#011 - NY Cannabis Chaos: Insights from Two Licensed CEOs w/ Karli Miller-Hornick and Brittany Carbone

Speaker 1: 0:07

Hi everybody. Hi everybody, welcome to High Spirits. I'm Ben Larson, and with me, as always, is my Smarter Half, anna Rae Grabstein.

Speaker 2: 0:16

How are you doing Anna Rae, hi Ben.

Speaker 1: 0:19

We have an awesome, awesome show for you guys today. We have two New York CEOs licensed in the regulated emerging market in New York. Many lauded New York as the most promising market. As a Californian, I can't tell you how many times I had a New Yorker tell me that they were going to be the taste makers, that they were going to be the market to watch. Well, let's just say it hasn't been super smooth. We're going to dive into all of that today with our amazing guests. Before we get there, allow me a little bit to get caught up with Anna Rae. Anna Rae, how's your week been?

Speaker 2: 1:01

My week's been really good. I'm having a great time, but I want to hear about how your week is going. I know you're in DC, let's hear about it. What have you been up to, oh?

Speaker 1: 1:11

man, I'm tired. Let's just put it that way. There's a lot of hustle and bustle. We spent the entire day on the hill with Attach, which is the American Trade Association of Cannabis and Hemp. For anyone that's not familiar, it's just a really interesting time. Attach has been around for about 10 years now, but it was a novel concept for them to join that voice of Cannabis and Hemp. For a long time everyone knows it's been very distinct swim lanes, even at NCIA, the National Cannabis Industry Association. We've been talking about when do we change the name to cannabinoid, because it is all one plant and it is becoming scaringly muddied in between the two lanes.

Speaker 1: 1:56

Anyway, we spent the entire day meeting with senators and assembly people and trying to move the conversation forward. There's just a lot happening. For fear of turning the whole show about what's happening at the federal level, maybe we'll do an episode on that. We have the HHS recommendation that we talked about with Pamela. There's the Safer, which just dropped yesterday. That's going to be hitting the Senate next week for markups. That's huge. It seems like there's a lot of positive momentum there. We'd love to see that. That, combined with the Schedule 3, with the removal to ADE, would just be the biggest boom for everyone's businesses. Even the Farm Bill, which is expiring right now. Essentially Something has to be signaled or due by the end of the year. Lots going on. My head is spinning. A lot of great people here got to hang out with a lot of old friends. It's just super energizing but also immensely draining.

Speaker 2: 3:00

Nice Well, I'm really glad you're there. I think we're all grateful for people that are standing up for us. I've been back in the weeds. Literally. I've been working with a really cool science team that's been doing some powdery mildew resistance work. They think they're on to something. I've been reaching out to folks in my network looking for powdery mildew samples from around the world because we want to test this hypothesis of powdery mildew resistance against as many strains of powdery mildew as we can, and not just the limited sample that we currently have been testing against. If you're out there and you're hearing this and you're a cultivator of cannabis or hemp and you are willing to put two leaves in a Ziploc bag and send them my way, reach out to me. I'm easy to find. I won't go into too much more detail, but hopefully we can keep doing cool science that's going to make growing cannabis safer and easier for everyone.

Speaker 1: 3:59

I'm going to ignore the fact that you just invited our guest to ship cannabis in the mail, because no one does that.

Speaker 2: 4:10

No, I'm not inviting them to do that, of course not. I'm just looking for leaves, and they would be hemp, of course.

Speaker 1: 4:19

We all know that USPS is the biggest drug dealer in the world.

Speaker 2: 4:22

Absolutely. There you go. The other really fun thing that both Ben and I have been working on is getting High Spirit Spirits website up. You can find us online now at highspiritsmedia. There you can find all of our past episodes and all of the different ways that you can listen to the episodes on the different podcast platforms like Apple and Spotify and Amazon Music and all that stuff. Please go there, check us out, follow us. We'd appreciate it.

Speaker 1: 4:55

Wow, spoken like a professional podcaster, I'm really proud of you. All right, you want to bring us in. Should we get to these amazing ladies that we have on?

Speaker 2: 5:05

today. Let's do it. Let's not talk to each other anymore. Should we bring them on?

Speaker 2: 5:11

Today's guests are Carly Miller-Hornick and Brittany Carbone. Thank you, guys, both for being here. I'm just going to big up both of these incredible CEOs and founders. I met Carly last year and it was such an exciting human. To me, a young and vibrant woman CEO is just the kind of person that I want to be spending my time with.

Speaker 2: 5:36

Carly is the CEO and co-founder at the Pharma Group. She's also the creative director of its brands, which include Flores Farms, head and Heel, blotter and Tune. Carly's business is both in AUCC and AUCP. You guys are going to learn what those things are on this episode as we talk. Brittany Carbone is the founder and CEO of Tri-Cola Farms and Tonic and also is a board member at CanE, which is the Cannabis Association of New York, which is the trade association with the largest coalition and voice in the state of New York right now. Super blessed to have both of these badasses here with us today. I think that we should kick it off by hearing from you both a little bit about your companies and your journeys in cannabis. If you would, carly, you want to kick us off.

Speaker 3: 6:32

We, each one for different people. All right, I'll start it off. Your introduction covered. I am founder of Tonic and Tri-Cola Farms. It's whole journey started with Tonic back in 2017.

Speaker 3: 6:48

I started to develop CBD and adaptogen blend for my own mental health, for my own needs with anxiety and depression. I was a personal trainer at the time. I started to share it with my clients. They were experiencing the same amazing results from these products that I was. That's really what inspired me to turn it into an actual brand and business. It was right place, right time. I really saw it as a side hustle. I could sell these products to my clients, my community, things like that. But the CBD industry really started to take off. At that time I saw an opportunity, a combination of seeing the growth of the industry and being really frustrated with the lack of product that I felt really spoke to me and what I would want as a brand sourcing product, the quality, the consistency, the intention behind it. It really was difficult to nail down that early in the CBD industry, having this property in upstate New York.

Speaker 3: 7:49

I was born and raised on Long Island. That's where I was living and working at the time. My family has property in upstate New York, right between Binghamton and Ithaca, I had this crazy idea to start growing our own hemp here. In 2018, my husband and I left our full-time jobs on Long Island, moved upstate with my parents, my father-in-law, my uncle. We all lived here for the first year all hands on deck, starting our family farm growing hemp. It's been a crazy, crazy journey, but it has led us to our adult use cultivation license that we have now, and we are a transition into the adult use cannabis space.

Speaker 2: 8:31

Awesome, and so, in order to be eligible for the adult use cultivation license, you had to be a preexisting hemp farmer. Did you know when you became a hemp farmer that that was going to be the path? Is that what your eyes were on, or were you just going into it to go into it at that?

Speaker 3: 8:47

time, absolutely not. And a lot of people said that to us, like, oh, like this, like you know, this is just to kind of get your foot in the door or whatever. And to be honest with you, like by the time things were getting close to legalization, and then, especially when the MRTA passed, by the time the MRTA passed, the hemp industry was in the toilet and let's just be a frank about that, right. And then, especially on the cultivation side. So it was really like people kind of assumed that we would go for adult use cultivation license and being a full outdoor farm without, like, greenhouse infrastructure and a lot of stuff like that. My answer was no, I don't think we're going to go for a cultivation license because it's I know the difficulties of it, the risk of it, and that the farmer whether it's food or cannabis, whatever it is, the farmer is the bottom of the totem pole, unfortunately, right, the most important part of the supply chain and the most kind of neglected part of the supply chain.

Speaker 3: 9:44

So, knowing that, I was kind of going into this eyes wide open. So you know, when this opportunity came about for conditional cultivation license, obviously we were like well, we need to take advantage of this right Like because in my mind, you know, getting a license was going to come with huge license and application fees and you know all the kind of stuff that you kind of think of when when you hear you know, applying for an adult use license, right, and I think that that was again one of the really big intentions that New York had was, you know, make this an easier transition for people who would kind of be experiencing a barrier to entry right from the beginning, with even just applying and, you know, paying those initial licensing fees and all that kind of stuff was just like. You know, allow this opportunity. But we'll get into kind of what went wrong there.

Speaker 2: 10:34

Yeah, wow. Thank you so much, harley. Will you tell us about your business and how you got to where you are right this minute, where we are today?

Speaker 4: 10:41

Sure. So, like Brittany, I'm based in the Ithaca area. We started as an organic vegetable farm in 2010. I joined my business partner in 2016 on the farm to help market our vegetables, which we sell at the farmers markets locally and also we supply all the carrots for sweet green, fun little Tibet. And so we started as an organic vegetable farm.

Speaker 4: 11:09

A year after I joined, my business partner got blind disease and really started suffering from multiple symptoms and turned to cannabis and CBD as his medicine. And we were like well, we already grow over 100 varieties of vegetables, why not add hemp? So we became one of the first licensed hemp growers in the state, thinking it was just going to be a small side hustle sell some CBD at the farmers market, right. But, like Brittany, timing was right and the market took off and head and heel was born and it really grew and grew, and grew. So we still grow over 30 acres of vegetables on our farm.

Speaker 4: 11:47

Cannabis is actually our smallest crop. We're super passionate, super passionate about sustainable agriculture and community resilience, and hemp and cannabis are just a part and a piece of that puzzle. So last year, we became one of the first licensed cannabis cultivators in the state of New York and we launched our products in December at Housing Works and we have four brands that we decided to bring to market. So we have head and heel, which focuses on wellness and tinctures. We have florist farms that focuses on recreational side gummies, pre-rolls, vapes. Blotter, which focuses on concentrates, and we just launched tune, which is our infused seltzer line.

Speaker 1: 12:30

Nice. So this is kind of like unique that the hemp licenses were offered this opportunity, and I think it was largely done because CBD wasn't turning out the way that everyone thought it might have, right, and so they offered this opportunity for everyone to convert. At this point in time have most hemp farms converted to cannabis farms and like what's that dynamic like? And it's also interesting, the nuance of like being able to do other things on your farms, because I know there's a lot of regulated markets where you do cannabis. You're not touching anything else, right? Like I don't. Like. A lot of our facilities are not allowed to have anything that resembles anything that's not cannabis, right?

Speaker 3: 13:11

So like what's that kind of?

Speaker 1: 13:13

dynamic in the state, like right now.

Speaker 3: 13:15

Well, I'll jump in and say that I was at Carly's Farm recently, over at Main Street Farms and saw their beautiful hemp plants growing and got really excited, because it has been very difficult to find New York grown hemp flower over these past couple of years.

Speaker 3: 13:32

It's definitely not like many. A lot of people have converted right and I think this, what you asked, really brings up a very important point of cannabis is agriculture and you know I'll let Carly speak to this more. As you know, like you said, cannabis being the smallest crop on their farm, but from Canny's perspective, like you said before, the trade association and we're really fighting for a lot of little day to day operational things that make it kind of feasible to be a small business in the space, but some big picture things as well on our legislative agenda, one of them being getting cannabis classified as an agricultural crop or commodity right, and that really kind of protects farmers in a lot of ways and allows for cannabis to be considered an agricultural crop, allows farmers to make sure that the tax assessments on their property and things like that right. I can all be in jeopardy when you're talking about a federally illegal substance rights schedule, one, you know, plant right, which is just a crazy combination of words, right there.

Speaker 1: 14:37

We're working on it. We're working on it.

Speaker 3: 14:40

We got really close to getting that bill passed last session. It got some hiccups, you know. At the end basically got held up because you know and this is, I think, just again, kind of speaks to the backwards, backwards logic that really comes with cannabis prohibition, right, and set like, oh well, we don't have what would stop a cannabis farm from popping up next to a school if we were to just allow it to be agricultural? And you know there's agricultural land next to a school. It's like, well, what about the corn and soybean fields next to school? Like a parade with pesticides constantly, whereas cannabis you're not allowed to use these pesticides, right. So it's like what is actually more dangerous for, you know, to be next to school grounds, to children, right. And that's just like getting over these. You know biases and this kind of prohibitionist mentality is the biggest kind of hurdle that we need to get over when it comes to everything related to cannabis. But you know, having it classified as a crop at least, is that step in the right direction. Yeah.

Speaker 1: 15:43

Yeah. So, carly, did you want to follow up on that?

Speaker 4: 15:47

Is there kind of something from your perspective with just navigating the hemp and the cannabis and Well, you know, as far as how many farmers like converted, I believe that there are over 800 hemp licenses and only about 240 cannabis licenses given out.

Speaker 4: 16:03

So not everybody converted, not everyone continued to grow hemp. You know, as we learned, the hemp market got completely flooded in New York and prices crashed, and so a lot of people lost their farms, lost everything they had and were not ready or did not want to come into the cannabis space for fear that that would happen again. And unfortunately we are here in New York in September with many of the 240 farmers losing their entire crop from last year, again due to stores not being open. So, you know, I think, while hemp farmers were like we were given this opportunity right is presented to us as an opportunity and we thought to have that opportunity. We wanted small farms to be the first in the state to be able to grow rather than, you know, large corporations coming in. Thank you, you know, sometimes it's not best to be first because, as we're seeing, the rollout is not going very well.

Speaker 2: 17:06

Well, let's jump in and talk about that. So we we titled this episode New York cannabis chaos, and Anybody who is paying attention has been hearing something about how challenging it's been, and and I wanted to set the stage with, just so, some numbers and context of where we're at in New York. So today we have 23 legal adult use retailers that are open, and they're not even all storefront retailers. Some of them are delivery around, like Carly said, around 240 cultivators and then another around 40 processors on top of that. And then there's close to 500 retail licenses that were issued by the Ocm under the card program, and Most of those licenses and license in their businesses are in purgatory they can't open under an injunction. That is challenging the legality of the entire program.

Speaker 2: 18:02

And then, at the same time, in parallel, there are a small group of 11 pre-existing registered organizations that are often called RO's, which are the medical cannabis businesses, and most of them are large corporate, multi-state operators that operate in other states, and those are companies that are allowed to be vertical, grow a manufacturer and sell, and they currently can't sell into the adult use market, but they very much want to.

Speaker 2: 18:33

And then, in terms of when the money is flowing. I stumbled upon this Consultants report from a group called MPG consultants that was commissioned by acreage he's one of the RO's and this consulting group, in the beginning of 2023, said that they believe that there's currently five to seven billion dollars per year of cannabis transactions happening in the state of New York, but yet most of those are happening in the unlicensed market, because the Ocm just reported that there was only 17 million dollars of dispensary sales in August, so very small fraction. So that is setting the table for where we are, and I guess, carly, you were, you were talking about what's going on with farmers and having a Large crop that they have nowhere to sell to you. Can you dive into that in the library on what's happened, what, how much people grew and what they anticipated was going to be the retail channels that they were selling into by this time?

Speaker 4: 19:40

Sure. So each license was allowed to grow one acre of an outdoor crop. As Conditional cultivators, we are not allowed to grow indoors. So those two hundred forty farmers most of them grew one acre of cannabis, being told that we would have 20 stores by the end of 2022 and 20 stores opening every single month after that, at the time when we put the crop in the ground, I think it was about 120 stores were supposed to be open within the next few months. So If there had been 120 stores, the entire crop that had been grown in New York would have been sold every last gram. Unfortunately, you know, we only have about 20 open dispensary, some of which are delivery programs, and so they're just purely is not enough shelf space for For farmers to get their crop on those shelves.

Speaker 2: 20:39

And what's happening. So farmers like what are they doing?

Speaker 4: 20:44

Well, if you watch the OCM recording last week I was there in the room is honestly a really tough day for everyone. People are losing. We had farmers, you know, talking about not being able to feed their children, having to sell their tractors in order to do so. We had farmers talking about being on suicide watch Suicide watch. People are really not in a good place. They risked everything on hemp and lost it all, and then they they risked what was left on cannabis and lost it all again.

Speaker 4: 21:16

So it's, it's really we're in a dire situation in New York right now. The state it. There is one silver lining, which is the cannabis growers showcases that are being allowed in New York now, which was an emergency regulation to try to help the cultivators get their products to market. So, basically, one dispensary along with three Conditional cultivators and one processor are allowed to do these pop-up Dispensaries throughout New York State and we are seeing some success with those, and Farmers who are not able to get on shelves are starting to see some sales not enough, but you know we've we've seen some really successful growers showcases happen so far. We're looking forward to to more coming in the future and right now, that's really the only path to a sales outlet that we have with the, the injunction stopping any new dispensaries from opening.

Speaker 3: 22:12

Yeah, I'll just add to that. You know, through, like just been doing a lot of, you know, work with cultivators. You know hosting this bi-weekly cultivator call, basically open to all AUCC's, and we legitimately had to get, you know, new York farmnet to. You know, come and talk about their mental health services because we were so concerned about the mental health of these farmers. You know, over over the past few months it's been a heart-wrenching process, not only experiencing it firsthand but seeing so many of our colleagues and peers really going through very challenging times and it's, you know, to Carly's point, these growers showcases are amazing, like, just in the grand scheme of things, when you look at Other markets and how long it kind of takes to get these types of things up and going, and like the, the ways in which it can lead to De-stigmatizing the plan and, you know, getting it in front of more people in different areas and kind of not limiting it to dispensaries and you know Things like that all positive across the board.

Speaker 3: 23:21

But let's be very honest here, that it's not doesn't replace dispensary sales, right? It doesn't replace the volume that a store is going to do, right? It's a great marketing tool. It's a great way for brands to get out there right, farmers markets are you know that's always like especially the AUCC's a lot of them small family farms, right homesteads, and you know they're just that's like like the kind of people that you would expect to be at a farmers market type of you know event right, where you let's like really the, the growers talking about their process, about their product and and engaging with local consumers in the community. Like that is an amazing thing in and of itself, but like it is, it's not making the dent that really needs to. I think that's like there there's just been a lot of band-aids, right, a lot of band-aids to attempt to fix all of the issues. That really only one thing can fix and that is more retail. That's it. That's really the only answer.

Speaker 1: 24:15

Yeah well in. So, like the recent actions by the state, I'm trying to like rationalize a lot of what's been happening and we can let you guys dive into the details. But you know, spending a little bit of time here in DC, like we talk a lot about, like the pendulum swings of politics, right, and it's like the you know Ocm hearing that we need more dispensaries, like we're not having adequate avenues to sell through, and then we'll talk about the this acceleration of allowing the RO's into the market. Is this potentially just a miscalculation by the Ocm or do we think there's bigger conversations at play that are kind of Accelerating that timeline? Because it just does. Really, it's like it seems like it was an easy answer. It's like let the retailers open you know all the rules that you had originally said. You know that three-year window and then the RO's can leverage their very Numerous benefits, you know, for their shareholders shareholders.

Speaker 3: 25:21

Yeah.

Speaker 1: 25:24

Please.

Speaker 3: 25:25

I think that it's. It's important to call out one of the kind of main culprits in this mess On the retail side, and that's DASNY to be Chris, completely Frank, right, the dormitory Association of New York. They were the ones tasked with. You know, managing Getting this social equity ventures fun together. Yeah, they're. You know dispersing the, the funds that would, you know, kind of purchase this real estate or sub lease the real estate to the licensees and you know finding the real estate, building out the real estate of these 24 stores, or well, 20 stores and for delivery services that are open. What's the exact number, carly, you might know, but maybe, like six of them are DASNY stores, seven, maybe, like you know what I mean, it's less than half of them are actually, like you know, it's people and that was a rule change kind of after a realization from the state that, like, I think the state realized what cannabis entrepreneurs knew all along it is really hard to raise money for cannabis, right, it's a really hard to find capital and it's really hard to get. You know, real estate, you know, that is comfortable with. You know engaging with the cannabis business, right, for all the federal illegalities. You know all these things.

Speaker 3: 26:38

And then you add you know the kind of just corruption of New York politics, to put it bluntly, right, that DASNY is kind of, you know, a legacy New York political machine. Right, it's bigger than the OCM. You know, the OCM is kind of, you know, like a newborn baby in this like world of New York politics, right, and their intentions are really good, but they're, you know, up against a lot there. You know what I mean. And that's just that was really the biggest mess was that DASNY completely mismanaged the rollout of these retail locations and that was that was a thing, is like that.

Speaker 3: 27:14

That was like the only way that this timeline that they were putting out there made any kind of sense whatsoever, because anybody who understands cannabis business knows it's 12 to 18 months to get a dispensary open, right. But DASNY was supposed to be able to use their political pull, use their power, to expedite the building codes and getting that real estate, getting everything in line, and that did not happen whatsoever. People were able to actually do it independently much quicker than DASNY was able to do it, right. So it's like that was really a recognition of that was what made them change the rules of the card program, is that, and say you know what you can bring your own real estate, because at first it was like you're going to be utilizing state owned real estate right, every single licensee and then they changed that when they realized that wasn't going to work out right. So there was a lot, of, a lot of errors from the DASNY end. That really kind of proceeded the situation we find ourselves in now Right.

Speaker 4: 28:11

They had an entire year to establish these stores and get them open and they had told the licensees that they could not bring their own stores.

Speaker 4: 28:22

So everyone just sat on their hands and waited because they were told they were not allowed to do anything and not do their own buildouts. Had DASNY done what they said, had they opened the 100 stores that they had promised, it wouldn't be an issue right now if the ROs were opening, because all of the farmers products would have been sold, the stores would have been open, it would have been fine and the timeline would have worked out. But their failure to do so yeah, as Brady said, has really led us to this moment where you know it's time for the ROs to enter the market, but they were promised that, they were told that there was a plan in place and you know it's just where the market isn't where it needs to be, and the people who are promised that head start, who are the people who are most impacted by the war on drugs, are not getting that head start and are really suffering due to the inability of DASNY to open those stores.

Speaker 2: 29:17

So let's dive into that a little more. We went pretty deep on talking about the farmers and the cultivators, but on the consumer side where the consumers were hoping to go and be able to buy weed the card licensees, brittany with CanE you guys have formed an incredible coalition. It just seems like you've brought in your arms, kind of everyone is at the table and I'd love to understand and get an update from you about what's happening with the card program, how the card licensees are thinking about this upcoming application period and if people are going to reapply or if there's a belief that somehow the card program is going to get worked out and they don't need to. Whatever you can help illuminate here would be really helpful.

Speaker 3: 30:02

Yeah, so I mean definitely over the past, yeah, six months or so, a majority of our new members in CanE have been card licensees because there's been recognition. I mean there's a card coalition that has done really incredible work and basically there's a lot of crossover. Just to be able to kind of have as much of a voice in the rooms that matter right now is very important. So it's great to see these different groups kind of coming together and forming that voice and cohesive kind of message to the powers that be. But really it's a tricky situation right now because the OECM recently just the end of last week trying to get a stay on the injunction and the order from the court so that they can continue to process some of these licenses and continue to process some of these stories that were weeks away from opening when this injunction hit. That's like super, super heartbreaking part. There were stories that were like fully built out.

Speaker 4: 31:09

They were stories receiving their inventory.

Speaker 3: 31:13

Yeah. So it's like they were that close and then it's just everything was put to a stop. It's been a big rallying cry from all sides to codify card, which means to basically with the adult use, conditional cultivation and processing bill. That was a bill that was passed by the legislature and basically amends the MRTA, the law that legalizes cannabis in the state. So we're protected. The cultivators and processors are protected under law.

Speaker 3: 31:48

The card program was never codified. It was just kind of regulations from the OECM. It wasn't officially a bill passed by the legislature. So that's what left it up to this kind of legal challenge and the challenge of constitutionality that the OECM was overstepping their powers by creating this program. So that would be the easiest thing codify card and then that way you kind of null out this entire argument that it's unconstitutional. It doesn't seem like that's happening.

Speaker 3: 32:20

Unfortunately, the legislature seems pretty resistant. There's a feeling that that's not going to solve all the problems where people think it's going to. There's the other idea that opening all applications to everybody on October 12th is going to solve all these problems. We'll see if it does right. But all in all I think that the OECM they put out a lot of documentation on their website ahead of the September 12th cannabis control board meeting, one of them being a mock-up of the application. Right, kind of like a template wireframe, the application, and they put some Easter eggs in there, I think, for people, right, whether it was like the micro business and like a checkbox if you're an AUCC right, because that's been on top of AUCC's minds. Being able to convert to a micro takes that challenge of finding a retailer off the table. Right, because then you can become your own retailer. So, yeah, little things like that. And then also, on the retail side, a box to check if you are a card applicant, a box to check if you have real estate already. Right. So, knowing that the OECM, like Lord, hopes that, you know they understand what they need to do is license more retail. But also license more retail that is ready to open right, like, if they can, they would definitely need to. Just you have to be good.

Speaker 3: 33:37

People waive the application fee for any card licensee that you would need to reapply. But, like you know, the really, again, the good thing that about this application wireframe is that it really mirrors you know, carly, correct me if I'm wrong but really mirrors, like the process that we had to go through as AUCCs and AUCPs, meaning a very straightforward application process that does not require you to pay a consultant $100,000 to do right Like that paperwork. All that stuff will be due eventually, but not until, like, you kind of get that first phase approval right, like so just to get kind of get that first phase application approval. It's a very straightforward application process. So if they can like allow for, you know, waived application fees for you know people who have already applied for card, I think that other than that, it should be a pretty kind of easy application process for that card license to be able to do. If it's just like, if it's a matter of doing that and then you can get approved right away and get back to business, I think people will obviously, you know, be more than happy to just fill out that little bit of paperwork you know what I mean and do that.

Speaker 3: 34:43

But you know there's always the risk that, like, if if anything is kind of seen as like not really following the letter of the law of the MRTA, what it authorizes the OCM and the CCB to be able to do, it will continue to be challenged by the ROs. It will continue to be challenged through this veteran's lawsuit, right, it's like. So there is a big risk. They really need to make sure that they're not trying to cut corners and just kind of shoehorn these card licenses in, because it's just going to result in more problems in the end. Right On the other side, you know you're going to have card licenses that, understandably, are looking at class action.

Speaker 3: 35:22

You know lawsuits right now because they are losing an incredible amount of money.

Speaker 3: 35:26

There are real damages that are being incurred, real harm that is being experienced.

Speaker 3: 35:30

So you know, we want to see, you know, what Kenny is continuing to fight for is, first of all, the $50 million that the state is contributing to that fund that was supposed to be opening up the stores.

Speaker 3: 35:40

Get it, like, directly to the card licenses, right. But then that begs the question well, what if there's, like, not a card program anymore? Right, like, and it's just like there's a lot of unanswered questions right now. But at the end of the day, you know what we're always going to be fighting for and what we're really kind of keeping the messaging on is, like really supporting the people at the MRTA centers, right, those that are most have been most harmed by cannabis prohibition. Right, social and economic equity, applicants and populations, people from communities, just proportionally impacted. Right, there's even like the tax revenue part of it that we can get into, but you know that really I think we need to kind of shift conversation if card is going to be too inflammatory, you know, and too risky from a legal end, like there's a way to still take a lot of those licensees and, you know, make it clear that these are the people that the MRTA was designed to support and to protect.

Speaker 1: 36:36

There's one aspect that you just reminded me of something. So this $50 million fund whatever happened with that Chicago Atlantic announcement like two months ago about a hundred and fifty million dollars going into this fund made it two hundred, like yeah so there's still.

Speaker 3: 36:54

There's still moving forward. But you might you might have seen a recent report from your cannabis insider that there is a TPI issue with Chicago Atlantic, which you know. There they hold a lot of what is the virial dispensaries in New York? What's the? You have Virio. Well, yeah, that's my time.

Speaker 3: 37:27

But so that, yeah, so they are like a you know 10% plus a shareholder in an RO and somehow they're able to also be, you know, the primary kind of investor in all these card licenses, right, and so if any normal business was going to try to do something like that, they'd be blocked because it's EPI. Apparently, you know, the justification is that like, oh, if it's you know, they're contributing to the, the fund, that is then the investor, then it's okay. But like that hasn't been the case, one that you've been pressed on TPI from anybody else, right? So it's like just say that you're you're desperate and you don't have another option, like I'd respect that more, and then also allow for other people who are desperate and don't have other options to have the same kind of leeway. Because, again, I said before, I think they're realizing in real time how difficult it truly is to raise capital for cannabis businesses yeah, I guess you want what the.

Speaker 3: 38:24

TPI rule is, oh yes, true party of interest, so it's very strict two-tier market in New York, right? So basically there's the TPI. The true party of interest thing is, like most, most important when it comes to investments. That you know, cross the supply side and the retail side of the supply chain, right, so like they've kind of laxed it from the first version of the regulation so that like, let's say, you know, we, like Carly and I, shared an investor as cultivators and suppliers, right, like, as long as they're passive investors, that that could be okay, right, all good. But if that same investor wanted to have even just a 2% stake in a retailer, no, that would violate TPI.

Speaker 3: 39:13

The ROs are vertically integrated, so there's very strict regulations on who can own, you know, part of the registered organizations and then any other business, because the registered organizations themselves are ready across the you know that, and are kind of you know not kind of subject to that same two-tier system.

Speaker 3: 39:33

So there's very strict requirements on who can be an investor in one of those companies and then any other you know company in the New York supply chain. I mean, there's even restrictions on if you are a California cultivator, right, an investor in a California cultivator, you cannot be an investor in a New York retailer. Because I think, again, when we talk about this federal landscape that is, you know, constantly evolving and that we're coming closer to this, you know a place where we're gonna see interstate commerce understanding that you know the narrative, you know whether it shapes out to be true or not is that the West Coast is gonna be the, the country supplier and you know New York is gonna be the consumption capital, right, and so like kind of having your eye on that, you know people could be kind of setting things up that way. I think that's what New York is trying to protect against, right, but there's all it's to say. There's obviously a lot of restrictions that are seemingly being just kind of ignored when it comes to the Chicago Atlantic deal.

Speaker 2: 40:39

You are just bringing up so many obstacles and challenges. It is overwhelming to think about all of the levels of complexity that are at play here and trying to navigate this market. At the same time, I think that you're both in it and you're getting up every day and you've got teams and you're doing really exciting and innovative things and you're in market and stores, and so it isn't all bad and the regulations have been released. I'd love to hear a little bit about your predictions of where it's all going and some hopefulness, like what is the silver lining that is in front of us, right?

Speaker 4: 41:17

now.

Speaker 2: 41:18

Harley, you're laughing. I know that you've got some good stuff going on. Let's talk about it.

Speaker 1: 41:24

It's called high spirit.

Speaker 4: 41:27

Honestly, like over the last year, you know, I've had kind of low expectations of what is going to happen in the market. However, those I've learned that my expectations have not been set low enough. Unfortunately, and honestly, like I have no idea what's going to happen next and I have I have let go of trying to make predictions because I never would have predicted that we would be sitting here today in the situation that we are in. So I don't know what's going to happen today. I don't know what's going to happen tomorrow. My hope is that by the end of the year we have a lot more retailers in the state of New York. But, like my heart has been hurt so many times by everything that has happened, I honestly have just set my as, like my expectations were like at ground level, like they're now at the basement level, as low as possible, and we're just trying to survive as a company and get through every. You know, just just survive this, honestly, and everyone is kind of in survival mode right now. So, you know, I really hope that New York grows into the market, that it has the potential to be.

Speaker 4: 42:42

Elicit shops are winning in New York right now. There are thousands of them operating all throughout the state and the consumers do not know the difference. Enforcement has not been where it needs to be in the state of New York when it comes to shutting down a list that shops, and it's very frustrating for the entrepreneurs who have tried to follow all the rules and do everything right to be in this survival mode right now while elicit shops are thriving. So that's where I'm at right now. Honestly, I've like let go of control, I've let go of hope. I've like, I'm really just like in, I'm in survival mode and we're in fight mode right now and we're just trying to make it through and link arms with the other entrepreneurs in the state who are in the same situation that we are and try to push the industry forward so that we can all succeed.

Speaker 3: 43:42

Yeah, thank you know it's. While we're very excited for the market to open up to more people, I think what we really want to avoid is more people getting themselves into the situation Carly and I find ourselves in right now. That's really to put. You know, it's just how it's not really an opportunity. You know a license could be, you know, the start of something great, or it could be like a, you know, really something like a trap. You know what I mean. It's if you're, if the kind of market is not set up for, you know, small businesses to be successful, if the market is not existing really at all, right, like then, then this is just become something. It becomes a massive financial burden, it becomes something you get buried under rather than an opportunity that you're going to flourish through. So that, you know, is a really important thing. That you know I'm trying, like it's it's hard, as an advocate and as somebody who has been, you know we've both been championing social equity in cannabis. You know, since, since we started and it's just we've been wanting to see this, you know, kind of play out in a certain way and then to kind of try to have the conversations with, you know, those potential applicants who do qualify as your social and economic equity and telling them like, think twice, right. And it's, it's hard to not seem like a hater, it's hard to not to seem like you're a gatekeeper, because they see you as somebody who has a license and they're easy for you to say, but it's like no, like it's easy for me to say because I am dying right now, like this is horrible, like I don't want you to go through this.

Speaker 3: 45:20

You know what I mean and it's, and you see it, that's not just small businesses. You're seeing massive corporations like canopy going asset light, right, like it's. It is just like a kind of a product of the way that this is this market. It has to exist, as you know, a schedule one drug with state legal markets and like 280 E and all of these things that make being a plant touching business very, very difficult. And that's why the only reason the MSO is and our is whatever you want to call them like are able to survive, is like they're able to lose millions of dollars per quarter, like and be okay, right, like they have so much like access to capital that they can. It's just they can lose all that money and still live to fight another day.

Speaker 3: 46:04

Obviously, your average, you know, small to midsize business cannot sustain those types of losses, right, so that's like really just like bigger picture Again, like this is going to continue to be a really volatile market until we get more kind of and schedule rescheduling could actually make things worse, right, so it's like you know, yeah, it could remove to 80, but what happens to the small businesses? Right, so there's, there's no, like you know it's, it's going to be a challenge, no matter what. So it's like you know, really going into it with a very kind of clear, with clear eyes and an understanding kind of what you're in for. As you know, if you're thinking about entering the New York market or any kind of his market, really it's just really something to keep in mind that it's challenging, its resource intensive, capital intensive and obviously, like you know, it's just been like, like I said before, there was a reason why I was not planning on going for a cultivation license and like I might not transition to a full license after the conditional.

Speaker 3: 47:06

Like, especially the way things are going right now. It's just that's the reality. I'll still keep my brand going and work with other farmers, right, like Harley, and there's so many great farmers around the state that we can team up with, and that, I think, is where we need to really put our focus on is what are these kind of horizontal partnerships that we can, that we can make right, and just how can we collaborate with each other and give each other more opportunities as small to midsize businesses and that's how we can really, you know, fight against these like big kind of corporate cannabis players that, yeah, everybody is very resistant to entering the market.

Speaker 4: 47:41

Yeah, I think it's proceed with caution. You know, if you're on the outside looking in, honestly like I would be running the opposite way from the hellfire that's happening in New York right now. Really, truly like be very careful and have a very clear plan on what you're trying to do and what you want to do and what kind of resources you're able to spend, because, as Brittany said, we're in a very volatile market. Things are extremely uncertain right now and just be careful. We just don't want to see more people lose everything.

Speaker 2: 48:15

Yeah, I bet it means a lot to folks that are listening, that are in similar situations as you, for you guys to be sharing so openly. So, is that the optimism you were looking for? Sorry, no, that's okay. Sometimes we just can't bring that optimism, but I think it's really courageous to say when things are hard and by naming that, I think that you guys are going to be helping not only like people that are struggling, like you, but also, hopefully, regulators and policymakers, to understand the perspective and the context of what's happening. Hopefully, as policy is evolving and you know, maybe we can codify card, who knows? Or maybe DASNY is going to get some accountability throughout all of this. It's hard to say, but by putting faces to the stories, I think it helps people to understand what's going on. And it isn't just about market size and total addressable market like. It's about all of your businesses and the people inside of them. So it's just really brave. So thank you so much for sharing what you have.

Speaker 1: 49:20

Yeah, I want to double down on that. I mean, that is quite literally why I'm sitting in DC, because when we go and talk to the regulators, like put faces to names and stories, and you know, it's like even my own family and friends everyone thinks that every time a state legalizes a boom to the business and then must be crushing it. I'm like no, it's crushing us, it's phenomenally hard and it's like take this episode and multiply that by well, we don't have 50 legal states, but you know, 40, right, 40 stories like this. That is what it is to be growing in the cannabis industry. So, just yeah, I really appreciate you guys, hey, telling the story, but be like fighting the good fight and pulling together it does. I mean, I've had a couple, couple conversations this week about like fighting in the trenches together and it sounds like the operators have really kind of pulled together and are galvanizing in a special way and do pull ourselves out of this. You know it'll, it'll make the whole industry stronger together.

Speaker 4: 50:25

Yeah, if there is any silver lining, you know really watching the cultivators and the card licensees link arms and fight together, like we've built an incredible community here in New York and we really all are in this together and we really want everyone to succeed. So, to see, to see that community be built and come together, I would say, you know, at least at least we have each other. Yeah, absolutely.

Speaker 2: 50:55

I've never seen anything like it, and I think it says a lot about how it's all gonna come out on the other side. So, yeah, I think there's so much more, and maybe we'll have to have you both back for part two in a couple months, when there's another update and some more good news hopefully to be able to share and more retail stores open. But with that, I think we need to start to move into our last call, and so this is where we look to you, our guests, to leave your last impression. Whatever you want, you can plug your business. It's a call to action. It's really your choice. Brittany, why don't we start with you? What's your last call?

Speaker 3: 51:40

Support your local legal cannabis businesses, new York, across the country.

Speaker 3: 51:46

Support your local farmers, support small businesses.

Speaker 3: 51:50

That every dollar you spend is a vote.

Speaker 3: 51:53

Right, you can actually influence more than the regulators can when you vote with your dollars. Right, because, as you see, they can try to regulate big business out of the equation. They'll just sue to get back in the equation, right, but what you can do is basically choose to support, you know, the independent mom and pop shops, right, and really, again, vote with your dollars and say these are the businesses that we want to see in this market, these are the businesses we want to see succeed and that will do more than any regulator ever can and that will do more to support these businesses and you can imagine. So, please, if you have the opportunity, if there's a dispensary near you, a delivery service near you I know that it's more expensive than the illicit shops down the street, I know, I know, but if you're able to please support and you know it doesn't have to be tonic, doesn't have to be florist farms and you like, just please support the legal market, because we need all the help we can get right now, a bonus if it's not a florist farm.

Speaker 2: 53:02

Carly, what's your last call?

Speaker 4: 53:05

I mean, I honestly couldn't say any better than Brittany. People have been asking me what they can do Truly, know your farmer, know your brands, be an educated consumer, ask questions when you go to your dispensaries, ask which of these brands were made by New Yorkers. Well, they're all made by New Yorkers, which are owned by New Yorkers. Really like invest, yeah, like Brittany said, in your community. I'm all about community resilience and keeping dollars within the community, whether that comes to our food supply or our cannabis supply. So, as consumers, definitely make sure that you're asking the right questions and supporting the brands that are local and nearby.

Speaker 1: 53:51

Incredible. Thank you guys so much. You guys are champions and we're with you. We'll love to check in in the future, but thank you so much for today. I know this has been incredible insight for the audience, so appreciate you.

Speaker 4: 54:06

Thanks for the opportunity.

Speaker 3: 54:08

Yes, thank you both so much.

Speaker 1: 54:10

Yeah, absolutely, nra. Wow, what a conversation. It's devastating, and I think we were just talking yesterday that the OCM actually pulled down the video, or someone pulled down the video of the testimonies of that hearing that we were talking to, because the stories were too real.

Speaker 2: 54:35

Yeah, they claimed they didn't want to platform self harm, so we'll see.

Speaker 1: 54:42

God forbid we tell people what's actually going on.

Speaker 2: 54:44

It's actually real yeah.

Speaker 1: 54:48

All right. Well, everyone, as we wrap up, I just want to remind you that the conversation doesn't have to end here. We invite you to continue the conversations and we would love to hear your thoughts. What would you like to see on the show? What topics would you like us to cover next? We're immensely grateful to have you.

Speaker 1: 55:11

Our audience is our community, like this is. We're all doing this together. I'm just reminded as I sit here in DC, that, like we, it takes us all being on the same team to move this forward. We're such larger forces working against this industry, but at the same time, there's many opportunities for us to kind of continue to move this ball forward. So get out there, get engaged. Your engagement encourages us to keep bringing this to you every week, and we will keep doing this every week, with exception, or maybe next week because I'm trying to take a vacation. So then, share this with your friends. As Anna Ray said, subscribe to the podcast. You know, help us get the word out. We're just getting going. We love this and, as always, stay curious, stay informed and keep your spirits high. Talk to you soon.