buck Young, Jeff Scanlon and Geoff Webb

Fuck. I deleted the draft, fell back into my seat and let out a noise that must’ve concerned the neighbour. Our publisher, Will [McEwen], and I reconnected. I was at a bit of a loss: our story highlighting independent cannabis featured a brand that was no longer independent. Will wasn’t so worried. I sent an email, set a time and eventually ended up on a video chat with Buck and Geoff to talk about what consumers can expect from the new company.

“So, what the fuck, man?” Will, who could give a MasterClass in honesty, started. “I thought you were employee-owned.”

Buck’s face lit up with a laugh as Will continued, “I think you had a plan: a plan to get everybody paid. We have our worries though. I’ll let Will [Zorn] take it away but we want to hear what happened.”

I explained the fear that as cannabis connoisseurs we grow attached to the brands. Corporate cannabis deals historically have been a matter of buying the competition for market share. Everyone says they’re different but how is this different from those of the past?

“We’re not in the same targeted brand positioning,” Buck said. “We’re in different segments. Everyone’s looking at mergers and acquisitions in the industry and assuming all deals are the same: if you’re a pub-co, you’re all the same. People are prejudicing before any details are out.”

Buck ran us through the Letter of Intent (LOI) and the laundry-list of things that needed to get done before the deal could be considered done. He then discussed how Royal City’s hopes to help micro-cultivators come to market will translate into reality with the deal. He also pointed to the Canopy and Supreme merger, which came weeks after the closing of Canopy grow facilities as an example of what the new company won’t do.

While Buck’s enthusiasm seemed authentic, the skeptic in me recoiled. I’ve worked for “the Big Guys” and I’ve seen well-intentioned projects quickly be swept aside in favour of projects promising ROI. What ultimately set Royal City apart when I discovered them was the fact they were owned by their employees.
I heard stories of the CEO scrubbing toilets clean and how those in every and all positions met up in the trim room to spend the night manicuring bud. They were stories of stock-holders working on the very product they’ve invested in: an active base.

“My concern is what made Royal City bud special was that the people who owned the company handled the product,” I said. “I own a handful of WeedMD shares. Unfortunately, I’m not the one who’s trimming. How is this going to change the product?”

“Our cap-table,” Buck said, “which is employee-owned, becomes owners in the new company. The single largest shareholder [in Entourage] is a pension fund that represents labour across North America. So we are a worker-owned entity.”
Buck seemed confident about the new organization’s leadership as he believed the stock wouldn’t be in the hands of corporate Brads n’ Chads, but lovers of the plant.

“There isn’t a big institution, banks, or other things involved in this. The people who are supporting this are the people who believed in WeedMD in the early days. They’re sitting on their shares and are waiting for someone to articulate a vision.”

In the summer, prior to changing it’s name to Entourage Health, WeedMD sold a subsidiary named Starseed medical at a hefty loss. The move reminded me of Buck’s comment about Canopy and Supreme’s merger.

Our founder, Will, spoke with Royal City’s leadership again after the Starseed sale. This time Buck and Geoff Webb were joined by Jeff Scanlon. Will asked them about the Starseed sale but also wanted to report on other aspects of the company’s operations. Scanlon had other ambitions.

Jeff Scanlon Business Development Royal City Cannabis Entourage Health Corp
After reading a draft of the story to this point Scanlon said, “I think there’s an easy way to tell the story and then there’s the braver way. I think you guys have taken the easy way by saying ‘Wow, look at another one of these back-end things. Great founders sell out, yada, yada, yada.’ We can all tell that story. It’s easy.”

Scanlon and Buck both went on to push the idea—again—that this acquisition is not like the others. They both tried to make the case that for a publicly traded company to survive it would need to incorporate craft into its portfolio. On the flip side, the craft producers needed the money from bigger pockets if they wanted to lead the way in changing the profit-centric culture of the industry. This deal, they assured us, was not like the others. To think otherwise somehow made us cowards.

In late November of 2020, Royal City’s leadership began firing staff from a number of departments. The trimming and packaging operation in Guelph is reportedly moving 90 minutes away from its current location. Senior leaders of Entourage informed employees affected by this move they can keep their jobs—as long as they also move or commute 90 minutes twice a day. Entourage will likely replace employees who leave because of this with temporary labourers.

How long did Scanlon and Buck know they would eventually be firing a large portion of their staff? How much do they actually know about how things will run under Entourage?

Scanlon’s brother secured a job as the head of cultivation for all of Entourage. Buck will likely end up as Chief Innovation Officer in the new company. It’s unlikely Scanlon will find himself trying to collect E.I. with the rest of his employees. We could try and find out but, as Scanlon pointed out, we do like taking the easy way.

This story first appeared in Volume 3. Read the whole issue here.

 

1 comment

  • “Employee owned” meant they gave each employee a minuscule number of worthless shares instead of a living wage and used it as a marketing tool.

    Budman42

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