High Spirits

#010 - Cannabis Business News Round-up | September 14, 2023

September 14, 2023 AnnaRae Grabstein and Ben Larson Episode 10
High Spirits
#010 - Cannabis Business News Round-up | September 14, 2023
Show Notes Transcript Chapter Markers

Ready to navigate the unfolding drama in the New York cannabis market? We unpack the legal complications surrounding the MRTA adult use law and discuss challenges entrepreneurs and stakeholders face in the market, largely due to state government missteps. By sharing the compelling tales of those affected, we shine a light on the impact of the MRTA's equity programs.  

We also dive into the alleged million-dollar racketeering case involving Trulieve and their former purchasing managers, highlighting the power held by the long perceived gatekeeper's of store shelves.

We then explore the  public cannabis stock performance after the HHS recommendation a few weeks back, as well as the thrilling prospect of New Jersey welcoming cannabis beverages and other products.

And of course, we return to the hemp THC battle, underscoring the need for further progress in cannabis and hemp legalization more broadly.

It's a whirlwind tour of the complex legal landscape where cannabis and hemp intersect, complete with identifying the usual winners: the lawyers.

Strap in for an enlightening journey through the world of the cannabinoid industry.

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Remember to always stay curious, stay informed, and most importantly, keep your spirits high.



Speaker 1:

Hey everybody, welcome to High Spirits Live. I'm Ben Larson and, as always, I'm joined today by my smarter half, anna Rae Grabstein. We have a juicy cannabis business news roundup for you today, including New York, new York, new York, new York. Meanwhile, two bartenders in Arizona are being sued by their former employer in a racketeering case for stealing over a million dollars. Cannabis stock performance is jumped post HHS announcement. We'll see if it's sustained. New Jersey is finally opening up to beverages and other form factors. Hooray, and the hemp THC battle continues until then or before then. Before we get going. Anna Rae, how are you doing this morning?

Speaker 2:

I'm doing super well. Thanks for asking. I have been really busy this week doing a lot of cash flow projections and helping businesses look forward and do some optimistic projections, and I created a financial model for the first time ever with a 280E toggle. So if you're out there and you're a cannabis entrepreneur, you know that that means that we're thinking about what happens next. So I'm excited to be thinking about that in the future. Ron how about you Ben?

Speaker 1:

What's going on. Well, now I'm feeling a little behind the eight ball because I don't have a fancy little toggle in my financial model, but I do have a new VP of finance that is building a cash flow model right now. So, dustin, if you're listening, 280e toggle, that is a new feature. I like that. No, but in my world I don't know what am I doing this week. I'm really actually preparing for next week, heading back out to DC to do some more lobbying, this time with Attach, the American Trade Association for Cannabis and Hemp, which has been very top of mind as we have these conversations about the intersection of cannabis and hemp. You know the cannabinoid industry, as Pamela so coined it. So yeah, just a lot of things top of mind about how do we continue to move this ball forward, how do we keep the momentum? You know been having conversations with NCIA, the National Cannabis Industry Association. I even proposed in a board meeting for them recently. It was like when do we change to the National Cannabinoid Industry Association and potentially bridge that gap? So you know, it's interesting all this kind of in conjunction with the HHS recommendation and the potential for going to schedule three and removing 280E. I don't know, I don't mean to arbitrarily get everyone's spirits high, but it does feel like things are moving in a positive direction for once.

Speaker 2:

I agree, I think it's as complicated as it's ever been, but I have been feeling hopeful, excited, activated in new ways, thinking about ways that businesses can start thinking about growing again after being super, super profit focused and laser focused on efficiencies, which is what it's been all about, because the capital markets have been basically unavailable in any way and they aren't yet open again. But I think that many of us can see a path to capital coming back in, with interest in new businesses, existing businesses, growth efforts, things like that.

Speaker 1:

Yeah, I was speaking with a couple of our investors again this week and it was the first time in a long time I had heard them being like, oh yeah, the capital markets are opening back up a little bit and I'm like really, Because that was news to me. But yeah, it is good and hopefully we've all created some new muscles around cash flow and understanding just really how to build a sustainable business, even if we do go back to more exuberant times and are able to attract that capital and still having that hybrid mindset of both growth and sustainability.

Speaker 2:

I love that. I think that's what it's all about. I've often brought forward a hypothesis that you can really drive impact and purpose in a business by running a business efficiently, profitably and sustainably. I think that it doesn't have to get in the way of the other. It's the classic push and pull of capitalism versus impact and purpose, but I think that when you run a business that is self-supporting, that understands its underlying fundamentals. it actually gives a business the opportunity to push towards more purpose and impactful efforts because it has underlying confidence in its ability to just exist and stand on its own, based on its own operations and I have seen that development over the past 12 months in cannabis. A lot of the companies that are making it through these hard times are being able to imbue a lot more pride and purpose in their work just because they've gotten it figured out now. I think you and your company are a good example of that, Ben. There's a lot of other companies out there that we talk to and that we will have on this show. That embodies that.

Speaker 1:

Yeah Well, I mean thank you, but also, as we know and as some people are learning right now, even in the times of your best efforts and having a well-designed business, that there are external factors that can very much make it impossible or at least very challenging. And, of course, top of mind for me right now is New York, and we've been talking about it this week and I know we have a really awesome show queued up for next week. But let's dive in a little bit to our first segment with New York. Anna Rae, I know you've been tracking this closely and watching social media and just man, the hearing that happened on Tuesday was just kind of devastating, especially for myself, who's not immersed in it day to day. It was just kind of like slapped aside the face, just like, wow, this is really kind of devastating. What's happening to some of the operators in New York? Can you catch us up on what's happening there?

Speaker 2:

Yeah, so for those that weren't on Instagram till all hours of the night watching the videos, and thank you to groups like Honey Suckle Media and other groups for putting out videos so that people that weren't there could see what happened. But what's been going on in New York has been an ongoing drama of how do we take the MRTA the adult use law and then create regulations and roll out a legal market, and there have been many bumps along the road. There have been optimistic moments and most recently, what just happened on Tuesday is that the state released and finalized its regulations and set a date to open up the application process for everyone to apply to come into the market, so that, in and of itself, could be viewed as good news. It is a path forward. It's a step we're doing. The regulations in place gives everyone some idea of how we're all going to play together in New York and legal cannabis. Part that was devastating was the public comment from current card licensees and those are the conditional adult use retail dispensary licensees that were part of the initial tranche of licensees that were given licenses but that those licenses are actually held up through an injunction right now and none of those businesses can open those people. We were commenting about everything that they had put on the line to get to where they are now over the past year and to try to open their businesses, and the incredible harm that's being caused by not being able to open and the injunction that's in place. And then we also heard from distressed farmers and processors farmers in more detail about how the lack of open retail in the state is causing incredible strife because they had big harvests in 2022 and haven't been able to sell their product. And now the state is providing a pathway for the existing medical businesses that are called ROs, that are allowed to be vertical while no one else in the supply chain is allowed to be vertical, are going to be allowed into the supply chain at the end of the year into the adult use market, and those groups have many different advantages over the new entrance to the market, and that includes being able to grow indoors, being able to be vertical, having larger canopy that's already built, and also that they can build outside of the one acre restriction that is in place for the new entrance to the market.

Speaker 1:

And this is New York right, where everyone is forced outdoors and those outdoor grows in New York generally get one crop a year, yeah, and in the indoor facilities can get up four to five.

Speaker 2:

A definite five for sure. Yeah, five If you're doing it right.

Speaker 1:

At scale, plus vertical integration, where you're cutting out margins, you know, from from operator to operator, and not to mention just the fact that they are these well entrenched MSOs like like, who are the big ones, like PharmaCAN was what was one of them.

Speaker 2:

PharmaCAN, gti, acreage, cresco, columbia Care. They're all there. There are 11 of these ROs that are the medical operators that have been in market for a long time and they have invested significantly in infrastructure that they've built out. And those companies too have not made a lot of money in the medical market, which has never fully matured in the state of New York. So they have been advocating hard, and not just advocating but also suing the state in order to be able to accelerate their entrance into the adult use market. And there's just not aligned incentives across the board with the stakeholders that are trying to come into New York and serve the adult use consumers in the state. And unfortunately, the state has has made a lot of missteps in their path to have the very best intentions, and what I mean by that is that the MRTA was one of, I would say, probably the most equity, social equity, focused cannabis law that I have ever seen, and I think most people would agree with me on that. And the regulators in the Office of Cannabis Management, the OCM, that have stood up the regulatory agency to implement the MRTA law have, by all all signals, been very focused on equity as well. And what has seemed to be like a truly authentic way, and that has caused them to create these different programs to really prioritize certain categories of equity applicants. But unfortunately it turns out that some of those efforts do not seem to be aligned or legal allowed inside of the MRTA, and so they put a lot of effort, money, energy, hopes, dreams into these entrepreneurs that are starting businesses. Almost 500 of these card licensees received licenses and are now in purgatory, and many folks are at the finish line, like they were ready to open days away from opening their stores, employees inventory, getting lined up everything, and are now just stuck paying rent, not making revenue, and so it's just incredibly heart wrenching. These are folks that it's hard to not want to root for them.

Speaker 1:

So, yeah, the testimonies were just again devastating. It's like I mean, people were talking about like just being on the verge of, like not being able to feed their kids, like wanting to hang themselves, like I've often talked about a lot of these equity licensing programs and how they attract vulnerable people into streets paved of gold and it's just a false bill of goods and people end up in a worse position after going through these experiences than when they entered. And I mean it's almost like with New York. You would have hoped and it sounded like they were heading down a better path than maybe what we have experienced in other states, but now it's seeming almost a lot worse and it's hard for me to imagine that. You know, like Tremaine Wright, the head of the Ocm, and like Chris Alexander, and like their intentions were right, like are there bigger issues at play that we're not seeing? You know, it's like it can't.

Speaker 2:

These can't just be missteps, right Like yeah, I think that there's a level of incompetency where hope and good intentions sometimes, sometimes, and in this instance, seem to have gotten in the way of following the law early on, which could have prevented a lot of this harm. If the card program was not legal under the law, then it should have never been rolled out, but it was, and that's really where the rubber meets the road here. There was so much lip service about the creation of generational wealth through this program and and people saw the opportunity to get a cannabis license in New York as a golden ticket, and I think that what it's turned out to be today is more like golden handcuffs, and that's the exact opposite of what the intention is when we're trying to help right the harms that were created by the war on drugs. So, you know, I luckily there is an incredible coalition that's come together, and that's one thing that I'm excited to talk about next week with our guests Carly and Brittany, who we'll talk about in a second. But what's happening in New York is that all of the stakeholders that are trying to get into the market are really coming together in a way that I've never seen before to just make sure that their voices are heard. It remains to be seen if if there's actually action taken to make change, to help everybody. Who's who's, who's, who's who's walked into this fire. But it's been invigorating for me to see how much everyone is showing up, and it's reminded me of my early entrance into the cannabis space as an entrepreneur, when I thought of myself more as an entrepreneur than an advocate or an activist, and it's really something that I think every cannabis entrepreneur at some point realizes that that this is not a policy environment that you can sit back and and watch from the sidelines. That the policy and the regulations that are being rolled out in your local state or municipality and even at the federal level, are going to have direct impact on your opportunity. And so you better show up and you better have your voice heard, otherwise it's going to happen to you. So you got to stand up, and we're seeing that happen, and I hope that. I hope that these folks get heard.

Speaker 1:

Yeah, yeah, you mentioned something interesting like that, like it was unlawful for the way it was structured and in that case, basically precipitated the, the lawsuit and the injunction. I guess you know what I'm having a hard time with, because I do understand, I understand running a business, I understand trying to return shareholder values. So like I have a bit of empathy for for the MSOs that have invested and spent millions and millions of dollars for for acquiring some of those businesses with the intention of, of course, the medical program is going to roll over into the eventual recreational market, I just wonder, you know, was an injunction necessary? Was there a different path? Because when you have all these advantages you 100,000 square foot indoor grows, five cycles a year, you know access to the market, vertical integration, all these things, like You're going to win eventually. So did it require an injunction to stop all these other licensees from moving forward? And can you still have, you know, ensure that you got to play in the market and maybe not have to wait the full three years? But did it really have to require stopping everything else? And I don't know this is. I don't know if this question has an answer, but yeah, I think it's an open-ended question.

Speaker 2:

I will say that I think that the injunction came about not only because of the medical operators but also because of the Fiori lawsuit, which was a lawsuit filed by five disabled veterans who wanted to be able to apply for retail licenses and did not qualify under the card program but would have qualified as applicants under the general MRTA law. And that was actually what got the case in front of Judge Bryant, who ended up issuing the injunction. The ROs joined the case and, I think, probably put a lot of fuel on the fire, but they were not the sole instigators to create the injunction. The MRTA had a line in it that says that the applications are going to open up for everyone. At the same time and that's what this is all balancing on is the fact that there was a certain group of folks that were offered access to licenses and applications before everybody was. And this is the deal with laws and regulations. It comes down to these small details of the way that something was written. That maybe wasn't the intention, but it's what the law says. And at some point it doesn't matter what the intention is. It matters what the law is, and that's what's happening here, and I think it's very similar to the talking points that Rod Kite had last week. Yeah, exactly, it doesn't matter about the intentions.

Speaker 1:

It's what was written in the law.

Speaker 2:

Well, so then let's just preview our episode next week, and then we'll let those folks carry the story forward.

Speaker 1:

Yeah, yeah, because to leave everyone with a cliffhanger, the legislature is now in recess until January, in an awesome display of politics. But that doesn't mean that the activities are going to stop. And so we had a preview call yesterday with Carly Miller Hornick and Brittany Carbone and they're both CEOs women CEOs in the New York market and they were there. They were there at the hearing, and so we're excited to bring them on and get kind of the boots on the ground story about what's happening in New York, what's developing week to week. They assured us that there would be developments this week with another lawsuit. I think the hearing is on Friday and so we'll be able to bring that to you as well. So super excited about that show. Next Thursday, same bat time, same bat place. But yeah, man, new York it's a big rotten apple right now, unfortunately.

Speaker 2:

It's a heartbreaker. I was so excited about the New York market, and I still am, but it's a tough one. Let's move on to our next story. You want to tell us about what's going on, what's happened in here, ben?

Speaker 1:

Yeah, yeah, so that's let's see, I'm going to bring it up right here. So true leave ledges employees and vendors engaged in a racketeering. It's a big word, it's a big scary legal word. Purchasing suit, essentially. And this is MG Mag. So thank you to Sue Denham for this article. It says true leave cannabis corp is suing two of its former Arizona purchasing managers, five other employees and three vendors, accusing the group of perpetrating a million dollar fraud that provided brands and premium shelf space in 21 dispensaries. And the article goes on to then just highlight the details about how these bud tenders and purchasing managers just really kind of perpetuated that image of them being the gatekeepers of the industry and, in this case, defrauded the business. They were taking bribes, they were adjusting prices, taking payment for the prices and then paying, like you know, doing a little bit of arbitrage and paying true leave for the stock. And I think the big one was just like premium placement, merchandising and, you know, getting the premiums for that, which is very clearly one of the business models of a retailer, like anyone that knows, like mainstream CPG, getting into Safeway, getting an end cap like that's all purchased. That's why you always see Coca Cola at the end caps and yeah, this is very clearly not cool. I don't care if you like MSOs or not as a business owner like if you have an employee that's scraping off millions of dollars because the business has something to offer yeah, something, something, something sketchy is going on.

Speaker 2:

This is so wild. I agree, and I do want to add the caveat that this is alleged these folks have not been convicted. I didn't name any names, so but it it does seem like there is a lot of evidence pointing pointing to this behavior having occurred, and what really blows my mind about this story is that shelf space like Ben said, in CPG space, but also in cannabis is something that retailers many retailers have chosen to commercialize and and and sell to brands in order to get premium placement. But in this situation we were looking at, we're looking at purchasing managers and bud tenders colluding to sell that shelf space on the side outside of the business and that they allegedly brought in over a million dollars. And how does this happen? And I think that the reason why something like this can happen and what creates the environment is that in Arizona, where this happened, there's around 150 cannabis dispensaries in the market and truly has 19 of them, so they have over 10% of the retail dispensaries in the entire market, which means that they have a massive amount proportionally, of the shelf space that consumers are seeing to purchase cannabis, and this creates kind of a disproportionate amount of power that a purchasing manager has who might be deciding what to put on the shelves of these stores, and it's it's just a really great reminder for brands out there of how important bud tenders and purchasing managers are, and I don't mean that you should be paying them on the side, but these are the people that are making the decisions of what is in front of consumer's eyes. And here's an example of a bunch of brands realizing truly how much power those bud tenders and purchasing managers had and being willing to put their money behind it in order to secure premium placement on the shelves. It's just. This is a crazy story.

Speaker 1:

Okay, I, I, I, I get it, um, and yeah, it's bad. But does this also mean that truly was just leaving like a million dollars on the table, like and not realizing that they weren't fully capturing the opportunity? Because, like, again, you're running a business right and like, if these bud tenders and and these purchasing managers, indeed, are the gatekeepers, then maybe we should be designing the roles to fulfill that and realize that and, and I don't know it's like, if the power is there, then maybe the, the incentive structure should all always be there, like, shouldn't they be? You know, if they're the ones engaging with the brands, shouldn't they be the ones that are, are like I don't know, have a commission structure that is based on selling, like premium placement in in in the store, Like I? Just it's hard for me to imagine that because, especially coming out of the California market, where there's very little margins and people are, I, I believe, paying what they can and, in many cases, not paying for what they should, um, like, how do you just leave a million dollars on the table Like? How do brands have a million dollars to give? Uh, on top of everything else, like, I don't know enough about the Arizona market to understand where all that band with this yeah.

Speaker 2:

It's, it's a good question, it's the. I guess the question on the table is was truly, then, not selling that shelf space um making it possible for these entrepreneur, entrepreneurial purchasing managers?

Speaker 1:

Yeah, these guys are intrapreneurs.

Speaker 2:

Yeah, intrapreneurs to to do it themselves. Uh, I guess I've. I've seen a lot of of brands go after bud tenders with their marketing and when, um, when brand.

Speaker 1:

I mean there's like free hats, free t-shirts, you know that kind of thing Right.

Speaker 2:

And this and and that all seems pretty kosher, and I guess it's just taken it to the next level with, you know, stacks of $20 bills. Um, that's, that's when it starts to become, uh, immoral and illegal.

Speaker 1:

Yeah, like in the realm of like $50,000 to $100,000 a ticket, right Like, or a month in some cases. Yeah, yeah, shocking. So let's uh, I mean those, those two stories were a little bit on the negative side. Let's take it more in a positive direction. You know, in kind of reflecting on some of the shows that we've had in the past. We had Pamela Epstein on on two weeks ago. We're talking about the, the HHS recommendation to DEA Moving us to schedule three. We all know it's happening. What we all kind of probably presumed would happen would be a pop in the public stocks, and that indeed did happen. And so like, actually, let me show, let me show this here here's the, here's the stock tracker. So we were having around four dollars and 90 cents. When it comes to the MSOS, here's the decision and here it goes like ramping on up to to eight dollars and 40 cents. So like I mean, that's like a 90% increase over over where we were, which again is pretty good news. But Jesse Redmond is doing this talk. When is this talk? Water tower research, fireside.

Speaker 2:

You can find it on their website. I think it's next week.

Speaker 1:

September 13th. Did it already pass? That was yesterday. It happened yesterday, folks, but there's. There's this number in here. Can I, can I zoom in? Look at this After a 931 day and 91% drawdown, we really in a 931 day slump like that is a startling. It is a startling number.

Speaker 2:

Yeah. So the hypothesis here is that, after a 931 day drawdown, that we may have hit bottom in the cannabis public stock index on August 30th, and that the hope, the optimistic perspective and what we're now seeing in the graph that Ben just brought up is that we're we're moving in the right direction. That said, we're still very far from our peak. Let's go. Let's go five years out.

Speaker 1:

Let's go five years, yeah, five years out. It doesn't look good.

Speaker 2:

So a 90% bounce back is not the same thing as a 90% drawdown.

Speaker 1:

We're we're still, like you know, 80 90% away.

Speaker 2:

We are still very far away and there's a lot of people who are still very far away, and there has been tremendous loss of value for investors who have put money in cannabis stocks over the past few years. But I think that there is reason for hope and it's a. It's a hopeful time in the industry when we see the stocks turning around and I think all of us are starting to hear whispers that there might be capital that's going to start coming back into the industry if the stocks can hold on, and certainly more positive federal policy news seems to bolster investor interest in the space.

Speaker 1:

Yeah, and it sounds like. I mean like sounds like schedule three is kind of the foregone conclusion, right, it's like the president is backing it. Hhs has signaled DEA, fda they know they need to do something. There's been a lot of speculation in the social media spheres and elsewhere just about what does schedule three mean. Some people think it's great. Other people are saying it's the end of the cannabis industry as we know it. I don't think either are true, but I had an interesting conversation with Michael Bronstein, who is the president of Attach and he was. He said it very simply, which kind of made me take a deep breath, and he just like look, the intention of this move is not to destroy the cannabis industry, it is to make things incrementally better, incrementally easier. And sure, it gives opportunity as a schedule three pharmaceutical, but guess what? Pharma companies have access to it as a schedule one drug right now. And there hasn't been a ton of activity. In fact, gw Pharma has been questioning like why are we the only ones spending money in trying to get you know products legalized in the schedule one drug category? So all this to say is like, I don't know, I'm feeling a little bit more optimistic this week. The stocks are holding. You know there have been times where there's been good news and they bumped back down like the very next day, and these ones seem to be sustaining. And so you know I'm excited to go out to DC next week and just test the temperature and see what the conversations are looking like. But this, on top of safe banking V8, you know, is also exciting, I guess. Maybe a little bit more chance of it passing, you know, on the eighth try, yeah, I don't know, how are you feeling about it?

Speaker 2:

I'm open to it being a positive momentum builder for the industry and certainly having a better tax environment for cannabis businesses, I believe will have really really like a ripple effect through the industry that I've been waiting for for a long time. What Michael Bronstein said in terms of incremental change I think that's where we're at and I am optimistic. But I think I'm not delusional to think that we're going to get everything that we want as an industry all at once in some sort of broad, sweeping legislative action. And one of the reasons is that we can't even agree on exactly what it is that we want, and I think we've been making light of that in our conversations recently about the difference between the cannabis industry and the hemp industry and everything in between. I think that what a broad, sweeping legislative package could look like to fully end the prohibition of cannabis is just it's too big of a mountain to climb in our current political environment, so I'll take what we can get. I don't think it's bad. Could it be better? Is there more Sure?

Speaker 1:

That's the next headline. I don't think it's bad.

Speaker 2:

So, yeah, I say like, please, dea, let's move this thing forward, let's not let it drag on, and let's see what it can do. I am hopeful that the Department of Justice will, if and when the DEA comes out with a schedule three action, make some sort of updated coal memo Ask statement that ensures all of the state programs are able to continue to exist while the feds roll out kind of a schedule three implementation. So I'm very open minded to what happens next year.

Speaker 1:

Yeah, and I do know that with NCIA, that the focus on that memo and the carve outs is where the critical efforts are going to be going over over the coming months is like you know, what can we get alongside this schedule three designation? How do we protect what we've built so far? And that is the important lobbying work that is happening through these organizations is like obviously it doesn't stop at schedule three. Just because we've got schedule three doesn't mean we can't get the scheduling, but that doesn't mean that's what the next step is. There's a lot to be done in between now and when the schedule three presumed schedule three gets implemented right, and so I've been pushing people this week to get back on board with with these national organizations because there's a lot of work to be done. But maybe I'll say that for my last call. Anyways, whenever I kind of get drug down into the sludge of the federal government and household things can move there, I always like to avert my attention to to what's happening state by state. And so, hallelujah, new Jersey is going to allow beverages and and and other foods, but mostly beverages, if you're asking me. Anyways, it's about time. It's been almost two years and and we've been waiting for other, other formats and this is not a done deal yet, but six months from now maybe we'll get some, some rules implemented. So that gives people kind of some time to get their facilities ready, get the equipment, get it started, do some product development. Give us a call if you want. Yeah, I don't know. I'm excited. New Jersey, new York, it's going to. Eventually it's all going to like fill in and be a normal cannabis community out there. We can get through all all those transitional periods.

Speaker 2:

Yeah, what we saw with New Jersey's adult use rollout is similar to what lots of states do, which is rolling out product restrictions that, in the case of New Jersey, restricted perishable products and other types of manufactured products, and so there were some types of edibles that were allowed in the market, like gummies were allowed, but brownies and beverages were not allowed, and I think what we're seeing now is just a relaxing and normalizing implementation of more sensibility in terms of the product mix that consumers want and the more that we allow access to all products, I think that the ability for the legal industry to overcome illicit, unregulated products become stronger, because when all products are available to consumers, they have no reason and if they're easily accessible and affordable, they have no reason to turn to illicit or unlicensed suppliers. So this is very hopeful. I think there's a lot of other states that have some really funny restrictions in place, and this is a loosening that I believe will continue to see. As there's more time that stacks up in these adult use markets, the restrictions will loosen and the product availability will become more diverse.

Speaker 1:

Yeah, I know I'm not a politician, but like it's just like, after so many states legalizing and Getting to observe not, which is an assumption I I know they don't always necessarily observe what's happening in other states or they always think that they can do it better but it's just like, can't we just see, like when? This is a such a tired question so I'm just gonna stop myself. It's like why do we have to wait? Just, we know what works, we know what doesn't work. Well, actually, I don't know if we know what works because, at the end of the day, things just keep going in the direction of people wanting, to your point, cheaper, more accessible products, and when that's popping up the most, like we were talking about last week Is in the, the hemp side of the market, which is just continuing. You know, I used to be a civil engineer. I don't know how many people know that. I don't know if you knew that. I know In civil engineering we had this rule about water and it's like water goes where water wants to go. You can, you can try to stop it. You can try to build a dam, you can. You know it's gonna go where it wants to go. Dams break, culverts, bust, you know, like in water just goes where water once go. And right now Water is cannabinoids and cannabinoids and cannabinoids want to go to people and this, this, yeah, this analogy is getting tired so I'm just gonna bring up this little screen. A federal judge blocks Arkansas hemp restrictions. So Arkansas throwing up the barriers and protecting a bit of hemp. Now there's some nuances here. It's not like Arkansas is like super favorable intoxicating hemp cannabinoids. But what did pop up in In this is John Schreuer from Green Market Report. It's a great, quick article, but it talks about the dormant Commerce Clause which popped up a few months ago, maybe a year ago, in Potentially opening the door for cross-state commerce for cannabis. Right, it's like you have two legal markets. Is it unconstitutional to block those markets from from transferring cannabinoids across state lines? Now we're talking about the hemp market, where there is a federal statute through through the US Farm Bill, where Hemp products are legal, and now they're using the dormant Commerce Clause and they're saying, yes, it may be unconstitutional to prevent people from transporting hemp products into Arkansas. And so this is this injunction is live like they're, like you can't restrict Delta 8, delta 9, delta 10, whatever it is, I don't know, is this gonna be a trend? This is, this is kind of wild.

Speaker 2:

This is one of those situations where you really see the divide between what's happening in the legal adult youth cannabis markets like we were talking about with New York, compared to a more nationalized hemp system. And we just we're talking about New Jersey how the regulators opened up opportunities for new types of products, but there were already a lot of restrictions. This is the complete opposite. What we're, what we're seeing here is a judge saying you, as as individual cities or states, are not allowed to get in the way of these hemp based cannabinoids moving freely, and it is. It continues to just be mind-blowing. In the face of everything that's going on in the cannabis side, the Farm Bill just seems to be this incredible pathway for, for Open opportunities. Yeah or cannabinoids to flow to the people, like you said, using that, that water metaphor, and here we have a federal judge saying Let the cannabinoids flow to the people as long as they are made from hemp, not cannabis. Yeah, I think that this, this is just. This is just another, another kind of bright, bright light, some, you know, glitter being tossed onto the hemp folks that reinforces, reinforces the Open opportunity that exists in the the hemp derived cannabinoid space. I.

Speaker 1:

Will say this, this kind of the little element of what we were discussing in New York, and it's kind of gets down to the letter of the law and in process, right, because the judge, the judge isn't necessarily in favor of of hemp drive cannabinoids being available to the people. It does come down to the fact that there's this dormant commerce clause that that states Constitutionally that you can't prevent commerce happening between two states. What he did say in a clarification was that limitations can still be put on hemp. You just got to follow the process, and the process that you need to follow is you need to state that you can't have cross-state commerce with hemp products, right, and so it's like and I, I, you know in, I guess, the the good sign for the hemp operators. I think that's a much higher, you know, bar to to get done and there's gonna have to be Some, some actions that are much harder than than some of the other limitations that are being put in place in other markets. So We'll continue to watch it, but it just seems like every day there's there's something going on. I know, I know there's a lawsuit that that has spun up in in Virginia. You know, virginia was notable because in the last, I guess, few weeks, I think it was. They basically, you know, clarified they're like 0.3 percent THC by by weight, yes, but with a maximum of two milligrams of THC per per product. And so it's like that was super interesting, right, because you know, you know, you know what has two, two milligrams of THC? Can you know the, the infused beverage company, so it's like, oh, so now can is legal in the hemp market in Virginia and any product that has a similar, similar dosing. And so it's like that is a cannabis product. It by historical measures. So Virginia has essentially, you know, has established that they're okay with hemp derived THC. But this lawsuit, which people are putting at about a 50, 50 percent, 50, 50 chance of passing, it hasn't, it hasn't gotten to court yet. Um, but even this they're saying like, well, you're like stopping good business and why not just let the farm bill rule? Um, yeah, and so, and, and then I think earlier we're talking about, like what was happening in Missouri, which is just Missouri.

Speaker 2:

Yeah, the hemp, hemp and cannabis are going to head to head. So there was a Missouri licensed cannabis company that is now subject to a recall because it was uncovered that this licensed cannabis company was sourcing hemp derived cannabinoids to use in their products and, while the compounds might be identical on a chemical level, the, the source material Came from outside the licensed cannabis supply chain. It came from the hemp supply chain I think it was a supplier that this Missouri company was using, from florida, and, um, it's causing a recall. So it's. It's just another example of how these two spaces Don't know how to play well together, even though there are so many ways that we can point to that. There's a lot of commonalities. Um, I think the commonalities are centered more on the foreign factors of the products, the Love and affection of the consumers for the compounds themselves, the, the process of manufacturing the actual plant. But, but in terms of the two industries and their ability to to work nicely and friendly Together, we we do not have a path still, and the series certainly bringing that to light.

Speaker 1:

It's funny we have. We have this world we're living in now, where we, you know, we've long known, though, the Fragmented legal landscape of the cannabis industry. It's been long lamented about, like how one state is so different from the next and the next and any brand that's trying to build across it. You have packaging considerations and and supply chain considerations, all this kind of stuff, and the allure to the legal hemp market was that we didn't have all this Incongruities, that you could have centralized manufacturing and appointed distribution and, you know, shipped, all these different states, and that is going away very quickly, whereas it's becoming almost more complicated to track what is happening state by state in the hemp market. And and and to the last story's point, you know now, the overlap of cannabis and hemp. I'm, you know. I'll tell you one thing the people that always win and will continue to win are the lawyers. Like all these lawsuits, just getting clarification. I know we're we're we're calling our legal counsel every day, just trying to get. It's like what are we allowed to do? You know, what are the rules? What do? What do we have to tell our customers? Because our customers are asking us constantly, like what do they have to do for their labeling. You know, just last night I was on this thread. It was like in California there's apparently enough ambiguity in the hemp laws with AB 45, where there's, like now, thc hemp products hitting the markets in California and it was like oh, watch out everyone, make sure you put your prop 65 label on there. It's like prop 65, not prop 64. Okay, yeah, it's like, yeah, we don't want people getting cancer from cannabinoids. Okay, yeah, we have to put that, that label on the on the cancer and it's it's mind-numbing. I, I just but it, but it's fun, I guess.

Speaker 2:

Yeah, Well, I think we're moving towards rap here.

Speaker 1:

It's been a week. Yeah, you sure you don't let me rambling longer.

Speaker 2:

Well, so let's, let's move into our last call. Ben, why don't you give us a last call for this week?

Speaker 1:

My last call, I think I'll just kind of spin off like what I was saying, just because it's top of mind. I'm just gonna keep saying, and it's really important, like get involved. And it's not enough, like I I've always said that like when you, when you become an entrepreneur in the cannabis space, you automatically become an advocate, an educator, a representative. But it is important that the longer you are in this and the more influential you become and the more knowledge you have of the space and more perspective, that you do get involved with the professional organizations, especially at the federal level and the state levels. Obviously, like the state level is obvious for a lot of us, because that's our home turf that affects our businesses. But the federal movement is critically important and it is, you know, it is a numbers game, like the more conversations that you can have, the more, the more seeds that you can plant. Just showing up in numbers, like it lets people know that that we're worth listening to, that we're actual voters on top of being cannabis representatives. And so if you can get involved with, with NCIA, attach or your favorite, you know, representative at the federal level, please do so. There's memberships. They're very approachable depending on the organization, but there's always ways to get involved and we always need more help. So that's my last call get involved, and if you're gonna be in DC next week, I'll see you there and array, how about you?

Speaker 2:

my last call is Is that I am going to Benzinga in Chicago in two weeks. I just booked my plans and I would love to meet up with any of you that are gonna be there. So if you're gonna be in Chicago, find me, message me. Let's meet up, let's talk about what's going on for you, and I'm excited to meet some new people. That that's really my goal for that conference is to bring some new people into my network and learn about businesses that are growing in unique ways or launching in new markets or having challenges that need help with, and I'm just I'm excited to To meet some new folks. So find me if you're going to Chicago.

Speaker 1:

Excellent. Yeah, here's. Chicago is gonna be a great time. I know we have some team members going out there, so, yes, all right, as we wrap up, remember that dialogue doesn't have to end here. You need to continue these conversations and we'd love to hear your thoughts. Who would you like to see on the show? What topics would you like us to cover? We are immensely grateful to have you in our audience. Your engagement encourages us to keep bringing you these thought-provoking conversations. So so, if you you enjoyed this episode, please like, subscribe, share with your friends, family, co-workers, everyone, please. We're just trying to get this going. We've now launched our Spotify and Apple. There'll be more announcements coming out about that. So, if you prefer the audio format, if it's easier to free to listen to car, go find us there. But, yes, help us build this and remember folks, stay curious, stay informed and, most importantly, keep your spirits high until next time. That's the show.

Welcome to the News!
NY's Cannabis Market
Injunctions, Fraud, and Positive Stock Pop
Schedule Three and State Cannabis Implications
Hemp Industry Legal Challenges and Opportunities