Scott Boyes, of MPXI, didn’t set out to be one of the leading cannabis companies on the global scene. In the way of so many great success stories, it just kind of happened.
Scott Boyes, chairman, president and CEO of MPXI, heads up one of the leading cannabis companies on the global scene. Here we learn about the origins of MPXI, the international interest and what the future holds for the company.
Back in 2014, Boyes and his partners applied for a Canadian cannabis licence, and while they were waiting for approval, headed over to London to raise the necessary cash. Boyes had experience with European investors from his previous work and knew there was interest in cannabis across the pond. He wasn’t prepared however for how much appetite there was for the industry. “We were hoping to raise USD $20m (~€17.8m) by Sunday,” he explained. “By Wednesday we had USD $25m and by Thursday, I insisted that we close the books at $27m.”
Boyes was shocked by the speed at which investors turned up, especially considering cannabis was still illegal in the United Kingdom. But it signalled to him that there was significant untapped interest in the cannabis space. “We thought there’d be more conservative investors in London,” he said. “But we found a really enthusiastic investor base that was excited by the opportunity.”
A new direction
He went home to Toronto to await a licence from Health Canada, the country’s licensing agency. The trouble was, the government was moving at a glacial pace. In the summer of 2014, Health Canada had received more than a thousand licence applications but had approved just two. “We were waiting and waiting and waiting,” Boyes said.
Then one evening , while he was sitting around the dining room table with his partners — bemoaning how sluggishly the government was awarding cannabis licenses — Boyes had an idea. “We could have been waiting forever,” he said. “We wanted to get moving and we knew there was so much happening south of us. So, we decided: Let’s just go to the United States.”
It wasn’t as farfetched an idea as it may seem. Boyes, who for a long time maintained an apartment in Kansas City, Missouri, had plenty of experience and contacts in the States from his days operating two other US-based businesses. After an exhaustive search, he found a cannabis business in Arizona, which his company purchased for USD $25m. It was a small cultivation operation, along with two medical dispensaries and an advanced processing facility. Then he went looking for other licences for future expansion and purchased two others in Arizona and one each in Nevada and Massachusetts. Together they had a USD $100m revenue run rate.
Boyes went on an expansion binge, and by last year, his MPX Bioceutical Corporation, had cultivation, retail or production capabilities in Arizona, California, Massachusetts, Maryland and Nevada, along with all the staffing, procurement, financial and real estate capabilities that go with them. He’d also started dabbling in the international cannabis market, poking around a bit to see what was happening, and acquired a cannabis production facility and licence in Canada, had a joint venture relationship with a pharmaceutical company in Israel and 50% of a licence application in Australia.
It wasn’t long before MPX started drawing attention from other companies. Specifically, iAnthus Capital Holdings, a vertically integrated cannabis company, came courting. iAnthus had a presence in six eastern US states, but was looking to expand out west. MPX’s properties were just what they wanted. “We’d raised over USD $100m from Europe and ended up selling for about $800m,” Boyes said. “All of our shareholders were delighted, and my wife was a happy camper.”
Boyes hadn’t forgotten about all that overseas interest in the industry, and iAnthus only wanted his domestic holdings. So, when the deal went through in February (and MPX Bioceuticals ceased to exist), Boyes launched MPX International Corporation (CSE:MPXI, OTC:MPXOF), with the ‘leftover’ foreign bits of the company including a licensed cultivation facility in Peterborough, Ontario, just outside of Toronto, a late stage application for much larger facility in the Ontario town of Owen Sound, a company which facilitates the sale of medicinal cannabis to Canada’s military veterans, and options to acquire several retail dispensaries in Western Canada. MPXI also retained the relationship with the Israeli ‘cannabis-focused’ pharmaceutical company, Panaxia, and hopes to expand that relationship internationally.
MPXI is focused on developing and operating assets across the global cannabis industry, with an emphasis on cultivating, manufacturing and marketing products which include cannabinoids as their primary active ingredient. “Our game plan is to go from grow to finished product,” Boyes said.
Part of the attraction of the international market is that it’s less expensive to do business right now than it is in North America. Licences are cheaper to buy and easier to acquire, and so are workers, greenhouses and manufacturing operations. Another big draw was the opportunity to create a company with an international footprint, and the chance to open up the cannabis space in these emerging markets.
For example, because of its newness, the wide variety of cannabis products that are commonplace in California aren’t available yet in many global markets. Boyes estimates the global cannabis industry is two to three years behind the Americans in terms of product availability, branding and marketing. So, he’s using the experience that he and his management team gained there to give MPXI a head start on becoming an international juggernaut.
Expanding to become one of the leading cannabis companies
But Boyes hasn’t been content to stay just a bit ahead. He’s aggressively securing brands and facilities around the world. In fact, he had a particularly busy April. First, MPXI spent nearly €9m on Swiss-based HolyWeed, a well-known cannabis brand and one of the largest outdoor growers of high-CBD flowers in western Europe. The deal gives MPXI access to HolyWeed’s certified organic crop of more than 25,000 kg of dry cannabis flowers to be harvested later this year. From that crop will come a line of organic products added to MPXI’s stable, including high CBD pre rolls, dry flowers, sublingual oils and cosmetics.
There’s also HolyWeed’s distribution network and its established online presence, where cannabis products are courier-delivered within 24 hours free of charge anywhere in the country. Later this year, MPXI will add HolyWeed branded retail stores in Geneva and Zurich. Importantly, the deal also stamps MPXI as a luxury brand. Around the world, Swiss products are considered top of the line, and that’s also true of its organic cannabis, Boyes said.
As well, Holyweed is one of the first companies to have received the Belgian government authorisation to commercialise CBD flowers and the only one with a pre roll product. Smokable CBD (with THC below 0.2%) can now be sold in any retail location across the country, which has a population of 11 million people.
But the deal with potentially the biggest impact was the acquisition of Alphafarma Operations Ltd, a Maltese company that packaged and distributed pharmaceutical products throughout the European Union and North Africa. It’s strategic location in the Mediterranean Sea makes Malta a key commercial entry point to the European market. It also has a growing reputation as a pharmaceutical exporter. “Malta is part of the European Union, and if you have an operation in the EU, you can sell anywhere in the EU,” Boyes says. “So, buying this gives us a shortcut.”
MPXI bought the facility for €1.5m and stock. In addition to its location and EU membership, what makes Alphafarma so valuable to MPXI is its “GMP-ready” plant in B’Kara, just outside of Valletta, Malta’s capital. Pharmaceutical companies in the EU must be certified as using ‘Good Manufacturing Practices’ (GMP) to produce and distribute products. So buying a GMP-ready facility again puts MPXI in pole position. The company will convert the 1,200-square-meter plant to cannabis processing and then start shipping its products throughout Europe, hopefully by the end of the year.
At the same time as it announced the Maltese deal, MPXI also revealed it had secured a Letter of Intent from, Malta Enterprise, the economic development agency for the Republic of Malta. The LOI means MPXI has been approved, subject to completion of the B’Kara facility and its approval by the Malta Medicines Authority, for a license to import, extract and produce finished products, and distribute medicinal cannabis and cannabis derivatives to the EU and other international markets. “Malta has a pretty ridged application process for medicinal cannabis licensing, so the fact that we have secured one is a big deal,” Boyes said.
The biggest hurdle so far has been adapting to and managing the different regulatory environments in each country. For example, the levels of THC allowed in CBD products differs from 1.0% in Switzerland, 0.2 % in the UK to 0.6% in Italy and 0.3% in the rest of the EU. However, it’s a familiar landscape. “It’s the same in the US, where you have each state with its own rules and regulations,” Boyes said. “We’ve seen it before and are used to dealing with it.” It’s why he tries to remain abreast of local politics in the countries where MPXI is active and makes a special effort to lobby for favourable medical cannabis regulations.
On the horizon
Next up, MPXI is working on grow and production operations in Australia and a joint venture in South Africa, about 40 minutes outside Capetown. Australian made products have a luxury cachet in Asia, and South Africa has dozens of different benefits, including that it’s English speaking, is currently the only African country that is granted EU-GAP certification status, (necessary for the import of agricultural products into the EU), and has a strong cultivation history. “It costs a twentieth to operate there as it would in North America,” Boyes said.
Boyes is focusing on a half dozen or so countries where he expects medical or adult recreational use of cannabis to be legalised over the coming year — or sooner. He’s been amazed at the accelerating pace of change. “Last May, I was at a conference in London and the prevailing attitude was the UK would have legalised medicinal cannabis in two to five years,” he said. “They legalised it in November 2018.”
Just recently, MPXI announced its plans to open two CBD retail outlets in Soho and Covent Garden in London. These will be the company’s first forays into the UK market and will also be the first to adopt a new branding strategy which, if successful, will be implemented globally.
Meanwhile, Boyes occasionally slows down to contemplate how he ended up operating one of the leading cannabis companies in the international cannabis scene. “It really got sparked by the fact that Health Canada was really slow in giving out licenses,” he said.
Please note, this article will appear in issue 10 of Health Europa Quarterly, which will be available to read in July 2019.