Situated at the foot of the mighty Hikurangi and on the banks of the Waiapu river, Ruatōria is a lonely town on the east cape of the Gisborne region. It represents one of New Zealand’s poorest regions, holding a population size of 750 people and some of the highest unemployment rates in the country, mounting to 15.7 percent. But what Ruatōria lacks in urban development and monetary wealth, it boasts in fertile cannabis and hemp crops.
Manu Caddie, the managing director speaks of Hikurangi Group, speaks of the company’s origins: “In 2015 a hapū cluster on the East Coast near Ruatōria decided that more attention needed to put on economic development and job creation for their rohe”.
But what was once a hapū cluster has turned into a pillar of hope for the community.
“We grew our first crop of industrial hemp in 2016 because it was a plant well known and loved in our region so there was considerable local expertise and knowledge of the plant, and we could see the market and regulatory space moving quickly both for hemp food and medicines derived from cannabis,” Caddie says.
“At the time of planting we weren’t sure what the end use would be, but by harvest time we were very focused on producing the first approved cannabis medicine in New Zealand.”
Hikurangi Cannabis Company is a research and development enterprise who aims to lead the change in pharmaceutical grade cannabis production at an affordable price. But unlike other contenders in the cannabis industry, Hikurangi serves a wider purpose.
The enterprise intends to create jobs, raise household incomes and provide opportunities for young people, or other whanau who can return to their whenua and marae to contribute to cultural continuity and regeneration of Te Reo me ona Tikanga.
While Hikurangi presents a huge opportunity for the local community, the plant has been somewhat problematic for locals, who have been suppressed to utilise the resource under rigid government bodies.
Hikurangi are now in the process of turning a small portion of criminalised drug growers into legal medicinal marijuana workers.
Caddie admits, “We had our sceptics at the start – both from those who saw cannabis as a blight on the community and from those who already rely on the plant for a basic household income, albeit with massive risks for families.”
Despite the pitfalls attached to the cannabis industry, the local community believe in it, and they believe in Hikurangi Group. So, much so that when Hikurangi gave first dibs of investment to the local community in Ruatōria on Pledge Me last week, it was as if money grew on the plant.
Grandmothers, single parents, and small business owners rallied and collectively invested over $1.4 million into the enterprise, including one notable contribution of $100,000 from a local shop owner.
To repeat, a town holding a median income of $17,100 mustered up over $1 million of investment. Asked how? Caddie says it was a broad flax roots effort, where 80 percent of the pledges were less than $1000.
“The amazing thing over the last 18 months has been how the concerns have dissipated as we’ve progressed, explained the vision for decent local employment and the science building around proven medicinal cannabis products. And it’s not just an emotional or aspirational interest, we had business leaders read the prospectus and see the potential returns.”
While opportunity is rife, cannabis is a risky business. And for local community leaning on the enterprise for salvage, there is no guarantee the money invested will pay dividends. Asked how job creation and re-distribution of investment is fed back into the local community, Caddie says there is still much planning to be done in the employment process, but is calling on global experts to train staff on Ruatōria soil.
As for finding workers, they have had no trouble seeking keen employees to travel to the secluded town.
“We’ve already had expressions of interests from hundreds of people who want to move to Ruatōria, including a number from overseas and a number of people with highly relevant technical experience and skills in cultivation, extraction, manufacturing and analysis who have been working in industries like biotechnology and pharmaceuticals as well as horticulture, dairy manufacturing, marketing and HR.”
Despite the job creation and economic opportunity, Hikurangi Group extends further, aiming to embed kaupapa Māori values: Ponotanga, Tikanga, Manaakitanga, Mauitanga, Kaitiakitanga, Whanaungatanga, Wairuatanga and Te Tiriti o Waitangi into its business practise. It is a vital element to the coordination of the business and local community, where 94.8 percent of the population is Māori.
Outside the gates of Ruatōria, investment has been paramount. In February, the venture cannabis company penned a letter of intent with Seattle-based Rhizo Sciences to produce 3,000kg of pharmaceutical grade cannabis products next year, and a further 12,000kg by 2021.
The partnership represents a $160 million deal, and is said to drive what could be a billion dollar industry. The deal is subject to the medical marijuana bill passing its second and third chapter at the end of the year.
Additionally, just last week Hikurangi Cannabis launched its equity crowdfunding campaign on PledgeMe. The venture received so much investment interest it broke the equity crowdfunding PledgeMe platform twice in consecutive nights, before referring to a Google doc to receive pledges.
Despite the technical difficulties, it had little effect on the outcome, as Hikurangi Cannabis reached the $2 million PledgeMe cap in just 16 minutes.
Caddie states that locals will attain 75 percent ownership of Waiapu Investments Limited, the investment fund established for the crowdfunding offer.
Caddie adds, “The rest of Hikurangi Hemp Holdings is owned locally and at this stage that entity will control at least 60 percent of the operating company – we will aim to retain as much local control as possible during negotiations with institutional investors and some who have expressed already are really attracted because there is so much local investment – both in funds and community support.”
As for regulation, signs are looking good as the first medicinal marijuana reading saw unanimous support earlier this year. While cannabis has been a nostrum in the eyes of government legislators, times are changing, and white collared legislators are beginning to see its benefits. But while there is movement at government level and support from investors, Hikurangi have had their fair share of regulatory hurdles and will likely have more to come.
Caddie says, “The Ministry seems to have had support from politicians for progressing medical cannabis development as quickly as possible but are constrained by current legislation. They have interpreted the legislation relating to CBD in a particular way that is different to how many scientists and hemp industry folk see it.”
He adds those most effected by the current legislation isn’t his business, but the patients seeking medicinal cannabis who have to deal with lengthy applications to the Ministry, specialists support and importing and supply issues.
“While we have challenges in the production space, the biggest challenges are for patients trying to access safe, consistent products to help with a range of serious conditions.
So, if years of piecemeal medicinal marijuana policy finally sees legislation, what does the medicinal cannabis landscape look like in New Zealand? Could we end up like Oregan, who is flooding with marijuana supply and dealing with an excess of 1 million pounds of unsold marijuana? Or Canada who has just 15 percent of supply of its demand?
“We think the regulations around cultivation should be the first focus to enable us to get on with growing as soon as possible, then processing and manufacturing standards as well as distribution and export rules,” Caddie says.
“We expect the standards put in place initially will be slightly more lenient than existing medicine rules or they would not have included provisions for them in the new legislation as rules already exist for medicine manufacturing, importing and distribution in New Zealand. This will enable the industry to get going and the rules can be tightened up in time as has happened in Canada.”
As for Hikurangi’s next step, Caddie says the company’s future is “pretty bright.” For now, it’s focused on reaping the investments sowed by its PledgeMe campaign.
The investments will be allocated towards opening the GMP processing facility before the end of the year, and allow Hikurangi Cannabis to start clinical trials.
Idealog has been covering the most interesting people, businesses and issues from the fields of innovation, design, technology and urban development for over 12 years. And we're asking for your support so we can keep telling those stories, inspire more entrepreneurs to start their own businesses and keep pushing New Zealand forward. Give over $5 a month and you will not only be supporting New Zealand innovation, but you’ll also receive a print subscription and a copy of the new book by David Downs and Dr. Michelle Dickinson, No. 8 Recharged (while stocks last).
Idealog is part of ICG. We work with clients like Woolworths New Zealand, All Good, Huffer, Liquorland, Resene, Citta Design, TVNZ, Spark and FCB on their event activations, in-store, in-office or out-of-home signage, content creation and vehicle wraps.