For Canadian cannabis entrepreneur Chuck Rifici, cannabis wasn’t really a part of life growing up. Sure, he liked Bob Marley and Cypress Hill, and he had plenty of friends who got high. Weed just really wasn’t for him.

Two things changed that. Rifici, who trained as a computer engineer before later becoming a CPA, was an internet and telecom entrepreneur from an early age, having started his first dial-up ISP and web-hosting company back in 1995, when he was 21. From his early adulthood, he has remained keenly attuned to market possibilities. For that reason, when California’s 2010 Proposition 19 to legalize cannabis failed by only 3.5% of the vote, Rifici took notice.

“My antenna went up and I started scanning what was happening in Canada,” Rifici explains. “In late 2012, when the draft regulations for large-scale commercial productions came out here, I immediately read through the regs and shut down everything I was doing so I could jump right into it. The opportunity to legally cultivate commercial cannabis at a large scale was just too exciting to ignore.”

The second thing happened a year later, when in 2011 Rifici injured his back and was hospitalized for a short time. Prescribed opiates for persistent pain, he began to think seriously about alternatives to such heavy medication (whose side effects many users find outweigh their benefits).

“After being on opiates for any amount of time, that was the beginning of a shift in my thinking. I was more open to cannabis generally after living through that kind of pain,” he explains. “Cannabis seems to be a very effective answer for symptom relief, versus continually increasing your amount of opiates. I find that’s usually what resonates most in the medical community.”

Today, Rifici is CEO of finance company Cannabis Wheaton, but he made his name in the industry first as co-founder of Tweed Marijuana Inc., North America’s first federally regulated and publicly traded cannabis producer, listed on the TSX as WEED. (In 2015, Tweed was renamed Canopy Growth.) Rifici has carried the Tweed experience with him into his new venture, Cannabis Wheaton Income Corporation, a finance company that employs a “streaming” model borrowed from the mining industry.Rather than simply cutting a cheque to producers, Cannabis Wheaton funds licensed or nearly licensed cannabis producers “with smart money,” bringing in experts to evaluate budgets and injecting capital in conjunction with construction stages.

Rifici explains that while the streaming model is drawn from the mining industry, that’s the last of the similarities, since ore is not a controlled substance and mining deals with a fixed amount of resources.

“In mining,” he explains, “streaming is usually seen as capital of last resort, because you’re effectively giving away some of the value of your mine. There’s a fixed amount of ore—you can’t make ore magically appear. With cannabis, it’s the opposite. Since it’s a controlled substance, we don’t actually take delivery of the product. We partner by providing that early-stage capital to licensees or applicants who are at the stage that they’ll get their license if they build the facility. Our partners get access not only to the capital, but also to the team to help de-risk their execution. We’ve built a team of industry experts for each kind of risk vertical—cultivation, regulatory construction—to help them execute faster.”

Once facilities are set up and producing, Cannabis Wheaton gets a royalty on the sale of one third of the output, which it is set up to purchase at direct cost. They also broker deals with distributors—as the industry figures out how legal cannabis will be sold, Rifici imagines possible deals with businesses like Shoppers’ Drug Mart, legal dispensaries, or provincial liquor control boards.

As the industry figures out how legal cannabis will be sold, Rifici imagines possible deals with businesses like Shoppers’ Drug Mart, legal dispensaries, or provincial liquor control boards.

“We never actually touch the plant,” Rifici says. “We’re very much a finance company. A lot of people assume it’s easy for cannabis companies to find funding given how some of them have done on the stock market, but when you’re the 55th licensee to get licensed, a lot of those deals start looking the same. As more and more licenses get minted by Health Canada, the value of a license itself goes down. Which means that if you’re looking to get $10 million, you’re only worth single-digit millions as far as a company out of the gate. So you have to give up control of the company right off the bat. People are trying to raise money at valuation that they can’t get in the early stage. We’re bridging that gap of taking an early license and getting it to scale.”

Rifici says the streaming model is lucrative for both Cannabis Wheaton and for its partners, since they retain a majority ownership of their facilities. However he acknowledges that stigma against legal cannabis remains an obstacle that businesses in the field are going to continue facing.

“Legalization is generally a positive for people who need access,” he explains. “Some in the medical community and the population at large feel that medical use is a cover for recreational use. If you have recreational use alongside medical use, then those people still seeking medical have one less barrier to cross.”

The bar for medical cannabis in Canada is actually much higher than in most US states with medical availability. Rifici cites Quebec as the most stringent of provinces, in which patients must be enrolled in a mandatory study in order to get a very short-lasting prescription that must continually be renewed every handful of months. Consequently, Quebec has the smallest number of patients registered in the federal program, which Rifici says likely feeds the black market.

The barrier that he and Cannabis Wheaton have to cross, meanwhile, is that major Canadian banks—like RBC and Scotiabank—still refuse to deal with cannabis production companies (as well as with some head shops and cannabis-oriented businesses). Their official reason is that it is a risk to their reputation, but Rifici thinks the real reason is that Canadian banks hold US interests, which are prevented by law from profiting from cannabis.

Rifici finds it baffling to presume the cost of figuring out compliance with US law will be greater than the potential profit to be gained from working with the cannabis industry, both in the present and the future. “To me it seems very short-sighted to turn away a fast-growing industry that I think is going to equal if not supersede the alcohol business,” he says. “Why you wouldn’t want to deal with them as customers, I don’t know. But that’s where that prohibition and stigma still come through.”

However, as companies like Tweed become publicly traded and more and more Canadians own shares in and profit from cannabis, Rifici suspects that stigma will evaporate quickly. In its place, Rifici sees nearly limitless profit horizons.

“The industry is hitting a point of maturity where with legalization coming on a federal level, we know we’re going to see a massive growth in the market,” he says. “I think we’re just kind of in the second inning of the cannabis industry in Canada. A lot has happened so far, but there’s only going to be a lot more opportunity down the road.”

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Jesse B. Staniforth Jesse B. Staniforth is the editor of the free cannabis-industry

newsletter WeedWeek Canada. He also reports on Indigenous issues,

cybersecurity, and food safety. View Jesse B. Staniforth's articles