Ben Larson: 0:05

Hey everybody, welcome to Episode 86 of High Spirits. I'm Ben Larson and, as always, I'm joined today by AnnaRae Grabstein. We're recording May 1st May 1st 2025. How did that happen so happy May Day. Do people celebrate May Day? Is that a thing? Oh fast. Happy May Day. Do people celebrate May Day? Is that a thing?

AnnaRae Grabstein: 0:26

Oh, it's May Day, that's right. Yeah, hopefully there's children dancing around Maypole somewhere. I love that. It's so beautiful.

Ben Larson: 0:33

When I think of May Day, I think of the word May Day Like May Day, and it's like every day this year has felt like May Day.

AnnaRae Grabstein: 0:41

Forest children with pieces of dancing and ribbons around a maple.

Ben Larson: 0:48

That sounds very North Bay. Yeah, I could see that.

AnnaRae Grabstein: 0:51

Welcome to my life in Northern California. Waldorf and Montessori schools yeah.

Ben Larson: 0:57

Well, yeah, we're in Northern California. We're both in Northern California. I was in Atlantic City this morning, so hello everyone. You get me in my airport clothes because I just jumped straight on.

AnnaRae Grabstein: 1:07

Atlantic City seemed like it was a blast. I was getting texts after midnight East Coast time last night from Angela Chang, CMO at KANA, who was texting me videos of the two of you raging on some kind of crazy roller coaster.

Ben Larson: 1:23

Yeah, it was the slingshot, you know, the most extreme ride like in the middle of the Atlantic City Pier and I'm like I want to do that and I asked at least 10 people and I got a lot of no's but Angela said yes emphatically and so we jumped on it and it was rad. That's awesome. It was a good way to wrap up the trip. You know trip. I was not super excited about traveling all the way across the country to go to Atlantic City, which is an hour from the Philly airport without traffic. I think I did the smart thing. I didn't really leave the Hard Rock Hotel slash pier, I just kind of kept that as my zone of influence but really enjoyed myself and something just really magical last night the weather was perfect. Mj Impact had rented out the entire Atlantic City Pier, so it's like we had it all. To the cannabis folks.

AnnaRae Grabstein: 2:12

That's amazing. What did you witness about the New Jersey market? That was exciting.

Ben Larson: 2:16

From the vantage point of the Hard Rock Hotel. Generally the sentiment was high. You know people were excited. You know I talked to a few brands and dispensary owners and it's definitely feels like the honeymoon phase and it's as a as an old, haggard operator in the space I I try not to like rain on their parade and just be like just wait so yeah, I'm like, oh, that's great, that's wonderful. I hope it stays that way.

AnnaRae Grabstein: 2:43

Yeah, I think that they're okay Old Haggard operator over here who's feeling negative for New Jersey but on the flip side, this is high spirits.

AnnaRae Grabstein: 2:52

We try to like see the silver lining in all of it, and I think it is possible for some state markets to stay successful and to not have this crash and burn after the first 24 months.

AnnaRae Grabstein: 3:02

And a lot of it has to do with how the licensing ends up rolling out, how much I think oversupply happens as a result of licensing at the state level. And one thing with New Jersey is that there isn't a ton of supply in the market still and as a result the prices have stayed fairly high. They've come down a little bit, but the prices are high enough that it seems reasonable that at least the supply chain side of the operators will be able to stay profitable for some time. And there is some saturation of dispensaries in certain cities like Jersey. City has a lot of dispensaries of dispensaries in certain cities like jersey city has a lot of dispensaries, but but by and large there are pretty solid dispensary opportunities around the state too. So I'm I'm staying hopeful for new jersey that the entrepreneurs there are going to have a good run for a while yeah, and we also don't have the artificial pumping of like venture capital.

Ben Larson: 4:02

Well, I mean, there's still venture capital out there, but it just tends to be a lot slower and smarter these days. I don't know if it's smarter, it's just slower. But yeah, there was a panel about investment at MJ Unpacked and I think the major takeaway was just that there's debt out there for good operators and there is some growth capital out there, but you have to be a really good operator and so, at the end of the day, if the market is demanding good operators just to get started and survive, then maybe that'll be the foundation for less pain. We shall see, but they are. I did see some pictures of some hemp products at head shops down the street from some of the dispensaries, and I definitely saw a picture of like a 10,000 milligram gummy pack. How that's achieved, I don't know 10,000 milligrams.

AnnaRae Grabstein: 4:51

that is a problem, it's crazy.

Ben Larson: 4:53

I was thinking like okay, if there's 20 gummies per package, that's like 750 milligrams per gummy.

AnnaRae Grabstein: 4:58

Yeah, I'm not sure who needs that or wants that. That's not the kind of progress that we need. Needs that or wants that? That's not the kind of progress that we need. It is helping basically no one in our fight towards normalization, destigmatization and better regulations. Like no, thank you. Yeah.

Ben Larson: 5:14

Yeah Well, not everyone's on the same page there yet, but that was the moral of our talk. It was like we were up there at a cannabis conference. There was, luckily, no pitchforks or torches in the audience. We were talking about the hemp opportunity, and Chris Lackner from the Hemp Beverage Alliance was also up there with me, christy Palmer from Kiva, so two-thirds heavy on beverage and just talking about, yeah, like how does this all work together? How do we create a bifurcated market? And how do we recognize that we're all talking about cannabinoids here and how do we create a system that works?

AnnaRae Grabstein: 5:48

Beverage is interesting in New Jersey because I don't think that there are maybe I shouldn't say any, but I'm not aware of any in the regulated market beverages that are being manufactured inside the cannabis supply chain manufactured inside the cannabis supply chain and so it's a bit of a bummer for the dispensaries that have gone through that process that they don't have access to all of the exciting beverages that exist right outside. That are the hemp beverages.

Ben Larson: 6:15

I think they will come. I think there will be. Whatever the maxing out of the cap is I actually don't know what it is in Jersey. Is it 100 milligrams? We'll see the higher dose products in dispensaries for sure in very short order. But we are seeing movement in the low dose hemp beverage space as well, going into the state.

AnnaRae Grabstein: 6:34

Well, while you were in Atlantic City, I was basically as far away as possible and, in an opposite experience, I was in central coast of California at Coastal Sun Farm. Yeah, I spent the day there yesterday and it is beautiful. It is a certified organic farm. They grow blueberries and cannabis and I got to visit with over 100 goats that were there helping them clear their cover crop. They were so cute, so friendly, all these goats, and I was also there while the High Road sales team was there, who was also doing a tour of Coastal Sun with me. It was really cool to see the passion and the traditional agricultural farming techniques that have been such an important part of the Central Coast's kind of breadbasket agricultural history and legacy in California playing out at this particular cannabis farm. They have a whole philosophy about sequestering carbon, building soil and how healthy plants lead to healthy people and happy people. It was just really inspiring, helped bring me back to my why of what I'm doing here.

Ben Larson: 7:51

Yeah, I was going to say we're kind of getting back into that theme of like your hippiness this is showing today. It's because I like organic agriculture, I'll take that if that makes you and your forest children dancing around the pole and celebrating.

AnnaRae Grabstein: 8:10

Yeah, okay, the forest children, I'll own it. I will. Some interesting stuff, though. Another reminder and interesting takeaway Darren's story, who's the CFO at Coastal was giving this tour and talking about the history of the land, and I think it's worth noting, as we've been talking about tariffs and things, that the central coast of California in 1995, when NAFTA was passed, experienced pretty massive shift in the dynamics related to what was happening in the economy, and so NAFTA opened up free trade and, as a result, the farms in the Central Coast had a lot of struggles to compete in ways that they hadn't before, and specifically the property where Coastal Sun now grows cannabis used to be a rose farm, and all of that rose production was no longer competitive from a price perspective and it was all started.

AnnaRae Grabstein: 9:06

All the roses started coming from South America and were a lot cheaper. And that was part of anti-drug policy change, where the Clinton administration was trying to convince South American coca farms to stop growing coca to help stop the inflows of cocaine from South America, and told them that as part of this free trade agreement, they should start growing flowers and that those flowers could come into the US, get a really nice healthy margin. And what that did is it ended up putting out of business the flower farms that were functioning in the US and opened up kind of the next moment for these farms. And it took a while Obviously in 1995, there wasn't legal cannabis to come in and save the day and take over the property. But eventually that did happen. That did happen and it just shows sort of the long tail of these different trade decisions and how it causes dynamic shifts of how we work, where we work, where things are manufactured, and then it tends to seems like it comes back to some sort of equilibrium eventually.

Ben Larson: 10:18

So whatever that says about the tariffs, I'm not sure that interesting I was, I spent a little bit of time down on the Central Coast. This is like back in 2017, like Grupo Flordes and I toured one of their their greenhouses, and one of the greenhouses had a bunch of roses in it and they hadn't like switched it over yet to to cannabis. What a funny connection. Yeah right, what a funny connection.

AnnaRae Grabstein: 10:43

Yeah, right. Well, so for all of our listeners, this is our once a month episode where we try to bring you some news. We're not going to bring you a guest, you just get the two of us. That's all for today, folks. No, just kidding. Here we go, we're going to break into it.

Ben Larson: 10:59

We have one and a half hosts today. A little brain dead after the last three days in Atlantic City.

AnnaRae Grabstein: 11:06

Atlantic City will do that to you for sure. So give us a hemp legislation update, Ben.

Ben Larson: 11:13

Oh dear, it's been a very busy legislative session. I think the biggest news recently that happened this week is that there is no hemp bill moving forward. In Florida that was celebrated online. You could go online and search your favorite influencer and figure out what happened.

Ben Larson: 11:31

But yeah, I think we're in this session right now where there's a lot of efforts to either ban intoxicating hemp or there are some kind of middle-of-the-road legislation, often beverage-focused, which is not very palatable for a lot of the hemp community, and so what we're seeing is a lot of attempts to kind of maintain the status quo. In California we did have a beverage bill that showed itself but never really saw the light of day. Showed itself but never really saw the light of day, so that that kind of went by the wayside. All the focus is on assembly bill 8, which is some sort of kind of like fusing together the hemp and cannabis supply chains and trying to make it workable.

Ben Larson: 12:17

But on both the hemp and cannabis side there's a lot of conflict, and so I think it's the we could go state by state, but it's generally the same story of we need rules and we're not aligned. Hardly anyone's aligned on what those rules should look like and I think a big argument that I've gotten involved in a number of times is just, if you don't like the bill that you're seeing, where's the bill that you do like? Because we need something. We need something that structures this taxes. It creates consumer safety measures and hopefully isn't an all-out ban because we arepull inside the hemp space hemp versus cannabis, as well, there was some unique news from the Small Business Administration, who has new leadership under the Trump administration about SBA loans.

Ben Larson: 13:15

yesterday oh, okay, something we don't often get to talk about.

AnnaRae Grabstein: 13:20

Yesterday it was announced from the new SBA administrator, kelly Loeffler, that the SBA has updated its guidance to confirm, to reaffirm and confirm that marijuana businesses are not eligible for federal loan programs like 7A and 504, even if they're operating legally under state law, and that this includes both direct cannabis businesses and those indirectly involved with cannabis, like consultants or equipment suppliers. However, the guidance also clarifies that hemp businesses remain eligible, a key distinction as the legal hemp industry continues to navigate a separate regulatory framework regulatory framework. To me, this move really underscores the ongoing tension between federal policy and state legal cannabis and kind of state illegal slash, legislatively complex hemp and the fact that the federal government is saying SBA loans yes for hemp, no for cannabis. It just stirs the pot even more and reaffirms to me a lot of what feels so unfair for cannabis businesses to be hearing this type of feedback as they're making so many strides to be compliant. It's just. This is like that emoji where your head explodes.

AnnaRae Grabstein: 14:44

It's that, but also like emoji where your head explodes. Yeah, it's that.

Ben Larson: 14:46

But also like maybe I can run to the bank really quick and apply for an SBA loan.

AnnaRae Grabstein: 14:52

SBA loans have been drivers of entrepreneurship in this country for a really long time. I mean, for those in cannabis who have never looked into SBA loans because you don't, because you know that you're ineligible for them SBA loans basically represent the very best possible terms that you could get on any debt that exists out there.

Ben Larson: 15:11

It's like a first-time homeowner's loan. They're going to bring down the barriers, work with you on your business plan. If you're a trustworthy looking person with a decent credit history, you could get up to like $5 million to get your business off the ground.

AnnaRae Grabstein: 15:23

Yep. It has been an opportunity for unconnected people to be able to use their skills to start businesses for decades, and I think it also is one of the reasons. The lack of access to SBA loans that have driven such high debt rates in cannabis is because there's just no other alternative for folks to turn to, and to see the type of rates that cannabis businesses pay compared to non-cannabis businesses is just really extreme. So it's another way that hemp businesses are positioned to have a easier path forward than these state legal businesses that are trying so hard to be compliant.

Ben Larson: 16:06

I'd be really curious to find out like what kind of devils are hiding in the details. Is this any hemp business? Yeah, what is hemp? It's hotly debated right now, but that I mean, it's wild. Like you know, hemp has become a pretty significant part of our business and you know, like all good businesses in the space, we properly structure everything to kind of put them in the right buckets. I guess there's nothing stopping me from going and trying to get an SBA loan.

AnnaRae Grabstein: 16:32

No, you should. Let's keep talking about it as you do.

Ben Larson: 16:36

Should I live tweet it?

AnnaRae Grabstein: 16:39

Yeah, it would be really interesting to share what the process is, but doing that might mean that they reject you for the loan altogether, but at least you'd be highlighting it for the rest of us what the experience is and how many hemp businesses are actually getting SBA loans. I have no idea. So if you are a hemp business that has gotten an SBA loan, reach out. I think it would be really interesting to hear about how or if it created opportunities for you that you wouldn't have been able to have otherwise. I think it would be a beneficial narrative for us to be able to use as we talk about policy and inclusivity at the federal level the importance of policy change.

Ben Larson: 17:20

There's so much in flux at the federal level, whether it's the new nominees or the farm bill, the appropriations bill coming in the fall. What happens if you take an SBA loan and then they change the rules on you?

AnnaRae Grabstein: 17:33

I have that exact thought. I think it's wild that the SBA is willing to give loans based on the farm bill when the farm bill has to get renewed so often, and so it could change what is allowed. But yeah, we actually do have some more federal news, and we've been avoiding talking about federal news for a while because it's felt just like so much nothingness. This is sort of still.

Ben Larson: 17:59

This is no guarantee that it's still about nothingness. I just want to point out.

AnnaRae Grabstein: 18:03

Still might be nothing. Yeah, apologies if it's still about nothingness. I just want to point out Still might be nothing, yeah, apologies if it's nothing. But yesterday was the confirmation hearing for the nominee to be the new head of the DEA for Terrence Terry Cole, and he has been nominated by Donald Trump. And he has been nominated by Donald Trump and this is a guy who has spent 30 plus years in law enforcement kind of split between the state of Virginia and Homeland Security and he has notoriously been anti marijuana. He posted a year ago on LinkedIn quote everybody knows my stance on marijuana after 30 plus years in law enforcement, so don't even ask.

Ben Larson: 18:47

Hashtag just say no. Hashtag not legal for distribution. Hashtag health issues yeah, not great.

AnnaRae Grabstein: 18:55

Oh yeah, those are some heavy hashtags. So yeah, terrence Cole did not seem like a friend and when he was nominated, the industry gulped and thought oh, the schedule three rescheduling administrative process is really going to go nowhere now. But the silver lining is that yesterday, during his confirmation hearing, cole stated that reviewing the cannabis rescheduling process would be quote one of his first priorities. If confirmed, when I arrive at the DEA to see where we are in the administrative process, he says so that doesn't mean that he is going to push it forward, but it did. He is clearly saying that when he arrives at the DEA he is going to pay attention to it and that feels like a win. I'll take it.

Ben Larson: 19:50

Yeah, well, with the exception that there is the legislation that has been offered that would maintain 280E penalties even after rescheduling.

AnnaRae Grabstein: 20:01

Oh yes, but that legislation hasn't appeared to be moving. But it's possible it could if the rescheduling continued to move forward. But you're right, there is an evil representative that is trying to make Schedule 3 even less important and impactful to the industry if it was to move forward. You're right, good point.

Ben Larson: 20:23

It was Arrington, republican from Texas, but I was. I was talking to some folks actually this week and Arrington sits on an important committee that could actually potentially see it through. So oh, wow, yeah it's. We'll just go back to pretending like it's nothing, just a lot.

AnnaRae Grabstein: 20:42

Yeah, you're pouring water on my fire here, sorry.

Ben Larson: 20:45

Yeah, sorry, sorry. High spirits. Let's just not talk about federal. That's how we keep our spirits high.

AnnaRae Grabstein: 20:53

Well, I do think it's worth talking about a few comments that came up in the hearing that weren't just from Terrence Cole, senator Alex Padilla from California he really waded into it, in my opinion, alex Padilla from California. He really waded into it, in my opinion. He started making comments and advocating for full de-scheduling and saying that moving cannabis to schedule three doesn't really resolve any of the damage done by criminalization of cannabis and that full de-scheduling is the only solution. All right, dude, great. But come on, can we just focus on what's right in front of us and not open a huge other can of worms of saying that this isn't good enough? It's the kind of thing of when you say something isn't good enough, then the response is OK, well then, maybe we shouldn't do it at all. And no, thank you, senator Padilla, let's let's keep our eye on the ball and try to move towards more incremental progress, and that we are very open to Schedule 3 being that next step of incremental progress.

Ben Larson: 21:52

I appreciate the virtue signaling from him, but it's all right, it doesn't matter. No one listens to Democrats from California anymore in DC.

AnnaRae Grabstein: 22:02

Oh, so they're just fully irrelevant anyway.

Ben Larson: 22:04

We're just completely irrelevant. Yeah oh, so they're just fully irrelevant. Anyway, we're just completely irrelevant.

AnnaRae Grabstein: 22:07

Yeah, all right. Well, someone that potentially might be considered more relevant these days is Senator Tom Tillis, republican from North Carolina.

AnnaRae Grabstein: 22:15

He also spoke at the hearing. He says that the conflicts between federal prohibition and state legal marijuana markets need to be addressed. He talked about the patchwork of different rules, state by state, and he advocated for a working group at the federal level that would help figure out federal boundaries and guidelines. It wasn't exactly a legalization path. He wasn't saying de-scheduling, but he very clearly acknowledged that the lack of reconciliation between state and federal laws is creating some big problems. Don Murphy, the well-known law.

Ben Larson: 23:00

I'm pretty sure this is why the cannabis caucus existed. I don't know if it still exists because there's a lot of people that have retired, but maybe this is a new picking up the mantle from the other side and pretending like they're doing it for the first time.

AnnaRae Grabstein: 23:14

Yeah, for sure. But you know Don Murphy, who's a well-known lobbyist. He says, he says we are making incremental steps that will lead to an end to prohibition sooner rather than later. So I'm going to take it, I'm going to say yes, Don Murphy, I hope so. I hope that this new DEA administrator is able to keep this ball rolling, that the work that was started in the last administration continues to move forward. I think the industry could really benefit from a win.

Ben Larson: 23:50

So yes, please, absolutely. And look, I think the reason why it is hard for me to get bogged down by day-to-day news is because I do see everything generally heading into a very positive direction, right, the more people talking about cannabis, the more bills being entered the general public knowing about it a lot more and having exposure to it. It's all on the whole, moving up and to the right Doesn't mean we're not gonna have setbacks. But there's this quote of I'm gonna mess it up, but following the climate, not the weather, or something like that. You know what I'm talking about.

AnnaRae Grabstein: 24:26

I hear you following the climate, not the weather, or something like that you know what I'm talking about, but I hear you Following the climate, not the weather.

AnnaRae Grabstein: 24:28

I get that, and I think part of that is this idea that, even though the business landscape has been really challenging and we've seen a lot of failures and we have a lot of folks that are still on the brink through all of that, we're also seeing successful turnarounds. Still on the brink Through all of that, we're also seeing successful turnarounds. We're seeing businesses that are figuring it out, figuring out how to run lean, figuring out how to create a niche for themselves and it has nothing to do with the policy being in their favor or not. It's like policy be damned, we are still going to keep focused and win at this thing that we started at. And that's really the energy of a real cannabis entrepreneur. It's like, okay, we accept that there's all of this messy shit in these laws and in these regulations and could they be better? Hell yes, and we figured out how to carve ourself a path through it all and we're going to win. No, that's going to keep people relevant and keep businesses open. Yeah.

Ben Larson: 25:34

Okay, I totally butchered the quote. It's supposed to be climate is what you expect, weather is what you get. And that's by Robert Heinlein. I got climate and weather right.

AnnaRae Grabstein: 25:43

I kind of liked the way that you said it. It was just simpler.

Ben Larson: 25:45

It was just simpler Less words.

AnnaRae Grabstein: 25:46

Yeah, yeah.

Ben Larson: 25:54

We have this thing in our company that we say to each other and we just say words to wisdom ratio. So it's like stop talking so much, Just get it out in fewer words.

AnnaRae Grabstein: 25:59

How is that working for you?

Ben Larson: 26:01

Great, yeah, wait, the practicing it or the saying it to people.

AnnaRae Grabstein: 26:06

Like are people offended when someone says that to them?

Ben Larson: 26:09

No, because they generally know what it means. It's like you know we all practice it. It's like, all right, you're talking too much, you know. It's like it's a nice way of saying that.

AnnaRae Grabstein: 26:18

Yeah, I like it.

Ben Larson: 26:19

What's next?

AnnaRae Grabstein: 26:20

So next we're going to talk about the New York market a little bit.

Ben Larson: 26:23

All right, yeah, so New York's one of those interesting markets where it didn't start out great, but also like kind of progressively gotten better. Kind of progressively gotten better, is that fair to?

AnnaRae Grabstein: 26:33

say oh, 100%. It was looking really grim there for a minute.

Ben Larson: 26:37

For the first, like 18 months.

AnnaRae Grabstein: 26:46

It was taking forever for the dispensaries to open. Meanwhile the illicit market exploded to something like nobody had ever seen before. There was a lot of hubris going on with the unlicensed dispensaries in New York. So, yeah, you're right, it was pretty bad at the beginning, but I'm thinking that it's moving in the right direction. It's good. It's looking pretty good right now.

Ben Larson: 27:06

Yeah, I mean I've heard it's generally very positive. They really did step in and intervene with some of the competing factors right. I know they went pretty hardcore on shutting down the illicit shops. We know what happened with the hemp bill, that they came back and really hyper-restricted that, so giving it a fighting chance much better than what's happening in LA, I guess.

AnnaRae Grabstein: 27:29

Yeah Well, so the state published this market report looking back on the whole year of 2024. And we'll link the report in the show notes so people can go and check it out themselves. It's 64 pages of data and it's really interesting. The first, probably 58 pages, is just straight up data, and then at the very end, is the state actually making some recommendations and insights into all of it.

AnnaRae Grabstein: 27:59

And so there's some points that I think are worth talking about, and I think we all have some things to learn from, but so I'll just jump in with some data from the report Indoor versus outdoor flower.

AnnaRae Grabstein: 28:13

This came out in the report in that they talked about 19% of the flower that's going into the market is being grown by one of the nine registered organizations, which are the original operators from the medical market, which, by and large, are public MSOs Not all of them, but most of them and the reason that we can jump to indoor versus outdoor is that these companies were the only ones that were allowed to grow indoor flower at the launch of the market, and all of the new cultivators of which they've licensed 191 that are operational and then 300 additional conditional ones all were forced to be outdoor or greenhouse growers, and so to have nine companies out of over 400 that are licensed, accounting for 19% of the flower is definitely a unique market dynamic that is creating some winners and losers in the market, and, as a result, the state, in their insights, said at the end of the report that they are recommending that the state consider allowing all of the types of cultivators to grow however they want if they choose.

AnnaRae Grabstein: 29:33

So basically, they're saying that we should open the doors to any type of cultivator being able to grow inside if they choose, because the market clearly is interested in indoor flower. That being said, the reason that the state put so much emphasis on outdoor was because they really created their entire cannabis law and program based on a lot of environmental and social justice themes, and so they wanted to have a less carbon intensive cultivation method Interesting.

Ben Larson: 30:09

It's almost like the inverse of what happened here in California, where they were were going to start small, with 22 000 square foot canopies and and all of a sudden boom, you get to stack licenses and the big guys came in and crushed it all yeah, now people have hundreds of acres of outdoor cultivation um, but you know, california is also a better place to grow outdoor weed and new york has a lot more water.

AnnaRae Grabstein: 30:30

It has a lot of fungal issues with their outdoor plants. So I mean, really what we need is interstate commerce to be able to take all of that wonderful cannabis from the central coast of california and bring it to new york legally oh, don't worry. I saw another article about interstate commerce being alive and well yeah, yeah, there is a whole situation with inversion which we weren't even planning on covering today, but you can all read about it.

Ben Larson: 30:59

Well, I was talking to Josh Swider from Infinite Chemical and he said he went to I think it was a head shop. It was like all Michigan product. They had like Michigan stickers and labels and all this kind of stuff on it.

AnnaRae Grabstein: 31:11

In New York City.

Ben Larson: 31:12

I can't remember if it was new york city or new jersey, but it was definitely. Yeah, definitely over there all right.

AnnaRae Grabstein: 31:17

Well, a couple more things. On new york, there are currently 513 brands sold into the state and I thought that sounded like a lot of brands for such a young market and that within all of these different brands similar to how we have seen it unfold in other markets flour and pre-rolls are the most competitive category, with 300 brands competing in flour and over 200 brands competing in the pre-roll category, with a lot less staticky numbers of brands competing in the like tablets, tinctures and topicals, but still lots of different edible companies. And that within that, the top five selling brands account for 21% of the sales. So this is wild because if there's 500 brands, five brands, which is just 1%, account for 20% of sales of the whole state.

Ben Larson: 32:13

Pretty intense power ranking right there.

AnnaRae Grabstein: 32:15

Yeah.

Ben Larson: 32:15

But I like to see Heirloom on there. Big fan of Heirloom.

AnnaRae Grabstein: 32:18

Yeah, and so the top five brands that are, those that top 20% are all New York brands. They are Dank, heirloom, jaunty Off Hours and MFNY. But when you look at that list that they publish of the top 200 brands, once you start going down the line like the first 20, you'll start to see at least three to five multi-state brands that are showing up in many different markets. You'll see Stizzy on there Enfused, a few others that are multi-state brands. So it's not like New York doesn't have multi-state brands in their most popular categories, but the top five are holding strong as New York companies and that the top 200 brands account for 96% of the sales. So even though there are 500 brands out there, 300 of them basically have zero sales.

Ben Larson: 33:11

We have to give some kudos to the OCM, and Felicia Reed was actually at MJNPAC. She's the executive director and it seems like very in tune and thoughtful about what's happening, and that must be really nice to have not only that level of thought and putting out a report with data and then making recommendations about what could be better and then potentially even acting on it, but maybe even having a framework that allows them to do that. Compared to some other markets that we're very familiar with, it's worth recognizing as, I think, a step in the right direction.

AnnaRae Grabstein: 33:48

Yeah, I'll give them some credit.

AnnaRae Grabstein: 33:49

There's been enormous turnover and change with the OCM, and the initial staff and team, who seemed very mission driven and social justice focused, have basically been exited, and there's there's new sheriffs in town, quote unquote and they're really action oriented.

AnnaRae Grabstein: 34:09

I thought this report did a really great job of shedding some light of what's happening in the market and setting the stage for what 2025 and even 2026 might look like, and so I think probably the final point on New York is just an update on where they are with their dispensaries as well.

AnnaRae Grabstein: 34:29

As of the end of the year, they had licensed just a little over 700 dispensaries and close to 300 of them had opened their doors by the time that the year closed, and so there is a bunch more stores that will be opening, and New York, in their law, kind of gives some flexibility to the regulators to figure out when the right time is to stop issuing licenses or how many is the right amount of licenses. There currently is not licensed caps in New York, but they might decide at some point that they have issued enough, and I think this goes back to what we were talking about at the beginning with New Jersey and what could make a long-term healthy market, and I think what it has to do with is not oversaturating the market with any particular license type, so that the licensees that are in the market have enough opportunity to capture enough market that they can be profitable and successful.

Ben Larson: 35:29

Well, I think they're running at a pretty good clip right now, so I didn't realize this. But new york has like 8.3 million people, so third to a quarter the size of california, and so for them to be kind of approaching 700 licenses, it's actually pretty solid oh yeah, I'm not. I'm not sure what local control looks like in in new york. Do most new yorkers have access to legal cannabis?

AnnaRae Grabstein: 35:53

The local communities did have an option to opt out instead of an opt in, and which is what it was. In California, you had to opt in as opposed to opt out, and there were definitely areas that opted out in New York, but by and large, I think that there's going to be pretty solid retail access within, you know, a 20 minute drive of most people, and that should be really good for the market great well, go new york.

Ben Larson: 36:22

Should we talk about our own, our own home state of california, and how awesome it is?

AnnaRae Grabstein: 36:26

yeah, well, so there is a lot of stuff going on in california, but I think what is worth talking about is taxes. There has been a tremendous amount of coalition building new types of coalitions in the industry to rally around stopping a scheduled tax increase of the excise tax in California From 15 to 19%.

AnnaRae Grabstein: 36:48

Yeah, which currently is 15%, scheduled to go to 19% over the summer, and there've been a whole bunch of new. I want to just call them coalitions. I don't necessarily want to call them trade associations, because I don't know at what point you become a group or a trade association from a group, but it's a whole bunch of new groups that are coming together with new messaging trying to stop these taxes. Normal, california Normal has been one of the louder voices in all of this, which I really love to see normal at the table, because they really are about representing consumers as opposed to just businesses, and I think that that's a really powerful part of the conversation is remembering that it's not just about businesses that are trying to stack dollars, but it's about creating an environment where access is simple for consumers and affordable, and affordable is kind of the key here is that we know that when taxes are too high, consumers choose to buy cannabis outside of the legal market, and normal is being a really strong advocate to make sure that well, not only that.

Ben Larson: 37:53

Operationally, if you're pinched as a business and you're cutting corners like the quality of the products is going to be lower.

AnnaRae Grabstein: 37:59

Yeah, the whole thing. And so not only is there rallying going on at the state level, but in California, as as is the case in many cities around the US that have legal cannabis programs, there isn't just a state tax, but some cities or municipalities or counties or towns have passed their own additional cannabis taxes. Sometimes it's a gross receipts tax, sometimes it's an excise tax, it can look like all different things, and the city of Los Angeles has just this type of tax, and they have a gross receipts tax, which is enormous it's 8% and a gross receipts tax is particularly painful because even when a company is not profitable, you have to pay gross receipts tax and it can just really really hurt a business. And so, on top of this advocacy going on at the state level in Sacramento to stop the tax increase, there is also talk of this is the first I've ever heard of anything like this of a dispensary tax boycott for the city of Los Angeles taxes. It's pretty wild.

Ben Larson: 39:09

Can we just do that as a population? Can we just like boycott taxes?

AnnaRae Grabstein: 39:13

that would be great I've always thought like wouldn't it be nice if, when you pay your taxes, there was a checkbox of like what you'd like your taxes to go to, so that you choose to like not fund the military but to fund the roads, or fund fund schools, but not I don't even know what?

Ben Larson: 39:31

I'm not, I'm not gonna, I'm not gonna pick apart idea.

AnnaRae Grabstein: 39:36

Or just keep it all together. I'm not against that, but I know that we do need taxes to keep our civilization civil.

Ben Larson: 39:44

Do we have the power? I'm so deathly afraid of the IRS and CDTFA. I just really don't want them knocking on my door for anything personal or business or otherwise. It seems wild to me and as cannabis companies, we've always been conditioned to be like follow the rules, don't get in trouble, Don't ask questions, you know. I know man that's like, uh, that's begging for a conflict.

AnnaRae Grabstein: 40:06

Well, this idea of the tax boycott in LA, you're right. It feels like, on the one hand, if you're just one single company and you say, screw the city of LA, they aren't showing up for me, they're not doing all the things that they said they were going to do, like shutting down legal dispensary which they aren't right I mean they generally aren't you say I'm not going to pay my taxes.

AnnaRae Grabstein: 40:25

It's kind of a drop in the bucket and they're probably going to come for you. But if every dispensary in the city of LA together at once collectively comes together and does something like that, I can see the power in it and I think that's the whole idea of the power of people coming together.

Ben Larson: 40:44

So do you know how far along?

AnnaRae Grabstein: 40:45

this is Do they have like near 100% coverage of all these dispensary owners? I mean, there's not a ton of good information. This is mostly coming from LinkedIn stories and Instagram stories of folks that are operating in that market sharing what's going on, so we need more information. If you're out there and you know about this Los Angeles tax boycott, send us more information and we will talk about it on future episodes, because I think that there's something. There's something interesting brewing here.

Ben Larson: 41:08

Man, imagine if they pull this off, like the coordinated efforts that would spin up out of being motivated by that. So true, so true. But yeah, I mean, the one thing we complain about all the time in the cannabis industry is taxation without representation. Right, we pay through the nose, but what services do we get? Like when we had our business in Oakland, it was hard to get the police to show up for anything.

AnnaRae Grabstein: 41:32

Yeah, and yet you had a big gross receipts tax in Oakland.

Ben Larson: 41:35

Yep. Thank you, Berkeley, for the tax shelter that you provided everyone. I think, Berkeley pulled back their taxes for like three years or something like that.

AnnaRae Grabstein: 41:47

And you know this local tax issue is big. I was speaking with a client that was thinking about moving a cultivation company to a new city. Thinking about moving a cultivation company to a new city and that city has a temporary tax pullback and in 16 to 18 months or something the tax is supposed to go back to what it was initially when they allowed cannabis use in that area. And we had to think really hard about well, that's too big of a risk to move a whole business because we don't know if, in 18 months, if they turn that tax back on, this is no longer an area that it makes sense to do business in when there's other cities that aren't charging you that tax.

AnnaRae Grabstein: 42:25

So, cities should heed this call.

Ben Larson: 42:28

Yeah, so with gross receipts tax that's just like 8% straight off your margin.

AnnaRae Grabstein: 42:31

Yeah, it's just it's very challenging Cool.

Ben Larson: 42:38

Well, it's just, it's very challenging, cool. Well, take us to our next story, ben. Yeah, so, um, deals being done, I get to take it back to the beverage space. So organigram, a large canadian operator, picked up collective projects, which is a lesser known beverage brand down here in the states. They have kind of dipped their toe and into into the hemp marketplace but they've been very popular in the canadian beverage space. So they I, their blood orange yuzu was like the top skew being sold in canada for felt like at least a year rockstar team, their craft brewery in the greater toronto area, incredible beers and and they were like a pretty big exporter into the uS and so I think it's a nice pickup for Organigram and you know Organigram is a really strong company. It's been really solid.

AnnaRae Grabstein: 43:22

So this is again just another validation that people are seeing the hemp beverage opportunity as public companies being able to list in the US, being able to accept capital from strong capital partners interested in creating a future outside of tobacco and has supported Organigram in a lot of unique and interesting growth opportunities and has given them capital to be able to do acquisitions and to invest in growth like this. And this isn't the first time that we've talked about Organigram investing in innovative companies. It was probably a year and a half ago that we talked about them investing in open book extracts. They've made some other really interesting investments in genetics and other things, so it's just it's another example of how the US is being left behind because of the way that policymakers have not moved to open up access to institutional and highly mature capital partners for American companies.

Ben Larson: 44:46

Yeah, and ICBC was this week as well out in Berlin, and so just another place where the US doesn't have a big presence. I think Curaleaf has a little thing going on out there, but it's largely Canadian companies and then European companies.

AnnaRae Grabstein: 45:00

Yeah, I mean just think so. Canada is doing tons of exporting of cannabis and it's basically been the savior to the Canadian cannabis market who, similar to some of the US states, created a massive oversupply initially when they were building out their market, but they have found a relief valve in the international markets. And why are American companies not able to participate in that relief valve? Because there is not federal legalization. This is just endless handicapping. Come on America, let's clean this up.

Ben Larson: 45:35

Okay, so really quick, before we wrap up, I want to kind of pull on this thread a little bit because BAT being involved and now through Organigram being involved in the hemp beverage space, is there potential for big tobaccos all of a sudden to enter the chat and start trying to influence things? Because right now the fear for a lot of like camp operators is big, out taking over doing force, like three-tier system, all this kind of stuff. But you know there's also like convenience stores and the convenience store lobby is really big and they want a piece of it and so like they're kind of in the conversation as well. Would be really interesting to see like big tobacco team up with the convenience store lobby and all of a sudden they're going head to head with the alcohol lobby and you know we're just here in the middle well, I think what's most interesting tobacco is at the table, uh, but has is at the table much more quietly.

AnnaRae Grabstein: 46:30

And what has happened in the past 12 months, and even more just in the past six months, is the alcohol has really come out of the closet and hasn't isn't at the table quietly anymore, like there's actually policy positions and and direct asks to policymakers, and that is what isn't as clear for tobacco. Tobacco is not grabbing arms with cannabis companies or hemp companies and advocating for certain positions in a public way, but I think it's still happening. I think that there is such a bad perception of tobacco companies different than alcohol companies that cannabis companies don't generally want to be associated with tobacco companies publicly.

AnnaRae Grabstein: 47:15

Whereas the beverage space has seemingly welcomed the alcohol partners in with open arms-ish.

Ben Larson: 47:21

Yes and no. Yeah, there's a lot of politics. I mean in general, yes, especially from the brand side. But, as you know, in the regulated California market, if you're talking about retailers, the narrative and perspective is very different than if you're talking about brands. Right, and as we kind of reach these decision points of access and regulation, I think we're going to see a lot of like divergence when it comes to what we quote, unquote, want, right, yeah, such as the world we live.

AnnaRae Grabstein: 47:54

Well, I think that you should do the last call today, ben. Last month I did the last call. So I'm going to put you on the spot here, Ben. What is your final message today for our listeners? It's time for the last call.

Ben Larson: 48:10

Just in the vein of everything that we're talking about. I'm thinking about because I just booked my flight today mid-May, I think. It's like the 13th, 14th and 15th NCIA is doing lobby days. If you're anywhere in or around DC or you can be there, come join us. It's important that we have these conversations, that we get a pulse of what's going on on the hill and what people are talking about, what they know, and on average, every 18 months you're dealing with a new team anyway, so the work is never done. Every conversation is important and come join me. That's my last call.

AnnaRae Grabstein: 48:45

Awesome, well, I guess I could read us out, since you did the last call. That would be wonderful, awesome, well, thanks everyone for listening today. Keep engaging with us. Thank you to our teams at Vertosa and Wolfmeyer and to our amazing producer, eric Rossetti. We hope that if you enjoyed this episode, that you'll drop us a review on Apple Podcasts or Spotify or YouTube. Really, wherever you listen, it really helps people to find our content and spread the word further. So just thank you, like, subscribe, share it and, as always, stay curious, stay informed and, most importantly, keep your spirits high. That's the show.

Ben Larson: 49:28

Bye-bye.