#026 - Inside Minnesota's Cannabinoid Revolution w/ Leili Fatehi & Laura Monn Ginsburg

Speaker 1: 0:01

Hey everybody, welcome to High Spirits. It's episode 26. I'm Ben Larson and, as always, I'm here with my smarter half, anna Rae Grabstein. It is Thursday, january 11th 2024, and we have an amazing show. Today we're going to the heart of it, where it all for me at least started Minnesota. We're going to talk about the emergence of the medical cannabis program, how hemp emerged as a complementary category and how their legal regulations for adult use is kind of filling the gap. But before we get all into that, I'm going to check in with my co-host with the most, anna Rae, how's your week going?

Speaker 2: 0:49

Hey, ben, so good to see you, glad to be back. Yeah, the week is great. I'd say that I thought that the end of 2023 was busy and I realized that it was totally a sleeper, and since the new year has started, it's just like a wild ride of everyone trying to kind of light a fire under lots of projects that were being ideated and contemplated, and now it's like action. It's like January let's get some shit done. So I've been having a lot of fun like moving ideas forward, thinking about kind of execution, doing a lot of budget strategy stuff, just resource allocation. It's been kind of a wild week, but also giving me a lot of optimism and hope, because I think that creating these plans can create some roadmaps for folks of what they're going to tackle this year and what they're not.

Speaker 1: 1:50

So good stuff. Yeah, you know, I always like to say like, structure always creates the opportunity for creativity. Right, it's like once you get all the nuts and bolts in place, you go through that hard, arduous work. It actually frees the mind to do the more creative stuff, which is counterintuitive for some folks who just like, oh, I don't want to get all that, I just want to go. It actually allows you to move faster. But I agree, this last couple weeks has been intense. The holidays feel like eons away. Yeah, you know, the closer we get to the end of January, you know we have a state of the Union on the horizon, we have the legislative session. Everyone's gearing up and, like you know, we were talking about in the intro just hemp, I think there's a lot of bills and all these individual states that are kind of spinning up and you know we were predicting at the end of the year there's going to be some hard fought battles throughout 2024 to kind of see how hemp and cannabis integrate. And, yeah, there's going to be some fireworks.

Speaker 2: 3:00

I will say that we've been talking a lot about hemp and I think there's been so many predictions about how big hemp derived cannabinoids are going to be. But one of the things that the last week and a half of 2024 have reminded me is just how impactful regulated cannabis is to, and there's continues to be so much building and new opportunities, like we're going to be talking about today. Minnesota, turning on Ohio, is very active. You know Maryland is accepting applications. There's just like there's a lot of action and regulated cannabis and it is not a game over by any means. There is so much happening and speaking with people that are creating new technology solutions and just like looking at continuing to create like new efficiencies and pathways and supply chain kind of stuff going on. It's just, it's yeah, it's just always dynamic. So, yeah, get to be here, feel blessed to keep having these conversations.

Speaker 1: 3:57

Yeah, in two weeks we're going to be in Miami at Canada con with with Delta, emerald and the whole crew, and I was excited to see some of the programming and there's actually some some new tech platforms that have launched recently, so some female founders that are being highlighted on stage and, yeah, it's as you were saying there's. There's this new sense of optimism coming into 2024, some momentum for the industry, and I'm here for it.

Speaker 2: 4:27

Hell yeah, hell yeah. Well, let's, let's dive in.

Speaker 1: 4:31

Let's do this. I love it.

Speaker 2: 4:32

I couldn't be more excited to have this conversation. I think that you know it was maybe four or five months ago that a picture of THC beverages in traditional retail blew up on the internet.

Speaker 1: 4:46

Yeah, total line, I love it yeah.

Speaker 2: 4:49

And it really I think it started to make everyone pay attention to Minnesota in a way that they weren't before, for better or for worse. But all of a sudden people were like Holy shit, you can buy THC beverages at a regular, you know alcohol and beverage store in Minnesota. What is going?

Speaker 1: 5:08

on or restaurants, yeah, or restaurants.

Speaker 2: 5:12

Yeah, I know it made me pay attention and Minnesota had been a bit of a sleeper state on the cannabis side, with only two companies overseeing and operating inside of an existing medical cannabis program that's been around for a little while but just doesn't have a ton of legs and doesn't have a lot of inclusivity because it's only two companies in it. So luckily, I think that we found the people to talk to, so let's bring on our guests and I'll introduce them. The people.

Speaker 1: 5:45

Welcome.

Speaker 2: 5:47

And Laura Mon Ginsburg. Hey, ladies, these folks have a firm called blunt strategies and they work as political operatives representing the industry, as advocates and policymakers. They were instrumental in creating and gaining legislative approval for the Minnesota is ready campaign. In our prep calls we learned that they really have been a part of both the hemp legislation and the adult use legislation, so this is going to be awesome. Can't wait Welcome.

Speaker 3: 6:21

Thank you.

Speaker 1: 6:22

Yeah, I was super excited diving this conversation. I know as someone operating in many of the states around the nation trying to figure out how to get reasonable, responsible change implemented right and and I an erase war choice of political operative I think is really interesting. You You're not lobbyists and I think how most people in the industry think it's like, okay, we need rules changed, we need to enforce our will upon these regulators, but that's not necessarily the most effective way of getting things done. So I would love to just kind of kick off and kind of frame up like how do you guys, you know, position the work that you do, how have you been so effective at being engaged in those conversations and just what's that groundwork so that when our listeners are thinking about you know affecting the change that they need, that they're going through the right channels?

Speaker 3: 7:24

Yeah, you know, appreciate that question, because oftentimes people are just looking at the outcome but not really thinking through what was the entirety of the process that got us there. And you're right, minnesota was a sleeper state. We launched the MN is ready campaign in 2018. And when we launched it and we started, you know, reaching out to some of the national groups for support, almost uniformly, the answer that we got was you know, we don't really see Minnesota as a place to be investing our time in resources right now Because you have, you know, divided legislature. We just don't think, you know, politically, you are there where legalization is going to be happening anytime soon. There's lower hanging fruit in other states and, you know, I think that ended up really being an important factor in how Minnesota's laws and our approach to legalization ended up, you know, shaped up. We had to go it alone, and so we launched that MN is ready campaign.

Speaker 3: 8:32

We put together, you know, a steering committee that brought together leaders from local government, from nonprofit, from organized labor, from advocacy groups, patient groups, whatever it may be.

Speaker 3: 8:48

We put together as wide a table as we could and we started from a place.

Speaker 3: 8:52

The first what we need to do is just soften the ground for this to be a politically palatable topic for Democrats in our state to lead on.

Speaker 3: 9:04

Because at that time, you know, as you talked about, we have a super restrictive medical cannabis program here in Minnesota. The administration that that legislation passed under, while it was a Democratic governor, he was not very supportive of cannabis in general, and that's how we ended up with such a restrictive policy and, as the, you know, purple state, within our Democratic caucuses there was no unified position on legalization when we started doing our work, and so, you know, the first thing that we had to do was make that case to legislators that the public was ready for Democrats to begin leading on this topic, to begin inquiring as to what their hopes and concerns were about legalization as a starting point, and so we spent one year doing that, and then our then House Majority Leader, ryan Winkler, I think, was the first to really see that now the ground was soft and ripe, and so he launched a statewide listening tour to go to different communities across the state of Minnesota and just really have those conversations.

Speaker 1: 10:25

And when was? What was that time period that that was occurring at?

Speaker 4: 10:29

So this was 2019. Yeah, and one thing that is implicit in what Laylee is saying is that, as a state that does not have valid initiatives, we necessarily had to go through the legislative process Right, and it is different than many other states who have legalized either through ballot initiative or have a super majority of Democrats. That has been able to. You know progress policy a lot faster and with a lot more, a lot more expediency than we were able to. We have a purple state government very much, and that has been true for a very long time. We are currently under a very rare and very narrow trifecta of one party control, but which we played a hand in.

Speaker 3: 11:14

I mean, you know. So after we did this work to kind of get a unified piece of legislation that the Democratic caucus was standing behind, we still had a GOP controlled Senate and that was becoming the impetus. And they wouldn't even, you know, give the bills a hearing. The couple of you know one hearing that a legalization bill got was really just a kangaroo court put on by the GOP prohibitionists in the state.

Speaker 4: 11:37

They had, you know, created outside, as though you know, created people in uniform talking about how bad this would be and how deterioration of all society. But you know, so I want to jump in and talk about.

Speaker 2: 11:50

so the Minnesota is ready campaign, talk about hemp versus adult use cannabis and like how, how hemp came first and how you thought about hemp as a path for expansion and destigmatization, but not not the whole thing. And so, yeah, if you could give us some history of the hemp piece and then where we are today with adult use.

Speaker 1: 12:12

And specifically because there's this narrative outside of Minnesota is like that Okay, we had the medical program and then there was some like legislation that was being passed, like last year no, two years ago, I guess was that 2022. So we're fast forwarding a little bit and they're like oh, it just got kind of got snuck in there and there was like the rule.

Speaker 3: 12:42

Yeah, you know. So I think I think there's sort of two sides to what it is that happened there and what the role that hemp played so shortly, you know, after we had launched, and then it's ready. It was really contemporaneous with that 2018 farm bill, with Minnesota setting up an industrial hemp program that really introduced us to a cohort of folks in Minnesota industry, especially in agriculture, that were, you know, participants in that industrial hemp program, but they wanted to be advocates for legalization because ultimately, you know, they were working in hemp with an eye for moving into that expanded, you know, cannabis marketplace upon legalization. And then, you know, as Laura said, minnesota this being having a divided legislature being purple, this is a thing that we expected to endure for some time, and so we also were looking at what are some strategies for beginning to move the envelope towards legalization that we could do under these constraints of having a divided government. And you know, around 2021, 2022, what we started seeing were hemp derived THC products.

Speaker 3: 14:09

Largely, they were gummies and things like that.

Speaker 3: 14:12

They were popping up on the internet, they were showing up in gas stations, claiming to be, you know, federally compliant, but they were.

Speaker 3: 14:21

There were no regulations in place whatsoever in terms of age restrictions, you know, potency, dosage, ingredients, anything. And meanwhile none of the hemp businesses in Minnesota could legally under Minnesota law be manufacturing or selling any of these products. So folks from out of state were making money selling potentially dangerous, unregulated products to Minnesota consumers and putting them at risk and generating economic benefit for themselves, while Minnesota industry members who truly cared about a well regulated and safe marketplace, they were being prohibited from even putting CBD and things like that in beverages and edibles. And so that really became the point of conversation with policymakers who really understood that the first step that just needed to be taken was to put in place some state regulations to ensure that these products, whether they were being manufactured in Minnesota or elsewhere, were packaged, safe, et cetera. And that legislation, I mean it went through the necessary committees, it was introduced a hearing. So anyone that says it was accidental or snuck in is just not true. They just didn't read the legislation or didn't want to say that they read the legislation.

Speaker 4: 15:51

They didn't want to say that they were reading the legislation.

Speaker 1: 15:53

It's possible to be liability.

Speaker 3: 15:57

Yeah, but for us as operatives really looking at how do we move the envelope on this?

Speaker 2: 16:05

We knew that once sorry that moved the envelope. For sure it moved the envelope, right it really did.

Speaker 3: 16:12

We knew that cannabis products well regulated cannabis products especially when manufactured by local folks that care about the community and their consumers, and especially when they're being retailed through some of the earliest folks to be developing these products for our local craft breweries that already are well-known and trusted brands in Minnesota when they're producing these products, it would play a considerable role in both putting cannabis in front of folks who are ultimately constituents and voters, folks who otherwise may not identify as being cannabis consumers.

Speaker 3: 16:58

These are not the like burn one down on the capital steps type of folks, and it would help to sort of destigmatize it. And then what are you gonna do? You're not gonna snatch those products away from people once they've been consuming them, enjoying the recreational and health benefits of them, people seeing how much objectively safer and, for many people, preferred this is to alcohol. The sky didn't fall down, but what it did was also give us that ground to now say look, now we have a medical cannabis program that's being overseen by an office of medical cannabis. We have this hemp derived marketplace with jurisdiction sort of all over the place. Wouldn't it be great if we just created?

Speaker 3: 17:43

an office of cannabis management that just regulates the whole plant, whether it is medical hemp. And while we're at it, let's talk about adult use. And I gave us the avenue to start talking about adult use. But it also made it so that all of these industry members whether they were the folks that were already working in hemp or some of these folks that were working in beverage now became part of this MNIsReady coalition and they became part of this effort to help convince people that legalization was the direction to go in. And that's really what gave us the runway to end up with a DFL-led trifecta to be able to pass adult use legalizing.

Speaker 1: 18:29

That's amazing.

Speaker 2: 18:31

So before we jump into talking about adult use, I think we should pause and just reflect on what's happened with hemp, which I think is really interesting, and I like the story that you told about how you saw this existing hemp farmer community.

Speaker 2: 18:45

That wasn't being served, by the way. The lack of policy clarity was like actually limiting opportunities, and so the next step was sort of incremental change. It was a roadmap. It was like a step forward. Let's make it so that Minnesota companies that are already growing hemp can participate and then through that, all of a sudden now we have these new consumers that are coming in and trying these products. There is this natural destigmatization that's happening. You talked about craft breweries, which I think we should dive into a little bit more. It sounds like craft breweries have really benefited from the hemp rules in Minnesota, and I'd love to kind of get your overview for the people that aren't on the ground there, of kind of explaining what the hemp space looks like in Minnesota, what the products are, where they're sold and what the dynamics are Like between the businesses.

Speaker 3: 19:46

Yeah, absolutely. I mean, people are really focused on the beverages. I think because there's been so much explosion there, and I think in large part it's been because, as you said, the breweries were pretty immediately able to capitalize on the ability to add these ingredients to their products, and so the beverages were the ones that started rolling out just because it was cheap and easy to make. I don't want people to be under the impression that the brewery produced beverages or especially at the front end, like this wasn't for the love of the plant. It was because they could throw THC into a vat of seltzer, basically, you put it on the market.

Speaker 2: 20:33

It was an existence to change. Yeah, that could work.

Speaker 4: 20:35

It was also the pandemic. For many of them, this was a lifeline, when they couldn't have tap rooms, bringing all people in.

Speaker 3: 20:43

So it was a really big windfall for folks in brewing and it was a very nice alignment for us again, because it provided a trusted retail avenue for consumers to first become exposed to and enjoy these beverages, and so that was really important. But what emerged as a dynamic is we started working on adult use, and one that persists, and one that we continue to work on now, is that, by and large, the brewing community does not see themselves as being part of the cannabis community. They have not been active participants in advocacy on the cannabis side, while they have been very active in making sure that they're just like ensuring that their turf of hemp derived stuff stays there, and so there are some tensions that have emerged over, yeah, I mean, between folks that are in the cannabis industry and who are really the ones that made the investment of money and time and resources in a very communitarian way, dating all the way back even before 2018, but certainly since 2018 to getting us to this point, and then folks that were able to benefit from it but ultimately never participated in the advocacy for it. But what you know I think what we're hoping now is we're, you know, looking towards the future is really for folks to see in Minnesota how having the hemp-derived marketplace and then the regulated cannabis adult youth marketplace, these are not competitive, these are complementary. We were very intentional in the drafting of the legislation here in Minnesota to make sure that there was parity between these two kind of like product tracks. And I think, as our marketplace here in Minnesota is maturing, we're beginning to see, you know, some nice leadership coming out of the brewery community and certainly out of, you know, especially the independent liquor retailers and such, towards understanding where that cannabis expertise is really important, towards, you know, informing what's happening on the hemp-derived side. So I think folks are starting to hopefully converge a bit more around that.

Speaker 3: 23:25

But, you know, beyond the beverages, we just have an amazing marketplace here in Minnesota because this hemp-derived marketplace just allowed people to really experiment with the type of products that are coming out. So you know, it used to be just the seltzers. Now there are, you know, sodas, there's, cold brews, there's tea, space man, ice cream there's, you know we're starting to see again because, you know, the Lodos marketplace has allowed smaller entrepreneurs to begin putting their brands and their creativity out there. We're starting to see products that really are associated, you know, that have cultural elements to them. So, for example, misota Essence is a company here in Minnesota she's a Latino-owned business and she's manufacturing THC Agua Fresca that she has a little thing of tahin that is attached to the can that you can put on the rim and this is really nice.

Speaker 3: 24:24

You know we have Doc Dabs who's creating, you know, jerk seasoning and things. I think these are the things that those of us that really come from that love of the plant, from that advocacy space, really have always dreamed about as a cannabis marketplace that creates unique opportunity, economic opportunity and consumer excitement about products that are being manufactured by folks that come from communities that otherwise would be disenfranchised from participation in this, and so that's why we continue to. I know a lot of people are kind of tired of the hemp versus cannabis dynamic, but that's the reason that we continue to say like that dynamic is not one that we can just summarily or dismiss or move beyond.

Speaker 4: 25:12

There's an important social equity element and we don't, yeah, and we don't see a winner or loser there either. We see very much, as Laili has said. You know, a complementary path for both to exist, all to exist simultaneously. There are folks that are going to want those hemp-derived products indefinitely. They like the Lodos THC, or they want just CBD or something different. And you know, for a state that's only had legal liquor sales on Sundays for a handful of years, it's pretty incredible how far we've leapfrogged ourselves.

Speaker 1: 25:43

Well, just the fact that you were able to quickly recognize the interrelatedness between these two supply chains and be like, oh, maybe we should create an office to manage the two of them together and then successfully push that through. You know, as a Californian, I'm just with an licensed operator, like I answer to two different departments within the California Department of Public Health, not to mention the Department of Cannabis Control, and it's mind-numbing to be able to like navigate all of this and like it's like wow, like Minnesota was able to apply some common sense here and, staying in the vein of like hope and optimism for 2024, like we can get other states to start applying some common sense and maybe the federal government not going to hold my breath Like that would be the hugest advancement for this hemp and cannabis conversation.

Speaker 2: 26:41

Well, what you both are touching on what Ben is talking about too is this idea of being one plant and I think it's interesting because you called the hemp market in Minnesota the low-dose space or the low-dose market, and that's almost that's the evolution of thinking about this as one plant of, like these hemp products being the more low-dose products and then the regulated or adult use cannabis being where the more high-potency products live.

Speaker 3: 27:14

Is that a good summation of yeah, yeah, and that notion of low-dose is again something that is like circumstances in Minnesota uniquely created the enabling conditions for that. Minnesota still has 3-2 beer, and for your listeners who may not be familiar with 3-2 beer because, like virtually everywhere else, has gotten rid of it Even you're talking about 3-2 beer is 3-2 beer with an alcohol content of 3.2%.

Speaker 3: 27:45

So it is basically low alcohol concentration beer that can be sold in supermarkets whereas regular beer can't. And so this notion of having something that is less potent available in retail contexts where a higher potency isn't allowed Maybe was something that was part of the Minnesota culture and so that, like nomenclature kind of worked to transition over, and that's when it was now not available just in the local liquor stores and at the breweries, but then restaurants, bowling alleys, the place I go skiing, they have it at this geisha leg when I get my hair done.

Speaker 4: 28:34

It's amazing. The dermatologist.

Speaker 3: 28:39

Yeah, it's. It lent itself to a nice outcome. But I think you know part of the again, the reason a lot of the local retailers and bowling alleys and things like that were willing to take these products in retail. That really had to do with the fact that, like they were working with in-state folks, that they trusted whether it was folks from the industry, the folks manufacturing it, the folks setting the policy, whatever it was they had those local resources to go to. You know, feel like they were covered on the liability side and that it wouldn't create backlash for them with regulators or with consumers.

Speaker 2: 29:24

And so the next step on this roadmap, this incremental policy change roadmap that you guys are leading, is adult use, and the rulemaking is happening right now. The regulators are sending out surveys, asking people questions. I'd love to hear your kind of predictions or inside knowledge of what the next 12 months of adult use rollout in Minnesota is going to look like. Along with I know that you've also spoken that it's possible that some of the hemp rules might change as a result of some of the adult use. So, like within that context, kind of give us the whole piece, whole story.

Speaker 3: 30:03

Yeah, so there's going to be quite a bit of rulemaking that is going to have to happen. You know our legislation was very large, but you know the last legislative session they pushed more successful, in passing, just in overall one of the most ambitious, I think, agendas not just on cannabis, on all sorts of things in the history of our state, and so cannabis was just one issue that legislative staff were very busy working on, and so we carried as much of the water as we could on helping with the policy development and things like that. Ultimately, like when the Reviser's office was at full capacity and there were changes that needed to be made, we just kicked it to rulemaking. Whatever it was, we said, okay, we'll delegate this to rulemaking. I tend to be an evangelist for trusting an administrative state to especially make decisions about like things that have a scientific dimension, so we were comfortable with that.

Speaker 3: 31:05

But what it meant is that there is going to be a lot of very important topics that are going to have to be addressed in rulemaking, and so, as you said, you know they've circulated.

Speaker 3: 31:16

The state has circulated some surveys to begin to gather input from stakeholders as to what are the issues that are going to have to address in rulemaking. But you know we've been tracking sort of what we see as being the highest priority issues that need to be addressed and sort of doing what it was that we did to help get the legislation passed Organize as much information as we can about what are the issues, what are the highest priorities, what are the potential solutions. Helping to draft language and just making ourselves available and helping to prepare folks in the industry to be helpful, you know, to regulators as they go about their work in doing this, Because we know and we trust that they really are aligned with us and our local stakeholders on vision for Minnesota's cannabis industry. They wanted to be a success. They want to see success between you know these two product and it's really three because it's medical, hemp and adult use.

Speaker 1: 32:25

Were there any whoopsies with the hemp legislation that are not trying to put you guys on the spot? Were there any obvious kind of like you know oversights that are now trying to be kind of rectified with the new adult use regulations that are being rolled out?

Speaker 3: 32:47

There are some things that are going to, you know, need to be tightened up. I think most of it can be done in rulemaking and probably without legislative fixes. Legislative fixes would be to probably, just, you know, fix some things that were non-controversial. So no big whoopsies in terms of the drafting of the legislation, but just the aggressive sort of timeline through which all of this has happened has really created some operational and like capacity challenges for the state government in terms of being able to effectively and clearly and efficiently communicate to industry members about, like, what's allowed, what isn't allowed, what does enforcement look like?

Speaker 3: 33:41

That's really lagged as well. As you know, local governments have, by and large, I think you know, understandably felt a little bit left to their own devices or left without a safety net on some of these things because, like businesses started popping up, they obviously play a critical role in, you know, ensuring public safety around those and wasn't clear necessarily what their role is or what even the rules have been. So that's something we're continuing to, you know, figure out what our mechanisms for just helping to broker sort of the knowledge and the information and the questions between government and industry and other stakeholders. These are the natural growing things.

Speaker 2: 34:30

How does the government to communicate with local government and keep the peace and cannabis?

Speaker 2: 34:37

I think that's going to be the solution that takes you to the moon on a rocket ship. It's local government and state policy, and the culmination of where cannabis fits in is always complicated, absolutely so, within the rulemaking you know. So we've got two existing medical businesses, then we've got all the hemp businesses and we have licenses that are going to be open for application at some point. Maybe you could talk about, like when you see the adult use part of the market blossoming, like when, when can I show up in Minnesota and walk into a adult use cannabis dispensary based on what's coming?

Speaker 3: 35:21

2025.

Speaker 3: 35:22

So we anticipate that we'll start seeing licenses issued and adult use opening up, hopefully Q1 of 2025.

Speaker 3: 35:34

I think one of the things that you know will, because a lot of the existing hemp businesses, the hemp retail shops that really have set up like we have the brewery, then the things like that, but like we have entire I mean tons of retail shops that are dedicated to selling cannabis products.

Speaker 3: 35:56

I'm not selling flour, or they shouldn't be at least for the time being, but they're selling beverages or selling, you know, edible seeds, things like that, and they're really many of them are establishing a footprint in anticipation of just transitioning to adult use once they get that license, and so that will help sort of abbreviate the timeline for getting up and running. A lot of them aren't going to have to, like wait till they have the license to then commence with build out and things like that. They already have a business up and running and they're building it, you know, with an eye for what are going to be the regulatory requirements for adult use. So I think you come in 2025 and you're going to see a really vibrant retail environment here in Minnesota. I think it's going to continue to be very different from other states.

Speaker 4: 36:45

You know like we're not treating this like plutonium here in Minnesota, I think, even in the adult use context which will be great, though we're excited about that, but come here anytime because, as we've been talking throughout the episode, there's a thriving market here and you know. As far as answering your question about when can I walk into a full on dispensary, to Lely's point, we think we're going to continue to see these mixed use and interesting ways, because that's kind of how we started and it's really hard to claw that back. So there's an expectation among consumers that they're going to continue to have flexibility and accessibility to these products, and we're excited to see that. So don't delay, though. There's plenty that you can get your hands on now. That's fully within our legal realm, and it's wonderful and delicious and local and we've got.

Speaker 1: 37:31

you guys must be members of the Chamber of Commerce.

Speaker 4: 37:33

I should be, I remember, but I should be.

Speaker 2: 37:38

I'm sorry you gave me chills honestly, because it's been this massive multi year fight in California to allow a cannabis dispensary to sell anything other than cannabis Like even if it's a consumption lounge being allowed to sell orange juice or iced tea or a bottle of water is not even allowed. And it's really cool to think about actually integrating cannabinoids into traditional retail experiences. I think that's just fun and exciting and it represents normalization in this way. That is amazing.

Speaker 3: 38:15

Yeah, I really think it's going to shape the approach that our regulators take in rulemaking and I think it's going to shape any future legislation in the state the fact that you know, with the like you basically get to test all of these things out to see if there are problem or not with the low dose hemp derived stuff before moving into adult use. And then I think for regulators, I mean, you know. The other thing that is nice is you do have all of these local hemp derived businesses that you will have a track record of are they compliant, or they'll be data to look at to help inform these regulatory decisions on the line, so they'll be able to actually have some things to base a licensing decision on, based on the track record of the person applying for the license and how they've been operating in that hemp derived space. But also it's sort of like a beta right or identifying like what are the things that may need additional attention in rulemaking.

Speaker 2: 39:24

Well, that's really interesting. I know there's been a Minnesota first approach in the way that you've been thinking about building this, and so when you talk about the existing hemp businesses being able to come into the adult use space, that's one way to foster that In the context of the applications that aren't open yet. There has been tremendous amount of pushback in states that have required residency and I'm calling it the verisite effect to the group in New York and other states. That's just suing everyone because of residency requirements. So I'm curious of what you think the residency requirements will be and, if there won't be residency requirements, how the state will be taking a Minnesota first approach, as they're inviting new applications in and then, also, kind of like layering on top, how many of these hemp businesses are going to choose to play in adult use and hemp at the same time?

Speaker 3: 40:25

Yeah. So we initially pushed for pretty stringent residency requirements, both on the hemp derived side, but especially on the adult use side. And against this backdrop of the litigation that's happening in other states, we sort of had a choice. We could continue to push for the residency requirements. But the concern is you get caught up in litigation now all of a sudden no one is getting licenses. That really does nothing to help your local industry.

Speaker 3: 41:00

Yeah, it keeps other guys out, but it keeps our folks from being able to get licensed and move into adult use, and so we now will continue to track what's happening with the legality of residency requirements with the hope of being able to implement those. But I think really what we ended up doing to compensate for that one was just the approach we took with our legislation. And what I think is one of the biggest crews with Minnesota's model are the caps that we put on the scale of licensed business. So we placed canopy caps, especially for vertically integrated businesses, so you can have a micro business as long as your canopy is under 5,000 square feet of flowering canopy. And then there's comparably pegged like manufacturing caps and things like that. We have what's called a mezzo license, which is kind of mid-sized. That's capped at 15,000 square feet and even to be a bulk cultivator it's capped at 30,000 square feet. And we picked those numbers very intentionally to be a scale that really doesn't make economic sense for an MSO to want to pick up and come set up shop here in Minnesota at that scale, and so that was one way to really level the playing field and really it's not even level create a playing field that prioritizes and benefits smaller Minnesota businesses and just makes it less capital intensive to be able to get up and running.

Speaker 3: 42:45

And then the other thing that I think is just important and this is, I think, a role that we really play as people who are visible and people who are evangelists for Minnesota's industry is setting the consumer expectation.

Speaker 3: 43:04

Minnesotans want Minnesota made products.

Speaker 3: 43:06

This is just part of our culture here in Minnesota is to support Minnesotans to the maximum extent possible, and this is, again, I mean, why we really see the hemp-derived marketplaces having been and continuing to be so important from an equity standpoint and from a creating fair economic opportunity standpoint.

Speaker 3: 43:31

It is allowing smaller businesses to establish their brands, build brand loyalty, create a Minnesota like supply chain where this is a thing that consumers want to see that everything from your hemp to your extraction, to your manufacturing, to your packaging, that everything is in Minnesota and it's a thing that you know they're willing to pay premium for. They've recognized the local brands before they're recognizing the out of state brands, and when that transition to adult use happens, we think that that will be again just part of what the consumer expectation is is to want to support the local brands rather than looking outside the state, and so we spend a lot of our energies on making sure that we're creating those kinds of opportunities for our smaller brands to be, you know, recognized and be able to like be making some money now, so when they move to adult, use their capital.

Speaker 4: 44:30

So Minnesota acceptionalism is alive and well.

Speaker 1: 44:33

Yeah. So first I want to dive into just the hemp aspect a little bit, because one of our regular guests, gary Kaminsky, has asked what happens in the unlikely and unwanted event that Farm Bill is amended to change the legality of intoxicants, and I've even heard that like there's some Minnesota representatives on the committee for the drafting of the Farm Bill, is this like kind of top of mind for folks like yourselves, as you're kind of thinking about the future of the hemp and cannabis, and what do we imagine might happen in the Farm Bill and how it will impact this kind of beautiful framework that you guys have been working to? You know, implement yeah.

Speaker 3: 45:18

I mean. So you know what happens with the Farm Bill will be. It is not an existential threat, I think, for Minnesota companies that are operating in Minnesota because, just as with adult use, you know, you create an intra state regulatory system and marketplace and, quite frankly, that was going to be that. That was our argument for why we wanted to basically restrict even the hemp, the right marketplace to just folks in Minnesota. The argument was that, you know, no cannabinoid is approved by the FDA as a food additive. So, quite frankly, like interstate commerce, rules don't even apply here.

Speaker 3: 46:04

I continue to think that Minnesota could have been restrictive in those regards. So I think if that happens, minnesota players in Minnesota will be covered by the fact that we've set up an interest. You know, we've set up a statutory system that would allow our hemp derived marketplace to continue to operate and it would make life more difficult in two regards for our local Minnesota folks. It would be much more difficult for them to put their products into distribution in other states and that's certainly, you know, very real. And then, but it would similarly create a challenge for out of state brands to be then marketing their stuff into Minnesota.

Speaker 3: 46:52

But you know, overall like we really need to be thinking through with the farm bill, making sure that we're not making negative progress on legalizing the plant writ large, moving more, you know, back towards more prohibition. But at the same time we also want to make sure and this is really important to us again from that social equity lens that it doesn't become like we don't liberalize the hemp derived marketplace so much that there's no room for you know, people just decide like well, we don't need to worry about like regulated cannabis anymore. Anyway, we now have this laissez-faire hemp market and everyone just, you know, throw your capital into that.

Speaker 1: 47:45

And so so okay, that's interesting. So what? Necessarily lock up the Minnesota kind of market as it is and as Xavier Jaya kind of commented. If for some reason it did, you could go this route of allowing liquor stores to be certified MJ retailers.

Speaker 2: 48:06

theoretically Okay, anna Rae, yeah that's the concept, which I think is really interesting, of a whole kind of overhaul of all these state markets, of looking at, instead of delineating between, hemp and regulated marijuana, instead saying, all right, these low dose products, like Minnesota has created, these levels of potency that are allowed, should be available everywhere or whoever wants to be able to sell them in age-gated ways. So if the intoxicating hemp got rolled back, that seems like it could be a way to substitute the products in these markets that have established consumer demand for them already. It wouldn't go away, it would just fuel the regulated cannabis side, I think.

Speaker 3: 48:56

Yeah.

Speaker 2: 48:57

Yeah, well, amazing. This has been so cool, so instructive, it's so fun to get to talk to you both and you're just really at the front line. So thank you from our listeners, from us, amazing. It's time to move to our last call, and so I'll throw this your way, and either one of you can take the mic and go for it. You each should give us a last call, because I know you've got a lot to add. So what do you got? Yeah?

Speaker 3: 49:27

I mean, I think, for folks in other states that are looking at Minnesota and trying to extrapolate lessons for recreating the marketplace here.

Speaker 3: 49:41

I think it is really important.

Speaker 3: 49:43

It's really important to delve into what that process was that allowed us to create that have derived marketplace, and the underlying philosophy of that marketplace is, and there's no better way to do that than to engage with local stakeholders that were involved, whether it is us or whether it is folks from our industry who, many of whom are organized under the Minnesota cannabis growers cooperative and industry councils.

Speaker 3: 50:19

So that's a great avenue for folks that are interested in learning more about what it was that we did here in Minnesota to get to this place and how operators here in Minnesota that are playing in the hemp space some of whom are planning to stay there, some of whom are planning to transition to adult use, some of whom are planning to stay in both how it is that they're looking at the evolution of our marketplace here and what we see the future as being. And so, yeah, we always welcome people to reach out to us and visit us here in Minnesota. Come see what our retail environment is. We hear a lot about total wine and the supermarkets, and that's all fine and good, but really the incredible retail market that we want people to come and experience are our smaller shops that are embedded in their communities. They're the neighborhood. You have your neighborhood cannabis shop. Come see what that culture and environment is like and how incredible it is, both in a consumer standpoint, in terms of access and availability, and diversity of products.

Speaker 4: 51:38

Yeah, so there's that, I would say. A hallmark of certainly our work in this area and everywhere else that we spend our time is the desire to bring people together and share information. And so, to that end, the Minnesota Cannabis Resource Center, which is meant to be kind of the next evolution of what had been part of the campaign work and thinking about how we can help connect folks to opportunities and networks as we are entering this next evolution of our industry coming online. We also started the Minnesota Women's Cannabis Network, similarly meaning to bring folks together that just want to learn with and from each other. As a women-owned business, it's important to us that we continue to give back and pay forward, bringing those leaders together and helping them just be in the same room and see what they're doing.

Speaker 4: 52:28

And to Lely's point earlier that folks want that whole Minnesota supply chain, that doesn't just mean for their products. That means they want an attorney that's a woman, they want an accountant that's a woman, they want whatever other business services to be a woman or non-binary folk leaving it. So that's been important to us too, and that's kind of one of our other things that would be remiss to not mention in the last minutes of this podcast because it's been really important to us to continue to build that network and welcome folks in. Build the whole ecosystem, the whole ecosystem.

Speaker 1: 53:03

I love it. Yeah, I appreciate you guys bringing up kind of that aspect. We have mentioned in the past that the social equity component hasn't been necessary, a hall mark of the hemp movement, and I think there's an opportunity to kind of make this a unified conversation. It is one plant right and I'm excited. Next week we're actually going to be talking about social equity expungement and all that. So it's a nice segue for us and I know I'm not supposed to do this, but I do have one more question for you guys after the last call when do you find that amazing wallpaper For our audio? Only listeners.

Speaker 3: 53:46

It's beautiful, well, this is a new industry for us. This was designed by a very, very local artist. It was like me, you designed the wallpaper.

Speaker 1: 53:58

Yeah, we were on the wallpaper.

Speaker 3: 54:01

Yes, when we say that we are a 360 degree full service firm.

Speaker 4: 54:08

Everything is in our purview, including your design.

Speaker 3: 54:11

It includes wallpaper design, yeah.

Speaker 1: 54:15

All right, well, I'll be giving you a call about that as well.

Speaker 3: 54:18

Yeah please do Absolutely.

Speaker 1: 54:20

Amazing. Thank you guys so much. This was an amazing conversation. I can't wait to catch up with you in the future as legal adult use rolls out and see how it all integrates together. We'll talk to you later. And a ray All right, so we have another one in the bag and I feel like we just got a rapid education on where this whole hem conversation really kind of accelerated.

Speaker 2: 54:47

Yeah, I kind of want to go on a Minnesota Canada tourism high spirits tour.

Speaker 1: 54:56

Oh, high spirits live in Minnesota.

Speaker 2: 54:59

Maybe we should think about that.

Speaker 1: 55:00

All right, I love it.

Speaker 2: 55:03

Once the ice melts there, you know?

Speaker 1: 55:05

Absolutely All right, we'll put it in the books. We got to do our annual planning, all right, folks, as we wrap up, remember that the dialogue doesn't have to end here. We invite you to continue these conversations in the comments. If you're on LinkedIn, we'd love to hear your thoughts. Who would you like to see on the show? What's top of mind for you? The show is here for you. So, yeah, you. We are immensely grateful for our listeners. We're also grateful for our teams at Virtosa and Wolf Meyer. I couldn't do it without all of you and man, just all of our guests are so excited with episode 26 now in the bag, looking ahead to 2024. See if we can get 52 episodes in this year. No breaks, we don't take vacations yet. We will see. Anyways, I'm rambling now, so I'm going to tell you Stay curious, stay informed and keep your spirits high. And that's the show.