#003 - Cannabis Business News Round Up | July 14, 2023

Speaker 1: 0:04

You, you.

Speaker 2: 0:33

You, you, you, hi, everybody, you welcome to high spirits live. I'm Ben. I'm.

Speaker 1: 1:02

Ben.

Speaker 2: 1:04

All right, we're getting going. It is Friday morning. I hope everyone has had a great week. Whoo, I'm glad just to be here. I'm here, unlike last week, where we were supposed to record and I was not here, and so we did it.

Speaker 1: 1:22

Well, I hope you're feeling better. Ben had a bad back injury, so all all the good love for healing and feeling better, getting strong.

Speaker 2: 1:30

Thank you. Yeah, it turns out I'm an old man and that's a thing, and I have to take care of myself and sleep and do all those things and stretch ice. Yeah, getting old socks.

Speaker 1: 1:46

Getting old is not does not only suck, though. I think that getting old is pretty awesome. At the same time, I think like keeps getting better.

Speaker 2: 1:52

That's what I that's what I keep realizing Okay. Yeah, like a fine wine with your own wine country. How, how was your, how was your week in wine country?

Speaker 1: 2:03

It was a wild week. It's been lovely weather, lots of busy work Like. I'm growing pumpkins in my front yard and they're just starting to show up little baby pumpkins. I'm hoping to have a pumpkin patch by October.

Speaker 2: 2:20

Oh, excellent. Yeah, very nice. I need to. I need to spend more time in the garden. I spent a lot of time at the office, in this office, my studio, but it's been a good week.

Speaker 2: 2:32

We so in California we had AB 45 past. What was that like two years ago? It was supposed to be the incorporation of hemp into into foods and supplements in California, kind of falling in line with many other states that have allowed CBD and hemp into their products. And, anyways, there was a, there was this part of the legislation that said the DCC, the Department of Cannabis Control, will provide guidance on how the cannabis supply chain and the license operators may be able to integrate hemp. And so, like there was a lot of excitement about potentially build the building, especially for companies like us, you know, an ingredient company building some efficiencies between the two supply chains, not having to have separate equipment, separate facilities, all this kind of stuff.

Speaker 2: 3:21

Anyways, they never did that and so there's a big old confusion. Long story short, I'm rambling, we got our hemp license today or this week, wow, and I'm like, and it kind of came out as, like you know, we were filing under duress because there was a lot of confusion and amazingly, they're like we reached out to him, hey, it's like what's the status? Do we need to do an inspection? Like, oh, we sent one, we sent a license to your mailbox and I'm like, oh, is that easy? Okay, great, so much easier than the cannabis process. But now we're licensed for both hemp and cannabis in California.

Speaker 1: 3:59

But you aren't able to use the same equipment, correct?

Speaker 2: 4:03

No, no, so, yeah, so it wasn't a win on that side. This is high spirits. We're trying to keep spirits high, right, it's like celebrate the small wins, but anyways, good, I'm glad you had a nice week. It has been another week in the cannabis space and so this week we are doing cannabis business news. It's kind of like a news roundup where I mean kind of like I used to do this with marijuana today a little bit, there's very much a kind of a policy bent on that show. Here we're trying to provide, you know kind of our observations, insights into the kind of headlines that are are catching people's eyes and I don't know, going through this week's headlines, there's some big ones, but something I recognize is you know, news is news and they really a lot of these are clickbaity, you know headlines.

Speaker 1: 4:58

It's true, and I think that one of the reasons why keeping up with news matters so much and I do a lot of work helping executives and boards like work on their business instead of in their business and that means that you need to understand, if you're a business operator or owner or investor, like where you are in comparison to the whole market, and the best way to do that is just to be a consumer of information and of news so that you have a broad understanding of the landscape, and so I consume a ton of it constantly. I was just this morning laying in bed, probably from 6am to 6.45, looking at the news before my son got up and given myself sort of some bandwidth to think about what we're going to talk about here today. So I think there's a lot, a lot of good stuff.

Speaker 2: 5:52

Yeah, amazing and lucky for our audience, you the listeners. We've done this for you, so we're going to try to crank it out. In the next hour We'll get through our top seven ish. How many one, two, three, four, five, six, seven, seven headlines, and so we're going to run through them. There's some pretty big juicy ones, like one of my favorites that kind of like popped up is celebrity marijuana brands outperform traditional brands. Data suggests we'll dig into that. I think I've heard a hundred times that we all know that celebrity brands don't work in the cannabis space. I don't know, maybe we're, maybe we're wrong, maybe they are.

Speaker 2: 6:32

In Boston, mary Med throws a tea party or a wee party Denouncing 280 E and saying that no taxation without representation. So we'll dig into that a little bit. We have the Manhattan cannabis chain rated by police and state agents. New York always good fun there. More news out of New York with Chicago Atlantic talks of a hundred and fifty million dollar equity investment deal Very interesting, something near and dear to my heart. Researchers investigating a pre-roll grind by availability, getting real sciency in the world of pre-rolls I love that. More fire for cookies, that's. That's all new news and also old news. And then, finally, the feds aiming to reschedule cannabis. So, ladies and gentlemen, this is a week in the cannabis industry. This is what we all signed up for. I'm here for it. Should we dig in anyway?

Speaker 1: 7:33

Yeah, this is all super juicy. Let's get started at the top.

Speaker 2: 7:37

All right. So celebrity brands, I mean what I remember when we were first coming in the space like 2015 for me, you know, marley's was was kind of big. What were some of those old, old brands like that, that like Tilray and and private here were kind of like pulling together.

Speaker 1: 7:59

I'm trying to Marley was the celebrity brand I worked on potentially standing up a Chelsea handler brand. At one point I was on her podcast. You can check it out.

Speaker 2: 8:11

I remember when that RFP came out. Actually we submitted on that.

Speaker 1: 8:16

Yeah, it never came to fruition. I think that there have been a lot of celebrities that have tried to get into the space and have it, but what this MJ biz article highlights and what headset put out, there was some data on a bunch of celebrity brands that have launched. So some some of those are, let's see. You're bringing up up the table.

Speaker 2: 8:38

Here we go.

Speaker 1: 8:40

This is who MJ biz is saying. Are those celebrity brands that are doing so much better than the traditional California brand At the top they call out? Can that they?

Speaker 2: 8:52

arrive beverage, there we go.

Speaker 1: 8:54

Yes, your category. Yeah, so they're saying that can is doing seven hundred and fifty thousand dollars a month. The next most popular celebrity brand that they call out is Houseplant, which is Seth Rogen's brand, followed closely by Tyson 2.0, mike Tyson's brand, and the list goes on. We've got Khalifa Kush, the Santana brand, jerry Garcia's brand, I guess Bella Thorne has a brand, and so what they've done to get to this super juicy headline is headset has taken, has created a benchmark for what they call the traditional California brand, and they say that the traditional California brand brings in twenty six thousand five hundred and ninety one dollars a month, and so take that as a benchmark and create this juicy news story that all these other brands are making more than that. What do you think about that then?

Speaker 2: 10:00

What do I think about that? I just so, I'm still stuck up on the definition of a celebrity brand, because you mentioned can at the top of the list and they have celebrity endorsement, but I don't, I never perceive can necessarily to be a celebrity brand. I agree, and so I think there's some nuance here which maybe is like getting a little bit into the weeds. But Tyson, for instance, you know, if he falls out of public favor, his audience starts to shrink, his product sales will likely start to shrink as well, whereas I feel that can has has built an authentic brand, that that identifies with certain celebrities, or vice versa. But if any of those celebrities end up falling out of favor, then they can bring on new celebrities and and, and you know that align with their brand and ethos, and and so I kind of got hung up there. Then I started hearing you talking about the numbers and I'm like I don't know, those don't sound like very significant numbers. Can you talk about that a little bit?

Speaker 1: 11:10

Sure.

Speaker 1: 11:10

So yeah, the numbers is where my head always goes and to me this benchmark of the twenty six thousand dollar a month California traditional brand is also sounds like the definition to me of a failing brand.

Speaker 1: 11:24

I don't know many twenty six thousand dollar a month brands that have very much longevity.

Speaker 1: 11:31

The math on that is is a little over three hundred thousand dollars a year being brought in by the brand and nothing against these small startup brands. But the top brands in California are bringing in well over two hundred and fifty three hundred thousand dollars a month and many over a million dollars a month. So In the end I would question if the celebrity brands or these traditional California brands are okay anyway if they're not at that at least $100,000 a month marker and how you even pay in your rent and your processing costs and your COGS and let alone your brand designers and your marketing folks for all of your fancy celebrity brands if you're not actually bringing in the bacon and bringing in the revenue with customers. So I'm not impressed to see that, for instance, the Heisman brand, ricky Williams brand, $50,000 a month All right, yes, that's more than $26,000, but is that a brand that is bringing in enough money to feel really confident in its longevity in the market and in consumer adoption.

Speaker 1: 12:49

I'm much more interested in repeat purchases of these consumer brands. I think also that of these celebrity brands. I think that celebrity brands create curiosity and I would like to see that curiosity crossover into customer loyalty. So that would be really interesting to be able to see some data around that.

Speaker 2: 13:10

Yeah, if I compare some of these celebrity brands like Houseplant versus the old celebrity brands that built that reputation that celebrity brands don't work, I see more of an investment into the brand and ethos from the celebrity themselves. Seth Rogen really cares about weed. He's designing ashtrays, he's designing playlists or his team, and I think there's something really interesting that. And so it's like, at the end of the day, it goes back to the tenant of building authentic brands and celebrity or not like again, I don't see like Jake and Luke it can being celebrities themselves, although one day they might be it's like they have built something that's very authentic and their brand engages their consumers in an authentic way. And so it's, if you are going to create a celebrity brand, making sure that A it makes sense. It's like do you smoke weed? That's a good filter, but are you going to go show up at a dispensary in LA and really drive foot traffic? That would be a huge way to build authenticity and engage the audience.

Speaker 2: 14:30

Just slapping your name on the label is not enough to get it done. One of the ones I was curious about when it first launched was Rick Flair's. I was never a huge wrestling fan, but I know who Rick Flair is. He's like woo, okay. And anyways, I now see that David Tran and Fairchild are promoting this big Rick Flair party after the Terrence conference and I don't know I was kind of pleased with that. It's like, oh shit, rick Flair is actually getting involved in the weed game.

Speaker 1: 15:02

I have met him at a conference now promoting his brand and he's definitely showing up for it. So God give him credit there. He's doing just what you said needs to happen. But I do think you're right that putting your name on the label is different than building an unauthentic brand that a celebrity gets behind and you look at Houseplant and yes, it's Seth Rogen's brand, but it's not called Seth Rogen weed.

Speaker 1: 15:25

So, it's different and I think it is differentiated in a way that the brand is being built to stand on its own, with or without the founder, truly, and I really do like the distinction that you brought up related to Cannes, as, yes, they have celebrities that have been involved with the brand, but my guess is that Cannes does not think of themselves as a celebrity brand, that they are much more of a lifestyle brand.

Speaker 2: 15:53

Yeah, yeah. Well, speaking of authentic brands, I want to give a strong shout out to the team at Merrimed for throwing a 20 ETSC party like the Boston Tea Party. They literally sailed a boat into Boston Harbor and threw boxes of weed, so to speak, into the bay and dressed in the full regalia, chanting no taxation. Without representation I mean, I mean kudos. This is like an amazing display of activism.

Speaker 1: 16:30

It was so great. I loved it. It made my day yesterday Watching the video. Everyone should find it online. It's just really you get a good laugh. But it also is something that needs to be said, and when we have these historical moments, it was the 250 anniversary of the Boston Tea Party yesterday. Okay, so, they've been into that anniversary to make light of again a situation where we are being taxed without representation.

Speaker 2: 17:00

I just loved it.

Speaker 1: 17:01

And I loved it too because it actually gave me a new perspective on Merrimed and I've thought that Merrimed, from an external perspective, has not really leaned into being very cool. And to me this showed me that Merrimed has some spirit in a way that causes me to give myself a.

Speaker 2: 17:24

I for one didn't know who Merrimed was. I mean, I know they existed, I still don't. I should probably yeah.

Speaker 1: 17:31

I mean they're an MSO, that's a public company, and they have consistently actually had better economics and performance than many of the other MSOs out there, and so strictly on a numbers basis. I've paid attention to Merrimed and I've seen that they are a company that seems to be sort of a quiet Jedi and that they don't make a big deal about themselves, but they have consistently put up good numbers and decent margins, which is not a small thing for public cannabis companies.

Speaker 1: 18:02

If you follow the space, but I never thought of them as cool and, like I said, this gave me a second look, so go.

Speaker 2: 18:12

Merrimed. Yeah, you know it's interesting. We're both sitting in California and there's very much like there's the California cannabis ecosystem and life that we kind of grew up amongst. But the entrance of all the Midwest and East Coast players has been really interesting. It's like you know, it's just like this agglomeration of all these different perspectives and cultures and how cannabis is integrated into their understanding of the life we live. And I don't know, it's just like I don't think you would have ever seen this from a California company. I guess what I'm saying.

Speaker 1: 18:55

Absolutely, and to see it. And yeah, boston is this historic place where lots of kind of early American history around the creation of our country and our laws happened. And so they were out there in the full regalia, like they looked like pilgrims and they're like where else do you do that except the Boston Harbor? You know, it's just Exactly.

Speaker 2: 19:25

Yeah, it was funny. It's like you know we have so many cultural conversations, especially here on the West Coast, and you know, to see people in costume, like you have, I have this like initial reaction of like is this appropriate? And it was a weird kind of quick mental journey. I went on. It's like, oh well, they're kind of the people on this boat are dressed up as their own ancestors, so like yeah, I guess it makes total sense.

Speaker 1: 19:55

Yeah, yes, absolutely. It seemed like they really kept to the gender roles with the outfits. The women had the bonnets, the guys had the. I don't even know if those hats are called, but yeah, the funny sailor hats from the Boston Tea Party, yeah.

Speaker 2: 20:11

Anyways, kudos to Mary Med. Thank you for doing what you've done. No-transcript. There's a lot of there's a lot of regulations that that are Complicating our lives.

Speaker 1: 20:24

In 280 is a really important one, I'm sure well sometimes, like people have said for many years that comedians are some of the best, are some of the best folks to deliver tough messages that people don't want to listen to or hear. And while this wasn't comedy, I think that sometimes performance is a great way to Humanize and give light to something that some people maybe weren't paying attention to, and so my hope is that this wasn't just fun and cute, but that that maybe Someone who hasn't been listening to the campus industry, but who thought that this was a clever or unique way to explain the fact that we don't have representation on the federal level I'm still paying taxes. Yeah, I rode into understanding this issue in a new way.

Speaker 2: 21:10

That would be a real I mean I can say firsthand you know, I've talked to a number of legislators on the Hill and Many of them don't know about 280. They just have no idea. And so very important conversation, important for to get some some play. Where do we go next? What's happening?

Speaker 1: 21:29

Yeah, let's talk about New York. We're gonna talk about a couple things going on in New York, but the first is at the beginning of the week I think it was Tuesday a whole bunch of raids happened of unlicensed THC dispensaries around New York State and namely the one that got a lot of press was the Empire Cannabis Club, and If you've been in New York City or New York State recently, sure, you see one of these spots. When I was in New York a few months ago, I went into one, and so what they are is they call themselves a concierge club, so you pay a fee to join and then it's like any other dispensary you can. But not only is it like any other dispensary, it's actually feels more legit in some ways because you can use credit card. But anyway, new York shut down Empire Cannabis Club and arrested the owners, and the regulators said that their business model is illegal, and the state lawmakers are Disagreeing with the business owners, who are convinced that they think that it's okay because they have this paid membership For consumers to access cannabis through them.

Speaker 1: 22:54

But what was really wild about this story to me is that by the end of the day they had already reopened. And you know I I went to the New York One of New York's Empire Cannabis Clubs and I saw a lot of California product on that shelf that I recognized. And the reason that I went to Empire Cannabis Club in the first place is because it must have been Maybe six or eight months ago. Kyle Kazan from Glass House put this former, former police officer right.

Speaker 1: 23:26

Yes, I'm a police officer and he was taken a selfie, selfie video of himself at Empire Cannabis Club where he saw his own Glass House product on the shelf and he said where he was and that stuck in my mind and I thought, well, I got to go check out Empire Cannabis Club and see if they really do have all the California product that People say they do, and they sure did. I saw a bunch of brands I recognized. I won't call them out Because I don't want to say I Don't want to accuse them of being the the reason that those brands are there. I think it's a complicated question, a complicated issue, but but really ballsy that these folks reopened after getting shut down.

Speaker 2: 24:10

Yeah, yeah, absolutely. I don't know. I Mean it's a matter of time, right, and so to speak, specifically to the membership Loophole that they were exploiting. Apparently, governor Hockel closed that loophole very specifically, like she knew that operators were using that as a way to kind of get around the licensing requirement, and that loophole was closed last year. So I don't know, I don't know what their defense is, but I mean kudos on the tenacity to kind of like keep the shops open. And I Heard that they did kind of Rick, like they confiscated a bunch of the product. But this is, like you said, a chain, so they must have a distribution center where they just quickly repopulated the store.

Speaker 1: 25:01

Yeah, they have over 10 of these stores and my guess is that the stores are looking at it and saying what do we really have to lose by reopening and assessing the risk and the way that the MRTA, which is the adult use law in New York, was written? It scraps criminal penalties and so really what they're looking at is tax related Finds and always the tax man.

Speaker 2: 25:31

Tax man got a al Capone, you know.

Speaker 1: 25:34

It becomes, if it becomes a financial equation to figure out how much you're willing to pay the tax man and fees, how much you're really willing to push up against the edges of the law on this, and how New York responds. I think will be really interesting to to see If they're really willing to go after it again, because I mean, it's in the New York Times that they reopened by the end of the day. So everybody knows this happened. What's New York gonna do?

Speaker 2: 26:05

the balls in their court.

Speaker 2: 26:06

At this point I mean, but they have to do.

Speaker 2: 26:09

I mean, again, sitting in California's, like we can say this they, they have to do something, but whether they will or not we don't know.

Speaker 2: 26:19

But, like also in the news, right is this news of this social equity fund and and, if anything, we know that the illicit market is a direct competitor to the regulated market, and so the state of New York is going from like 19 retail licenses and and now they're assigning how many, was it like 35 or something like that to to social equity applicants. And there's um this, these funds that are being made available for small business loans, and If those businesses are going to be able to pay their loans back and be successful, like they're gonna have to start Start shutting down these, these clubs somehow While I agree that you're right, in order to create a fair price for the funds that are being made available that you're right in order to create a fair playing field for the legal market, which includes the new social equity businesses that the state is helping to stand up, I think that it is not as easy said than done.

Speaker 1: 27:22

I think that the laws that have decriminalized selling cannabis have created a Feedback loop whereby people then aren't afraid to break the law Because the criminal penalties are no longer there. Even they're not allowed to do it anymore, and there's a lot of money to be made. There's a massive Desire and demand for cannabis in New York and, with so few legal stores open, consumers have to go somewhere, and I don't think that these stores, especially Stores that are big chains, like Empire Cannabis Club, these are not necessarily legacy operators.

Speaker 1: 28:07

I think, in many cases, that they are opportunists that see this as a as a as a short term Play to passion. They know that it won't last forever, but how long it will last, I think nobody really knows now. And it and it is in the court of the regulators to really shut it down. Yes, they need to, but how are they gonna pull that off TBD? I think everyone sitting in the corner with popcorn on this one.

Speaker 2: 28:36

Yeah, but you know, as I kind of alluded to, there's like there's now like some big money kind of coming into the New York market, right there's. There's this Chicago Atlantic deal that was announced a hundred fifty million dollar equity investment and that that's fulfilling this, this two hundred million dollar Fund that the state had allocated. But it's identified as a debt instrument, right, and, as we know, in the kind of space it's like, debt is not easy to come by, and so I'm just trying to like wrap my mind around what is a $150 million debt fund? How is that gonna be profitable for Chicago Atlantic? How is there assurance that these companies that they're gonna invest in are gonna be successful? What were your initial thoughts when you saw this headline?

Speaker 1: 29:34

Well, I thought, good riddance. These equity operators that are starting stores need capital and, without the state stepping in, to make good on the promises of the program. And in the program they made a promise that they were gonna create a $200 million social equity fund, of which 50 million would be funded by the state and 150 would be managed by an outside group that would raise the funds somehow. And for the last year that somehow seemed very elusive and it seemed that there was no money in the fund. There was a lot of questioning about the fund managers, who are Lovetta Willis and Chris Weber, who had some very- Chris Weber, basketball player.

Speaker 1: 30:25

Yes, chris, Weber, the basketball player, but also a cannabis entrepreneur, okay. I grew up in Sacramento.

Speaker 2: 30:34

So like watching him play on the Kings for that brief period was a highlight. We weren't winners at the time, but it was the closest we had been to winning in two decades, or something along those lines. Nice, it is the same, chris Weber, chris Weber.

Speaker 1: 30:49

And they were tasked.

Speaker 1: 30:51

They received the contract from the state to manage the fund and they were tasked to fill the fund with funds and it really seemed that they were striking out.

Speaker 1: 31:01

So this announcement about Chicago Atlanta coming in to create a debt instrument for folks is good news superficially, because people need the cash to be able to get their stores open and the hope is is that the debt won't be overly predatory. I think that it remains to be seen how it will actually be deployed. Some details from the article that was released say that Chicago Atlantic will likely reap up to 8% return on their investment, but it isn't crazy. They declined specifics on how they plan to return a profit with the investment or if New York has guaranteed that the $150 million will be repaid even if social equity retailers default on the loans. So that's really interesting. It is not public knowledge yet about whether New York state is guaranteeing the money and if they don't guarantee the money, then theoretically, if one of the folks that takes on the debt does not pay it, that Chicago Atlantic, as the debt tour, could potentially take possession of the asset the retail store.

Speaker 2: 32:26

That's what I'm most beginning to think, because we do see a lot of loan to owns in the space, right, and I mean that wouldn't be a good look if you're talking about a bunch of social equity applicants, so there'll be that social pressure at some point. But reading into the details, it does look like Chicago Atlantic's taking an active role in kind of evaluating, even down to location and that kind of stuff, so like probably taking into account real estate values and that kind of stuff if people are looking to purchase their properties. But yeah, my big question coming out of this is is Chicago Atlantic gonna be the biggest cannabis operator in three years? Not to be a cynic, but it's gonna be a big one. Not to be a cynic, but, like we've seen, many, many, many companies in the space, especially early stage companies, struggle to pay their debts.

Speaker 1: 33:21

I just I don't know. I wonder, and I do guess that there is some amount of this fund and debt being guaranteed by the state to protect against the receivership that you just described of Chicago, atlanta coming in and taking over all these stores. But it remains to be seen. But I will say that I do think that this is optimistic news. I think that this is gonna propel a lot of forward progress to get retail stores open in New York, and that's what we wanna see. It's gonna be going to the people that need it most, which is the small businesses. That is the ecosystem that New York is trying to incubate with their program. So I'm just gonna stay hopeful on this one and follow along as it unfolds.

Speaker 2: 34:09

All right, all right, well, yeah, interesting, all right, I wanna switch gears a little bit and take things into a direction that is near and dear to my heart the science of cannabis consumption. There was this article that popped up, and it was using a lot of the same language we like to use in the beverage category with nano emulsions, talking about droplet or particle size and bioavailability, and this is the first time I've actually seen it applied to pre-rolls, and so this article is talking about doing an analysis of the fineness of your grind and how that impacts the experience of smoking the joint, and so they broke it up into three different particle sizes, so they had one milligram, three milligram and five milligram or millimeter sorry, millimeter.

Speaker 2: 35:09

One, three and five millimeters, and then they applied a. This is really awesome. I'm actually gonna read it. Let's see where did it? So the study looked at samples. They rolled half gram joints and smoked quote unquote 18 of them using a combustion smoke cycle simulator. The machine takes a 50-cease puff of cannabis at a time until the pre-rolls are finished, and then there's this like filter that captures all these smoked cannabinoids, which kind of geeking out. I'm just really proud that we've gotten this far with cannabis science. It's like an automatic smoker, so to speak, and the results were actually pretty interesting. There was a significant variance of experience with these various products. I don't know, do we wanna tell the listeners who the winner was, or let them find out on their own and go do the research?

Speaker 1: 36:17

Oh yeah, let's tell the listeners I mean, and it's not just about experience, let's be more scientific and say that it actually has to do with efficient delivery of THC.

Speaker 1: 36:28

And so when the smoke machine was smoking the pre-roll, they would capture the smoke that they pulled out and test how much THC was in it. And so, of the one, three and five millimeter particles, it was the five millimeter particle that delivered the biggest bang for your buck when it comes to THC delivery, which I personally was totally surprised. I would have assumed that the smaller the particle size would have delivered more THC, and in this situation, with the smoking as the consumption mechanism, the scientists say that the larger particle size won in terms of potency.

Speaker 2: 37:15

Yeah, really interesting, so coarse grind. Coarse grind, and you know which actually, I mean this gives credit to all the folks that really like to, you know, roll their own joints and like really take care about how they're separating the flour and the art that kind of goes into rolling a nicely spaced you know. Really, I'm just trying to like wrap my head around, like why and why the five millimeter?

Speaker 1: 37:47

I love this because it just speaks to the continued innovation that's happening in cannabis, and I have seen that some innovation in terms of new products and formulations has slowed down as times have been tough financially for companies. This is the kind of work that really helps drive product development forward in unique ways, and this is not yet a product quality that I have seen marketed or have consumers have awareness about in terms of the size of the grind.

Speaker 1: 38:22

Nobody talks about this, but I do know that from my own consumption of pre-rolls that there's some that smoke smoother or faster, and part of it I always think about is how tightly packed they are. But I think that it's not just about how tightly packed they are. That's really got me thinking about how the actual shape and size of the grind most likely also affects the ability to pull air through the joint, and I'm excited to see like products really take all this science and create a consumer experience that's just excellent.

Speaker 2: 39:00

Yeah, the article that we read kind of like dives into the nature of the flame, right, and how volatile the burn can be and so, like, a certain type of particle size can create a more controlled burn, like a slower burn. So you're like, when you're not puffing on it, maybe it's releasing less out the other direction and you're pulling more through the filter, right? Hmm, I like it. I don't think it's ever going to be a thing where people are going to be advertising their, their particle sizes in the joints, but perhaps the knowledge of it will kind of naturally make the industry gravitate towards a certain standard.

Speaker 1: 39:49

Yeah, good stuff, and let's just keep bringing more innovation to the forefront here, and I'll be excited to platform it as much as I can. So good stuff for sure.

Speaker 2: 39:59

All right.

Speaker 1: 40:00

Maybe we need to have an in-person, high spirits scientific experiment ourselves.

Speaker 2: 40:07

I like that. I like that. Let's shoot. Should we? Should we drop a teaser to the eventual studio that that will have built out in Berkeley?

Speaker 1: 40:18

I love it.

Speaker 2: 40:22

All right. Also on the IP front, cookies Wild, just in a different way though you know. Cookies coming under fire again, this time with with Seed Junkie, which I'm not super familiar with. Seed Junkie, I don't know if you are, yeah, yeah.

Speaker 1: 40:44

Yeah, seed Junkie is a prominent genetics group and we're have been really well known for a long time of putting out fresh height related genetics and. Seed Junkie and cookies, based on lawsuit, created some type of partnership, most likely for Seed Junkie to be producing genetics for the cookies, genetics arm and brand, and I mean without going into the details of the lawsuit. It all fell apart and Seed Junkie is very upset and feels that their former partner did not live up to the promises that were made. Lots of really broad allegations against cookies.

Speaker 2: 41:35

I mean it's almost become like a made for TV dispute because, like and maybe it's because Burner has a very public personality and this is his MO but like taking the Instagram and using unsavory words to describe the folks over at Seed Junkie and vice versa, kind of going at each other. I mean, the only thing that we haven't seen is a diss track from Burner, but we reserve the right for that to happen.

Speaker 1: 42:03

Yeah, look, I think that cookies is one of a few and Burner himself, or one of very small group of folks that have are perceived to have really made it in cannabis and are thought to be really successful.

Speaker 1: 42:17

You know, I don't have any personal knowledge of how successful Burner or cookies are their private company but I think that when there is a perception of financial success, that there's always going to be people that are not going to be successful, that there's always going to be people that are going to be on your tail trying to be a part of that or try to get some for themselves.

Speaker 1: 42:35

So I don't know who's right or wrong on this one, and the thing that sticks out to me about this the most is that I know that this partnership between Seed Junkie and cookies was about genetics, and I think that the cannabis industry is really behind on protecting IP related to genetics and that there seems to be a widespread misconception that it's not possible to create protectable IP around your genetics and it's just flat wrong work with companies that are actively creating IP portfolios in the genetic space.

Speaker 1: 43:22

And I believe that if the industry or cookies and Seed Junkie and many other folks were further along in using the mechanisms for IP protection that exist in this country that some of these lawsuits would look very different. But because neither party took the steps to protect their IP, you end up in this gray area of well, he said I was going to get this, and he said I was going to do this, or you said he said whatever, back and forth. So I think that everyone that's out there that's listening to this that has something special whether it's genetics or formulation or a really awesome brand should be thinking about ways to create moats around that with the protection that exists through our IP system in this country.

Speaker 2: 44:19

Yeah, so I mean this could hopefully this case goes the distance right, like it could help start creating some case law for protecting IP in the space, you know, and if anything bring, bring relevance to it.

Speaker 1: 44:36

You know it's like like I mean, I we just haven't seen many cases tried when it comes when it comes to cannabis, you know it's, and I think is one thing and then enforcing on it is is the next piece, and right, but I think in this situation there wasn't any IP that was actually created, that was protected, and so they're fighting for other details instead.

Speaker 2: 45:00

Oh, ok, all right. Well, I mean, all of this is is really driving towards our desire for relevancy and kind of the mainstream of of cannabis. Right, like it would be nice to know that there was some security in, in protecting and IP that we developed over time and, and you know, seeing that acknowledged in the courts, like if this was wrapped around IP, like for the courts to be like whether it was a valid case or not, for them to be able to explain why and and to create guidance for for other companies that eventually find themselves in a similar situation. It's not the only lawsuit that I know of going on right now between you know former partners where one's accusing the other stealing, stealing their stuff or misappropriating the funds from those deals.

Speaker 1: 45:53

Absolutely. Our space, the cannabis space, has gotten gotten really big. I mean, we're a multi-billion dollar industry and I think that these lawsuits are the tip of the iceberg. There's just going to keep being more of them as more success happens. That's. That's why this entire area of like this? Yeah, because when all of a sudden you've got something, you're going to have to protect it and other people are going to try to take it from you.

Speaker 2: 46:26

Yeah, I don't know, it's all it does. It's funny, like back in the day we used to talk about the tipping point a lot and it's like, oh well, we're getting really close, like we have to make a big conversation, but there does seem to be something happening this year that does seem very kind of momentous and so we're working on that. Did I say that right? Anyway, I want to see kind of our show next week.

Speaker 2: 46:59

So marijuana moment reported that the head of the US Department of Health and Human Services, hhs, is aiming to present President Joe Biden with a federal cannabis scheduling decision this year, as agencies work as quickly as we can to complete an administrative review. So so HHS oversees the FDA, Also NIDA, which is the National Institute of Drug Abuse. They have the DEA looped in and essentially they have the FDA's and essentially they were given the directive to kind of determine whether cannabis gets rescheduled, descheduled or remain at schedule one, which seems like that would be not the purpose of this whole effort. It's kind of crazy, because we've been talking about this for decades and we might actually see movement on rescheduling this year from the federal level, not just from advocates.

Speaker 1: 48:07

Yeah, you know, xavier Becerra is the secretary of HHS and he used to be the attorney general of California, and when he was the attorney general of California and I was the chief compliance officer of a cannabis company, I met him representing my company and talking about regulations and laws in cannabis on, actually, I think, two or three different occasions, and I found him to be both curious, smart, engaging and knowledgeable about cannabis. He hails from Los Angeles. I think that's where he was born. It's certainly where he made early moves in his career, and so he is not someone that is blind to cannabis. There has been a lot of cannabis in Los Angeles for a long time.

Speaker 1: 48:58

This is a guy that came up around it, and when it was announced earlier in the year that he was the one leading this effort, I felt really hopeful. I have a picture with him for our episode next week. I'll dig it up so we can show it on the screen. But yeah, this is really exciting and we're going to bring on Krishid Koja, who is a super knowledgeable lawyer who works in this space. He also is the lead of the board at NCIA and is a friend to both myself and Ben, who is going to really help everybody out there, listening, thinking, think about what this all means to your cannabis business, how rescheduling will change or not change the way that our businesses are operating.

Speaker 2: 49:46

Yeah, the spoiler alert is rescheduling is not a panacea for your cannabis business and there's a lot more work that needs to be done, depending on where we land on the schedule, because rescheduling probably not going to be the recommendation. Anyways, I have no idea. Did I use that term wrong? Anywho, anna Ray, that was a boatload of news. We're nearing the top of the hour. Anything that you want to leave our listeners with this week, should I intro?

Speaker 1: 50:30

the last call.

Speaker 2: 50:31

I don't know, we don't have guests this week. We normally call this section the last call, where you get to send everyone off with a tidbit of information, advice, something you learned this week, a plug what do you think?

Speaker 1: 50:47

Yeah, one of the things I've been thinking about this week, which I think is relevant to every executive and operator and cannabis, is about reframing failure. So I guess that's what I'll leave people with is that I was doing a little bit of research about reframing failure and stumbled upon a quote from Thomas Edison where he was talking about his journey to invent the light bulb. He made a thousand light bulbs that didn't work before he made the light bulb that we all know him for. He became probably the most famous inventor of all time. If you ask people who you think of when you think of a famous inventor, they will often tell you Thomas Edison.

Speaker 1: 51:36

And a reporter asked Thomas Edison, wow, how do you feel about the fact that you had to fail a thousand times before you finally made the light bulb? And he said I didn't fail a thousand times, there was just a thousand steps that it took to get here. And I was really inspired by that. And I think that there's a lot of struggles that cannabis companies are facing, whether it be regulatory or business or issues inside your team or with your products that can sometimes feel like failures. But I think, leaning into Thomas Edison, there's thousands of steps on the journey and we're all on that path and we're going to get there.

Speaker 2: 52:22

So that's where I'll leave everyone today.

Speaker 2: 52:24

Excellent. I love that. I was just like looking at this quote that I was just finding online, so I've not failed. I've just found 10,000 ways that won't work, which we both have been there. Okay, okay, I'll play off that. I spin off that.

Speaker 2: 52:45

I was listening to one of my motivational morning YouTube things, because I'm a cheesy business leader like that, but there's this one that kind of really was good at keeping my spirits high this week and it was the reframing of challenges, and we always talk about in the cannabis industry how challenging it is, and there's a lot of complaining and rightfully so about the regulatory frameworks that we have to navigate. It's said to reframe these challenges as privilege. It's a privilege Like we are the right people to be facing these challenges. These challenges are going to help us grow and they're going to fill us with the toolbox that we need to navigate the harder things in life, and I just thought it was a really nice reframing.

Speaker 2: 53:43

It's like every day, no day is the same in the cannabis industry. Every day there's a new challenge that I never thought would drop on my desk, and being able to hit those head on with confidence and navigate through them and continue to carry on. Really it is a privilege. So, like we've chosen this path, we've chosen to be here, so we might as well keep a very positive outlook on it and in line with failure, it's just a way that has kind of built us to be here. It kind of built us to be stronger leaders. So I like this. We have a little motivational bent to our sign off here today.

Speaker 1: 54:27

Well, we hope everyone will come back next week and join us.

Speaker 2: 54:30

Yeah. So, as we wrap up, remember that the dialogue doesn't have to end here. We invite you to continue these conversations in the comments below and we'll hear your thoughts and reflections. Who would you like to see on the show? What topics would you like to have us cover? We are eternally grateful for you All two of you right now, probably, but we're looking to grow. That your support will encourage us to keep bringing you the breakdowns of the business business of cannabis every week, whether it's news or the guests that we're bringing on. Anyway, this episode, we begs a strong word. But thank you to like, subscribe and share high spirits, live with your colleagues, your friends, share with your family, but as we send you off, remember always stay curious, stay informed and, most importantly, keep your spirits high Until next time. We'll see you later. All right, and we're out.