AnnaRae Grabstein: 0:05

Hey everybody, welcome to Episode 61 of High Spirits. It's Thursday, september 26th, and we've got a fun twist today. Jeremy Burke is stepping in as my guest co-host while Ben is off doing whatever it is that Ben does. Jeremy is the founder and editor-in-chief of Cultivated Media and I'm so happy to welcome you here today, jeremy. Welcome Hi.

Jeremy Berke: 0:28

Yeah, thanks, I'm looking forward to be doing it. We have a lot to talk about today, so never a dull moment in cannabis.

AnnaRae Grabstein: 0:34

It's so true, but we always do love to step in and just have a minute to level and check in. So tell me how your week's going. What's been hot for you these days in?

Jeremy Berke: 0:43

So tell me how your week's going. What's been hot for you these days? My week has been good, busy as ever, trying to cover cannabis news, and I'm also an MBA student, so you know, balancing class and news and all that. I'm going to my friend's wedding this weekend in Toronto, so that's probably the most exciting thing. Leaving tonight Trying to think what else. That's probably all the highlights. How about you?

AnnaRae Grabstein: 1:01

Yeah, you know this week has been busy for me too. I am in Northern California and there was a big cannabis event last the end of last week and over the weekend, hall of Flowers, which I went to and was really fun. I actually went both days. The first day was the industry day and the second day was a public recreational like festival event and I got to say that they really took it home. On day two there was carnival rides, there was this incredible food activation with celebrity chefs that a local farm, sonoma Hills Farm, hosted and people just really brought it and yeah, but you could also buy tie dyes and glass pipes and people were spoken joints in public and just felt like like the thing that people have really been looking to create, um, with adult use cannabis. So it was super fun.

Jeremy Berke: 1:53

I saw I don't know if this is true or not, but I saw that they set a record for the most joints lit at one time.

AnnaRae Grabstein: 2:02

And yes, I heard that. Um, I did not see it and I was okay, yeah must have been on the other side of the fairgrounds or something. Um, yeah, yeah, I think that was.

Jeremy Berke: 2:13

It was khalifa that hosted that yeah, it was him and then some rolling paper company who press released that they set the record. You know, I I think it's probably hard to judge that, maybe at some Phish concert at Madison Square Garden there's probably something close to the record, but pretty fun yeah.

AnnaRae Grabstein: 2:35

Thank you for dropping a Phish reference. I really appreciate that you know. Before we jump into the news, I would love for you to just tell our listeners a little bit about Cultivated, in case they don't know, and kind of how you started it and where you're at today, and then we'll jump into the news.

Jeremy Berke: 2:53

Yeah, sure, I'd love to talk about Cultivated. The tagline we use, that we practice very much, is the five-minute daily newsletter for cannabis industry professionals. Basically, if you'd like to sign up, you can go to cultivatednewscom, enter in your email, it's free. It is a curated roundup of all the news you need to know every single day in an industry with such rapid news flow, rapid change. We think, and our readers hopefully think, that it provides them a lot of value. We launched officially as a daily newsletter in November of last year, so we're a little less than a year into it. We have a little over 10,000 readers and we'd like to grow more, so I would encourage you all to sign up. I guess, what else on Cultivated?

Jeremy Berke: 3:33

Before I launched Cultivated, I launched and led cannabis industry coverage at Business Insider, a job I had for about four and a half years, and so we were one at the time, one of the first financial publications to cover the industry as a mainstream industry and not you know, this is 2017, 2018. And there's still like punny headlines and, you know, not taking it seriously as a multi billion dollar industry and, you know, in my humble view, one of the biggest business stories of my generation, and so I left Business Insider. I started business school and I launched Cultivated to kind of build my own cannabis media company. And you know, I think hindsight will prove whether that was a good decision to leave my full-time job. But so far so good. It's been a fun ride.

AnnaRae Grabstein: 4:19

Yeah, the entrepreneurial journey is not for everybody, but I think it's really cool. I also incubated a startup business back in 2010 when I was in business school and it was so incredibly useful as I was running my books. For the first time with the company, I'd be able to take in my balance sheet to my accounting professor and be like I don't understand what retained earnings are. Help me get it. It was just such a great way to use business school to benefit the work that I was doing. I would do the same stuff in a marketing class. It's just getting to take it into real life the next day.

Jeremy Berke: 5:03

I mean I will admit this that I'm over a year into business school and I still don't quite understand what retained earnings are, but I won't tell my accounting professor that. But on a more serious note, I totally it's been really fun. I mean it's sort of really interesting to sit in a class on Tuesday morning and apply it Tuesday afternoon. You know it's a really unique opportunity and you know one I'm not taking lightly, and you know my professors have been great, like everyone sort of thinks the idea is awesome and try to help me build this business as well as possible, and so it's been really fun. I think, you know, intervening 13 or 14 years, it's a little bit easier to run your books automated which I'm very thankful for than it was a little while ago, because that is certainly not my expertise. But the marketing stuff, the strategy stuff, that's really I find that stuff really really useful in school.

AnnaRae Grabstein: 5:53

Amazing. Well, let's jump into what we're here to talk about today, which is the news. We've put together some really, I think, good topics that are a broad swath of the craziness going on in cannabis, and wanted to just jump in talking about this brand new hemp bill that the Senator from Oregon, senator Wyden, introduced yesterday in Congress. What's the top line here? What's this bill all about?

Jeremy Berke: 6:21

Yeah, so the bill basically would kick regulation of the hemp for consumer products industry so let's say the hemp derived THC industry to the FDA. The bill is called the Cannabinoid Safety and Regulation Act and it would basically direct the FDA to come up with comprehensive consumer safety standards for these products. The backstory, I think you know. All the listeners of the podcast understand the difference between hemp and cannabis, but for those that don't, it is the same plant, but hemp is legally defined as cannabis that contains less than 0.3% THC. So the idea when it was legalized in the 2018 Farm Bill was not to create a new class of intoxicating products. It was to allow some cannabis compounds cannabinoids into consumer products like CBD that may have not medical uses I think the FDA hasn't ruled that but but therapeutic uses right For people, for sleep, for, you know, pain relief, yeah.

AnnaRae Grabstein: 7:21

Oh, yeah, Well, and so we've seen quickly the national cannabis industry association come out and support the bill and hemp roundtable, which in some ways have been at odds at different policy issues. Yes, this is the direction that we need to go. People are immediately kind of putting this up against what seems to be the alternative on the table right now, which is the Mary Miller Amendment which has been proposed in the Farm Bill, sort of an all-out ban. This is more the path to sensible regulation. Theoretically it does outlaw synthetic cannabinoids, so that would be Delta-8, THCO, a whole bunch of other ones and certain types of conversion of CBD into other cannabinoids, including Delta-9. So it would definitely restrict product manufacturing more than it currently is under the farm bill language that exists today.

Jeremy Berke: 8:26

Yeah, I think I mean you raised, I think, what is the crucial point right, that it is a middle ground between California Governor Gavin Newsom's outright ban on any intoxicating hemp products versus the kind of regulatory free-for-all that a lot of these products are in today and I think you know what you said is very much true like the Hemp Roundtable, the National Cannabis Industry Association, finally being on the same side of this issue is pretty interesting to see, because they've been sort of opposed and it's been a bit of a battle between hemp and cannabis to date. And so, you know, in my view, this is pretty sensible, you know, middle of the road, legislation that creates real consumer safety standards that you know are necessary, at the same time without completely prohibiting products that people like and people are buying, right, I think that's the key thing. You know the lesson that we've learned from cannabis regulation and cannabis policies that prohibition is a bad policy, and so there are much better ways to work with the nascent industry to create regulations that I think make sense for everyone.

AnnaRae Grabstein: 9:29

Yeah, but also let's be real. What substantive policy about cannabis has actually moved through Congress and reached the president's desk? And so people are excited, they're high-fiving, the lobbyists are showing their worth in Capitol Hill, but is this going to make any kind of difference?

Jeremy Berke: 9:50

I don't want to play the total cynic about the US federal government, but I am a cynic about the US federal government.

Jeremy Berke: 9:58

I think that it's very, very difficult to even pass must pass spending bills through this Congress. And so you know, I think, a bill like this, that obviously some conservative members of the Republican Party don't want to see any sort of cannabis reform go through, they are going to be opposed to this. That includes Speaker of the House, mike Johnson. But, that being said, I do believe that the reform is so common sense that, if the bill does not pass as a standalone, it may likely get attached to the next iteration of the farm bill, which supposedly, will get negotiated during the lame duck session. And so you know, I won't be totally cynical.

Jeremy Berke: 10:41

I think that, like of any cannabis reform, this is good reform and necessary reform. And there is, you know, not a public health crisis, but there is an issue with underage people buying products that are very loosely regulated in gas stations all over the country. I mean, that's something that I think every lawmaker should want to handle. But, that being said, right like it's hard to pass anything. And so you know, time will tell whether this becomes law.

AnnaRae Grabstein: 11:07

Yeah, I mean as someone that that's trying to create long term opportunities in cannabis. I love the idea of a standalone bill instead of this language being attached to the farm bill, because the problem with the farm bill is that it's it's a short term bill that lasts for a set amount of time and then is constantly revisited every four or five years, and that is why we're having this problem right now. The Farm Bill in 2018 legalized something. A whole industry sprouted from that, and now, four years, five years later, everyone is having tremendous uncertainty about the businesses that they created. So a standalone bill would not have the same expiration that the Farm Bill does. But my guess is that the strategy with introducing this bill now has always been for it to become attached to the farm bill instead of the Mary Miller amendment, although it hasn't been directly stated by anybody that I've heard speak about it.

Jeremy Berke: 12:11

No, but I think that's a pretty good, you know understanding of the situation. I mean, the timing is certainly not an accident. I think nothing really in DC happens by accident. So I think that's absolutely true and I think the point is also correct that, like the farm bill is something that like every four or five, six years does get renegotiated, you know. That being said, it was a risk for some of these business owners to start their businesses based on, you know what I would read. That certainly is unclear language of the farm bill. Right, they certainly did not have regulatory protection. It was certainly a gray area, excuse me, and I think you know they did go into this eyes wide open, knowing that you know these regulations could change. But you know, if this bill, if Wyden's new bill, passes, that's sort of the best, most sensible regulatory change possible for them. So it would make sense in hindsight. But you know, again, like to the original point, things in Washington are pretty crazy all the time, and so we will soon see whether this becomes law.

AnnaRae Grabstein: 13:15

Sure. Well, what do you think? Folks? Let us know. Are you hopeful? Do you think this was a good bill? Reach out If you've got inside information. I think Jeremy and I both want to know. Well, let's go to our next topic New York. This is home for you. You're a New Yorker. New York cannabis market is continuing to be wild. We just saw the announcement in the last few days that Damon Vagon, who's been running equity at the state regulatory agency, is out. It seems like every few days someone else is out, there's a few people that are left, and this morning the mayor of New York City was indicted. So New York is a real messy place to be getting done with anything that involves the government, huh.

Jeremy Berke: 14:03

Yeah, well, new York is New York and I will say that it is a city with, unfortunately, deep corruption and a very rough and tumble political world. The Adams indictment I think I don't want to say I was shocked to see he was indicted based on how many people started resigning from his administration in recent weeks, and you know notable lawmakers, alexandria Ocasio-Cortez, who called for him to step down, Like I think the writing was on the wall that something was coming for him. But I do think it is a symbol of deeper dysfunction with New York City civic politics and New York's governor. And you know, you can even go back to 2021, 2022, when Cuomo was kicked out of office, right, like, we have a series of dysfunctional leaders in the state and cannabis the rollout of cannabis in the state Um, and cannabis the rollout of cannabis in the state. I don't know how much was directed by these dysfunctional leaders, but certainly, um, they had a hand in ensuring that the rollout would not go according to plan Um. So you know, and I think a couple couple of points on that are that you know it took uh, there's about 20 now. There's about 20 dispensaries open in the five boroughs that you know about. Took. There's about 20, now there's about 20 dispensaries open in the five boroughs. You know about 10 million, 12 million people here.

Jeremy Berke: 15:28

It took three years to get to that point.

Jeremy Berke: 15:30

That's just far too long for any economist to look at the market and say like this is going to be a tenable way to roll the market out and start these businesses. And I think the second point of that is just how chaotic and messy it has been for licensees to work with the New York State Office of Cannabis Management and actually get their licenses looked at, ensure that they're getting communicated with, and all the kind of nuts and bolts of running a new agency. They have failed to meet that standard in many ways, many ways. The third thing is that the Office of Cannabis Management and the state government has embedded themselves in pretty unsavory financial deals with outside private equity firms to get these companies started up. And you know, I think if the government was working well at some point along the chain, you know they would not have structured contracts like this for social equity applicants, put them really on the back foot, starting their businesses saddled with debt. You know, I predict there's gonna be a lot of lawsuits coming out of that.

AnnaRae Grabstein: 16:33

Yeah.

Jeremy Berke: 16:34

All that being said, I just I just sort of finish off like I again, like I don't want to be so pessimistic. I think at the end of the day, like New York is New York, it is the financial capital of the world. The cannabis industry here will be very, very exciting at a certain point, and I already think it is changing and it is getting more exciting. The dispensaries in my neighborhood are very cool, the products are awesome, people are excited, but it's just taken far too long to get here and I hope that you know things will be slowly fixed and they'll shake out as we get some new management.

AnnaRae Grabstein: 17:02

I I've been really excited about New York ever since the MRTA passed and I think that New York, like California, is going to have its own unique journey. And and what's happening, what's happening with the regulators is just a symbol of, of like, it's a symptom of this, of this complex journey. I'm curious, though, back to the Mayor Adams discussion. He was at least the face of the program to shut down the unlicensed dispensaries in New York City. With all of the tumult that's going on in his administration, do you think that that program will go on? Also curious if you think that it's been effective, just everything kind of that Mayor Adams was doing in terms of trying to bolster the legal stores in the five boroughs and get rid of the others. Do we think that there's an appetite while all this drama is unfolding?

Jeremy Berke: 18:05

Very, very good question, very big question. I'm going to take it one piece at a time. Do I think it's been effective? If the pure metric of effectiveness is on, are there more illicit weed shops closed around the city? Absolutely right, it's absolutely been effective on that front, I think about six months ago.

Jeremy Berke: 18:26

I live in downtown Brooklyn, which is a pretty dense neighborhood, within one that is still operating. You know, it's probably because I'm losing a bit of hair on top of my head, but I've never been ID'd in any of those. You know, maybe I'm 32, so maybe that's why, but you know, I've certainly never been ID'd. My friends who are much younger than me have certainly never been ID'd. The one that is still operating now has sort of like they frosted the glass. You have to bring a doorbell to get in, and so they've definitely put the fear into illicit operators, and there's far less now than there were. It is now, I think, for the first time over the past couple months, easier to buy cannabis legally than illegally in New York. So unequivocal success on that front right.

Jeremy Berke: 19:23

The more sticky issue I would say is that whether it has been a success or not, it often depends on A your financial incentive in the industry and B, where you sit politically right, I think a lot of progressives would say they legalized cannabis just to criminalize it again. Where you have these bodega owners who are getting raided by the sheriff's office, there's very little oversight. They're getting arrested, they're seizing money and contraband contraband, illicit cannabis in ways that some lawyers have alleged are illegal, and so you know this is going to be an ongoing issue. It's unsurprising that Adams was indicted, because I think the way he's running this, you know, as a former NYPD officer, is a little bit above the law.

Jeremy Berke: 20:08

And I think the third piece is that, I'm sorry. The B piece of that is that look like, if you are a licensed operator in the city, it's been very challenging for you to get a license, you've jumped through hoops, you probably are in debt or you put your life savings into this project. So obviously you know you're quite happy to see your listed market competition be pushed out of the market, right, and so I think it really depends on where you sit, you know. And then to the last part of your question, like will the program continue? I believe so I think it certainly would depend. If you know, strident Progressive is the next mayor of New York, or even if Adam steps down. I think that would change it, but I think by andlicensed activities that are going on in New York.

AnnaRae Grabstein: 21:07

And I say this as a Californian who I believe that most of the unlicensed kind of illicit activities and transactions in California are not on the retail side but they're on more the supply chain side. It's cultivation material, it's flour and products that are either leaving the legal market or never entered it in the first place, and it's a lot harder to shut down. You know, mayor Adams made a big deal of being able to go in and put chains around door handles but it's just harder because it's not right in front of you. You don't drive by it and see a sign outside. It's hidden and I think that the perspective has been that all the supply chain material to feed the unlicensed stores is not coming from New York and it's coming from California and other markets. Just one thing I just am not hearing anyone talk about is is there unlicensed cultivation going on in New York?

Jeremy Berke: 22:07

unlicensed cultivation going on in New York? Yes, the answer is absolutely yes. Most of the products that are on the illicit weed bodegas, bodega shelves are generally products from California and a lot from Oklahoma. Right, a lot from Oklahoma is very loosely regulated medical market. It's the same brands that you see in any legal dispensary, and so you know it's certainly possible that some of these products are counterfeit, right, like you know. I don't know, but by and large they've been shuffled from a legal market to an illegal market. All that being said, like yes, for a long time in New York there was too few stores to put too much product and a lot of the product did get diverted into the illicit market.

Jeremy Berke: 22:44

There's many growers who are otherwise licensed who, you know, do certainly plan both sides of the fence, and not because they want to break the law but because they need to to make their margins and to survive as businesses, and you know there is a pretty rich culture of cannabis growing, especially in the Hudson Valley in upstate New York, right where you know, these people have been growing for decades within their families or themselves, and it's very, very challenging for them to jump through all the red tape to get a license, they have to pay taxes and so, yeah, there are some small scale growers who made the decision to remain in the illicit market.

Jeremy Berke: 23:22

That being said, you know the state is certainly like aware of that problem. They are trying to get these people into the license fold via micro business licenses, but it's still challenging. You still have to hire a lawyer, you still have to work through the process, you still have to comply with a lot of regulations and some of them competing with each other and a little bit nonsensical to me. So it's gonna be really interesting. I think you know they're gonna have to. There's a really difficult challenge with designing regulations that make sense for consumers and make sense for the overall goals of ending the war on drugs, with actually getting people participating in the system. In a state as complex as New York, right Like, it's a really hard place to have a startup regulatory agency frankly and we're seeing some of the effects of that Great, great New York overview.

AnnaRae Grabstein: 24:09

I love it. Yeah, you guys have also been doing a lot of coverage around what's happening in Florida with the adult use ballot initiative, amendment 3. We've got True Leave kind of foot in the bill over $50 million invested into the yes campaign. Governor DeSantis very vocally opposed but there's been some new action. What's happening with Amendment 3?

Jeremy Berke: 24:35

Yeah. So Florida's Amendment 3, for those of you who don't know is an amendment or a ballot measure, excuse me to legalize cannabis in the state of Florida. The important thing about Amendment 3 is that it needs a super majority of Florida voters to pass. So that is 60 percent, not 50 percent, which means the bar is extremely high for the support of this, this ballot measure to pass. Trulieve is a Florida based cannabis company. They have sunk I think the number I have to double check, I think it's upwards of $70 million alone into the yes on 3 campaign. So they are heavily invested in the outcome of this.

Jeremy Berke: 25:14

The very, very interesting wrinkle is that Florida is, you know, I think conventional wisdom would say it's a purple state. It's kind of a red state. You know, based on the last couple election cycles. Ron DeSantis, the Republican governor, hates Amendment 3 and is spending a lot of his own political capital to try and defeat it. Who don't want to see Amendment 3 passed because the thinking there is. They believe that true leave is going to take over the entire cannabis market if Amendment 3 passes.

Jeremy Berke: 25:53

The other side of it is President Donald Trump, who is no friend of Governor Ron DeSantis supports Amendment 3. And a lot of his MAGA Republican followers support, support cannabis reform and support legalization. They've seen, actually, trump endorse these stances that are very similar to the vice president or the vice president current vice president Kamala Harris stance on cannabis. So you know, I think, for broader politics, amendment 3 is kind of becoming a fight internally in the Republican Party. Is it the party of conservative religious rights, like Ron DeSantis, or is it the MAGA party, like Donald Trump?

Jeremy Berke: 26:31

And whether Amendment 3 passes in Florida, like whose voice speaks louder, who can drag up the supermajority or pull it down below the supermajority, will be very interesting to watch. All that being said, like this is America and you know, political campaigns that outspend other ones generally win, and the yes on three side is outspending the no on three side very, very heavily. It has a lot more of a TV presence within the state and so I do think there will be some effect where the spending dynamic is what tips it over the edge. But watching very closely to see how much DeSantis does not like Amendment 3 and how much Trump seems to like it.

AnnaRae Grabstein: 27:12

You're right about the spending, and the spending that Trulieve has committed as part of this is wild and it's got me thinking. Will they, or will companies like them, put this much money behind federal policy change? If they think that the business outcome could be good enough, because this is an investment, they have to believe that this 70 plus million dollars is going to come back to them through their business activities in Florida. So it's pretty wild. I don't know. What do you think?

Jeremy Berke: 27:49

It's a really, really good question. I mean, I think, like, from a purely financial perspective I mean I'm in a corporate finance class this semester, so like, like thinking of NPV, let's say, I know you have your, your MBA as well Like, like, is there a positive? Is there a positive NPV on spending the 70 million in Florida? Like I don't know, but you got to think that they have some math to show. Yes, the one thing I'll say about that is that no one.

Jeremy Berke: 28:16

Three, the anti-legalization campaign has not really made an argument that legalization is bad, though they do Right, like they say. You know, they kind of rely on the old reefer madness tropes, like you know that everyone's going to drive high and the kids are going to smell weed and start smoking weed when they're 12. And you know all that kind of stuff. Like that rhetoric is there, but really what they are saying is that Amendment 3 is not about freedom to consume cannabis near home, it's about handing truly of a monopoly right. It's this anti-corporate idea, and that I feel like they have some internal polling where that message is resonating with people. You know I'm not going to go ahead and defend Trulieve necessarily, because you know they've been tied up in some pretty unfair labor practices and regulatory capture like that is certainly the history of the company. But that being said, right like to my knowledge, you know when you look at you know the distribution of own dispensaries in Florida, like Trulieve has about a quarter of the medical market. It's not a monopoly right. It's maybe an oligopoly with 10 companies, but you know that certainly isn't true, and I will defend them on that front.

Jeremy Berke: 29:31

And then to sort of set the stage for answering your broader question, like will they spend money like that on federal legalization? Like, of course it would help their business. I think what they really care about, though, is the 280e tax. That's the tax that says if you sell a schedule one or two substance in the US, you can't deduct regular business expensive. That has huge margin compression on a lot of these companies, and so I think they would be more careful about spending specifically to get rid of that tax, which cannabis rescheduling would do, versus outright legalization. Right, because they do benefit in some ways from cannabis not being federally legal. You know they've spent all the money and the R&D for all these facilities within states, and as soon as cannabis can cross state lines like, they're going to have to shift to lower cost labor areas to grow and all that kind of stuff, and it'll change the business in fundamental ways. And so you know, I think the jury's still out on that question. I'm fascinated to hear what executives would say.

AnnaRae Grabstein: 30:29

Well, and here's the back of the napkin math on their investment. So they've got around 140 stores in Florida. I don't have data on store level results, but average dispensary in Florida I think does about $3.4 million across the board if you take them all and divide them and Florida does share their data, and so at 140 stores, if Trulieve is bringing home around a 50% margin and I think it's a little bit lower, it's in the mid 40s. But if all of their stores make one more million dollars in a year with adult use, they will return their 70 million dollars investment in one year and so, and then they've got all the years that come after that. So it seems like, um, it seems like the math works, even though it seems like a lot of money.

Jeremy Berke: 31:21

yeah yeah, I mean I, you, you've done the numbers like I. I certainly trust your numbers like that. That makes a lot of sense to me. Um, especially if you combine that with rescheduling. If they're, you know, returning that money that quickly and they're not paying the 280 tax, like that's going to make a lot of Trulieve shareholders very, very happy.

AnnaRae Grabstein: 31:39

Yeah, and then this conversation has brought up Trump and Harris sharing a very close position, at least from the campaign's perspective, which is an undetailed position about where they stand on cannabis reform and just supporting cannabis in some way, and that is unique, and I have for years wondered if there's a cannabis voter out there, and if Ben was here today, he would say he's a cannabis voter. I am not a cannabis single issue voter by any chance, but this is unique. We're in a unique scenario where we've got two candidates for president that seem to be taking a pretty similar position, and I don't know if they have similar positions about anything else.

Jeremy Berke: 32:26

Yeah, to my knowledge like I'm certainly not an expert on the presidential campaign, so I want to caveat what I'm about to say with that but to my knowledge, like, no, like they are diametrically opposed on every single hot button issue the economy, immigration, like you name it, foreign policy they're very, very much opposed. I think earlier this month, when Trump released his sort of he sort of drip, drip, drip, his pro Florida Amendment 3 statement and his pro rescheduling statement, like, he basically brought himself directly in line with how the Biden administration has treated cannabis. The one thing I'll say about that is, in the past, harris has advocated for full, full legalization. She introduced a bill in 2020, the Moore Act, which would federally decriminalize cannabis. But, you know, since she has been the nominee, she has not come up with comprehensive statements.

Jeremy Berke: 33:16

I think it's pretty fair to say that, like the two parties, the two leaders of the two parties, have pretty much the same position on this issue, and it is a wildly, wildly popular issue in the US, I think you know the polling shows roughly two thirds of Americans want to see federal decriminalization or federal reform. So you know, I don't know, I don't know what that means, like I don't. I think I totally agree with you. I doubt that there are very many single issue voters on this issue. That would swing the election one way or the other, but it's certainly a popular issue that they're both trying to get in front of and I think you know it's kind of the metaphor of the train leaving the station that, like, no matter who the president is, the reform that we expect to happen pretty slowly will continue to happen pretty slowly.

AnnaRae Grabstein: 34:03

Yeah, and the reform that's on the table, which is Schedule 3, which is really just serious incremental step towards some type of reform, is going to most certainly occur once we know who the next president will be. The hearing that the DEA is hosting is going to be in early December and then, most likely, based on the DEA's administrative process, rescheduling would be moving forward in 2025, and then, subsequently, the new president stepping into their role in January may or may not affect the prioritization of rescheduling. I haven't heard anyone say that. It won't happen depending on who takes the seat, but it could be less of a priority for the administration to move quickly on.

Jeremy Berke: 35:06

Yeah, look, I mean, I think for those of us who pay attention to the industry every day, it certainly is a priority for, you know, the next US president. There's a lot of other stuff going on as well, obviously, and I don't know how much of a priority it is, but I think your point is absolutely a good one, and I think you know. One thing I'd add is it certainly would depend as well who the next attorney general is. Right, I think you know on the Democrat side I don't know off the top of my head who the leading candidates would be, but by and large, you know the dominant Democratic position is towards cannabis reform, and so I think you know whoever the Democratic attorney general is would take this seriously and understand that, like this is a process that needs to be shepherded. The DOJ has to take some sort of stance on what this means for companies selling cannabis to consumers in the US.

Jeremy Berke: 35:56

Trump could very well appoint an attorney general if he wins the election. That is no friend to cannabis, right? And is Trump's stance strong enough to overrule his attorney general? Does he care enough, right? I don't know. You know that to me is a big question mark and it's a big risk for these companies if they have, you know, frankly, like a right wing conservative zealot attorney general who William Barr, I'm pretty sure that he is actually now representing in his private practice, yeah, yeah.

AnnaRae Grabstein: 36:44

Kevin Sabet and his, his group of prohibitionists. So point well taken.

Jeremy Berke: 36:52

Yeah, no, I mean I just I think the broader like this is not. I don't think it's a certainly brilliant point, but I do think that, like, people at the top of the ticket say a lot of stuff on the campaign trail, but who their political appointees are really speaks volumes about their agenda. And you look at two of Trump's attorneys general. He's not able to keep them in the role for very long. Frankly, you know William Barr is writing op-eds against Schedule 3. He's fighting it in court on behalf of Smart Approaches to Marijuana and Jeff Sessions. His first attorney general rolled back protect very real protections for the medical cannabis industry pretty much immediately when he got out of the office, like that was a priority for him. And so you know, to me risky track record.

AnnaRae Grabstein: 37:34

Risky track record. All right, folks, you heard it here. Yeah, let's. Let's talk about what's going on in California. I mean, there's a million things going on in California. I think today we'll talk about the emergency regulations for hemp, which have mandated no detectable THC in any product that can be sold in California. They were announced and quickly implemented as emergency regulations, which follow a very different process than regular regulations, and they went into effect two days ago, I think, and they are set to be effective as they stand, as these emergency but also temporary regulations, until March 25th of 2025. So this is a big deal in California and I know you've been covering it.

Jeremy Berke: 38:29

What's your take? Big blanket ban? I think fresh in regulators and lawmakers' minds is the Evali crisis of, you know, late 2019, early 2020, when a lot of young people people under the age of 21, were smoking vapes these are mostly illegal nicotine vapes, though there were cannabis vapes involved and they got lung injuries because these products just were not very well regulated. Right, I think.

Jeremy Berke: 38:55

With that context, I'm not surprised that Newsom would go super hard on the side of consumer safety. All that being said, I think that prohibition of a product that people are buying is generally a bad tactic, right, Like as we discussed at the top of the podcast, there's a lot more middle ground that could more effectively regulate intoxicating hemp derived products for consumer safety than ban them outright, because people will likely seek them out if they like them, and I think you know you certainly want people to seek out legal products versus illegal products. Like that is the whole value proposition of cannabis legalization. I think this does undercut that. That being said, I'm sure there are dispensary owners I haven't talked to any, but I've sort of seen them quoted in the press that are very happy about this ban because that means they have a bigger target market. They're not competing with hemp sellers that aren't paying the same taxes and aren't conforming to the same regulations that they are?

AnnaRae Grabstein: 39:58

Yeah, actually, when I was at Hall of Flowers last week I ran into Jared Kylo and he's the founder of UCBA. It's the United Cannabis Business Association, which is a retail trade association that was founded in the LA area and really represents all the dispensaries in California and he seemed to be very supportive of this move and said that UCBA was involved in moving it forward. I'm with you. I think to me, prohibition doesn't work. This is not a middle ground. This is not sensible regulation. This is also going to be hurting a lot of folks that the state has issued hemp manufacturing registrations and license to who are creating products and have been and have them in inventory. It's going to harm a lot of people and it's going to put a lot of businesses in an awkward position to have to make hard decisions about the level of compliance that they can afford to to be in the other issue which I can't take credit for, for this I want to. I want to platform Lauren Yoshiko, who writes a great sub stack called Sticky Bits. She in her newsletter this week this is a quote she says the other issue is the difference in product offerings. The average dispensary carries caters to high tolerance daily consumers. You're lucky if you can carry one low THC flour or an edible containing less than five milligrams of THC.

AnnaRae Grabstein: 41:32

In the hemp sphere low dose products abound and I think this is another kind of just broad oversight when prohibition comes from Newsom's administration is that the products that you see in the adult use dispensaries in California are very different than the low dose products that proliferate in the hemp space, be them beverages and edibles. And that doesn't mean that there aren't other high dose products in the hemp space that I think are more the target of what the Newsom administration is trying to ban, be that THCA flour or vapes. But for the folks that are leaning into CBD, but full spectrum CBD products, which mean that there are detectable amounts of THC and and just like like a two milligram beverage or a two milligram gummy, those products just barely exist in dispensaries because the consumers haven't been there. And I think that what's been interesting as someone myself I've been an operator in the California cannabis market since since adult use launched we often at the beginning talked about the soccer moms and the canna-curious consumers and they just never materialized in the legal market.

AnnaRae Grabstein: 42:44

We just lots of people created products for them. They didn't sell. The products that sold were the most potent and in the hemp space those products have done well. So this is part of the problem that we're faced with right now with this prohibition is also, just where are the people that were buying these products going to go and to replace them in the legal market? I'm not sure that it's an option for them right now.

Jeremy Berke: 43:07

I mean, I would be curious, since you've operated in the market, like I think one of the things that I've heard from some hemp sellers that the dispensary model itself as a retail model is a little bit broken. Right, and the reason, like the reason is is that the core cannabis consumer and I'm interested in your perspective on this really wants, like probably has, a high tolerance. Right, they're probably buying cannabis, if not daily, on a very, very regular basis, like they want the high dose product, but the person who comes across a low dose hemp beverage in a grocery store might pick it up just to say, huh, like, what's this, I'll try it. Do you think it would be the case? Like do you think the low dose products would sell? If you know, dispensary model was disaggregated and cannabis products were available in many more places than dispensaries in California.

AnnaRae Grabstein: 43:56

Yeah, I do. I think that the low dose products cater towards a different consumer that does not identify as strongly as a dispensary consumer, that might not be going out of their way to drive or take the bus or walk to their local dispensary but instead is going to be purchasing cannabis as just part of a broader grocery shop. And so, yeah, I think keeping these low-dose beverages and edibles in grocery stores is the right place for them and I actually believe that it supports, it can support the entrance of those new consumers that I mentioned earlier, those soccer moms and canna curious who might become comfortable with the experience of cannabinoid products after trying something that they might be able to get in an ideal utopian scenario at their local grocery store. They try a beverage. They say, oh, okay, two milligrams, I didn't get too high, but wow, I really liked that. And when I had two beverages that gave me four milligrams, I even liked it more. Maybe I will go check out a dispensary and go see what these more high dose products are, with more form factors and things like that.

AnnaRae Grabstein: 45:08

I think that it can support introducing new consumers to the category to make them a little bit less kind of curious and more kind of confident as they go into a dispensary model.

AnnaRae Grabstein: 45:18

So I think that they can go together. But I think it's also hard for dispensaries to get behind that model and that's why I mentioned the UCVA retail trade group. I think they see it as an all or nothing. I think it's very threatening, when the market is challenging, to let products that are so similar inform to what they're selling at the dispensary be sold anywhere else when the legal market has had so many challenges and is so highly taxed. So it needs to be looked at, I believe, as less of a hemp versus cannabis issue and I think that the solution is ultimately looking at regulatory framework that allows for products to be in different channels based on their potency and their form factor. So I see low dose, non inhalable products could make sense and be easily age gated, similar to alcohol or tobacco in certain more open retail environments, and that inhalable and high-potency products should be in the dispensary and that that can create kind of a fair playing field for everybody.

Jeremy Berke: 46:25

Yeah, it's a pretty interesting idea. I mean, I'm Canadian originally and I always take the Canadian market as sort of counterfactual to what happens in the US and it's look like Canada has had federal legality for six years. It's certainly, you know, toronto, where I grew up, like certainly relies on dispensary model, but it is a little more disaggregated, right, because there's, you know, you can deliver it on Uber Eats and it's just a very different thing. Like I can order a burrito and like a few weed drinks if I want to my house at any given time or my apartment at any given time.

Jeremy Berke: 47:12

Regulation that you know hemp derived THC drinks exist in the US at all. Right, in Canada you certainly don't have consumers saying, oh, I want the hemp THC drink, not the regular THC drink. They just care about is it two milligrams, five milligrams or 10 milligrams, right? And so I think you know that to me is the entire distinguishing thing. Like if we just had in a utopian world that's a good word you use if we just had common, and you know the goalpost tends to keep moving of what that utopian cannabis economy might be like for everyone.

AnnaRae Grabstein: 48:03

But you know we're getting closer to the hour, so I'm curious if you want to give us any predictions for cannabis in 2025 or things that you want to take on for Cultivated, Like. What's coming? What's the next 12 months all about?

Jeremy Berke: 48:20

Predictions for 2025. Don't tell me to say who the next president is, because I think if you asked me that question in 2016, I would have said no way and I was wrong. I'll continue to be wrong. So I think yeah, I definitely don't want to be nailed to that. I think, more broadly, what I will say is this there's been a lot of doom and gloom about the cannabis industry regulations, companies losing money, things not happening fast enough at the federal level. In the short term, I don't think I'm very bullish on the cannabis industry. In the long term, I could not be more bullish. I believe that the long term thesis remains intact. I still believe it's one of the biggest consumer trend disruptors that I probably will see in my entire life, and I'm specifically focusing my time on building a business in this space, and so I think you know, whether it's 12 months, 24 months or 36 months, like we're going to be in a very different cannabis world at some point, and I think I'm very excited about that. I guess that's a good segue to plug my business. I would still love for you all to subscribe to Cultivated.

Jeremy Berke: 49:23

We are writing it every single day. I spend a lot of time trying to make it perfect. Every single morning, broader stories we're looking at. You know, we're certainly interested in the effect of the 2024 election, excuse me. We're certainly interested in Florida and we're certainly interested in New York and we'll be continuing to covering all. To cover all that. If you have any information, want to get in touch. Please do Otherwise, sign up at CultivatedNews.

AnnaRae Grabstein: 49:45

Nice, and that sounds like it was your last call. Do you have any other things you'd like to add for your last call?

Jeremy Berke: 49:50

I think that's it. I think that's the way I'm thinking about it. I think like look, the long-term thesis is very, very much intact. I couldn't be more excited about the space, but there's going to be some pain to get there and we all need to get through that together.

AnnaRae Grabstein: 50:02

Amazing. Well, you heard it here. Folks Connect with Jeremy and Cultivated Media for more insights in cannabis news. Join his newsletter, and thank you to our listeners for tuning in, and for those of you that are running businesses, remember to keep learning and stay flexible. If I can figure out podcast tech, stack this week to produce this without Ben, you can handle whatever comes your way, and so thank you, as always, to our teams at Wolfmeyer and Virtosa who make all this possible. Burtosa, who make all this possible. Until next time, stay curious, stay informed and keep your spirits high. That's the show.