Vic Neufeld: From a Peach Farm Boy to Pot Czar

April 6, 2018

Vic Neufeld: From a peach farm boy to pot czar

Veronique Mandal | The Drive Magazine

The journey from being the son of a peach farmer to pot czar might seem highly improbable and it could be, unless your name is Vic Neufeld and life on the farm laid a foundation for your future success. Little did Neufeld know the discipline and work ethic demanded by his father would guide him through a number of careers and near catastrophes and allow his life to become “a helluva ride.”

At a time when most people are heading to retirement, Neufeld is running a multi-billion-dollar marijuana enterprise, sitting on multiple boards of directors and travelling the world. In just four short years he and his partners—John Cervini and Cole Cacciavillani—have taken their company Aphria from zero worth to $2.5 billion. No mean feat and certainly not for the faint of heart. He is quick to credit his drive, passion and energy with the lessons he learned as a farm boy.

During the 1960s he and his three brothers worked long hours on the family farm with their hardworking father. George Neufeld came to Canada from Germany after World War II, penniless and eager to start a new life. After sharecropping for a number of years he saved enough money to buy the farm that still exists on the first concession in Mersea Township.

“Those were tough years, very labour-intensive, and Dad was in seventh heaven with four boys. He was very disciplined, not like the Gestapo, but he certainly made sure we did our share,” Neufeld says, laughing. “The only day off was Sunday. That day was for family and church. He was determined we would learn the value of a dollar and the importance of working hard to earn a living. That framed how I grew up and who I became later in life.”Neufeld’s days at Gore Hill Public School and later as a star athlete in basketball and baseball at UMEI Christian High School also left him with great memories. So much so that even today, when he is on a business call, he will put on his car’s Bluetooth and drive around his old neighbourhoods and Point Pelee. He wasn’t an A-student and wishes he had more time then to play golf. It’s still on his bucket list. He played hockey with his brothers and their friends but, because his father would buy only two pairs of skates, Neufeld the goalie played in a pair of iconic black rubber boots with a red band around the top.

 

“I often think back to my childhood and reflect on the simplicity of life then. When there were no cell phones and I took my marching orders from my father. Now, I’m the father. There’s a lot of nostalgia being back in Leamington. It’s like going full circle. I like it,” he says wistfully.

The journey that led Vic to Aphria (a Gaelic word for feeling free) started with leaving the farm to pursue degrees from Western University and the University of Windsor. He earned several degrees, including a Master’s degree in Business Administration. Because his two older brothers had gone to college and university, Neufeld said his father wasn’t surprised when he told him he was leaving. But there was a caveat: “you have to earn the money.” And, just like thousands before him, Neufeld left university with debt and an appreciation for where every penny was being spent.

“I learned that money didn’t come on a silver platter and even today, I bend down to pick up change.” Following his MBA in 1978 Neufeld was hired as a “lowly accountant student” by Clarkson Gordon where he was promoted to manager after receiving his chartered accountant designation in 1981. The next significant milestone in his life was to get married. On his 21st birthday, a group of his closest buddies had taken him to the Dominion House tavern on Sandwich Street in Windsor to celebrate. Neufeld took a shine to a girl sitting with friends who were sizing up the guys.

After many beers, Neufeld made his way to the washroom. On his return journey past the girls, one of them stuck out her foot and tripped him. He looked up at her—she had been sitting next to the woman with whom he’d been flirting. They talked for the rest of the evening.

“I asked to walk her home and we walked to Huron Hall on campus where she was living,” said Neufeld, enjoying the momentary memory the story brings. “I still can’t get over that she did that because anyone who knows Susan knows she is shy and timid.”

They were married soon after.

By the time the Clarkson Gordon accounting firm was acquired by Ernst & Young, Neufeld had cemented a reputation as a disciplined, energetic manager with a stellar work ethic and a focused dedication to putting clients first. At just 32 he had become the youngest partner in the history of the storied accounting firm. Neufeld thrived at EY.

He took particular pride in one of his blue-ribbon companies—Jamieson Laboratories Ltd. While his nine years at EY provided all the stability and prestige a young executive could wish for, Vic Neufeld was an ambitious professional with an entrepreneurial spirit. This did not go unnoticed by the brass at the vitamin company. They made him an offer to come work for them. In May 1993 Neufeld left a secure partnership with one of the world’s largest and most prestigious firms to became Jamieson’s CEO.

It was to be a good decision, but not without near disasters he rarely talks about. The first came when the VP of scientific and technical operations, who provided the bedrock for Jamieson’s success with its Canadian customers and growing world markets, announced he was returning to Montreal.

“It was a major kick in the gut. I relied heavily on him and he was vital to our success. How the heck do you replace someone that important? The first guy we hired lasted only four months and this could have been a game changer for the company. We were worried,” said Neufeld. “But the next guy was unbelievable and stayed for 11 years. He is now with us at Aphria.”

When Neufeld took over the reins at Jamieson the company was valued at $20 million and had 98 employees with four executives. He says those four execs were vital to him and had great leadership skills. Little did he know his ability to navigate serious landmines were soon to be tested.

One morning Neufeld woke to newspaper headlines around the world that screamed, “Study shows Vitamin E KILLS.” Bad press is a nightmare for any business, but for a vitamin company this was a disaster in the making. At the time, the company owned 80 per cent of the branded vitamin E sales in Canada.

“Talk about sleepless nights. This was catastrophic,” said Neufeld. “The entire market immediately dropped 50 per cent and within two months we lost 10 per cent of overall sales. It was huge. On sales of $50 million we lost $4 million, an eight per cent drop almost overnight. The bad press just kept coming.”

Neufeld and his team started burning the midnight oil. They had to avoid panic and come up with a strategy… and fast. They decided to re-focus and take a chance on herbals, which so far were limited to echinacea, garlic and very few other plants. Using science-based products and high-level marketing, they took an expanded herbal line to consumers. It took a full year of PR but the herbal market exploded. Jamieson became a national leader, especially in the omega oil products.

“We averted what could have been a disaster if we hadn’t had the right team in place,” said Neufeld. Over the next 21 years not all the decisions they made were perfect, according to Neufeld, but there were enough to create six expansions and the purchase of multiple parcels of land on Windsor’s east side. By 2013 the four executives had grown to 14 and there were now 600 employees. Neufeld smiles a lot when he talks about the successes they experienced.

“Our vision was solid and the company was founded on all the right principles,” said Neufeld. “We wanted to lead in the human nutrition sector and we did.

We became a world leader and I know it was due in large part to the fact that we all had the right commitment and passion for what we were doing.

“Market share increased from seven percent to 27 per cent and our product went from being carried in four to 44 countries.”

To reach that level of success meant Neufeld sacrificed family time and being around for his children’s upbringing. He is not proud to have missed hockey games and dance recitals, family and friends’ funerals and spending more time with his wife. It’s a sad memory but he is quick to point out that his family truly understood everything he did was to make a better life for all of them.

In late 2013 Neufeld was again at a crossroads. Jamieson was now thriving but Neufeld had itchy feet. “This was a tremendous journey but there were situations I needed to confront. There were the health concerns of the owner and we needed to look at the next evolution of the Jamieson story. But to take the company to the next level would take a further commitment of resources, in the area of around $5 million,” said Neufeld. “We were also facing the fact that the original four executives were now older and three had given notice they would retire. The fourth had decided to move back to BC. I had counted on them every step of the way and while I wasn’t scared to find replacements, it would be tough to get back what we had as a team,” Neufeld says. He also had questions about what the next chapter of his life should be. He asked himself whether he would have enough passion to give it his all, which is the only way he knows how to work, and would he want to commit for another five years as the company continued its international efforts.

With those issues swirling, Neufeld approached the chairman and laid out the reality of taking the company to where it needed to go in the long term. In their discussions they determined that perhaps it was time to consider selling. Valuation of the company was at an all-time high and it seemed to the chairman that the stars had aligned. In January 2014 Jamieson was sold to a private equity firm for $310 million—an increase in valuation of $290 million over 21 years. They had also reached $240 million in sales.

The ink was barely dry on the sale documents when Neufeld had a visit from an old school chum—Cole Cacciavillani—who had heard he was leaving Jamieson. Cacciavillani had gone to Kingsville High School with Neufeld’s wife Susan and came to his friend with a proposition.

“He told me he and John Cervini had spent the last year in research and development of cannabis plants. They knew the medical cannabis world was about to explode and wanted to step up their game,” said Neufeld. “These were two farm boys from Leamington used to growing Easter lilies and mums, and they knew the medical cannabis world had to step it up to meet Health Canada standards. So, I brought them to Jamieson and shared our standard operating procedures required to get GMP-compliant. Cole said he and John were back-shop guys and wanted a front man to build a team and believed I was that guy because of my expertise in the nutrition sector.”

Listening to Cacciavillani and Cervini, Neufeld began to feel the excitement of a new challenge. In early May 2014 he left Jamieson and embarked on another career as CEO and president of Aphria. While much has changed in the four years since he signed on, many of his friends and family had raised eyebrows when they first heard he was becoming a marijuana grower.

“There was still a stigma of Woodstock there and people questioned the optics of what I was getting into,” says Neufeld. “The execs I worked with at Jamieson had a chuckle or two and so did some of my friends. They thought I was taking a big risk and some asked if I was going to be getting stoned. But I had a different perspective—we were in the medical marijuana part of the business. This was just another stepping stone and I knew the benefits people were experiencing with medical pot. Today, I have hundreds of friends and family members who are using it for medical reasons.”

Neufeld’s son Bobby, 29, and daughter Victoria, 26, thought their father’s new venture was “cool.”  Neufeld admits to smoking weed in university. However, knowing the concerns about its use by teens, he supports the government’s legal-age requirements.

If the Jamieson nightmare gave him sleepless nights, the startup at Aphria was about to give him ulcers. In 2014 the process of getting a license from Health Canada involved four parts: build, grow, process and distribute. Because they had become a public company they promised shareholders they would have a license by a December 15 deadline. The first three licenses were in hand but the crucial distribution permission wasn’t coming.

“We waited week after week, month after month, then July turned to September and by November 24, 2014, we were discussing a disaster plan.

We were in crisis management mode and working out how to manage a very bad situation that was fraught with problems,” said Neufeld. “We had raised almost $20 million and spent $19.9 million on facilities and operations. We were really at the end of the road and the three founders had not been personally taking any money for salaries. This was not what we saw Aphria capable of but things were unravelling. We even looked at who might want to merge with us. We had a lot to lose here, including serious money put in by the founders. The frustrating part was it was all out of our control.

We went to Ottawa weekly knocking on doors. I was used to being in control, so this was pretty difficult.” By the time they were down to one or two more payroll periods and planning for the worst, they received the distribution license.

It was full steam ahead. Neufeld could now get excited about the future of the company. Nowhere is his excitement more obvious than when he is showing visitors the giant expanse of marijuana growing under acres of glass. Surrounded by a sea of leafy green vegetation, there is only a faint telltale odour he laughingly calls “the scent of money.” The immense tracts of greenhouses and their linking corridors are jaw-dropping not only because of the size of the operation—soon to be one million square feet under glass—and state-of-the-art technology, but also because of the extraordinary cleanliness of the place. In order to meet the stringent requirements of Health Canada, they purchased a cleaning company to ensure careless cleaning never contaminates the crop. All visitors wear lab coats and cover their hair and shoes.

Set against the purple hue caused by the fusion of blue and red LED lighting, Neufeld explains how mother plants are nurtured in their original greenhouse for six months. Then, after the top three plants are put aside for propagation, the mother plants are destroyed and the cycle starts again.

Neufeld proudly shows off the oil extraction room and vaults and the nearly completed five acres of phase 3, which is awaiting the final go-ahead from Health Canada. In phase 4, which is three times larger, the technology they are using based on Dutch innovation will be revolutionary and require fewer workers.

There are presently 190 employees with another 100 being hired for phase 3 and 400 for phase 4. Without automation  that number would be 800.

In the phase 4 area they are also building housing for the workers and creating a football field. Phase 4, which should be ready in August, is so large it will take 31 continuous cement pour days to complete the floor. They also have plans for a self-sustaining co-generation plant.

Once the tour is over, Neufeld leads the group back to his office in the “situation room.” This is where deals are made within hours and where decisions on multi-million-dollar deals must be made “pronto.” Neufeld is a hands-on CEO and tries to spend most of his time in the plants. However, with overseas business expanding rapidly, he is out of the country at least once a month. With the federal government set to legalize marijuana for recreational use in the next six to seven months, the Aphria team is gearing up to take advantage of the oils and edibles that will form part of the Health Canada approvals. By the end of 2018 about 50 per cent of their offerings will be marijuana oil.

The road to success, however, is still rocky—again, because of circumstances out of his control. Neufeld is acutely aware that the more than 100,000 shareholders, some of whom are friends, want to know how the stock market volatility is going to affect their investment. Time will tell. Neufeld says he is in the first part of the third and final chapter of his life. The second part will be when he eventually retires… sort of. He feels a compelling need to help the next generation of young entrepreneurs using the foundation of integrity and respect he believes should govern all aspects of a person’s life, and that form the qualities of a leader.

He has advice that goes beyond admonitions to be diligent and keeping a nose to the grindstone. It comes from wisdom gleaned from a speaker he heard many decades ago. Wisdom that says you can work hard and be successful but keep in mind how you want to be remembered. Make sure that at the end of your career you leave behind a fingerprint, he says, a signature you can be proud of and that others respect. If, when your name is mentioned it emanates with values of integrity, respect and best-in-class, then you have accomplished everything and epitomize the kind of leader you aspired to be, and hopefully became. Neufeld himself took that advice to heart and despite his economic and social stature, and has retained the warm and welcoming nature that lies in the heart of a farm boy.  “I sometimes walk around the original acres at Aphria and want to pinch myself. It’s all been a happy dream. I’m very grateful.

It’s been a helluva ride. I think Dad would be proud.”

 

Originally published on The Drive Magazine