#043 - Blunt Banter with Ian Dominguez of Delta Emerald Ventures

Ben Larson: 0:00

Hey everybody, welcome to episode 43 of High Spirits. We're recording May 16th 2024. I'm in DC, anna Rae is in California. We got both coasts covered. We're going to have an exciting conversation today, got our friend Ian Dominguez from Delta Emerald coming on and we're just going to chat everything about the industry, his investment strategy, all the things, some of the amazing companies that he's invested in. But before we get there, let me check in with my California co-host How's things on the West Coast, anna Rae.

AnnaRae Grabstein: 0:36

It's been a great week. I have been heads down, working on lots of projects and actually investing into my my home office space building a cool outdoor space to get stuff done and hang out with some plants while I work on spreadsheets and analysis for clients.

Ben Larson: 0:55

Nice.

AnnaRae Grabstein: 0:57

Feeling the FOMO getting the pictures of you being in DC hanging out with some of my favorite people spreading the good word in the halls. How's advocacy been going in DC?

Ben Larson: 1:06

It's been great, man, this is one of my favorite weeks of the year getting to hang out with just the people that care the most to be, yeah, walking the halls of Congress and doing the hard work and seeing a lot of just actually.

Ben Larson: 1:21

You know, I think my expectations for this week, this year in particular, it's like a lot of the same conversations, Nothing super pivotal at the moment to really be asking for, but actually it turns out there is, um, you know, there's some very specific issues happening in the industry. Right now I was talking to __________________ and you know there are companies that don't even touch the plant, that are having their ppp loans. Essentially, the doj is asking for them to not only return the money but to pay 3x of what they had taken. So if you, if you, borrowed a million dollars in a PPP loan, they're asking for $3 million, and so it's just another way to criminalize, you know, cannabis companies and it's just really disconcerting. So had the opportunity to have some of those conversations. It pushes, you know, the conversation around reissuing the Cole memo or I guess what would be the Garland memo at this point. So yeah, I don't know Important stuff.

AnnaRae Grabstein: 2:31

Yeah, I haven't heard anyone talk about that PPP issue, and a lot of cannabis companies got PPP money and continued to get it for a long time, and at the beginning I think we didn't think that we would be eligible and so a lot of people waited, but then it kept stacking and being like all right, there's all these other cannabis companies getting it, people are doing it and the money started coming in.

Ben Larson: 2:54

So I I hadn't heard that and that is not good news but also, I mean, like the two companies that I heard of, like uh, one was uh, _____________ and another one is ___________, and these are two ancillary companies, and so it begs the question. It's like, where does it stop? You know, do you go after accountants, lawyers, city officials, you know, the federal government, I mean everyone takes money from cannabis companies.

AnnaRae Grabstein: 3:20

Yeah, wow. Well, I have a lot to say about this and I think it's relevant to within the announcement that Biden made this morning, but I think that before we start talking about that, we should bring on Ian so he can talk about it with us. Absolutely, we we decided that we wanted to call this episode Blunt Banter and that maybe we would do more of these blunt banter discussions, because there's certain people that Ben and I just think are awesome to just chat with and catch up with, and that's what this is going to be about is, we're going to get to know Ian, but we're also just going to talk shop, which is what lots of us just love to do, and I know he's got a lot to say. So why don't I introduce Ian?

AnnaRae Grabstein: 4:01

For those of you that don't know him, ian Dominguez founded Delta Emerald Ventures and he leads the investments and the operations there, drawing on decade of experience in behavioral using use data to drive his investment strategies in the industry now, today. So a lot of you probably know Ian, have crossed paths with him, we see him lots of places and we're just stoked that he's here to join us today. Welcome, ian.

Ian Dominguez: 4:40

Thank you so much, Annarae and Ben Happy to be here.

AnnaRae Grabstein: 4:43

Awesome.

Ben Larson: 4:44

Ian, you and I met really early on in the Delta Emerald journey. Thank you for having me over to the Vertosa office in Oakland and talking about the mainstream finance work that you're doing. At Stonefeld I had this vision of investing in cannabis and starting your own fund. I'm so excited to see all the things that you've been doing in the space, not only investing in companies but doing actual work and creating proprietary uh tech and data. And then also the community work like canadatacon is so far like one of my favorite conferences and I I'm like I'm actually surprised to say that. You know I'm like why? Why is adventure fun doing a conference? And and then anna ray and I attended and it was just, it was just a blast.

Ian Dominguez: 5:34

It helps that I was on the beach, miami, but you know that was not accidental either it's also in the middle of, uh, winter for most people, so it's, I think it's an easy decision for people to make. Yeah, for those that go in person january in miami it, so it's, I think it's an easy decision for people to make.

AnnaRae Grabstein: 5:46

Yeah.

Ian Dominguez: 5:46

For those that go in person.

AnnaRae Grabstein: 5:47

January in Miami. It's the. It's a strong yes, please. Well, let's just dive into some news of the day and we'll weave in hearing more about your personal journey. But just this morning, many people probably got the alert for marijuana moment in their email box. Minutes after it happened, biden made an announcement about Schedule 3. And we've been talking about Schedule 3 already for a couple weeks now, because it was announced on April 30th, so it took him 17 days, but his quote was today, my administration took a major step to reclassify marijuana from a Schedule 1 drug to a Schedule 3 drug. It's an important move toward reversing longstanding inequities. And then he goes on to remind everyone listening that he believes that no one should be in jail merely for possessing or using marijuana. He always uses the word marijuana and he says that far too many lives have been upended because of failed approaches to marijuana and he's committed to fixing that. What do you guys think about this statement?

Ian Dominguez: 6:54

I think the staffers could use some new hits to play, and I think that if he really I love that he is speaking now, acknowledging publicly it's pretty well known that he's not, part on a personal level, the biggest fan of the plant, let's say, so the fact that he's doing this is definitely historic. I just wish that they would use this to the full extent that it could be in terms of the economic benefits, the jobs that this industry currently drives and where it's going, because that that would kind of round out the social part, which is important, but also talk about what this really means for, for people's jobs and their wallets about what this really means for for people's uh jobs and their wallets.

Ben Larson: 7:49

Um, yeah, well, yeah, I. I think he's embellishing a little bit about the impacts that this current effort is is going to have. This doesn't get anyone out of jail. It doesn't stop people from being put in jail, um and so like. If he's making these claims does, does that mean he's going to get behind the cannabis administration and opportunity act, a CAO? A if that's really if he wants to make these claims, like that's what he's going to have to do.

Ian Dominguez: 8:12

Yeah, I'll take, I'll take any progress we can get. Yeah, uh, frankly, uh, it's still the first time that's ever been, those words have been uttered, and so so I'm grateful for that.

AnnaRae Grabstein: 8:30

Yes, and I'd say that we can. We can do better. Yes, yeah, we, we get. We get so few wins on the federal policy side than, on the one hand, it's like, woohoo, the president said marijuana, and on the other hand, yeah, what about the $400,000, 400,000 workers and thousands of small businesses? And what does this do for them? And you're not actually making a move for social justice.

Ben Larson: 8:50

All right, well, I mean great, we acknowledge that you know who is those Minnesota, I think Minnesota announced this week that they're automatically expunging a bunch of low-level infractions. You're right.

AnnaRae Grabstein: 9:07

I think it was actually 58,000. Um, and then they're, and then they're doing more.

Ben Larson: 9:12

They're like they're going to. They're the ones that are a little bit less automatic, more, that require a little bit of like, uh, digging into the details, Uh, so we might, you know, we, we, we might see several thousand more.

Ian Dominguez: 9:24

Yeah, the reality is that it is most people that are in jail today for cannabis-related charges. You're talking about state-level crimes, so the federal government couldn't actually do that much about that and there's a lot of people that take plea deals. Maybe the probable cause was the smell of cannabis. The probable cause was the smell of cannabis, but then, unfortunately, someone gets convinced to take a plea deal for some other charge, and so there's a lot of people that are in jail today because of the initial say, the smell of cannabis, but actually they wouldn't show up in the register as such because they took a plea for some other charge. So it's complicated.

AnnaRae Grabstein: 10:08

Yeah, and as a segue to asking about your journey into cannabis, ian, I think it's interesting how all of us have become so knowledgeable about different elements of policy and social change and the data related to the impact of criminalization in cannabis as a result of being entrepreneurs and investors and operators in the space, and so I'm curious, ian, I know that you came from an investment background, but how did you end up here investing in cannabis? We heard a little bit about when you met Ben, but, like investing in cannabis, we heard a little bit about when you met Ben, but like, yeah, tell us the journey.

Ian Dominguez: 10:50

Yeah, so I like to say I've I've been a fan of the plants since way before I had a professional career and, uh, it took many years before I actually recognized that maybe I actually had some learnings that I could apply to this industry that I cared a lot about on a personal level. That actually happened for me in 2014. I was working at the time for a family office and actually the investment opportunity that came across our desk was for Pax. Back when Pax and Juul were the same company, same corporate holder of both assets, and I didn't know anything about Juul Frankly, I didn't really care. I knew Pax, I owned a Pax and so this family office I was working for, as strongly worded as I could, I tried to make the case that this was going to be a good investment opportunity. Unfortunately, they didn't agree and we ended up passing. They were worried oh, what would people think? All that kind of thing but I'm actually grateful that they did, because that's really what got my gears turning as far as okay, well, they don't see this and I know that this is going to be big. Maybe I actually know something other people don't.

Ian Dominguez: 12:11

And basically for the next five years.

Ian Dominguez: 12:14

I started a journey of researching this space, the way I was taught how to research an industry and, just for context, you know, I was taught by investors how to invest in, say, either publicly traded companies or privately held CPG companies and so I really did a kind of bottoms up research and I would take vacation days literally to fly to California to meet people like Ben, on my own dime and on my own time, just to learn more, and as a result of those conversations and those meetings, I got more bullish about it.

Ian Dominguez: 12:59

I started to make personal investments in the space, and I'm glad that I did, because those investments opened other doors for me and, specifically by the time we get to 2019, I was identified by a family office for this weird interest that I seem to have developed as far as cannabis the cannabis industry and was invited to pitch this idea that I, frankly, wouldn't shut up about at that time, which was a data-enabled cannabis fund. So a lot of luck went into this and a lot of also my own just just uh, incessant interest and constantly peeling back the onion and just wanting to understand better. How might this actually play out and what could this be? What could this look like, and how might I be able to contribute the knowledge that I have to this thing that I care?

Ben Larson: 14:02

about. Let's dig into the data side a little bit. How are you looking at data differently than, say, some of your colleagues in the investment community?

Ian Dominguez: 14:11

Yeah, I mean I can't speak for others. I know that from the world that I came from. It is very much an arms race in terms of data, very much an arms race in terms of data. So to build conviction in a thesis, an investment thesis, it is not sufficient to just say, oh, I read about this in the Wall Street Journal or whatever. There are very large funds today that do very well because they systematically consume large amounts of data to help understand a thesis. So, for instance, I can give you an example.

Ian Dominguez: 14:56

There have been multiple iterations of when Netflix people thought oh, that's it, the Netflix story is over. But if you have access, if you pay, for instance, for anonymized credit card data, you can understand where a broader narrative might be wrong. Because you might say well, based on my sample set of information, it doesn't look like people are canceling their subscriptions in mass. It actually looks like the subscription rates are steady. Subscriptions in mass, it actually looks like the subscription rates are steady. So that's a differential view versus the market and therefore I'll invest in Netflix in this hypothetical example.

Ian Dominguez: 15:33

So, really complimenting the investment process that involves what is your if you're talking about private investments what you know? What is your vision? What is the quality of the management team, all the things that would go into forming that type of decision. You want to complement that as much as possible with information to corroborate and strengthen the thesis and, most importantly, for what we do today. After you made the investment, that's day zero. Then you're talking about okay, how can we use information to help our portfolio companies improve the decisions that they're making day to day? So that's what we do for ourselves and that's what we seek to do for our partners.

Ben Larson: 16:16

Yeah.

AnnaRae Grabstein: 16:17

It's interesting that you make the delineation about private company investing and data, because there is a different level of access to public company information versus private companies. And then within cannabis, especially when you got started, we often talked about that there wasn't good consumer data and on the one hand, there is this trove of data in cannabis as a result of track and trace that isn't necessarily in place in some other categories, but it isn't always packaged up in a way that's very easy to access. But when you're talking about being data focused and data driven, and both to make the decisions and then in the follow on for portfolio support, like can you give some examples of some of the types of data that you are looking at and that you think actually can help make significant impacts in both, like your prediction of the future or in the success.

Ian Dominguez: 17:17

So the most important information at this stage is consumer behavior. This is where you can dispel myths. And I came into this category, into cannabis, with my own set of preconceived notions, some of which were dead wrong, and I'll give you a specific example. I thought that brands. At the time that I invested I started investing in this space I thought brands were certainly going to matter, because that was the world I came from, of covering consumer packaged goods companies, the grocery industry, alcohol, beverage, tobacco. This is how consumers make choices. So that that was my notion.

Ian Dominguez: 18:04

But the data that we now have, I can tell you that that notion is wrong, with an asterisk. In other words, brands do not matter in some cases. In other cases they do and this is also a function of time in any one market and to any one consumer. And to make this real, I'll give you the example of my mom. The first time she walked into a dispensary, she didn't know anything about what she was gonna be buying. I didn't even know she was planning on going into one. She told me after the fact I was like, mom, what did you buy? And she was like, oh, I don't know these things.

Ian Dominguez: 18:48

And it was very clear that the person on the other end of that transaction pushed her towards products that weren't really right for her, and every single person is on their own journey as far as understanding what is the right product for them. So this understanding, I think, is really important for the way this industry is to evolve, and this is why customer behavior is so important. It's for this reason that I can tell you that there's a spectrum of what we call promiscuity of. One person would say brand loyalty. I would actually say the opposite. It's more about promiscuity. For categories like flower, you have the most promiscuous type of consumer behavior. In other words, there doesn't seem to be that much attachment to a single brand. But for other form factors, there is evidence of attachment and consistent purchase, repeat purchase over time. I didn't know that until I had data to help guide that type of insight.

Ben Larson: 19:50

It's really interesting because the actually you can validate this or invalidate it, but it's like the if you, the closer you get to the plant, the relationship is with the plant and less the brand. But the further you get away from the plant ie beverages or something like that then maybe it's more about the brand at that point, does that resonate with the data that you're collecting?

Ian Dominguez: 20:13

In a word, yes, I can't explain exactly why. I have some theories, like, for instance, you have to think about the salience After the product is sold. What is the likelihood that your use of said product actually influences someone around you? And the problem with a joint or a gummy is you pop a gummy, now it's in your body, unless you tell somebody oh, I took these gummies, I love them. Or even with a joint, maybe it's on the filter the name of a joint or something like that, but otherwise you're burning it down and then it's ash. The thing about a beverage is that it is a walking billboard in your hand and it is held over many minutes. Call it 15 minutes, say, on average. And if you don't believe me, go to any bar and you'll. You'll see what I'm talking about. There's a reason why uh alcohol brands pay for the privilege of putting uh special glass in bars for a. You know, take your pick. Um, there's a.

Ben Larson: 21:25

there's a billboard aspect to this I was at beverage forum I think it was like last week or two weeks ago and they were talking about how bars on-premise consumption was moving more towards RTDs ready-to-drinks, because of that fact, of that ability to build brand recognition in the bar.

AnnaRae Grabstein: 21:46

And and going back to the question of starting at the plant and getting further and further away is it's also that the further away you get from the plant, I think you get much more like unique formulation and differentiation. In reality, there are lots of exciting and unique genetics, but it's still flower and and it can only be so good you can grow it really really well, um, and hopefully everyone gets to that point in their cultivation, but it's it is more of an ingredient and by the time you get to the actual product in that can or even the gummy, but you're right to point out that once you take it out of the, out of the tin, you don't see it. But you're right to point out that once you take it out of the tin, you don't see it. Those are where companies can really create something special that a consumer wants to come back again and again for, and so I think it makes a ton of sense that that is where the more brand-focused, less promiscuous consumers are landing. So that is interesting to hear you bring up beverage, because while you started with a real technology focus, and when you look at the portfolio that Delta Emerald shares on the website, you guys have clearly written some checks into a number of different technology platforms, pos, data, analytics groups, things like that. You are now making some investments in beverage and have been talking a lot about beverage. It seems like that has been an evolution of thought and we talk about beverage a lot here on this podcast. But I'm curious to get your perspective, Ian, on what's happening with beverage and in the hemp space.

Ian Dominguez: 23:33

Yeah, so we appreciate the call out on the website. The companies on our website we love all of them. It's not exhaustive. There are those that we've invested in that haven't press released it's up to them to do that but we've made 22 investments so far and our average check size to date has been two million dollars. Now, the vast majority of the capital that we've deployed has you're right has been in technology companies that support this industry. There's an entire thesis around that that we can circle back on if you want.

Ian Dominguez: 24:18

As far as beverage, this was a learning experience for me and, I think, one of our investments. Actually, I'm going to give a shout out to Ben. It was about, I think, january last year. January or February, we had our normal quarterly update call and saw results from Virtosa, which is a portfolio investment of ours, not on our website. Can't wait for us to press release that one, ben, whenever you're ready. Yeah, yeah, I'm getting on it. Yeah, yeah, it's all good. It's all good.

Ian Dominguez: 24:55

So what changed? Well, they became cash flow positive at a time when a lot of licensed operators, which Vertosa carries a license as a licensed operator. A lot of licensed operators were not making money and looked like it was going in the opposite direction. So that kind of forced us to say, well, what is going on here? And at the time Ben said, well, there is this new incremental source of revenue for us, which is these hemp beverages.

Ian Dominguez: 25:33

And at the time I discounted it heavily. I was like it's hemp, why are we talking about hemp? Like that's surely that's like some fly by night situation, like that doesn't really matter, right? And he was like, well, I don't know, I've got some repeat purchase orders and they're growing. And so this kind of made me stop and rethink and building the confidence that we needed to fully embrace this category. And you're right, anna Rae, that as a general point, I've not been as vocal. I haven't felt the need to be public about much in general. I haven't felt the need to be public about much in general. But for this category, I think it's really important to, to, to share what we've learned and to hopefully extend an olive branch and and build understanding with others that this is a good thing, it's a great thing for our industry, and so so, yeah, this has been a conscious effort on my part to take a bit more of a public stance on this topic in particular.

AnnaRae Grabstein: 26:58

And when you say our industry, you are talking about the entire cannabis industry where you have I'm talking about the market for cannabinoids.

Ian Dominguez: 27:06

Yeah, all, all, all that we, really all the consumer cares about, is you're overcomplicating it. If you're trying to explain to them, oh, it comes from this, it's just THC or CBD. If you want to talk about the minor cannabinoids, fine, but most people don't know what the hell that is. They just care that it works and that it's safe and that it's not in the hands of kids, and that's what I care about too.

AnnaRae Grabstein: 27:34

So I want to ask a follow-up question. So you have deployed capital into some hemp beverages and I'm curious of what stage you're focused on when you're looking at this space. There are some brands that have been around longer and started in regulated cannabis. There's a whole lot more that are coming directly into the hemp space. What are the things that you're looking for in a team and in a vision when you're deploying capital for hemp beverages?

Ian Dominguez: 28:05

Great question Focus is extremely important and a deep understanding of the way beverages specifically get sold in the channel.

Ian Dominguez: 28:17

So there's a very common phrase in the beverage industry that I've learned, which is called liquid to lips, which is there's no shortcut to encouraging trial and building.

Ian Dominguez: 28:29

It's a long slog, but to build your brand through interactions with people live and there's really no other way to shortcut that. On the point of those that have come from cannabis versus those that started fresh in hemp, I can argue both ways and in fact we have invested in a company, wonder, which made the transition, and we've also invested in a company, flyers, which was born in hemp D9. What I really think is interesting about those that came from the world of cannabis beverages is they have seen it not work and they understand and have been able to pivot and had the courage and conviction to make that type of move. It's scary to do that and a lot of people are not able or not willing to make that type of leap. But kind of in the same way that I wasn't at first willing to entertain hemp as a investable category, if the facts change, I'm going to change my viewpoint and I encourage other people to do the same going to change my viewpoint and and I encourage other people to do the same it was.

Ben Larson: 29:52

It was really interesting to see how the, the beverage brands, were so quick to start pressing on on the hemp market. Um, now we're seeing, you know, kiva and mso's getting on the hemp train and and it feels like the beverage community had about a year and a half head start on everyone.

Ian Dominguez: 30:13

Yeah, yeah, I mean, I welcome it. I think. Last week Curaleaf reported and in the earnings call they publicly announced that they are pursuing hemp products and specifically hemp D9 beverages using their select brand. They will not be the last and I think others will recognize that this is complimentary, especially when you're talking about low-dose beverages.

AnnaRae Grabstein: 30:43

When you look at what Cureleaf is doing, the select brand has at least in the regulated cannabis, so I assume in the hemp D9 space.

AnnaRae Grabstein: 30:52

it has a lot of different form factors and we were talking at the beginning of the hour just about how we all end up becoming policy wonks working in this cannabinoid space and when we're looking at the long tail of what's happening with hemp and then you see a company like Curaleaf deciding to come into the space, how do we all grapple with form factors outside of beverage that seem to be more complex from a public policy perspective? They're creating a lot more tension. Like, is this crazy for Curaleaf to say? I think they said that this is a long-term growth driver is one of the quotes from that earnings report. And I wonder is it a long-term growth driver or is it an important thing to do in the short term, while the federal government is working out the kinks to create regulation and then the states clamp down and try to get all of the you know, the edibles and the vapes into the regulated THC market? So is it really long term or is it short term?

AnnaRae Grabstein: 32:03

right what do you guys think?

Ben Larson: 32:05

I'm a little perplexed by it because it's a completely new business model for the MSOs, like the MSOs historically have, you know, fought for limited licenses, and it's more about building efficiencies in the infrastructure and the supply chain. And now you're talking about brand building. Um, sure, cure leaf has select, which has has decent brand recognition, um, but you know, really pressing on that kind of get your products everywhere in front of everyone and build like a strong, strong brand loyalty, as we were talking about, and so it'll be interesting to see how, how that adapts and influences their, their cannabis strategy I'm happy to see it in, so much as I think that it does create an interesting direct line to the consumer and learning new information about consumer behavior because of the ways that you can get to market with hemp products.

AnnaRae Grabstein: 33:00

And I've been surprised that so many MSOs have been taking kind of a prohibitionist stance, which is obvious to protect their own business. But on the one hand I thought, well, why aren't they just going out and acquiring some of these hemp brands and getting access to their email list, their direct to consumer channel, and getting to learn the insights about this other category of consumers that are choosing cannabinoid products but not going to dispensaries yet? And I haven't seen that happen. But I guess Cure Relief, doing something like bringing Select into the hemp space, is similar. It's just that they're going to build it themselves.

Ian Dominguez: 33:41

Yeah, and you got to think that there are people not in cannabis that are thinking about the adjacency of their deep intellectual property and brand power. We all are well aware that, um, what is it? Uh, it's a Sierra Nevada. And or, uh, who's the other? Um, California brewer. Oh yeah, Well, are you logging?

Ben Larson: 34:07

Oh, logging.

Ian Dominguez: 34:08

Yeah, the thing about logging is does does hi-fi hops right. So that's, we can't ignore the fact that there are large uh brands already around this space that could have a reason to play in this space, in fact, especially given how well they understand the traditional trade.

Ben Larson: 34:33

And PAP also manufactures in Southern California.

Ian Dominguez: 34:36

Yeah.

AnnaRae Grabstein: 34:37

Yeah, and with those big brands, going back to what we were talking about earlier about the spectrum of ip and consumer promiscuity, we don't see any large brands deciding that they're going to go into flower. People are looking at at highly manufactured products that that can be differentiated around their brand in a way that they're used to creating outside of outside of the space, um, be it in beverage or something else. So that seems like they're going to be.

Ben Larson: 35:06

I mean, it's probably also like a risk hedge, right? Because flower the thca flower conversation is probably going to be the most combative over over the next 12 months. Yeah, again, further you get away from the flower, uh, it's more palatable, it seems it's, you know, the. I've been writing a lot on online recently about just the low-dose beverage category and in states like california where you have a deeply entrenched, you know, licensed market with a very aggressive regulatory body, um, it seems like low-dose beverage might be the only thing that is really really palatable in the state.

Ian Dominguez: 35:46

But then, right, you have other markets, like, you know, georgia and kentucky, tennessee, texas, where they're framing up legal cannabis and calling it hemp yeah, I've shared this before on our on our um private newsletter, but last time I was in the Atlanta Hartsfield Jackson Airport, in Terminal A, there is a vending machine that is selling hemp-derived THC and CBD gummies right now. Or, like I said last time I was there, and there's a line of people when I was there waiting was there waiting to buy these products. And that's in Atlanta, georgia, you know. So.

Ian Dominguez: 36:27

So it's, it's, it's all around us, it's the demand is there, and one of the great things about this country is that states are their own proven grounds or scientific experiments. The way that we got same-sex marriage was a result of us going down this path of certain states proving it out, figuring out what that looks like and it catching fire. And I think what's happening in Minnesota is phenomenal and I think it's inevitable that you're going to see more states follow suit and states like Idaho are going to look like they are the odd state out in this calculus.

AnnaRae Grabstein: 37:13

Well, so on the Minnesota topic, and I'm going to go in a couple of weeks and go to the Hemp Beverage Alliances Festival that they're having and get to experience it.

Ben Larson: 37:24

I was going to say you should come a couple of days earlier and we'll get you into the camera conference because all the regulators are descending in Minnesota on the fifth or fourth and fifth I think. And um, and there's, oh, you're going to be there. Yeah, oh, amazing, yeah, yeah, and we're going to have a full like beverage panel.

AnnaRae Grabstein: 37:43

I'll see. It'll be a long trip if we do that, but you know, yes, going to Minnesota. Finally, after we've been talking about Minnesota and and there's a lot of accolades being given to Minnesota from the hemp folks and and in general, just seeing the marketplace be free in many ways, in general just seeing the marketplace be free in many ways, and at the same time, the adult use market hasn't launched in Minnesota yet and I am curious, ian, of your perspective of the coming together of these two markets, because I think that that's what's going to be really interesting in Minnesota to see is that are the adult use cannabis companies that are going to launch into their adult use program going to find success in this market? Is this truly integrated approach to regulating the whole plant of hemp and cannabis under one regulatory body and with kind of an integrated philosophy of understanding or thinking that both can create or both can coexist in a way that works for folks, will it work?

Ian Dominguez: 38:47

Well, we can only find out. I mean, I guess I could probably argue it both ways, but I'm hopeful that it does. I think that I mean, we just came out with a figure that was published today actually on Bloomberg. I mean, we just came out with a figure that was published today actually on Bloombergamp for a lot of consumers that otherwise would not go to a dispensary. And there's also another element here that we haven't talked about, which is tolerance.

Ian Dominguez: 39:37

Cannabis is different from alcohol in the way, physiologically, that tolerance builds, which is to say that even an alcoholic, if they were to drink a handle of vodka, they're going to die right, that is not the case with cannabis, and that people do build tolerance over time. The data would suggest that, and so those that are entering the category through low dose, if they like it, they might be totally fine sitting at five or 10 milligrams. But it's also, I'd say, likely that some of those consumers are going to decide that, oh, that wasn't so bad, my head didn't fall off, and what else is there out there for me.

Ben Larson: 40:22

And so that's that's where I think this could coexist in a very beautiful way I was just thinking back in a way, remember I told you how I had donated, like a cooler full of infused beverages, to to the school auction.

Ben Larson: 40:34

So I, I, I actually connected with the person who who won it, and he, he and his wife uh, not non-consumers and they actually started consuming it and like these things are wonderful also turns out I have a high tolerance and I'm like he's like I'm drinking like two or three of them and I'm like, oh my god, that this is amazing and this is like. I just love the fact that it was an entry point. And to your point, ian, already considering going for higher doses, and I just said well, you can go get higher dose products in dispensaries.

AnnaRae Grabstein: 41:11

I had seen a pitch in the last 18 months or so for a product that someone was formulating that was supposed to basically wash your cannabinoid receptors clean in your brain was supposed to basically wash your cannabinoid receptors clean in your brain if you got too high or if you wanted to start your tolerance over fresh. I didn't think it was a great idea personally, but you guys are bringing it back to my mind and I'm thinking maybe it is a good idea after all.

Ian Dominguez: 41:36

It sounds like the movie. I mean, just take a tolerance break. They're actually it costs you nothing and it's probably not the worst to take a break. They're actually, it costs you nothing and it's probably not the worst to take a break. Very true.

AnnaRae Grabstein: 41:46

Well, this concept, though, of people realizing that they are comfortable consuming a higher dose and then moving up, yes, that could definitely send someone into the adult use market. I think where it starts to rub is in this form factor confusion, like if, when the gummies are allowed in both the hemp space and the adult use space and you're seeing products that have similar dosages in each one.

AnnaRae Grabstein: 42:14

I can see that that's where it starts to become really complicated in terms of kind of what's fair to the market for these folks that are choosing to play in the regulated space. So I've heard when we had some lobbyists and political strategists from Minnesota on the show a couple months ago and they talked about that they anticipated, once adult use turned on, that there might become some new regulations for hemp products in Minnesota. So we'll see what happens, but I'm excited to go check it out.

Ben Larson: 42:49

I want to give a quick shout out to Pam Epstein, who's been on the show before. She's lobbying kind of like a separate effort about this. This labeling that kind of can go across both hemp and cannabis and it's TICC total intoxicating cannabinoid content and it's a way to put a label on let you know how strong the product is. And it kind of has this calculation where, whether it's THC, thcp, you know THCV, and it comes up with kind of like a standardized number that can help people judge how intoxicating that product is going to be. So I think that's like a an interesting evolution of the conversation and a kind of like a tip of the spear for having that. You know, the unification of the of the two industries.

AnnaRae Grabstein: 43:35

Well. So we're getting closer towards the end of the hour, and there's some stuff that I wanted to ask you about, ian, that we haven't talked about, stuff that I wanted to ask you about, ian, that we haven't talked about. Delta Emerald, in addition to making investments with checks, has also made investments in community, and we mentioned CandidateCon. You mentioned your newsletter. You guys have a Slack channel that you've shared, and you've talked a lot about collaboration, and you've also talked about supporting your portfolio companies in a pretty active way, and all of those things are unique from my perspective, compared to lots of other groups that I've worked with closely or that I've gotten to know over the years, and I'd love for you to talk about your philosophy on community and collaboration on community and collaboration.

Ian Dominguez: 44:28

We are all the product of those that came before us, and I owe whatever success I have to teachers and friends, mentors, and so, yeah, this is just to say I wouldn't be in this position were it not for all of them, and so my involvement in this space feels like a privilege, and one that I should make good on by helping people, even those that I have no chance or likelihood of investing in. That doesn't mean that there's not still some knowledge sharing or information that can help them out, and it all eventually comes back one way or the other anyway. It all eventually comes back one way or the other anyway. So I mean to speak to Canada DataCon specifically. I've been to many different conferences, both in cannabis and outside of it, in an investing context, and I just felt like this was something that we needed. We need a slightly different approach and one that that emphasized collaboration and knowledge sharing.

Ian Dominguez: 45:24

It is not like anybody has all of this figured out. Nobody does. There's never been a book written about how to do any of the jobs that we're all talking about. So we're all trying to figure this out. We're all students, I think, to move away from the notion that any one person has it all figured out, and to be open and honest with what's going on is the only way that we're going to be able to push this industry forward, and it's certainly not going to be the federal government that's going to do it for us, so we might as well do it ourselves.

AnnaRae Grabstein: 45:56

I love that. That's basically why we started the podcast too. It's great, it's really good to hear that you sum that up so perfectly as you kind of you know, gather all this information, data.

Ben Larson: 46:09

You know you're you're in a lot of conversations. How are you thinking about, uh, like the rest of your, whether it's from an investment strategy? You know important movements in the industry is Is it just all about beverage? Play it on us.

Ian Dominguez: 46:27

It's definitely not all about beverage. The dispensary channel is, and will continue to be, incredibly important, and for us, that does mean more in the realm of technology and how that can help operators improve their decision making. To give you an example, two really, that are related discounting this notion of loyalty, which I think a lot of people misunderstand it's not what you think it is, and you're probably wasting money on your notion of loyalty. And inventory Inventory is the center of the universe, as Andrew Watson from our portfolio company, happy Cabbage Analytics, is wont to say. So, yeah, I think what is a commonality between the biggest MSO and the smallest mom and pop operator is that you still have similar problems when you're talking about these topics, and so what I'm very interested in is software that can help solve these problems, because they're happening over and over again in every single state, and software can cross state lines, so that's a benefit that the dispensary channel doesn't currently enjoy.

AnnaRae Grabstein: 47:53

Ian, it's been really great to have you. We are definitely going to be hanging out in person in a couple of weeks at some point. There's a lot of events going on this month, but at the end of every show when we have a guest, we want to give you an opportunity to make your last call. So we're going to pass the mic back to you and it's really whatever you want you make your last call impression to our, to our audience.

Ian Dominguez: 48:18

My last call would be that we can all work together towards this shared goal of cannabinoids as a category doing what they do best, which is helping people, whether that's people that have medical needs, people that want to have fun. It's not up to me to decide that. As long as you're an adult and you want access to this, I think we're all working towards that, and those that are there are people that are trying to suggest that, say, hemp and cannabis are at odds. They're not at odds, they don't need to be at odds, and I think the more that we talk together and develop an understanding, I think we can all benefit from this. So, yeah, that would be my last call.

Ben Larson: 49:14

That was a certainly good message and it's something that you've been saying consistently from at least from the beginning of the year. I know Kind ofatacon really kicked it off, where I think we all started realizing just the opportunity in creating safe access to to cannabinoids and how that can really uh lift and normalize the industry it will be bigger.

Ian Dominguez: 49:35

It will be bigger than the alcohol industry, I think, in the next 10 years, which is like uh, depends on who you ask, but call it roughly 280 to $300 billion industry.

AnnaRae Grabstein: 49:44

Yeah, thank you for being so open and sharing your ideas. Deals with us and our audience. I am excited to see what happens with Delta, emerald and um happy to continue to participate in um your community. So, uh, thank you so much.

Ian Dominguez: 50:00

Thank you so much.

Ben Larson: 50:01

Thank you both. All right, Thanks. Thanks, Ian. We'll talk to you soon. Anna Rae another one in the bag.

AnnaRae Grabstein: 50:07

Awesome.

Ben Larson: 50:08

Exciting time here in DC too, having all our warriors pacing the halls and knocking on doors and getting the good work done. So shout out to everyone at NCIA and Attach and all those in DC right now. As for you, our listeners, our audience, thank you for tuning in, as always. Thank you for supporting us, for making recommendations on speakers and just being there to engage and listen. Let us know what we can do to make it even better. What would you like us to talk about? Who would you like us to have on? You know the drill Like subscribe, do all the things. Share with your friends, colleagues, co-workers. Until next time, folks, remember, stay curious, stay informed and keep your spirits high. That's the show.