Terry Lake is on pace to become a marijuana millionaire.
Since joining medical cannabis producer Hydropothecary Corp. last summer, KTW has learned the former Kamloops politician has hundreds of thousands of stock options and shares currently worth more than $1 million, with that amount likely to rise as the company prepares for significant growth when recreational marijuana becomes legal in Canada later this year.
“It really is on paper, number one,” Lake told KTW. “I don’t like to count my chickens.”
Lake was mayor of Kamloops, MLA for Kamloops North-Thompson and provincial health minister.
He did not seek re-election in the May 2017 provincial election and became vice-president of corporate social responsibility for Hydropothecary Corp. at the end of August.
Company co-founder Adam Miron volunteered for Lake’s mayoral campaign in 2005. Lake said he became interested in medical cannabis after attending a conference in New York a couple of years ago to support his daughter, who was doing research.
He said the world of cannabis opened up to him as a potential medication. After leaving politics last year, Lake said, he got a call from Miron.
“He’d been operating Hydropothecary for a couple of years before he contacted me and that’s when they were gearing up for this legalization that was looming,” Lake said.
Hydropothecary Corp. was established in 2013 and produces in Quebec 3,600 kilograms of medical marijuana per year.
As Canada moves to legalize recreational marijuana, however, the company is poised for significant expansion, with plans to break ground on new greenhouses this summer and winter.
“When both these expansions [greenhouses] are finished, we will have close to 1.3 million square feet of greenhouses and we will be capable of producing 108,000 kg of cannabis per year,” the company’s website states.
Under Canadian law, insiders are required to disclose their holdings of company stock. Public documents confirmed by Lake reveal he was given 325,000 stock options on Sept. 8, 2017. He also purchased 5,500 shares nearly three months later, on Nov. 30.
Options are given to employees as an incentive, essentially a guaranteed stock rate, sometimes given in lieu of salary increases or bonuses. They give employees skin in the game to help increase the value of the company without risk and work to retain employees.
When Lake received his options, they were priced at $1.37. On Thursday, Hydropothecary Corp.’s share price was at $4.98. Options are worthless until they’re paid out and, when they are, financial gain is measured by the stock rate less the option rate.
Lake said he can cash out one-third of the options in the first year and the full amount after three years. Today, Lake’s options and shares amount to $1.2 million.
That number may climb, however, as the company grows and recreational cannabis becomes legal.
If Hydropothecary Corp.’s stock increases on pace with its projected marijuana production — 30 times more by the end of the year — Lake’s current stake would be worth $36 million.
Since joining Hydropothecary Corp., Lake has spoken on various aspects of marijuana legalization both online and in the media. He has written op-ed pieces in Kamloops This Week and the Vancouver Sun.
Lake described his role as the “conscience of the company,” comparing it to social initiatives undertaken by BCLC among the temptation-goods industry. He is also a spokesperson for the company in English Canada.
Lake noted signing on with Hydropothecary saved B.C. taxpayers money. Former MLAs receive salary for up to 15 months to transition from politics. Lake said he collected it for three months.
Meanwhile, Miron is also positioned for a hefty green payout. He has 750,000 Hydropothecary Corp. stock options, which were given at a rate of $2.69 in December 2017. He also has 3.3-million shares in the company. The total combined value as of Thursday was $18.2 million.
Miron’s background is in media and he helped launch iPolitics.
While Lake is poised to cash in on the impending cannabis legalization, he cautioned those looking to join the green rush. Investors should consult financial advisors, he said, and stressed the importance of doing homework amid the hype.
“I would never want to shoulder that responsibility with friends or anyone I know,” he said.