AnnaRae Grabstein: 0:00

This is like a perfect example, I think, of a few powerful politicians that have certain positions on what is right or wrong for their constituency getting to choose when really the people have a very different position.

Ben Larson: 0:24

Hey everybody, welcome to episode 89 of High Spirits. I'm Ben Larson and with me, as always, is Anna Rae Grabstein. We're recording Thursday, may 22nd 2025, and there's been absolutely no news this week. Just kidding, we'll get there in just a bit. We have a great show for you today. Just kidding, I'll get there in just a bit. We have a great show for you today. We have mark hauser coming on, the purveyor of cannabis musings, lots of opinions and topics and we'll cover a bunch. But before we get there and ray, how you doing I am so good.

AnnaRae Grabstein: 0:57

this recording today is my last stop before I head out on a cruise to me, mexico, with my dad and my son and my brother, all of us.

Ben Larson: 1:09

Yeah, I'm really where we're in Mexico, are we going?

AnnaRae Grabstein: 1:14

We are just going to Ensenada. It's really so. My son is calling it a party boat and my dad is calling it a booze cruise. I have not figured out what I'm calling it yet, probably neither of those for me somewhere in the middle. But we're leaving from San Francisco. It's just a local weekend getaway. We'll cruise out under the Golden Gate Bridge during sunset and just I don't know partake whatever fun adventures happen on this floating hotel that will be careening south through the Pacific Ocean.

Ben Larson: 1:49

That sounds lovely, and they're right, it is a booze cruise. I think I might have been on that voyage before.

AnnaRae Grabstein: 2:00

I definitely have a cannabis strategy that I won't be talking about on air because I don't want to be breaking any rules, but my plan is to exercise every day, eat edibles every day, laugh and smile, and maybe have one or two deep conversations along the way and read.

AnnaRae Grabstein: 2:22

I hope no cruise line executives are watching this show, for your sake, yeah exactly, and other fun things that happened outside of cannabis is, um, but cannabis adjacent. I think everything grateful to add a sort of cannabis adjacent. And you know we've got a new mayor in San Francisco, daniel Lurie, and he's been really active um on social media, sharing kind of everything that he's been up to. And one of the things that he's announced over the past few weeks is that Dead Company, which is sort of the what's still hanging on in the Grateful Dead these days, is doing a three-day run for their 60th anniversary in Golden Gate Park in San Francisco in August. So I signed up for pre-sales for that as well. So if anyone wants to come party with me in Golden Gate Park in August, you let me know, because I will be there.

Ben Larson: 3:10

They might have to retitle the name of the brand to the Grateful, not Dead. Oh, is that sacrilege?

AnnaRae Grabstein: 3:17

I don't know, but you just have to keep an open mind about these things. What's going on in your world, ben? Just keep an open mind about these things.

Ben Larson: 3:24

What's going on in your world, ben?

Ben Larson: 3:27

Nothing. It's been a week. Texas voted on SB3, which we'll get to in a little bit, but yeah, just business as usual, just active and really doing all the things. Funny story though, again, cannabis adjacent, I was juggling a lot.

Ben Larson: 3:42

Yesterday I had my Vistage meeting, I had dad duty shortly thereafter, but I was tryinguggling a lot. Yesterday I had my Vistage meeting, I had dad duty shortly thereafter, but I was trying to squeeze in some meetings. And so I was picking up Alistair from school and I was going to take him to Kung Fu and I hopped on with a new contact We'll call him Mr Jackson and we were jamming on the industry and all the things that lay ahead and it was a really lovely conversation. I was able to transition alistair to kung fu while having this call, and then I'm like all right, I'm just gonna walk around this neighborhood. And so I had myself walking around you know some nice homes and in alamo, and talking to mr jackson, and all of a sudden I look up at the street sign and I was at the intersection of South Jackson Way, north Jackson Way and Jackson Way. It was a three-way intersection which we'll talk to the civil engineer about their creativity of street naming.

Ben Larson: 4:34

But I was just like one of those serendipitous moments. I was like broke out in laughter, had goosebumps. I'm like, whoa, the universe works in really strange ways, and by universe maybe I mean simulation, who knows. But yeah, that was. That was my moment of Zen yesterday, while the hearing for the the Senate Bill three vote was, was it?

AnnaRae Grabstein: 4:54

Yeah, we'll talk all about that and I know that, with your business being in both hemp and cannabis, it's going on in. Hemp has a big impact on on your team and clients and things, so I'm sure you're watching it really closely, quite closely, yeah. Yeah, on on the work front with me. I'm just plugging along. It's been busy, but feeling grateful for all of that and getting ready for some conferences that are coming up. Benzinga is is on the is on the ticket. There is a lawyer's event that I'll be speaking at in Denver, so, yeah, all those things.

Ben Larson: 5:28

But I think Nothing like surrounding yourself with a bunch of lawyers. That sounds like fun.

AnnaRae Grabstein: 5:32

Oh well, we're bringing one on right now. So we're going to introduce Mark and bring him on to talk through news with us, because he often remarks on news through his newsletter Substack Cannabis Musings. Mark Hauser is a widely respected voice in cannabis and he's a local friend also lives in Petaluma. Like me, he is formerly chair of the cannabis practice at Reed Smith and he was longtime personal deal counsel to investor Sam Zell at the Equity Group. He has overseen billions in capital markets and M&A deals and currently serves as chief of staff at Hardeen, a leading cannabis dispensary in Vegas, and he teaches law at both Northwestern and UNLV. So let's bring Mark on to include him in our conversation today. Thanks for joining, mark. Good morning.

Marc Hauser: 6:27

Though you know I'm already thinking of walking because of Ben's haunt about the Grateful Dead. I think Jerry Garcia is turning over in his grave from that one.

AnnaRae Grabstein: 6:36

Well, you've got a Grateful Dead poster in your background. Oh yeah, you must be a fan also.

Marc Hauser: 6:40

Oh yeah, there it is. Oh okay, yeah, he's going to come back and haunt you for that. So yeah, I should have checked the wall before I made that joke.

AnnaRae Grabstein: 6:57

I'm thrilled to be here. I'm a big fan of the podcast and I'm a big fan of the two of you. Oh, thanks, mark. We like fans Well, so I think we should just jump right into the news and then we're going to have a conversation with you about the industry. But, ben, will you give us an update on what's going on in Texas and start us off there?

Ben Larson: 7:12

Yeah. So you know it's been a very busy legislative session. Texas was oscillating between this booming hemp industry I think the Lieutenant Governor identified it as an $8 billion marketplace, which would peg it slightly larger than how much alcohol they sell in the state. That same Lieutenant Governor decided it was a good idea to just completely outright ban everything. He'll argue, it's not everything. Cbd isolates and CBG isolates are still okay, but pretty much everything else. And so there was a lot of efforts over the last several months to find a middle ground or kill the bill, all of which, in short, basically failed last night. And what really happened was that the lieutenant governor single-handedly took it upon himself to leverage teachers and their wages and a funding bill for the schools in exchange for a complete ban on THC, against the desires of many businesses, many consumers, many veterans, many patients, did something that we all generally know doesn't work and enforced prohibition. And now their pressure release vow, their moral high ground is that, oh well, they have teacup, but teacup is woefully inaccessible.

Ben Larson: 8:33

And say what teacup is? Sorry, teacup is the Texas Compassionate Use Program. It's a very limited cannabis program. There's three licensees, I think two that are active and they basically very limited. I think there's like 8 000 patients or something like that for the entire state of texas. And now there's a bill on the docket that hasn't been passed but would increase this and they said this in the hearing last night by 10x. Well, what's 10x of the existing thing? So it's like, okay, maybe that opens it up to 80,000 patients of the state of texas and maybe that creates 10 licensees or 30 licensees like, is that enough to serve the state of texas?

Ben Larson: 9:18

Probably not, and so are people going to be able to have access to to THC? Yes, they will. We'll be through teacup, who knows? We'll be through the illicit market, most likely. And where's Texas? Next to Mexico? So, yeah, bring back the conversations, the border walls and the cartels and all that. So yeah, it was a. It was a busy week. Last night was was fun. Last night did start the previous morning, so there was an entire day of session where sb3 being brought to the floor kept getting postponed, kept getting postponed. It was supposed to be 10 then, then 10 am yesterday morning and then it got postponed all the way till 6 pm.

AnnaRae Grabstein: 9:59

So, as you can imagine, there was a lot of politicking happening behind the scenes, a lot of adult use, and we're so so far from that in Texas and there is a tremendous opportunity to serve consumers in Texas, but it doesn't really seem like there's anything on the docket that is going to open it up in a way that would really do anything other than create a massive illicit opportunity. And I think about this, and I think about all of the businesses that started in Texas that were trying to do the right thing and that were open to regulations through some type of legislative fix, and I'm sad for those entrepreneurs because it doesn't seem like there's really options for them with this bill. It does seem like what there is is new options for illicit cannabis to come into Texas and to serve all these people that have been participating in the hemp market there. So I don't know. I'm sorry for everyone that is waking up today and wondering what comes next, because I know that there's a lot of that going on. What do you think, mark?

Marc Hauser: 11:28

I also before we go. I should have mentioned this at the beginning. This is all my own personal sort of statements. None of it reflects the opinion of Hardeen and it's not legal or investment advice. Look, I mean I agree with you that it is sad, that you know people are going to be losing their jobs, and you know it's not the result that people wanted. I think, though, it's a good example of how expectations in this industry are. Just, you know, continue to be off base and people not understanding that what is rational never applies in cannabis.

Marc Hauser: 12:10

And Texas is a funny state in. It's got kind of a unique political situation, both with the way it's lawmaking is structured, with the power that the governor, and particularly the lieutenant governor, have in that state. So you know, so it's uniquely sort of structured the way things play out there, but you know, at the same time you know I would counter a lot of this with this is all built on a loophole, and you know you may get and I'll probably get some nasty email for calling it a loophole, but it's a loophole and it's there. There is risk in building an industry, an industry based upon a loophole, particularly one where you're asking politicians to justify allowing psychoactive, psychotropic drugs to be or sorry, products I should say to be sold to the public without regulation or with a certain level of regulation. That doesn't quite sort of meet what other products are at.

Marc Hauser: 13:23

And it's possible in some states are continuing to allow it. But it really shouldn't surprise a lot of people that a lot of states don't want that. The reason why we're here today is because Congress hasn't moved on it, even though it's you know, it's known about this problem for a while, because Congress can't do anything and we kind of all agree on that. And it's only been until recently that states are, you know that states are really being coming aware of this. I don't want to call it a problem because that's motive. Anyway.

AnnaRae Grabstein: 13:55

Let's double click on this.

AnnaRae Grabstein: 13:57

Yeah, I'm going to interrupt you for a second and just say that what you're talking about is the power of politicians versus the will of the people, and this seems to be the sort of theme across cannabis policy constantly and this sort of recovery that the industry is trying to create in the hearts and minds of politicians who are holding on to reefer madness ideology from the past, because the American people support adult use legalization, they support medical cannabis, they support access to cannabinoids broadly, and I think that the American consumer doesn't even really have an opinion on hemp versus cannabis, and they don't need to.

AnnaRae Grabstein: 14:44

That is not the calling of the American consumer to understand the complexity of the laws related to hemp and cannabis. My own husband can't wrap his head around it and I work with this space. This is a perfect example, I think, of a few powerful politicians that have certain positions on what is right or wrong for their constituency. Getting to choose when really the people have a very different position, and I think that that's what Texans want is access. There's a lot of people and businesses that are enjoying access to cannabis and now they're not going to have it anymore.

Marc Hauser: 15:26

Yeah, but for better or for worse. I mean, that's the way America works. I mean, most people hate daylight savings time but we still seem to have it because the farmer lobby wants it. You know, I mean and I'm not trying to be flippant, but I mean, you know you can make that complaint about a lot of things. It's unfortunate because it is indicative of where cannabis is at and how. For years we've been expecting, you know, change. We've been expecting Congress to do the right thing, you know the DEA to sort of come to its senses about the sensibility of all of this, the presidents to make you know change, but that hasn't happened because there's no political. You know there's, the political will isn't there and it's such a it's such a hot button issue, but it's also a low priority hot button issue. I'm sorry, ben, I cut you off to make my little rant there.

Ben Larson: 16:20

well, no, it's. It's kind of funny, you know, reminds me of this chris rock quote where he was talking about when, like sigfried and roy got attacked by their tiger and he was like that tiger didn't go crazy, that tiger went tiger texas just went texas, like. I remember when, like, hemp thc started selling in texas and I was just so dumbfounded I was like this is happening in texas, te Texas hates cannabis and it just kind of proliferated and I never quite wrapped my head around why it was proliferating beyond this like two-year cycle. But they never like took it into session and I believe it was Dan Patrick that actually killed it last time around. So maybe it was just like not as important as this time, and yeah, but I think it's also important. It's. It's it's not done, done right, like I.

Ben Larson: 17:11

I know greg abbott hasn't proven to have like a huge against the lieutenant governor, but like maybe if he receives thousands of letters from veterans and consumers and business owners in the state that maybe he'll consider vetoing this bill or you know, lawsuits, lawsuits will certainly drop on the government's desk and that could tie things up in potential like restraining orders and whatnot, and so what this all kind of like generally leads to is what do we want to see and like? How do we get there? Because what we lack in this industry is a singular voice and we can't even decide what that voice is or where it needs to be or where it needs to align and like how do we make it big enough and strong enough to compete with these other lobbies that are that are in the marketplace? Like you know, we do have an effort where we've been aligning with some, some of the alcohol voices, and that has been like oil and water with a lot of the hemp operators. They don't want to see products go to to alcohol. You know, so to speak, they don't want to see, see the industry sold out to alcohol. But like, how are we going to get this done if we're just constantly fragmented on all fronts? This isn't just texas, this is at the federal level. This, this is in every state level. Like people are constantly being surprised by the laws that are being passed in Alabama and Tennessee and you name it. I'm kind of at a loss and I don't know if there's a question coming here, and so maybe I'll just kick it back over to Mark and see if he can muse on it.

Marc Hauser: 18:43

No, I think you're right and I think you know it's not just with respect to hemp. I mean the Right and I think you know it's not just with respect to hemp, I mean the non-hemp side of things. You know what I mean we were talking about this earlier is there's no good, there's no good words. Yet we got to come up with better vocabulary to distinguish hemp and non-hemp cannabis. You know, talking about confusion, you know, but the non-hemp lobbies, I mean, have been, have had that same problem for years. You know we have a lot of different. A number has been focused on a lot of random things instead of focusing all of its firepower on changing the narrative and getting legalization done. It's the only thing that's going to fix the non-hemp industry is legalization period. All these other changes, safe banking, safer banking, all this other stuff it's all marginal. And, ben, you're saying this on the hemp side. I mean, I think it's the same thing. You've got different constituencies trying to push for different things instead of all aligning on one message.

Ben Larson: 20:04

But to Anna Rae's point, are we still definitively have sides? After all, this Hemp is very divided within hemp right, there is material hemp, industrial hemp, and I think they deserve their own definition and category and I think that's coming from what I've been hearing at the federal level. But then there's all the cannabinoids coming from hemp and that is becoming very closely associated with cannabis, to the point where I watched a lot of the rhetoric being delivered last night and it was. There's this one story where this woman God bless her is like crying about her daughter who went through like cannabis hyperemesis or was it CHS? But she was describing her adult daughter that was in a legal state of nevada consuming cannabis. I'm like the lines are becoming very blurred well, it's.

AnnaRae Grabstein: 20:54

It's because it's because it's like, what are we talking about? Are we centering on consumer? Are we centering on regulatory navigation from a business perspective and what you're allowed to do from a go-to-market market by market, like legal allowance? So people, yes, they don't see the difference. They're going to ingest a 5-milligram edible, thc edible, and whether it comes from hemp or it comes from cannabis, likely their experience is going to be fairly similar and how it gets to them and what the legal pathway is through the regulatory and legal kind of messes that exist for businesses and manufacturers are unique depending on where that consumer is standing and living.

AnnaRae Grabstein: 21:39

Interestingly, I think, like pivoting to two of the larger legal cannabis markets. There are, I think, two different, pretty important conversations going on in both California and New York that are worth talking about. New York has finally announced that it's going to be launching its track and trace program and it's interesting most states, when they launch either their medical program or their adult use program, the track and trace program launches at the same time. And New York took a different approach and launched the market without launching its track and trace program, with a stated intent that it would do so at a later date and they signed a contract with Biotrack, which also was a divergence from the norm, which is most of the states have gone the way of metric, from the norm, which is most of the states have gone the way of metric, and they finally, after a couple years of having this program in place, have announced that in August is when the first track and trace requirements will begin for cultivators, and then they're going to, month after month, roll it out for different parts of the supply chain.

AnnaRae Grabstein: 22:46

September is when the manufacturers and, I think, distributors will need to come online and then, right after that, retailers will follow. This is on the back of massive questions about product coming into New York from other markets and potentially it not being caught because there hasn't been track and trace in place. So it's been easy for folks to import and invert product from other markets. So I think that this is news because it could have a domino effect on other markets. Apparently, oklahoma and California are the places that most people are saying that the extra product has been showing up in New York. I don't have any inside information to say who's doing this, but it's possible that track and trace could make a big difference.

Ben Larson: 23:39

I think diversion is happening in many places. I've heard of Michigan products showing up outside of Michigan. I just don't think it's going to stop. It's one marketplace, whether it's the illicit market, cannabis or hemp, people are going to get the product and they're going to get, hopefully, quality product, but cheaper product when they can. And great that New York's doing this Biotrack, sure, whatever. I also heard that they embargoed a bunch of Stizzy product, but yeah, I don't know. I'm curious, mark what are your thoughts on how the markets are evolving, and are any of them reaching a more viable state than the other?

Marc Hauser: 24:20

You mean California versus New York? Sure, let's start there, we're all sitting in California, which is not helping, which is about as non-viable as it gets.

Marc Hauser: 24:33

California is about, you know, it's about as mature a market as it can get, both you know both from a consumer perspective as well as a, you know, the licensed perspective. It's been. What since 2016 is when we passed adult use. It's when we passed the law and then it launched 2018. Launched 2018. It's about as mature as it gets and I think it's really showing its cracks. There are so few companies that are actually thriving here.

Marc Hauser: 25:05

That happens in a lot of states where that sort of reach maturity, where you see this curve in most states, where you get incredible demands to start and then you have too much cultivation and then there's too much product.

Marc Hauser: 25:20

Then eventually it flattens out because the consumers that are in that state who are going to be buying product from licensed dispensaries are fully being satisfied, and so you kind of reach this stasis and basically a flattening to slight downturn of the curve, and that seems to keep happening in every state. New York is definitely on the upswing. I mean, you know I don't need to repeat what everybody knows about the failures of the launch there, which you know it seems like they are it's getting better, you know, with respect to crackdowns of illicit, unlicensed dispensaries, certainly in Manhattan, but you know, from what I understand, it's still a problem. Going back to what Anna Rae was talking about is about sort of products showing up in that state. I think that you're probably going to see less of it because of track and trace, because it's harder then to get those products into licensed dispensaries and as the state becomes more successful at shutting down unlicensed dispensaries, there's going to be fewer places for those products to go.

AnnaRae Grabstein: 26:35

They can all go to Texas. Now, just as a side note, the products can go to Texas. So New York will turn on track and trace. It will close off the import and now there's a new opportunity for everybody. Yeah, that is sarcastic.

Marc Hauser: 26:48

It blows off the import and now there's a new opportunity for everybody.

AnnaRae Grabstein: 26:50

Yeah, Well right, that is sarcastic. I don't know if you can all tell in my voice but, also maybe realistic and truth telling.

Marc Hauser: 26:56

Well, yeah, that stuff's going to end up somewhere. You know it's going to still end up within the unlicensed market. What New York is doing will likely have the effect of reducing acts. You know it won't be. It'll reduce its prevalence in licensed dispensaries and with hopefully fewer unlicensed dispensaries in New York. But yeah, it'll just get diverted or I shudder to say, inverted I don't like that term into the unlicensed market, sure, into, you know, into the unlicensed market, sure. So yeah, I mean it's, but yeah, I mean, if you walked into a dispensary two years ago in New York City which were everywhere you could see, you know, branded products.

Marc Hauser: 27:41

I don't want to name names, but you could see branded products from all across the country and you know, it wasn't totally clear if those were actually. You know, were those authentic products from another state or were they? You know, were they just sort of scammed with that, you know, with that brand's name? It wasn't totally clear. But uh, you know, anecdotally, from what you heard, it was real stuff just being brought in from the other states. Um, it was a huge problem so we're.

Ben Larson: 28:08

we're in an interesting place in the industry, right, the the cannabis industry is is not super stoked with the reality that they're getting to live in most cases. There's some states that are still in their first 18 months, and so they're enjoying it hello new jersey. But then there's there's what the hemp industry is experiencing and and they're they're feeling like things are being taken away from them. And you know, I know, a lot of cannabis operators are looking at what's happening in hemp and they would just love a little bit of taste of that. And you know, many of some of the brands are actually trying that. Some of the MSOs are trying it, and so I guess let me take this more to a to in a personal direction. Mark, You've been doing this since 2018. So you've been through a lot of the ups and downs 17, 17. 2017. Sorry, I didn't mean that that's seven years.

Ben Larson: 29:02

Yeah, what keeps you enthused, like what are some of the bright spots for you? What has you excited looking at the remainder of the year?

Marc Hauser: 29:10

Oh, I mean there, what gets me excited? There's nothing that has me excited right now.

Ben Larson: 29:19

And there are no bright spots. Uh, this is called high spirits.

Marc Hauser: 29:22

There you go Um, I'm being slightly flippant, but not totally, I mean it's. I'm being slightly flippant, but not totally, I mean it's. You know, I, I look, I love this industry. It's. It's rare that you get to work, you know, you get to focus your career on building something from scratch, uh, and you know, and helping people and working with and being one of the people to to help sort of create a brand new industry, especially an industry that you know that ultimately is helping people.

Marc Hauser: 29:52

You know, I used to poo-poo the idea that that cannabis is medicine, but I, you know, I, I I've come to really understand that, that you can see that you, you really are helping people with we are, you know, and what we're doing, and that's, that's great, and's great. And this industry is so fascinating from an intellectual perspective because it's just so hard and so much of it doesn't make any sense. Trying to navigate an industry that's both illegal and highly regulated at the same time is really hard and it creates a lot of weird problems, both, you know, academic and sort of existential, as well as the practical problems of operating your business. And how do you navigate that? I mean, that's it's, it's fun and it's interesting that way. But you know, but at the same time I remain fairly pessimistic about it, and you know. So I go back to, like I, you know, there aren't many bright spots on the horizon, unfortunately.

Marc Hauser: 30:52

You know, particularly for, you know, non-hemp cannabis. You know it's not looking bright and you know the few sort of lights we saw on the horizon with rescheduling which would have, you know, eased the financial burden on the industry to a certain extent. It would have, you know, given the a bit more of a vibe, sort of positive vibe to the industry. Is is kind of, you know, fading, and you know, and, and the chances for any sort of real political action at the federal level these days are, you know, I think, zero plus the, the, the competition from its, you know, its its sibling hemp, remains a problem for non-hem cannabis. And then I, you know it's, it's, they're kind of like stepbrothers in a way, uh, where their family, but they, they, they, they, uh, you know they bicker a lot, let's just put it that way. You know, and the, and you still, you know what other industry has has an illicit market that's bigger than it, that continues to thrive. I am serious when I don't honestly see any bright spots. You keep working in it every day.

AnnaRae Grabstein: 32:05

I feel like what what you're really talking about is the difference between like transparency, honesty, like not being in denial about reality, and spin, and so you're talking about like balancing realism with actual, like, I guess, adaptability in the face of challenge.

AnnaRae Grabstein: 32:26

It's a good way to put it Because I know you. I know that you are pretty resolutely focused on your work in the industry. You get up every morning and you think about what's happening. You are working on compromise in all kinds of ways and you're someone that has a unique way of thinking about creating consensus and compromise. So I want to hear the honest truth of what you think separates those that will fall victim to the crap that cannabis is facing versus the people and the businesses that you think are going to make it through this. Because we know cannabis consumers aren't going anywhere. It's just, yes, it's a tough business environment, but what? What separates the good companies and the good leaders from the ones that are not going to make it through this climate?

Marc Hauser: 33:17

No, it's a. It's a, it's a good point and I, you know, I I am, I'm optimistic about the industry in the long run and there are good operators out there and there are people who are succeeding in this. There are well-run businesses and there's a lot of great people trying to make it work in the industry. You know, in the face of, you know of just rampant, you know pessimism and terrible overall. You know business environment for the industry. You know, and I think what distinguishes those people you know from a business perspective are just our tightness in the way they run their business, an incredible attention to margin, treating their people right.

Marc Hauser: 34:06

In making this business work, compliance is 98% of the game and I think, understanding what you want to be when you grow up, I've always felt that eventually this industry will be hourglass shaped, similar a little bit to the craft beer industry, or sorry, the beer industry, where you've got, you know, a handful of players at the top who have a lot of the volume. You've got a lot of small players at the bottom who are local or hyper-local, who are more focused on the connoisseur or, for lack of a word, snob, and you've got and I say that lovingly and you know, and not much in the middle. To me that shows that there's room in cannabis for both. There's room for big players of a national presence and a lot of you know who have a lot and a lot of resources to you know to cater to a broad consumer base. But without you know a ton of typicity within their product, you've got a lot of small.

Marc Hauser: 35:14

You know local craft producers who are you know, who are out there for the weed snob, who you know, who are producing very sort of highly crafted products, and you know, and so to me success is you know, know, if you're not going to be the big one and not everybody can be in the top how do you find your place within, within that small niche? What makes you different? And it's really hard, you know it's a lot, it's easy to say that, but it's really hard. In an industry where you've got a lot of brands a a lot of product, it's not that easy to distinguish yourself and everybody's competing for shelf space and it's hard to build a brand because advertising is really tough, if not almost non-existent, and so you know it's not that different from other CPG. But to me that is where companies succeed and don't succeed is what really makes them different in an industry where it's hard to differentiate yourself.

Ben Larson: 36:21

Yeah, I want to bring it back a little bit to the regulatory convergence, because you say hemp and non-hempemp and it feels a little bit like kind of stuck right. We're stuck with these two different paradigms that are running in parallel. And in my world, you know, I think a lot about the consumer, who we've already identified, really starting to see this as just, you know, where can I get the cannabinoids that I want? And we work with a lot of beverage brands who, as a product category, have been the most fluid across the two different regulatory structures. You know, you see a lot of brands operating in both. And then we have the MSOs, you know, kind of jumping in, like I said, doing their thing. And so, as we think about the future, is it even a potential that we see regulatory convergence like?

Ben Larson: 37:13

I have my thoughts and I'm queuing this up for you, mark, and, and I think something that came up recently really makes it poignant for us here in california is there's this uh, what's it called? The like the rethink cannabis um movement, where it's like redefined a new voter initiative for the state of california to replace prop 64. Now, if we can't get it.

Ben Larson: 37:36

That's what it's called cannabis aligned, sorry yeah and so if we could get past the whole, like how do we can we, you know, raise 40 million dollars or whatever it takes to kind of push something like this across? Like how would we actually do it? Would we get hemp and cannabis operators in the same room? And like, would we start looking at it as regulatory convergence? Could we set aside all the different capitalistic components to really think about, like, what is the the vision of the future? Like how do we get cannabis or cannabis in all its forms to people? And, and like I and I was saying this to nina parks like on linkedin, it's like I really want to ensure that we have all these voices equally represented. When we have this conversation it always comes down to is like, how do we make decisions with all those like diverse perspectives?

Marc Hauser: 38:30

because, as we've seen in california, you can have some very powerful voices representing just a few operators yeah, it's a great question, which I think the answer is a lot harder than people make it out to be. You know, I mean one of my beefs with the rhetoric from the hemp side of things is when you know the argument that let's just all work. You know let's just all work together to figure this out. You know that's easy to say but I don't. You know it's rarely explained or articulated what that means, because a lot of the you know a lot of the results is only really going to favor the hemp side of things and because you know how do you reconcile and I don't mean this in an antagonistic way, I mean this in like a, in an academic and sort of like trying to think this through what does that really look like? Because if you've got, you know if the point of hemp that might be the wrong way to put it.

Marc Hauser: 39:39

But the point of hemp is that it's a federally legal product and you know, with everything that's sort of wrapped up in that and putting aside, you know, fda regulations and the food, drug and cosmetic, that, putting all that aside it's it's a let's just for the argument. It's a legal product, federally legal product, and so that means that you know so does. But then you've got non-hemp that has, you know, by state law, has to go through the full track and trace system and is subject to 280E and it can only be sold in dispensaries, licensed dispensaries. You know, I don't know how you can feasibly reconcile those two.

Ben Larson: 40:22

So I mean we have examples right, or at least examples trying, and Minnesota's kind of the hallmark of the kind of bifurcated market. But one way to consider it is you have the cannabis marketplace where people are shopping for cannabis and cannabis alternatives, and then you have the low-d dose hemp products that are in the mainstream marketplace where they might be perceived as alternatives to other products. And I'm going to always speak from the beverage perspective, right, like you go into a bar you don't want an alcoholic drink, but you'll take a hemp beverage drink and it's low dose. It's not a hundred milligram drink that you'll find in dispensary beverage drink and it's low dose. It's not 100 milligram drink that you'll find in dispensary. But it creates an opportunity for general access and normalization of cannabinoids to consumers and, like that, could theoretically increase the whole, the whole pie for everyone and that's a fair point, and before mark, before you, before you respond, ben, what you're talking about is how we get there.

AnnaRae Grabstein: 41:25

I think Mark is talking about the challenges. But, mark, when you answer, you have a lot of perspectives about how to build consensus, because you have been getting deals across the finish line for a long time, for a long time and let's say this is the deal. This is like the biggest deal that there is, for cannabis is like how we reconcile this. You know that not everyone's going to win, right, there will be winners and losers in this deal, right? Like, oh, how do you get everybody together and get a deal across the table?

Marc Hauser: 41:58

Yeah, I mean, I don't get paid enough for that. I, no, look, I, you know, I mean, ben, I take your point, I, it is fair, and I think that that's where you know you. You have to distinguish form factors, um, and I think what I'm getting at maybe more has to do with you know, as you're distinguishing it between beverage and everything else. Beverage through dispensaries has always been a very small part of the market because it's hard to distribute. It's hard for cannabis distributors to distribute and dispensaries don't have a ton of shelf space or space to store it. Distributors to distribute and dispensaries don't have a ton of shelf space and so or you know space to store it, whereas it is.

Marc Hauser: 42:46

It is much more natural for you know the, the alcohol distribution system and you know, and all the mishegas that's, that's wrapped up in that. But you know, so I, you know, to me maybe that's where the resolution comes out Now. I mean, minnesota is a funny place too, because you know they, they also, their law is in place because of of a you know a reported mistake by the legislature, though I've also heard that maybe it really wasn't a mistake, you know. So that that's, you know, that's got. That's funny in and of itself.

Ben Larson: 43:21

I think it was. I think it was very deliberate. It just happened to be an oversight by certain yes voters yeah, yeah, yeah, it was.

Marc Hauser: 43:28

It was a mistake, but not really a mistake.

Marc Hauser: 43:30

You know it's which is nuts, but it's um, yeah, I mean me, you know I, and to iterate I mean figure, to your point, I mean to you know, maybe that's where the middle ground is found, where you know you, you, you have, you are allowing certain, you know certain beverages, beverages with you know that are that meet certain standards you know and are properly licensed through. You know, through a state system, that are sold through you know a certain license system. I mean maybe it's the alcohol system, I don't know that you know a certain license system. I mean maybe it's the alcohol system, I don't know that you know. Maybe that's the middle ground. Whereas, and then you know reforming and figuring out, you know a flower and all of that needs to remain within the you know the license system. You know there, because there isn't as much to me the the threat, because there isn't as much to me the threat, if that's the right word for it, to licensed non-hem cannabis is more from the hemp flower and hemp pre-rolls and all of that it's less so from beverage.

AnnaRae Grabstein: 44:56

And so maybe that's where it comes out. You know, and as we talk about beverage, we're talking about, you know, thc, hemp, derived THC beverage. You know, the whole sort of CBD is that I came away from that with. Is that remembrance of how fast staff turns over in DC and how fast the staff needs to constantly be reeducated about what these issues are. And kind of all the meat that makes the sausage, kind of all the meat that makes the sausage. And it occurs to me that this is just so nuanced that it's just so complicated for lawmakers who don't spend their days like we do in this sausage making to understand. And how we explain it and how we get them to understand is so important.

Ben Larson: 45:42

Well, my perspective is that how we explain it and how we get them to understand is so important. Well, my perspective is that it's kind of like organized chaos, right, like everything that's happening across the states between cannabis and hemp is it's a big experimental testing ground for what needs to happen at the federal level and Congress is designed to move slowly, like this has been said to me every time I've been on the hill. Like 15 years is like the general cycle that takes to like really get something normalized and passed, and you might argue we've been at this for more than 15 years, uh, but I mean, it's changed. It's changed so rapidly, right.

Ben Larson: 46:20

But what I do recognize happening is the regulators have been everything that's going on in all these different markets and they're talking, and they're talking to the legislators, and what we start seeing at the federal level is this understanding that's like, okay, you have hemp and you have cannabis, and you have hemp that's for industrial, and then you have hemp that's destined for cannabinoid extraction, and then we have the FDCNA, like Mark Mark identified right, and so like the FDCNA doesn't really have a definition for cannabinoids, and so what we need to make sure happens in the FDCNA is that we get a cannabinoid section, not a hemp section, not a cannabis section, a cannabinoid section and like this is how we start to drive regulatory convergence and in the meantime it's going to just be pure fucking chaos, like at the state level, uh, until we get clarity.

Ben Larson: 47:10

But yeah, like all this chaos is what's necessary to have a rational discussion at the federal level. So you know, really high level, I'm talking probably a hundred thousand feet instead of 30,000 feet. Like this is all like necessary for us to rewrite like the century of of bad legislation that's been written. But it's going to be painful for a lot of operators, you know, mainly dispensary owners, I think.

Marc Hauser: 47:38

I, I think that's spot on, you know, I think that the industry has been overly optimistic. That would just happen that the regulators and the state governments and the federal government were going to see the light, naturally, because that's what's rational and that's what's logical. And we kind of expected I mean, how many times as have did we hear oh, safe is going to safer is going to pass tomorrow, that's not a problem. And I think that you know there is a. I think most of the industry now realizes the reality that state, you know, the state and federal governments are not just going to hand this to us on a silver platter. And we, you know, we need to be much more proactive in rewriting our own narrative as an industry.

Marc Hauser: 48:28

And I mean that both in industry, both non-hemp and hemp. You know how do we? You know it's it's changing the minds of that sliver of politicians at the federal level who are, you know, who aren't yet willing to risk the political capital to make change. And at the state level, it's, you know, within each state, it's getting the regulators well, not the regulators, the legislators to recognize that. You know, the way that these laws have been drafted have been basically to isolate cannabis and not really to you know to give it the real tools it needs to be a viable, you know industry, a legitimate industry that it is and you know how you know. So it's refocusing our efforts and changing those narratives about getting politicians minds changed oh, a lot here.

AnnaRae Grabstein: 49:30

A lot here. Mark, do you have any predictions over what you think is going to be happening over the next six to 12 months in cannabis? There's so much discussion around consolidation and restructuring and debt cliffs that are coming with large companies. What do you think is happening in the next six to 12?

Marc Hauser: 49:56

Well, I think we will finally see a farm bill, because I have no basis for this, you know, I have no inside information. I just think that it's been long enough and with you know, with Republicans controlling both both houses and the White House, there will probably be more of an effort to finally get that done. So you know where that'll pan out. I have no idea when it comes to hemp, but I do think that we will finally see some sort of resolution on that. I don't think we're going to see safer pasts still. I think that we are going to see more restructurings of debt at these big companies and smaller companies, with dealing with this upcoming debt cliff that's coming, you know, in the next 12 to 18 months.

Marc Hauser: 50:46

I think it's going to be really hard. I don't see a lot of change, a lot of substantial change within the industry. I think it's just going to be a lot of the same. And I do see, though I do see a lot of your listeners who aren't yet subscribed going to cannabismusings, subsub stackcom and subscribing for free to my newsletter, so that I do see well, mark, I really appreciate you kind of uh jumping on with us and allowing us to navigate these different uh, sticky conversations I love talking about this stuff and I appreciate the opportunity and to talk to smart people about this stuff.

Ben Larson: 51:25

So yeah, well, as we head out, I want to give you an opportunity to take the mic and and give us one last shout. So we call this our last call. It's your opportunity to give a call to action, a plug, shout out to someone, anything cannabis related or otherwise. So, mark hauser, what's your last call?

Marc Hauser: 51:45

um, you know, there is a, there's a yiddish saying um I'm gonna probably mispronounce it because, as much as I know, yiddish by my pronunciation is terrible, but it's hyphen b as a, a point, and bonkus, which means trying to pick up a dead body with, with cups, which is which was cupping, which was they, you know, years ago. They, as a medical procedure, they take, you know, hot, like like glasses or like a glass, and put it on your, on your skin, to try to suck out the bad vapors and humors and stuff like that. And so it's, there's something, is this? The saying is it's, it's pointless trying to pick up a dead body with, with, with, with cups.

Marc Hauser: 52:32

And I, you know it's, it's one of my favorite Yiddish sayings because it's just kind of nonsensical and weird. But the you know, to me it encapsulates this industry is that trying to really understand it is is almost pointless and instead you just need, you just need to do it, you just need to embrace it, you need to just navigate it as best you can, but, but really trying to sort of understand it from a logical and perspective, it's just not worth it. And I say that lovingly. I say, and it's what I love about it is it's. You know Yiddish is such a loving you know, at the same time loving and bitter language, and so you know, so it encapsulates my feelings about this space.

AnnaRae Grabstein: 53:19

This concept of organized chaos that we've been kind of dancing around. This episode is hilarious, and especially in light of you guys kind of making fun of me for being excited about going to the 60,000 person dead in company show in San Francisco in August. It sounds kind of the same thing Like we just need to embrace the chaos and the crazy. It sounds kind of the same thing Like we just need to embrace the chaos and the crazy. Go for it, Let loose man.

Marc Hauser: 53:45

A little bit, a little bit, and use the porta potties. Yeah, oh God.

Ben Larson: 53:50

Yeah, well, this is like you were just asking me at the beginning of the show. It's like, how's the week been? I'm like it could I could say it was devastating, uh, but really it's expected in in some sort of way. It's just like it's just the chaos that we get to live in. Yeah, in general, like we can all look back and say it's like still kind of up and to the right, it's just a lot more volatile and and crazy than than we ever expected.

Ben Larson: 54:16

But yeah mark really appreciate your time. Thank you, so so much. Thank you. We'll talk to you soon. Alright, what do you think everybody? Big news week. A little bit of a deep dive there with Mark. Hope you liked it. Please like, subscribe, share, do all the things. Thank you to our teams at Virtosa and Wolfmeyer For keeping things going and, of course, our incredible producer, eric Rossetti. If you enjoyed this episode, please drop us a review, comment on our LinkedIn. Wherever you you find us, as always, folks stay curious, stay informed and keep your spirits high until next time. That's the show.