Friday Night Acquires Spire Secure Logistics: Five Questions For The Cannabis Security Industry

Shaking hands and making moves is Friday Night Inc. (CSE:TGIF) (OTCQB:TGIFF) who released on Friday details of their previously announced deal with Spire Secure Logistics Inc. Spire shareholders assumed over 7 million shares at a price of $0.65, subject to trading restrictions until July 2. According to a statement, the shares will be placed into voluntary escrow and released every three months; upon closing and then again on May 1.

Spire, a private Canadian company focused on security, intelligence, and compliance with international experience in high-risk mining security and the cannabis sector was founded around three years ago by expert law enforcement officials Andy Richards and Jeff Meyers. Using their knowledge of organized crime and both the illicit and legal cannabis industry, the two grew Spire into a top firm for cannabis companies looking to adhere to government regulations concerning security.

According to a statement, Friday Night’s acquisition of Spire will help to both diversify the company’s portfolio and aide their move into the global cannabis market. “Spire is uniquely equipped to keep companies safe, secure, and compliant – which in turn creates more shareholder value and peace of mind,” said Friday Night CEO Brayden Sutton.

Sutton, who held a ten percent interest in Spire, recused himself from negotiations and had no part in the Board’s decision to acquire the company. As part of the acquisition, Andy Richards joins the Friday Night Inc. Board of Directors. Spire also announced the hiring of former law enforcement leader and cannabis sector expert Tim Humberstone as the company’s new Chief Strategy Officer.

We caught up with the teams from Friday Night Inc. and Spire to discuss the deal, the cannabis industry, and the general misconceptions of what it means to be a “security company.”

You have a unique partnership between Friday Night Inc. (TGIF) and Spire. Can you discuss the benefits of such a deal in relation to the cannabis industry at-large?

The biggest benefit of the TGIF/Spire partnership is the ability to mutually support growth opportunities, domestically and abroad, in a safe, secure, compliant manner. Spire brings substantial industry awareness and experience to the table combined with legitimacy and respect in the regulatory, law enforcement, and security fields. To maximize growth and profitability for shareholders the emerging regulated cannabis industry needs to work constructively with and understand the regulatory side (and vice versa) and Spire bridges that gap. TGIF is an industry thought leader by recognizing and acting on this opportunity to differentiate itself and build internal capacity.

Let’s talk about the big picture; what is your business model? Generally speaking, who is your primary demographic? Would you say it is dispensaries? Cultivators? A mix of different businesses?

We are a company in cannabis but not necessarily a cannabis company.  We represent a number of industries including mining and investment but currently focus the majority of our services on cannabis as it is the fastest growing economic sector. With that being said, we provide advanced security consultation services to government, prospective licensed producers, retailers, existing licensed producers and ancillary businesses in the form of due diligence background investigations, security protocols/business rule development and implementation, site security assessments, transportation and support, licensing/permitting and applications both domestic and international, as well as stakeholder relations which includes but is not limited to domestic and international government and law enforcement.

If we can focus on cannabis for a moment, what are the most significant threats to the legal cannabis industry today, both in the United States and Canada?

Government officials on both sides of the border have suggested that the legalization of cannabis will push organized crime out of the lucrative cannabis black market. The inference being that the new systems would make the illegal cannabis drug trade a lot less attractive to gangs and organized crime. For a multitude of reasons, this perspective is both naïve and overly optimistic. Driving out the black market will take many years of very carefully balancing price control, regulatory compliance, and enforcement. One significant area not considered in the black market conversation is underage users and longstanding international black markets, including many U.S. states. The black market will likely continue to supply these broad customer bases.

As long as there is a potential for huge profit, gangs and organized crime groups will be a part of the picture. The illegal market for cannabis is estimated to be worth billions of dollars and organized crime groups have historically controlled most of its production, cultivation, import and exportation, and distribution. It’s not something they are likely to give up without a fight. Given the degree to which organized crime groups are currently involved in the cannabis market, it is probable that they will continue to produce cannabis illicitly and attempt to infiltrate the regulated industry.

So then let’s discuss government regulations. How are government regulations regarding security in the cannabis industry creating changes? Is the industry prepared?

From a Canadian standpoint, government regulations regarding security have focused on the physical requirements of the licensed producers. These included multiple cameras with large amounts of data recordings held for a number of years and high-level vaults to store product. These costly requirements slowed the application process and only looked at the facility’s physical security platform. To date, Health Canada has reduced some of the requirements and expedited the process. However, the two biggest threats to the industry have not been addressed: transportation logistics and cyber security.  

It will be the responsibility of the individual provinces to coordinate security protocols related to transport as the recreational market rolls out. In our opinions, it is imperative that these governments engage subject matter experts in Organized Crime to assist in establishing protocols to mitigate these risks in the first instance by being proactive and preventative rather than reactionary.

With the number of registered medicinal patients increasing, personal medical information kept on file by licensed producers are at risk to cyber-attacks. Currently, Health Canada has no regulations specific to information technology security. The risks of litigation and a decline in shareholder confidence could be very high if a breach of a licensed producer’s data occurred and these records were stolen which has been seen in other industries.  In addition, with the number of mergers and acquisitions taking place in the cannabis industry, information related to such business deals is also at risk.

Finally, being that this partnership is so unique to the industry, what is something the general public does not understand about your business that you think they should? In other words, tell us something that we don’t know.

There’s a widespread misconception of what our company does based on the fact that we are labelled a “security company.”  When the general public is asked what a security company does, the common answer is they provide physical security at the entrance to a business.  We like to think of ourselves as a high-level business consulting firm with subject matter expertise in all areas of security based on our operational law enforcement careers and specializing in organized crime – this experience is particularly applicable now as we move from a black market to a regulated/legal cannabis sector. Understanding how these criminal groups work, what threats they pose, and how best to mitigate these risks is our specialty.  We have the ability to ensure our clients are safe and secure while being operationally effective and financially efficient. The security industry is often misunderstood and an afterthought; something that is used as a reactionary service rather than a preventative one. We believe that in an industry that is heavily represented by publicly traded companies, having adequate support instills shareholder confidence.