From Moore Stephens in Monaco to BBC Radio & Music; The Walking Dead to cannabis plants, the career path of Regan Saveall has been anything but ordinary. A veteran of the media world, Saveall’s decision earlier this year to join cannabis oil distributor DragonFly Biosciences as CFO inevitably raised a few eyebrows.
“People said: ‘Oh, you’re going to get high at the start-up’. But that’s completely wrong. We’re not all here in dreadlocks smoking cannabis. As a matter of fact, you can’t get high on the product,” says Saveall.
Dragonfly Biosciences is one of an increasing number of companies to grow, extract, distribute and sell cannabidiol – more commonly known as CBD. This headline-hitting oil extracted from hemp plants contains very little, if any, tetrahydrocannabinol (THC) – the psychoactive element that creates the high. But what has given the press a field day is CBD’s potential medicinal benefits. A quick search on Google reveals headlines including “Scans show lung cancer patient’s tumours shrink because of CBD oil” and “Why CBD oil might be the answer for our anxious nation”.
CBD can be legally bought from high street retailers and pharmacists and is reported to help with everything from stress and depression to ADHD and cancer treatment. Most commonly it is used to treat pain symptoms. But Dragonfly Biosciences is not (yet) in the medicinal field. Its organic CBD oil is promoted as a food supplement. Saveall is at pains to point out that it is up to the consumer to do their research and speak to experts to establish how CBD can potentially help with any ailments.
“We would not make medical claims,” he says. “Our food supplement bottles have concentration of CBD at 3%, 5% and 10% and are therefore not considered a medicine.” But that hasn’t stopped them from flying off the shelves of Boots, Sainsbury’s, Tesco, independent pharmacists and, very soon, Harrods.
The company’s growth over two years has been impressive. Founded by serial entrepreneur and investor Chris Wronski, when he was researching CBD as CEO of the Wellbeing Network, the initial experiment was to see what a 10-hectare field of cannabis plants would yield.
“Chris got chatting to someone else in the sector who claimed to be growing 400 hectares. So Chris decided to buy 420 hectares of land in Bulgaria to grow the plant,” explains Saveall. “It was a big risk, and it turned out the person he’d spoken to actually only had 20 hectares. But, fortunately, when we finished harvesting the crop in October/ November last year, demand was far outstripping the crop we’d got.”
One of the company’s key selling points is that it is transparent from seed to sale. The product is organically certified, which means it’s free of pesticides and heavy metals; the facility in Romania where they extract the CBD from their plants uses good manufacturing practices (GMP); and they have a pharma grade facility for the formulation. The product is then shipped to a warehouse in Derby where retailers including Boots, Sainsbury’s and Day Lewis come to pick up supplies as they need. Dragonfly uses outsourcing specialist Ceuta Healthcare as its distribution agent.
“We can prove every step of the process,” assures Saveall. “We want to build consumer trust in our CBD oil. Our mission is to become the leading premium-branded extractor, formulator, distributor and retailer of licensed cannabidiol product.”
Trust is a key word. The market for cannabis products is expected to be significant and to grow over the next few years, and ICAEW is cautioning advisers to take care not to fall foul of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and the Proceeds of Crime Act 2002. But UK home secretary Sajid Javid’s decision at the end of last year to allow doctors to prescribe medicinal cannabis, and the extensive coverage of CBD in the media, are helping to alleviate concerns.
“If you were to walk into a Holland & Barrett health store now, you’d see shelves of CBD oil products on display. It’s become more widespread,” says Saveall, “although it’s still a little more expensive than the other wellness products. Our 10 millilitre bottles of 3% retail for about £25, and it’s around £40 for a 5% bottle. But our customers have been positive in their feedback.”
At the moment, Dragonfly Biosciences is just distributing in the UK. But the plan is to expland globally. “We’ve been talking to a number of big Canadian producers. One of the things they’re interested in is securing a supply of CBD products in Europe, so we could help them on that front,” says Saveall.
“But we’re also looking for investment from them so that we can expand as a business.” So far, Dragonfly Biosciences has relied on investment from family and friends of the directors to build the business. It has acquired land in Bulgaria, paid for the labour, harvested the seeds and so on. That’s all been handled locally through a 100% subsidiary, Dragonfly Biosciences Bulgaria.”
The company’s UK base is currently Wronski’s impressive home in West Hampstead, complete with swimming pool and gym. But they are planning to move to an office in the West End as the team, currently numbering 11, expands. Saveall is particularly keen to extend the finance function, which consists of himself and two others for now. But he enjoys being hands on with everything. “I’m head of accounts payable, credit control, tax, financial planning and strategy, as well as commercial. It’s full-on, but great and very different to my previous role at NBCUniversal, which was a more corporate environment.”
During his time at that media conglomerate, it went through some major changes, including acquiring and integrating the DreamWorks business (co-founded by Steven Spielberg). “That was a big job making sure their channels fitted alongside our own,” Saveall explains.
“I was involved in the due diligence, sorting the contracts, where their programming was and how it fitted into our business at the time.” Then came parent company Comcast’s acquisition of Sky last year, which required further huge restructuring and integrating of the channels. It was at this point that Saveall decided to move on to pastures new, which is why he joined Wronski at Dragonfly.
The fact that he had worked with Wronski before as CFO at media company Chello Zone (owned by AMC Networks, which distributes series including The Walking Dead) certainly helped. “Chris had already been building the Dragonfly business and doing deals when he approached me because he realised he needed proper controls and processes in place, especially when talking to investors who were asking detailed questions about the business plan and financials,” says Saveall.
“We’re now doing an audit, even though we don’t need to, to give investors confidence in our financial statements.” Interestingly, the auditor is Moore Stephens, the firm that Saveall started at when studying for his ICAEW qualification.
He says he is really enjoying the job, even if it is sometimes a little random. He recalls one recent conversation with a Canadian rugby union team which was looking for a supply of CBD because it wanted to make its own creams to help its players with chronic pain and injuries. At present, Dragonfly is processing its crop on demand to meet the requirements of the wholesalers. But the plan is to also process other people’s crops at its extraction facility in Bulgaria (Premium Extraction Services, a joint venture with a Canadian company) to increase sales. Dragonfly has also held talks with companies interested in buying bulk extract so they can make their own CBD products.
“White labelling is certainly something we’re looking into,” says Saveall. The company is already turning over revenue and has identified another area of land (around 300 hectares) in Bulgaria that could be acquired to grow more hemp plants. “We are looking to accelerate our revenue stream as fast as possible,” adds Saveall.
“We are working with Ceuta to get more wholesale deals. In March we secured our product in 288 Tesco stores, we’re trialling in Sainsbury’s with a view to rolling out in more stores, and Boots sales are going strong. We got data back on the Boots sales in stores and online, as well as the stuff they’re taking from the warehouse, and since the turn of the year demand has quadrupled. We hope that continues.”