HIGHLIGHTS
- 3 Sixty Secure now operating in Nevada and aims for three more states in 2019
- Company is now focusing on growth in the United States
- Cannabis accounts for roughly 60 per cent of 3 Sixty’s business in Canada
Canada’s nascent cannabis industry has given one young security and transportation company such a boost that its employee numbers ballooned by 75 times since early 2018, and it just expanded into the United States with plans to enter the European market by the end of this year.
On Thursday, 3 Sixty Risk Solutions Ltd. said its wholly-owned subsidiary 3 Sixty Secure Corp. is now operating in Nevada, with U.S. expansion plans slated for Missouri, New York and California later this year. The Almonte, Ontario-based company’s staff numbers could surge as high as 1,000 by the end of 2019, up from the roughly 600 currently in Canada, said Thomas Gerstenecker, founder and chief executive of 3 Sixty.
This compares with eight employees in early 2018.
“We expect to gain market share across Canada this year and have a significant presence in multiple states before the end of this year, and basically have a level of presence in the European Union,” said Mr. Gerstenecker, who previously held executive security roles with United Nations and spent years with Canada’s elite special forces group JTF2.
Revenue has jumped along with the company’s rapid growth so far this year. In the first quarter of 2019, 3 Sixty’s revenue soared to $3.4 million versus $353,000 in the year-ago period, though like most businesses operating within the burgeoning cannabis industry, the capital spending necessary for quick expansion meant the quarter saw a net loss of $4.8 million, according to its latest financial report.
“The intention is heading toward the U.S. more so than Canada now,” Mr. Gerstenecker said, adding that the company’s second-quarter revenue is expected to be no less that $7.5 million. “You can appreciate the scale.”
Mr. Gerstenecker started 3 Sixty Risk Solutions Ltd. in 2014, when the small company focused on security consulting.
But “then it morphed,” he said, with medical cannabis and then recreational pot late last year when it was legalized. This spurred the company to buy around 150 vehicles and establish seven secure storage locations in five provinces from Alberta to New Brunswick.
This compares with early 2018 when the company had just two vehicles and no secure storage facilities.
By 2017, 3 Sixty was transporting medical cannabis, so when the recreational pot industry began in late-2018, the company was ready for it: advising legal growers on their security requirements and transporting pot – often in armored vehicles for high-valued shipments that can reach millions – in its various stages.
Transporting, guarding and storing cannabis makes up roughly 60 per cent of 3 Sixty’s business and the company said it has around 65 per cent market share in Canada.
Demand for 3 Sixty’s secure transportation services, which include tracking temperatures inside the vehicles and a chain of electronic signatures, does not stem from government requirements but rather those of insurance, he said.
“We believe this will become very similar to how money is moved; it will be insurance driven,” Mr. Gerstenecker said.
But unlike cash, the same cannabis plants and products need to be transported as many as five times during the cycle from plant to retail, often starting with genetics to a licensed producer, then dried products to a testing facility, then secure storage, a distribution center and finally to a store.
Before recreational pot was legalized in October 2018, 3 Sixty was doing around 12 secure transport runs per week.
“Last week," Mr. Gerstenecker said, “we did 121.”