#046 - Boardroom Dynamics in Cannabis w/ Wendy Berger, Board Member at Green Thumb Industries (GTI)

Ben Larson: 0:00

Hey everybody, welcome to High Spirits. It's episode 46 and I'm Ben Larson. That almost sounded like a question. I'm Ben Larson and, as always, I'm here with Anneray Grabstein. We're recording Thursday, June 6th 2024, and we're in Minnesota, the land of hemp, THC beverages being in restaurants and bars. I'm here with a bunch of regulators, but we're not going to talk about that today. Well, maybe we'll talk about it a little bit, but we're going to get into a great conversation with Wendy Berger, a board member at GTI, investor and supporter of women entrepreneurs in the space and just all around Renaissance woman. So really excited to get into that. But first, Anna Rae from the other Minnesota hotel room how are you doing?

AnnaRae Grabstein: 0:48

I am great I landed in Minnesota last night. I was not here for the Canberra conference I'll let you give the update on that, but I'm excited to be here in Minnesota. I am going to be attending the Hemp Beverage Conference tomorrow and then the hemp beverage festival on Saturday and this afternoon, after we wrap the podcast recording, I'm going to be doing some market mapping, going and touring around checking out places that are serving THC beverages and their restaurants selling THC products and all different types of more open conventional retail than we see in lots of states. So I am here really pumped to get to see a different model and just explore the market here. How are you doing? How's?

Ben Larson: 1:32

it going. I couldn't be more thrilled to be here. It's, you know, it's my first time at Canara. Canara is such a special event. It's like I don't even feel it's right to call it a conference. It's more of a summit. Like there's there's no marketing or advertising. It's like the only banners you see are for Canara. Um, and you have about 300 people in the room that just really care about moving policy and the conversation forward. There are about a hundred regulators from 35 different States hemp regulators, cannabis regulators, public health Then you have 200 or so folks, you know business leaders, investors, policy leaders, social equity all just trying to have the conversation and say everything, put everything on the table that is necessary to kind of fix the situation that we're in.

Ben Larson: 2:25

And and you know, I think we all know that the industry is kind of at this fever pitch right now of like hemp, cannabis, cannabinoids, like how do we handle all this? And I think everyone wants to answer that question. And then one of the key takeaways from this is like there's this feeling of a need for, for a hard reset. Like what have we learned from from regulated cannabis? What's working, what's not? What are we learning about hemp? What's working, what's not same question for alcohol, because that's usually often used as a corollary. Corollary and hard resets. Fun to say, it's easy to say Uh, but like the question is like what is the path forward? How do we actually accomplish that? And I think that's like the. The main takeaway is is like what are we going to do with all this information?

AnnaRae Grabstein: 3:14

I want to ask you a question. You know you said you said there's an acknowledgement that we need to fix it, and I think that that is generally true when, when I'm talking with operators and investors, everyone realizes that the laws and the regulations are messy and complicated and have created lots of obstacles. But Canara is unique because it's an event for regulators and government people, and to hear you say that there was that acknowledgement in the room is interesting, and I know we don't get to talk about this for the whole episode. But are you telling me that the regulators know that it's broken to?

Ben Larson: 3:51

the regulators are in a very tough position. They're often underfunded, overwhelmed and are handed a laws to to enforce. Um, you know the? A common joke joke throughout the week is like we need a Canla, like we need a Cannabis Legislators Association because it's a broken system right now, and I think there's a lot of acknowledgement about that. You know, people want cannabis industries to succeed, but they also have to enforce the laws that are voted on or sometimes not voted on. Just put into place. Force the laws that are voted on or sometimes not voted on, and just put into place. So, yeah, there's a lot that we could talk about here.

Ben Larson: 4:30

I'm going to do a debrief, as I usually do for the LinkedIn community, so check it out there and maybe we'll have a follow-up podcast on really what are the next steps from here. But what is clear and the key takeaway here is that the farm bill is not a place to negotiate permanent legislation for hemp and cannabis. It is revisited every five years. There is no. It is not intended to manage final form factors, and so there's a lot of trying to fix that right now and put it into the right place. And the other thing is is, like you know, we're at a sensitive time where adverse effects are starting to pile up or adverse events are being reported and starting to pile up for, you know, for hemp products and the Congress is motivated to do something, and so we need to stop when I say we, I mean largely the hemp community stop approaching this from a hostile position and really come in and understand. It's like all right. How do we have this hard, long-term conversation about getting cannabinoids properly regulated?

AnnaRae Grabstein: 5:38

Great fodder for future conversations, for sure. So thanks for that. Let's start talking a little bit about what we're going to talk about today and bring Wendy on, but also just talk about boards. Ben, you and I have wanted to have a discussion about boards for a while and there really was no better person for us to bring on and to have as a guest to have this conversation than Wendy Berger. Wendy is the CEO and founder of WBS Equities, which is a group specializing in real estate for food and beverage industry, but she's also a prominent board member and an early board member from Green Thumb Industries GTI public cannabis company. She has been deeply committed to supporting women, both as entrepreneurs, by investing in them, but also talking about important board diversity in the boardroom. She does a bunch of community service, including a lot of different Jewish-focused efforts, and is also involved in the Chicago Public Library Foundation. So excited to welcome Wendy Berger to join us today to talk more about boards.

Wendy Berger: 6:52

Welcome Wendy, Thanks Anna Rae and thanks Ben. I'm delighted to be here with you. We could spend the entire time right now talking about what Ben just said about the Farm Bill, because it's interesting, I hadn't really thought about we've all sort of ended up cramming so much and placing so much value on what's happening with the Farm Bill right now and determining the future of the beverage industry. Not by intent, it was like by default and by accident. So that's a really interesting comment. So, but delighted to be here and having me about that.

Ben Larson: 7:45

It's not about deleting the Miller Miller amendment. It's about getting in touch with your legislators on the Senate side and getting them to propose something a little bit more palatable. So those conversations have started, that's. There was a lot of talk about that this week, but, um, we do have to get the farm bill into a palatable place so that we can have those downstream conversations.

AnnaRae Grabstein: 8:02

Well, so about board stuff, I guess personal short story for me I went to business school and I was a young startup CEO and through my business school training and even when I first became a founder and a CEO when I was young, I always thought that that was kind of the top crown, that was as high as you could go being the CEO, that was the end all and be all. And through my own personal journey in entrepreneurship, over time I started to realize, holy crap, wait, the CEO has a boss. The CEO is not actually the end all, and that boss is the board. And it took some time and I think it is something that is not very clear to both entrepreneurs and certainly like people that maybe aren't in that situation of managing a board but who don't understand, kind of, how the board fits into the structure of business and how the board changes over time. And so this concept of demystifying the board, talking about what effective board management is, how boards are formed, is something that's become really close to my heart, both as someone that had to learn about boards and then ultimately, through learning about boards, started to aspire personally to be on boards.

AnnaRae Grabstein: 9:20

And so, wendy, I first learned about you and your involvement in the GTI board, because you were on stage talking about it and I felt so seen to see someone like you that looks more like me than a lot of the old white guys that I'd seen on most of the boards up there on stage talking about board governance and it made me feel like, wow, this is a place that I could be one day, and so I mean I want to both thank you for that, but I also would love it if you could just sort of introduce your own path to board leadership and how you ended up on the GTI board and then that can open up the conversation to learning more about boards for everyone listening, right, thanks, so it's been an unbelievably fun and interesting and dynamic and challenging and scary but, most importantly you know, unbelievably cool privilege to be on the board of Green Thumb Industries.

Wendy Berger: 10:21

I've enjoyed every single minute of it, even the hardest parts, and when I think back to my journey onto the board, part of it did start with something you said, anna right, which was okay. I've been the CEO of my own business for 20 years. In fact, yesterday we celebrated 20 years of WBS equities, so really exciting and I kind of thought thank you.

Wendy Berger: 10:45

What's next right? What are the other things? I'm a person who loves to say yes to adventures, right? I try to say yes and I try to drink it all in, and because I have this great privilege of being exposed to so many opportunities, you say yes, but I kind of thought about, all right, being on a board of directors of a public company sounds like a really cool next step after you've been a CEO of a privately held company, and so it was on my list of things to do in life. I just didn't think that my first public company board experience would be in a federally illegal industry, so that's proved to be a really interesting dynamic.

Wendy Berger: 11:24

But the way I really got into this was I have always believed in the power of this plant. I have always been a casual marijuana consumer. I like my marijuana the way I like my wine and my martinis, but I'm also a big believer and practitioner of plant-based medicine. And so you pair this plant with a 5,000 year documented history with the consumption, and I thought, okay, I really I believe that more people are going to consume more marijuana over time. How am I going to get into this?

Wendy Berger: 12:02

And I am a classic serial entrepreneur, and the very first time I walked into a dispensary was about 17 years ago in California. I own a home in California, so I was able to get a recommendation, and the short version of the very long story is I can still today remember very clearly standing in a dispensary and thinking to myself this is horrible and it doesn't have to be terrible. It was a horrible experience. I'm not sure what was worse walking in with cash, walking out with product, or the five awful minutes I spent in the dispensary with what I used to refer to as a high functioning stoner. In hindsight it was a low functioning stoner stoner. In hindsight it was a low functioning stoner, but I remember so clearly standing there and saying this doesn't have to be terrible.

Wendy Berger: 12:52

And one of my favorite mantras in life is from chaos comes opportunity. And I kind of thought this is an opportunity. I want in on this business, and so I set about trying to figure out how to invest in the industry and I spent a long time looking around California and I couldn't find a way. In that I felt comfortable with. Everybody, felt like cowboys and nobody felt like people I could be partners with or do business with.

Wendy Berger: 13:18

When it became clear it was going to become legal in Illinois, which is my home state. I thought, okay, people, I know a regulatory environment that I think I can get my arms around. So I started meeting with groups that were forming to apply for licenses and whittled it down. I met with 35 groups over six months, whittled it down to Ben Kovler and what would become Green Thumb Industries, and from day zero, I made a commitment to Green Thumb, but my commitment to myself was also to be an active investor. And I made outside of Ben Kovler and I think I was the largest individual investor in Green Thumb and I said, from day one, I'm going to take a very active role, and very quickly. To Ben's great credit, he's been an extraordinary visionary and leader.

Wendy Berger: 14:13

From day one, we started acting like a publicly traded company. We believed that we needed to be accountable from day one to our investors. We started acting like a publicly traded company, knowing that that was where we wanted to go for the purpose of not being publicly traded, but for access to additional capital. We believed that it was going to take an enormous amount of capital to build a sustainable business, and so we started acting like it build a sustainable business. And so we started acting like it and we formed a board, you know, technically in 2014, but more formally in 2015. And so here I sit today, 10 years later, having been a part of this board for an incredible 10 year ride man, having a supportive first investor and board members so huge.

Ben Larson: 15:03

You know, I've worked with a lot of early stage companies, my own included um and the those initial board members being active and being kind of an extension of the team. Um is so critical and and I I do want to kind of start there it's like the very foundation of this discussion is how to build a board, how to leverage it. Um, because people not familiar with building boards uh are often intimidated by them, like I don't want any board members. I was like I don't want, I don't need a boss. You know, I don't need someone like meddling in my company, but it doesn't have to be like that.

Ben Larson: 15:35

And so whether I guess a good place to start would be like how did ben convince you that he was that visionary and that you wanted to be a team member with him? And an unpaid team member, one that pays in to be a team member? I just love that concept and my board members know that that's how I treat them. It's like you're a part of this team. You will take that call and get me information. So, yeah, how did he do it?

Wendy Berger: 16:02

You know, to Ben's great credit again, he was open to it from day one. I'm not sure that either of us would describe it as always an easy relationship, but it's not meant to be. Board is the best extension of your team because these are people who and even if you just look at your early investors people who are motivated to make certain you succeed and who are there for you, standing by your side, shoulder to shoulder with you, not just cheering you on. But it can be very lonely as a CEO and whether it's in the early days, in the explosive growth stage or even at the stabilization stage, I think often it's being the CEO is lonely. There's not a lot of people you can confide in and that you can look to for guidance, who really truly just have your best interest. So I think for a lot of people in the early stages you can say I'm building my board to be my advisory council to help me think about the path forward, and you know boards really have an extraordinary role in helping to guide strategy and with growth plans. But in the early days you know I'll use myself as an example I believe that my real estate expertise could be really helpful to GTI and I think this about all of the cannabis companies.

Wendy Berger: 17:40

Real estate is a really critical piece of a growing cannabis business and particularly vertically integrated between finding locations for dispensaries, finding locations for cultivation facilities. There's not a lot of people in the industry who have the expertise to build the business and where real estate is such a critical component. I think if most companies look at their SG&A expenses or selling general and administrative expenses and you look at real estate as a component of expenses, it's a very significantly large percentage of most people's expenses frankly, probably second in most companies to payroll. So I really felt that I could lend my expertise and really have fun and play a meaningful role in the early days in helping to find locations. We didn't have a real estate team. Now Green Thumb and all the other players in the industry have in-house teams for real estate, but that wasn't somebody anybody could afford to hire in the early days. In the early days where you have utility players who are doing pretty much everything from building the business to buying staplers right, it's, you know, it's CEO and chief garbage picker-upper is, you know, among the glamorous titles that you get as CEO in an early stage company. So I think you can really, as you start to form your board, you say what are the critical elements of this business that I need literally boots on the ground with and or help thinking through?

Wendy Berger: 19:31

Veterans issues and access for veterans to safe, legal cannabis and not potentially negatively impacting their access to VA benefits was something we felt very strongly about and was going to be something that was critical to building the business. And these are the days of medical only. So you've got, you know, these issues that are tough to think about. How do we none of us were veterans how do we really think through those issues? And then you look at some of the really deeply troubling statistics and I've seen different ones, so I'm going to use one that I read, which is an average of 10 United States veterans who are being treated by the VA for PTSD, 10 per day commit suicide. Ok, I don't think marijuana is the answer to that, but I do believe it was one of them.

Wendy Berger: 20:40

So we went out and recruited Wes Moore, who you know. Lucky for us, we built this beautiful relationship with Wes Moore, who is today the governor of Maryland, but Wes Moore was an early board director on the Green Thumb Industries board. Why did Wes's voice matter so much in the boardroom. Well, wes was a combat veteran in the United States military. He led his troops into combat and was responsible for providing basically pharmaceuticals to them, for everything to get them up in the morning and then particularly afterwards.

Wendy Berger: 21:17

Wes also happened to be at the time the CEO of the Robin Hood Foundation, which is one of the largest poverty fighting organizations in the United States, so he also had this unique perspective of dealing with those communities that had been most negatively impacted by the failed war on drugs. So Ben was really smart and went out and recruited Wes Moore to be on our board, to be that voice in the room as we sat around and crafted strategy for how do we deal with disproportionately impacted communities and how do we deal with veterans. And that, to me, was a perfect example of sit and think about what it is that you need to grow to the next stage and go out and find those resources that you need and bring them into your tight tent and use them to help you create strategy.

AnnaRae Grabstein: 22:21

It's such a great example um talking about wes, because what?

AnnaRae Grabstein: 22:26

What wes moore, also represented on the gti board, is actually moving away from what ben mentioned earlier about the board members that pay to be there and that aren't getting paid to be on the board, and that's more of a construct of early stage that the investors and and certain people that are close in maybe, are going to be on the board, but that at some point in the development and growth of a company, you start to have concepts of independent directors that aren't only investors, and that's when a board has an opportunity to be more strategic and thinking about how they want to staff the board.

AnnaRae Grabstein: 23:03

And even so, at the time when a company might be bringing on board members that are mostly investors, it's not a sure thing that every investor ends up on board, and so that process looks different in some ways. But I do think it's important, as part of the board demystification process, to explain the difference between investor board members and independent board members and also to start opening up a little bit of the conversation too about kind of at what point board members start to get compensated and what that compensation looks like. Is it cash, is it equity, the responsibility of an independent board member and how that might be different from an investor board member from your perspective. If you could touch on that member and how that might be different from an investor board member from your perspective, if you could touch on that.

Wendy Berger: 23:46

Yeah, and I think one way to think of that is when your board moves from simply an advisory capacity to a fiduciary right, and this is the ultimate duty of a board of directors is a duty of care and a duty of loyalty to the shareholders, and that it is very clear. And I think, as you're building a board, if you're the CEO or if you're one of the early board directors, it's important to be clear what the board's role is and how you are going to function, and that you are working for the shareholders, that you are not working for the CEO, that the board represents the shareholders of the company and that your job is strategy development and that you're not working for the CEO. And I think in the cannabis industry, what was so critical in the early days and continues to be a really primary function of a board, is risk assessment and risk management, because we go back to this fact that we are all navigating a brand new industry and an industry where you start to pile on all of the elements of this industry that we're not recreating. You know, we're not creating anything from scratch, but we're putting together a bunch of things that have never been put together in a puzzle this way before right. So you've got regulatory issues. You've got all of the challenges of simply building a business in a rapidly expanding industry where there's no documented path forward. You're not following anyone, and that's part of the fun and part of what's so being so interesting about being on a cannabis industry board.

Wendy Berger: 25:37

Is there's no roadmap on a cannabis industry board? Is there's no roadmap? It takes courage and it takes confidence in your own leadership skills to say, okay, I want to be a part of a team that's thinking very strategically about this really new and interesting and innovative business without a roadmap. And how are we going to keep our CEO focused on the strategic path forward in an industry where everything is changing by the moment and where uncertainty isn't just out there? It's the foundation of what we've built these businesses on. There's no certainty. It takes courage for leaders in this industry to make decisions every single day with very limited information. And so this is where building your board in the early days and thinking about okay, what do I want from a board? And when I go from an advisory only board to a fiduciary board, I'm now putting onto those board directors significant liability, right being in a federally illegal industry.

Wendy Berger: 26:53

Again, you know, back to the early days, the perception among many, and I didn't share this perception. I made my own choice, but the perception among many was this was fraught with tremendous risk as a board director. That's where and Ray, to answer your question, that's where the compensation comes in is to say, if I really want a meaningful commitment from a board director, I ought to pay them, because then there's accountability on both sides. And this also goes to who you choose. For me, I wasn't interested in the cash, I was playing the long game on the industry. I believe in this industry the way I have for the last 17-ish years.

Wendy Berger: 27:41

I believe as strongly today, maybe more so now that I'm educated in the possibilities of this industry, in the explosive growth, in the evolution of products. But if you want my time or you want a board director's real attention, compensation becomes a key component of it. Right, you need a mechanism for truly holding everybody accountable and doing that in the form of equity, whether it's shares or options, restricted stock units, whether it's shares or options, restricted stock units. Then you've got skin in the game and a real shared focus on strategic thinking so that there is upside for everyone involved. And so you know, as much as I can sit here and say I love this industry and this is exciting, and I've done this for my own personal growth. I'm a capitalist, I'm doing this to make a lot of money and my hope is someday that will come to fruition. And I, you know, as I said, I believe more strongly today than I ever have in the industry and in the power of this plant.

Ben Larson: 29:03

I think a lot of operators in the space also share your sentiment around capitalism. I'm curious. I want to go back to what you said and unpack like what it is to operate like a public board, right, like what does that mean? Like what were some of the activities that you were doing? How can we give advice to some of the operators out there about how they should be running their companies, or at least reporting on the activities of their companies so that they can be?

Wendy Berger: 29:29

perceived. We all agreed that on a mission and a vision for the company, and you sit around and say, okay, if our mission is to build a company with a strong balance sheet, because we think that a strong balance sheet will win the day in this industry, and that we want to be always held accountable to ourselves as disciplined allocators of capital and a disciplined shepherds of our investors' money. How do you best do that? And the best way to do that is to act accountable. I think of it like sitting in an office with glass walls right, if I am in a glass walled room, I'm accountable to everybody all the time. I'll give you an example from the early days. So in the early days we had a couple of separate companies. Our original business won licenses in Illinois. We formed a separate entity to apply for a license in Pennsylvania. We were fortunate enough, after we won three cultivation and one dispensary in Illinois, to then go on to win a license in Pennsylvania. Ok, you've got these two separate companies. If we're going to continue to apply in additional states and to try to build a sustainable, scalable business, we ought to merge these companies. And we took the extraordinary step of forming and the companies at that time had some common investors but also separate investors. So we actually formed a committee of investors from each of the existing companies and then we formed a third committee, which was basically independent people, to help value both businesses, and I had the privilege of leading this effort on behalf of the company. But we had to value the Illinois business, we had to value the Pennsylvania business to merge the two to decide what the shareholders in the new entity, what percentage of the original Illinois investors, what percentage of the company they would own versus the Pennsylvania investors, what percentage of the company they would own versus the Pennsylvania investors, what percentage of the company they would own. And we thought, forever, this is something that somebody may come back and say we want to know how you value those two companies.

Wendy Berger: 32:18

And we thought, okay, we're going to run this just as though we were running a public company merger process and we're going to be transparent, we're going to have independence. And we set the stage from day one that we were going to always stay focused on our shareholders and on our duty of care and loyalty to those shareholders and on our duties as fiduciaries. And that meant, from day one, setting up good governance. And I think if you can think about as you build your own businesses and as we all think about yeah, I'd love to serve on the board of directors of a private company or a private to public company what does good governance mean?

Wendy Berger: 33:05

What does it mean to say to your CEO we're all going to be accountable to each other, to our shareholders, and why do we want to do that? And I might come to you and you're going to say, as the CEO of a company, I don't have time, I'm growing fast, I need to stay focused on the business, and I would argue that if you want to build a strong foundation, you have to spend that time that you don't think you have early on to put best practices in place, and a board that is independent can help you do that. Help everyone with accountability. And back to the pay question, that becomes a part of it. When you're asking people to give their valuable time and you're asking people who have choices for how to spend their time, which most of us do, make it worth my while and make it enticing.

Ben Larson: 34:08

Yeah, no, absolutely I do what to be focusing on as a CEO and also as a board and like that interplay as a CEO and also as a board and like that interplay. You know, I think there's a lot of that feeling of like reporting to the board, right, so you have your kind of like monthly reporting, the financials, all that kind of stuff and a lot of that's kind of like looking back. How does an operator and a board kind of balance that kind of like health of the business, kind of weather reporting, versus kind of the strategic look like looking ahead? What's the best way to kind of like parse up those conversations and make sure that you're tending to them both, you know, with whatever attention that they deserve?

Wendy Berger: 34:52

I think it starts. Before we answer that question, I think you have to start back when you're recruiting directors and say what are my expectations? First of all, what do I want in a director and what I really recommend to people is that you create a matrix for yourself. Here's what I want from potential board directors. Here are the skill sets I'm missing. Here are the skill sets where I need supplemental help. Right? Do I want people who have been on public company boards before? Or is the value? I want someone who knows how to build a retail chain right? So if you're on the retail side of the business or vertically integrated, I want somebody who knows how to build a loss prevention model or a demand forecasting model for retail, to go all the way back, to tell cultivation what to do and things that are equally as important, if not more so cultural fit right? So you start with building a matrix of what am I looking for from my board, from from for from my board, and then expectations right? So you need to say how many days or the equivalent of days per year do am I looking for from my board of directors? And because that's then going to set up that expectation and that relationship between the CEO. If you're asking people for four days per year, right, I just want you to attend four board meetings a year. You're not going to get a lot from your board directors because all they're going to do is read the materials before a board meeting and sit and listen to a CEO talk at them during a board meeting. If I was building a company right now, I'd say I probably want the equivalent of 20 days per year because I want you to understand the business and I'm not going to create necessarily special reporting for my board. I mean, you've got to prepare some materials, but you're really taking information that you are already using within your business and making sure that your board directors understand how to view that information in the context of a larger board setting. So, for example, most board directors would need to know things like how many transactions per day do we have on average in dispensary? What's the average ticket? So that you're looking at those trends over time as you're building strategy.

Wendy Berger: 37:30

I think one thing that CEOs often fear is I'm going to have to create reports just for my directors. They're going to ask for more information and more information, and some of that is good because you're holding a CEO's accountable for how they're looking at the data, and I think part of what we all struggle with is there's way too much data available, right. How do you take the data and make it meaningful? How do you create a dashboard that a board director can look at and say, okay, I can see the snapshot of the business without being sorry about the pun, but without being in the weeds every day? You don't want board directors. Maybe in the early days when I was involved in helping Green Thumb find real estate, I was probably too much in the weeds, but that's what we needed at that stage of the business.

Wendy Berger: 38:29

I think you also have to look at where you are in the stage of the business, but setting out expectations for your board directors right, so that everybody is in sync from day one, is probably the smartest thing anyone can do, because there is that push pull between a CEO saying I don't really want to report to these people, I don't want to be slowed down by someone asking questions, and maybe you say to your board okay, yes, you can ask questions, but no, try, you know, active listening more than just firing questions and certain things that you want your directors to read about in the industry, make sure you're providing material. So I think that that expectation setting first of all, the cultural fit critical, and the expectation setting from the very beginning set you up for success. When you haven't talked about these things and all of a sudden you have a board director calling you and saying hey, what's happening with this, what's happening with that? That's where the dynamics go off the rails.

AnnaRae Grabstein: 39:41

There's so many things that I'm like what do I want to ask the question about next? Because there's so many different directions to go about. Next, because there's so many different directions to go. What you're talking about in terms of preparing special materials for the board, I think that what it speaks to is that board, in many ways, is there to work with the CEO on the business, as opposed to in the business once the business gets to a certain place. And it's not that the board needs special materials. A lot of the materials and the information that the board needs are, hopefully, things that the business is already generating, but if a CEO is getting requests about certain financial reports or certain data that the board needs, I think it's also an opportunity to think about. Well, is that something that, as a business, we need to be keeping better track of? Do we need to be tracing trends overall on the business, because we're so in the weeds that we're not figuring out what are the high level data points and metrics that are really the things that are driving the business that our board is going to want to keep track of and to understand as kind of these key indicators, so that we can tell where we are.

AnnaRae Grabstein: 40:47

So I like what you said there. When you're talking about filling different roles. I think that it's worth talking specifically about the GTI board, which I see as a pretty unique public board in cannabis from the perspective of how diverse the perspectives and the experience of the board members are, and GTI has been pretty public in announcing new board members that have come on over the past year. Off the top of my head, I remember Ethan Nadelman was a recent appointee to the board a really long history in drug policy reform, not so much in business. You talked about Wes Moore. I would love to hear about the process of recruiting new board members and how that happens, and specifically with GTI, and what that matrix is and how that ends up being actualized with the board people.

Ben Larson: 41:46

And if you want to toss in any details about removing board members, that would be welcome too.

Wendy Berger: 41:54

I've had the great privilege of being a part of helping to recruit new board directors and that's been really meaningful to me and really important to me, and I'm also really proud of the work I've done, not just with Green Thumb but in trying to push the other companies in our industry to build diverse boards. Not meant to be critical of white men I am not a male basher but if you build a board, if your CEO happens to be a white male and you build a board of six white men and that's your board you have an echo chamber I don't think it's representative of team members and I certainly don't think it's representative of our customers and what we know from the data. There's great data published by S&P, published by Harvard that diverse boardrooms lead to better stock outcomes. Period end of story. The data is unbelievably clear. So even if a CEO doesn't believe in diversity makes us all better people. The data speaks for itself. So I think that part of what you do when you're recruiting for a board is you go back to this concept of a board matrix what voices are important for us to have in our boardroom and I'll go back to another early Green Thumb example. That credit again goes to Ben Kovler.

Wendy Berger: 43:35

We knew we had a real challenge in building a retail business right. We knew we wanted to have enormous growth from day zero, that we were going to have an opportunity to grow our retail chain of stores. But none of us had great retail experience. I worked in retail as a teenager. I sold shoes. That doesn't help build a cannabis dispensary business. So Ben went out and recruited a guy named Glenn Sank. Glenn was extraordinary. Glenn had been the CEO of Urban Outfitters and Anthropology for 16 years. He took it from a tiny chain to the global chain that it is today. He knew how to build a scalable retail business and so Glenn joined our board and Glenn was an important voice in the boardroom. Bringing Wes Moore, as we talked about, was important.

Wendy Berger: 44:33

Today we have a woman named Dawn Wilson Barnes, who's incredible Dawn came from Goldman Sachs. Dawn happens to be a woman of color. Dawn has these experiences, both as a finance professional. Dawn also has an incredible accounting background. Dawn has a great track record of community activity, but she's a serious investment banker, great voices and perspectives in the boardroom. So you need to build into your boardroom my view that the best boards have these multi-dimensional people in the room and that you have to be really intentional about going out and finding those people. Today we have Hannah Ross. Hannah is a young-ish woman. I want to be respectful to Hannah and say I mean this in the best way. Hannah brings the perspective. I'm a 58-year-old woman. I don't have the perspective of a young female shopper right and a young female consumer. Certainly you know as strong as Ben is in terms of his knowledge of consumers and watching patterns, he can't speak for that voice in the room. So I think you build into it and you go out and find the people you are looking for to bring the voices into the room.

Wendy Berger: 46:03

And it's not easy, it's strategic and I'll give you an example. I'm not going to pick on any of our competitors, but I'm going to ish pick on any of our competitors. Until very recently, one of the largest companies in the industry had a board with no women on it. Okay, so I went to the president of the company this is that I think four years ago I happened to see him at a cocktail party and I'm not afraid to respectfully have this conversation with anyone and I said to him you're bored of six white men. How is that representative? How do you think that's the best way to build a company in this industry? How do you think that's the best way to build a company in this industry? And he gave me a very flip, unsatisfactory answer. And I continued to push him and he came back with I'll introduce you to all of them and I started. That's sort of what catalyzed me to creating a prospect list of women who can and want to serve on the boards of cannabis companies.

Wendy Berger: 47:20

And I say can and want to. The want to is an easy one because we're a self-selecting group. The can do it is a harder community. Let's take a. I'll use a real life example.

Wendy Berger: 47:32

There was a woman who I met who was a really extraordinary leader. She was a C-suite position holder in a publicly traded gaming company. Terrific, we thought she'd had the regulatory issues. We thought she'd have customer service issues. We thought she'd have customer service issues. And it turned out when she went and asked her board of directors, they were a no, because gaming and cannabis don't go together. And then you say okay, well, anyone who works for a financial company, in banking, in finance, many publicly traded companies. Their answer to their C-suite executives when you ask could you do, you want to and can you serve on the board? Their boards came back and said no, so you have this smaller group, and so you know some of this. Particular president said, well, we don't know any of them. And I said, ok, I'll introduce you. And so now I have this prospect list. I've kept it going for five years and I share it with anybody who wants it.

AnnaRae Grabstein: 48:40

Thanks, you heard it here. Yeah, contact Wendy for that list. Yeah, Great.

Ben Larson: 49:02

It's amazing, people on the list team. You know, as someone in the beverage space, that's very exciting that such a conversation is being broached. I don't even know how to ask this question. You know, like I guess, what is what's the? What's the forward looking prospect here of, like big alcohol getting involved in the cannabis industry with a company like gti? I mean like these I think in the letter, uh, there was some references to, to kind of revenues and it's like wow, it's like seeing it on paper that that gti is nearly the size of a boston beer company.

Ben Larson: 49:42

Um, is is just kind of like this. Just the startling revelation. It's like, wow, this is kind of like big time. Um, what do you think this means for the startling revelation? It's like, wow, this is kind of like big time. What do you think this means for the industry? And anything that you can do to comment on the situation itself would be great. But I know that there's certain things that board members can't say and there's certain things that board members can't say, so I'll just leave it kind of open-ended.

Wendy Berger: 50:03

This is one of those moments where we do have a fiduciary obligation, those moments where we do have a fiduciary obligation, and so, unfortunately, the only thing I can do here is point you to the letter that Ben posted on LinkedIn. So if you aren't friends with Ben or you're, you know, anybody can search for Ben Kovler on LinkedIn. He posted the letter he sent on June 2nd to the CEO of the Boston Beer Company. But this kind of goes back to one of the early questions, which is you know what's your role as a board director? And as a board director, sometimes my role is to say nothing.

Wendy Berger: 50:43

So unfortunately, there isn't really anything you know, as a board director of Green Thumb I can say other than that what I will tell you is I think we're all watching the convergence of so many different businesses and there's been so, so much talk for so long in the industry about early data that I looked at maybe nine or 10 years ago, which showed a perfect inverse correlation between alcohol consumption and marijuana.

Wendy Berger: 51:17

We know in marijuana consumption, and that was data that had been compiled over 80 years. Now you were dealing with very limited data sets, because the data from marijuana was mostly sort of hearsay. But I think we all feel good in this industry that there is a real correlation, that we're seeing alcohol use go down, particularly among people in their 20s, who routinely report that they believe that marijuana is less harmful than alcohol, and I think we've certainly seen examples in the past, with Constellation probably being the first alcohol company that made a massive investment in the cannabis industry. I think of it almost like dogs playing on a playground Everybody's sniffing around at each other these days and we don't know where any of this goes, but it's fascinating to watch and it's fascinating to watch from where we all are sitting. Maybe, maybe, maybe we're in the top of the third inning in this industry. The top of the third inning in this industry and predicting whether it's alcohol, tobacco, pharma, cpg, who everyone partners with, it's part of what's so interesting to listen and read about and watch.

Ben Larson: 52:42

Anna Rae. What did you think when you saw the news?

AnnaRae Grabstein: 52:48

Yeah, I mean, first of all, I I loved ben's letter. Everyone should go and read the letter um. It's a great way to to understand how the ceo of gti is choosing to communicate the strategy and performance um of the company and like what relative metrics might matter to the founder and ce of a Boston beer with, and so you know, there's some. There's some key metrics that Ben leans into. He talks about in a very direct way the power of combining the two companies and and what it could represent. And then maybe my favorite part is that he closes the letter with a Scarlett Begonia's quote from a Grateful Dead song. So very on brand for Ben Kovler there. Super interesting.

AnnaRae Grabstein: 53:38

And, wendy, I totally appreciate that you can't specifically talk about this. So poignant about the news is that while there have been strategic investments by alcohol companies like you mentioned Constellation, I think that was a $4 billion investment into Canopy those were investments and what Ben is talking about here is a merger and whether it's GTI and Boston Beer or it's someone else tomorrow and some other non-cannabis operational manufacturing and brand house. That's different than investment and I'm wondering if you think that we're going to start seeing that. Are there going to be cannabis companies that start merging with non-cannabis operational companies into having more portfolio companies that are in cannabis but in other categories. And is that because of a certain catalyst? Is that because of schedule three, or is it because of something that's making it so other companies might be ready for that, if you actually think that is going to start happening?

Wendy Berger: 54:53

So I'll pause. I'm going to add another sort of question out there for us all to think about, and that's maybe because the catalysts aren't happening right For those companies that have been basing their future growth on safe banking, passing timeliness of rescheduling, 280e going away, you know, through whatever mechanism and you know I don't even talk about federal legalization because it's you know, it's not an interesting conversation to me because it seems so far off Maybe these things will begin to happen because there aren't the catalysts we've been counting on right. I don't think that if we took a poll here among the three of us and our listeners, that anybody thinks safe banking is going to happen anytime soon, and particularly not, as we are, you know, five months or a little less than five months out from the election. So maybe it's time for creative CEOs to begin to think differently about the next phase of growth for this industry, maybe the path that we've been thinking about, in addition to organic growth, I think. You know, I think one of the things I'm most proud of about GTI is that we have, as a team, been laser focused on execution, our dispensaries, on providing safe access to the plant to as many people as we can legally reach and to growing our organic business. But I think any good CEO who's going to stay in front and lead, you can't lead from the back. You have to begin to pivot and be creative and, frankly, just try things.

Wendy Berger: 56:53

And I think from some of the different companies we're seeing interesting things, and whether that's Curaleaf becoming what seems like more of a global company or some other companies focusing on distribution and even, frankly, just the beverage space, which I think, ben, you have some sense of how much I love the beverage space, you know it has. Cannabis infused beverages have been for me for the last 15 years, my favorite mode of consumption, being in the liquor stores. Is there anything more interesting or exciting? And did we all think a year and a half ago that would happen? No chance, right? I mean last March or April when most of the big cannabis infused beverage producers began to understand what was happening or not happening with the farm bill and pivoted quickly into Delta 9. This was forward thinking and creative and I give everybody an enormous amount of credit. So maybe it's time for the leaders in this industry to think differently about the next phase of growth.

Ben Larson: 58:05

Yeah, there's a fair amount of attempting to do that. I think this week has just been really great and timing and array. You pointed out something really interesting this morning when you know with schedule three, that that does potentially open the window for an acceleration of some federal conversations because of the loss of of tax revenue, and so does that immediately accelerate the the conversations around CAOA or other initiatives that could redirect tax revenue back to the federal government Interesting that this is all happening all right now it does. I know from my vantage point, the last two months, or even just the last month, has been obscenely fast when it comes to the conversations around, around our, our infrastructure and and wendy, um, you know if and when it's time that you can give us some more juice on what gti may or may not be doing with boston beer.

AnnaRae Grabstein: 59:02

The invitation is open and and boston beer is a little unique in that um they that they have played in the cannabis space. If people go back to our archive of the podcast we had on Paul Weaver, who leads their cannabis innovation team out of Canada, and Boston Beer does have a cannabis beverage called Teapot that's in market in Canada, but you know Canada is federally legal and so Boston Beer chose to go to Canada in a federally legal space. So it would be a big move for a company like Boston Beer, or otherwise, to dive into the US market, but it would be one that I would love to see. So I'm here for all of it.

Wendy Berger: 59:47

Well, I'd encourage everyone to keep following Ben Kovler on the various social media channels, as well as LinkedIn, to see what he's up to, or, for good grace, he shared the letter.

AnnaRae Grabstein: 1:00:03

Yeah, cool. Well, you know this has been so engaging. Um, I hope that we can keep having more conversations. I think that the idea of elevating board leadership for board members and for companies is really powerful and will be a great catalyst to to just internal maturation. Um, we're seeing someone comment that they want your list, so it's great. It's good to get more platform, wendy Berger, more so I hope to get you out there and talk to you more, wendy. So thank you so much for being here. It's time for us to move towards our last call, and this is the time when we turn the mic over to you to make a lasting impression on our listeners. So, wendy, what's your last call?

Wendy Berger: 1:00:54

Wow. Well, thank you. First of all, it's always fun to talk about this. I think that, hopefully, what's come through this conversation to everyone is how strongly I feel about the opportunity to serve on the board of a cannabis company, and I don't care where it is in the supply chain or whether it's plant touching or not plant touching.

Wendy Berger: 1:01:13

The opportunity to be a part of this explosive growth industry is just extraordinary and it has been. Every minute of it has been exciting and I've loved it, and I think the opportunities for so many people to learn and contribute to a business are just are really terrific. So I would encourage people to stand up and use your voice and to start to talk about it and if you're looking for a role, tell people. And if you want that list from me, hit me up on LinkedIn and I am happy to help in any way. But the excitement in this industry, while sometimes things may feel like they're stalled, I don't think there's ever been a more exciting moment in the cannabis industry and I love the products that we continue to innovate and the challenges that we are all navigating through as we grow together this amazing business.

Ben Larson: 1:02:18

Amazing, wendy, I appreciate your leadership and your voice in the space. It's demystifying the board and showing, like, just how much benefit it can bring an operator. So thank you so much. And you know, to Anna Rae's point, I feel like we could just keep unpacking. Like every time you spoke I had like 10 questions popping into my head. So, yeah, more to come on that, but but thank you, thank you for spending a little extra time with us, yeah, and then hope to talk to you again soon.

Wendy Berger: 1:02:50

Thanks for having me.

Ben Larson: 1:02:52

Anna Rae, I've just I don't know I'm reflecting on my experience with with our board and you know, really appreciative of my board. Actually, they've always been very supportive in the different ways that they can. The reporting I've just. I've learned so much more about how to be a better business operator through the requests from our board and, like you know, I don't have a classic. You know MBA, you know education and I've certainly got it over the last five years operating in the space. So yeah, it's. I don't know what about you? Are you ready to join some other company boards?

AnnaRae Grabstein: 1:03:36

Yeah, I sit on two private boards right now. I have aspirations of being on a public board one day, so this is an official announcement to cannabis companies looking for public boards get in touch with me, and I'm actually talking to a few private companies right now about board roles and just trying to balance both what makes sense for those companies and what makes sense for me, and also learning more about board compensation as an independent director and how to. How to figure that out is another thing that we could talk for an entire hour about demystifying, because it is not easy to figure out what normal compensation is for board members, and the same issues at play with compensation that we see in salaried roles. It's even more complex when it comes to board roles because it's just not out there. But, yeah, really pumped. Wendy is a role model of mine, so I just loved that we got to talk with her today.

Ben Larson: 1:04:29

I love it. What about you folks? You ready to join some boards or do you need to diversify your board? Uh, we appreciate the questions for your engagement. Uh, continuing up you? You had the invitation from Wendy. Reach out to her if you need some help with your board. Uh, design or engagement. Um, but more than anything, just thank you again for tuning in, for supporting us, for liking, subscribing and sharing the show. Yeah, it's an exciting time here in Minnesota with all the regulators hearing everything that's going on. The activity in the industry this year is just intense. So thank you for being along for the ride. Remember, folks, stay curious, stay informed and keep your spirits high Until next time. That's the show.