AnnaRae Grabstein: 0:00

And to those who say it's too late and the cat is already out of the bag, no way to go backwards, I suggest you remove your head from your ass before it's stuck there permanently.

Ben Larson: 0:17

Hey everybody, welcome to episode 97. 97 of High Spirits. I'm Ben Larson and with me, as always, is Anna Rae Grabstein. We're recording Tuesday, july 15th 2025. And we have an incredible show for you today. We're bringing on an old friend, a new friend in Anna Rae's case, rick Bashkoff, and we're going to be talking about data and everything happening on the East Coast and beyond. But before we go there, anna Rae, we're doing a little bit of switching places. Where in the world are you today?

AnnaRae Grabstein: 0:53

I am in Southern Oregon in this adorable town called Jacksonville, where it is very hot but it is awesome. It's an old gold country town and I'm staying in this gorgeous Airbnb that's like finished to the T. It's lovely and getting ready to hit the Rogue River tomorrow for a four day camping and river rafting trip, Totally off grid, with a bunch of friends and my family.

Ben Larson: 1:17

Oh, excellent. I just got back from Oregon. I was in Bend and Sun River for the last few days and we took a little bit of a road trip on the way home and hit Crater Lake and Lassen National Park. Sorry, we didn't get to run into each other that would have been fun to hang out in Southern Oregon.

AnnaRae Grabstein: 1:33

Yeah, we're kind of crisscrossing Oregon ships in the night, but damn, I mean, america is really beautiful. I almost said the F word. It's F word beautiful.

Ben Larson: 1:45

It's too early for that right. We'll get there.

AnnaRae Grabstein: 1:49

Yeah, I feel really grateful to get to just get in the car and get to go somewhere as nice as as as we do, so really cool.

Ben Larson: 1:57

Yeah, yeah it's. It is beautiful where my wife and I have have set this goal a bucket list, so to speak, to all the US national parks before our kids go off to school. Luckily, we live in a state where we have a multitude of national parks to visit, so we can get the list kicked off early. But yeah, we checked two off this past weekend by hitting Crater Lake and Lassen, and I, you know, we did Lassen yesterday, just 24 hours ago. I was at 8,500 foot elevation, with snow and 85 degree weather, and it was just kind of magical, you know, to be on top of a volcano and be playing in the snow with the kids and to be able to come back down to life within just a couple hours and be back at home, so feeling really fortunate to where we do.

AnnaRae Grabstein: 2:46

Maybe we should become van lifers and take the show on the road.

Ben Larson: 2:51

I don't know. Yeah, we could, but I don't know. My whole family, one person in particular, I won't. I won't put her on blast. Oops, I just did. I might not come out of that trip alive.

AnnaRae Grabstein: 3:02

Amazing.

AnnaRae Grabstein: 3:03

Well, let's jump into a quick news update.

AnnaRae Grabstein: 3:06

Unfortunately, there is some big news that's happened in cannabis in the last week, and I just say unfortunate, because it's not really great news but worth talking about. I think we'll start with the biggest national headlines that has been a real cannabis crossover story, and that is that Glass House, which is the largest cannabis cultivator in the US, was raided by ICE last week and there was over 300 arrests from their farm worker team and unfortunately, to make matters even worse, that a number of those people that were arrested were minors. So this is a bad look, but it really is turning into some political theater between President Trump and Governor Newsom throw in kind of meanities back and forth at each other, and I think that what's happening with these ICE raids just really undercuts that. There's a human element to all of this, and what I worry about is the people that are being affected here, and the business will figure this out, but these humans that are getting separated from their families and their lives upended as part of this political theater just really makes me crazy.

Ben Larson: 4:25

Yeah, political theater is right. There's a much different way to handle this, probably a more effective way to handle this Just go to the top, go to the business. If you know this is happening, do an injunction on the business. And I mean shame on Kyle Kazan, the former cop that is now in charge of the largest cannabis operation in California, who also, I believe, is a Trump supporter. I don't know. I see a lot of chatter online just about the coordination that happened here and how they're coordinating with ICE and I don't know. It just reeks to me. I don't want to spread rumors, but there is a lot of chatter on X. You can go on there and check it out for yourself. I don't know, this just stinks to me. I don't want to spread rumors, but there is a lot of Tetra on X. You can go on there and check it out for yourself.

AnnaRae Grabstein: 5:08

I don't know, this just stinks to me it does, and I don't know anything about where Kyle Kazan's political leanings are, but what I will say is that what the data says is that about 70% of US farm workers are undocumented immigrants and it is extremely challenging to find workers to fill these types of really challenging agricultural jobs, and there's a reckoning that needs to happen as this country grapples with immigration to figure out if we're really going to go after deporting people. How are we going to fill these roles? I don't see americans lining up to fill them well.

Ben Larson: 5:47

also, like how come we can't do it with a bit of humanity? Putting kids on blast, that's just as bad as as subjecting them to supposed slave labor right, like you know, using their faces for propaganda. It's just wrong for the country to be dealing with this the way that they is. It's just shameful, like. Let's treat them like human beings that deserve at least a little bit of humanity and respect. Sorry, it's just really upsetting. I don't have the words. What I do see a lot online, what everyone sees online, is just the response from the MAGA, where it's yes, this is what we voted for, this is what we wanted. It's like they're taking American jobs and are they? Are you going to step up and take these jobs and get paid what they're getting paid and help produce the food and keep the prices where you want them so you can purchase them and live your cushy life? I don't know. I don't know what the answer is, but it's not this.

AnnaRae Grabstein: 6:43

Yeah, and while I think these actions by the US government are shameful and I feel more comfortable being loud about it than I have before because we have to use our voices here at the same time I understand that this is just a bad look for cannabis when we're in the midst of really important federal policy discussions. It would be really great if this wasn't the case, if there weren't 300 undocumented immigrants just arrested at a legal cannabis farm. So I just want us to all do better. I want to have humanity be the thing that centers all of us in this, and I also don't want businesses to be disrupted. So I'm hoping that we can get through this as an industry and as a country and as humans in the world.

Ben Larson: 7:27

Yeah, okay, well, we can move on. Yeah we can move on. Otherwise we're going to start dropping F-bombs and talking about the DCC and all that.

AnnaRae Grabstein: 7:36

Yeah, so why don't you give us an update on what's happening in DC with this potential hemp ban that's moving through appropriations see with this potential hemp ban that's moving through appropriations.

Ben Larson: 7:50

We've touched on it in previous episodes, but the long story short is Miller Amendment style language was included into the appropriations bill, the appropriations bill that's revisited every year, and so both 2025, which hasn't been approved yet, and 26, this is all being considered and 26.

Ben Larson: 8:07

This is all being considered, and McConnell, who is famous for ushering through the 2018 Farm Bill that did unlock the current situation that we are experiencing with hemp, is also leading the charge at closing the quote unquote loophole through the appropriations bill, and so, being that it's the same author, and being that he has the poll that he does, and so, being that it's the same author, and being that he has the pull that he does, there is a significant chance that the language, as it's currently written, might get through.

Ben Larson: 8:31

Now, I know that means it's an existential threat for a lot of folks, a lot of folks operating in the hemp space. However, there is a year long implementation period that has been tacked onto this. It's already in the language and it has been signaled, whether out in the open or behind the scenes, that that is a time period where we can really sit down and discuss how we want this to roll out and I can't communicate any assurities to the community. I do encourage you to get involved with the association that speaks mostly to your interests, whoever that might be, and make sure that your money and your voices are going and being heard in DC. Now I do believe that there is a fair amount of momentum in the hemp space and a fair amount of stakeholders that agree with responsible regulations and not completely closing the loophole, and I believe that there is a strong chance that we will see some form of responsible regulation being proposed over the next year instead of a complete, outright ban. Is that good enough? Do you want more detail on that too?

AnnaRae Grabstein: 9:44

No, I mean, I think what you're saying is that you anticipate that the feds are going to do something like what Texas is doing, which enter this period of moving forward with regulation, and I like to hear that confidence that you think it will happen. I think that one year delay that made me feel skeptical because nothing seems to happen at the federal level within one year. But I'm open here and I'm willing to stay optimistic as these things unfold. I think that it's an interesting moment because so many people in the hemp community have been saying that the toothpaste is out of the tube, the industry is too big and people are starting to grapple with the fact that it's possible that the policymakers don't see it that way. Uh, some of this stuff is really starting to seem like it has legs yeah, well, here's the thing it's like.

Ben Larson: 10:40

Mitch mcconnell has a duty right, and holding politicians to their duties is a whole other conversation. But he does represent Kentucky, and I saw recent numbers that 70% of the hemp grown in Kentucky is destined for cannabinoid extraction, and even if all those cannabinoids are CBD, it is no secret about where most CBD is going these days are CBD. It is no secret about where most CBD is going these days. And so, unless you want to dramatically impact your own constituents like there is, there is certainly work to be done, and I think we're.

Ben Larson: 11:15

This is just the phase of politics we're in.

Ben Larson: 11:17

We're in like this massive polarizing anchoring, like we saw in Texas, where it's like we're going to go all out, ban, we're going to shut down $5 billion of commerce and kill 55,000 jobs, or we're going to like take a special session and figure out something that actually makes sense.

Ben Larson: 11:33

And so this one year implementation period probably is what is going to be the special session for this particular piece of federal legislation. Of course, we still have the farm bill to talk about in September, so there's just a lot to do. But you know there's enough states now and there is enough commerce to your point where this needs to be paid attention to, and I know a lot of people don't like to admit it, or maybe some people don't even know it, but we have a lot of the alcohol industry wanting to see this survive, and I know that's kind of a double-edged sword. We constantly talk about not wanting the alcohol industry to control hemp or control cannabis, but it certainly helps to have them on our side when it comes to lobbying to keep it free and open, and so this is the tight, uh, tight rope that we're we're trying to walk and hopefully, as we get later into the year, we have secure updates to transmit to you.

AnnaRae Grabstein: 12:28

Totally. I think that there was a great quote that I wanted to read from a guy called Craig Fox, who writes about the industry as an investor and advisor, and he wrote a piece very similar to others that have been put out there, but reminding people how important it is to align with the trade associations and the policies that make sense for you and your business. And he says and to those who say it's too late and the cat is already out of the bag, no way to go backwards, I suggest you remove your head from your ass before it's stuck there permanently. So yes to what Craig Fox says. So thank you for that one.

Ben Larson: 13:08

Yeah, love you, craig.

AnnaRae Grabstein: 13:11

Let's get started with our guest today. You know, ben and I both hail from California and we've been accused of being too West Coast centric, but we're not, and we love all markets all around the US and the globe, and we also really love data, and so it seemed important and poignant to make sure that we created an episode for you guys to really dive into what's happening in these really important markets in the Northeast. So today we're going to bring on Rick Bashkoff. He is the CEO of Lit Alert. He's a seasoned operator with deep roots in music and media and venture and tech, and now he's turned his attention to cannabis, helping operators in New York and New Jersey, amongst many other markets, make smarter decisions with data, and he's got a sharp eye on what's working and what's not. So we thought he'd be great to bring on today and share with us what's happening. Rick, welcome to High Spirits. How are you doing?

Rick Bashkoff: 14:09

Hey Ben and Anna Rae, Good to see you. Yeah, good. Thanks for that nice intro.

AnnaRae Grabstein: 14:14

Absolutely.

Ben Larson: 14:15

Rick, it's great to reconnect man. I feel we always have these random encounters at events around the nation, the first of which was MJ biz in 2019, I think but now a coordinated effort to do it virtually in front of everyone.

AnnaRae Grabstein: 14:32

So it's good to have you man, good to be with you guys. Yeah, so, rick, you've built in a bunch of different industries. As we said in the intro, what brought you to cannabis and made you want to jump in and build something here?

Rick Bashkoff: 14:45

I'm a consumer first and foremost, so have been for a really long time. That really transformed into a pretty sizable passion around the industry Around 2016,. I was doing my thing in media and tech and was really looking for know, just candidly, I was getting a little older wanted you know part of my career to to be something that I was passionate about. So I like kind of like checked out what was happening in cannabis in 2016 and had like a borderline panic attack, like thinking I like completely missed the boat. There was like so much going on and all this information that I really didn't have my eye on, and so I was pretty entrenched in what I was doing then. So at that time, I made a couple of investments that helped me get educated. I was coming from digital media and music and things like that. I didn't think about supply chain or growing a commodity or anything like that. So I tried to give myself an education through that and ultimately ended up making the transition through a venture capital firm called 5-4 Ventures Really cool group of operators slash investors.

Rick Bashkoff: 15:53

Their main focus is on incubating concepts and they were looking at cannabis. So I joined them. That was my first full-time focused job in cannabis. We ran smack into COVID. Full-time, focused job in cannabis. We kind of ran smack into COVID. But before that happened in 2019 is when I met Ben working for that company and I was out there on a fact-finding mission about all different form factors because we were incubating all these different types of concepts. So I was trying to get a sense of pricing of inputs and kind of the realities of each of those form factors and then from there kind of just been investing in tech side of the business since and now you're the CEO of LitAlerts, correct, give us a quick download on LitAlerts, and then I have a question already queued up in my head for you, yeah sure.

Rick Bashkoff: 16:37

So pretty straightforward. So we're a data company, small software company. We're pretty new. So you've got like the headsets, bdsas of the world, who really did the tough work in the beginning, right Of getting the first data set into market, and then you've had others like pistol and hoodie and others that have kind of layered on top of that. So we entered pretty late in the game. So we're relatively new.

Rick Bashkoff: 17:02

We've been commercializing a software for about a year and a half, but we saw a unique opportunity A to build a software company in 2024 is very different than when a lot of these companies got started, but on top of it, we saw a specific opportunity around building action item and decision-making focused interfaces, because one of the things that we observed in market was I can't take credit for this, this is really the co-founders.

Rick Bashkoff: 17:31

What they observed was a lot of folks using data. Most of them were like the executives. Maybe there was a data focused person, maybe some of the middle managers, but nobody who's on the ground was really using this the sellers, account managers, brand ambassadors, inventory managers, buyers, and so that's where we've kind of tried to focus on is making these very simple UIs that can really act as a pocket tool. I mean the average time spent in our app is less than 15 minutes. So our whole kind of product vision is around folks that can answer their questions very quickly, but then of course also more robust features that the executives and questions very quickly, but then of course also more robust features that the executives and analysts can use.

Ben Larson: 18:08

Interesting, and so you mentioned building a tech company in 2024 is very different than, say, 2018. And part of that is probably the capital landscape and I'm curious because I know that Little Earths you've kind of grown it organically bootstrapped. You came from the venture side. Tell me a little bit about that dynamic, whether it's the current landscape or even just the team's philosophy around raising money and the need to do so.

Rick Bashkoff: 18:38

Yeah, I mean, I think it's largely as you said. The landscape has changed, right when I was coming up in tech and I made a transition from music into kind of software, early stage tech in 2008. And back then, you know, smart people from Google were raising money with an idea on the back of a napkin, right, like that was actually happening, right. So you've got very easy capital to hire a few engineers, build a prototype, put around with product market fit. You kind of have like 18 to 24 months to do that. That was really what a seed round was for. You know, fast forward to today, that capital is not really there, right, and so I can even tell you, as an investor, I'm looking for companies that already have customers, because it's just so easy to build a prototype today with off the shelf tools and bring something to market. I'm specifically talking about software, not talking about hardware. I'm specifically talking about software. I'm not talking about hardware. I'm not talking about anything else in the canvas industry. I'm specifically talking about software. Prototyping something has never been easier. We're doing it constantly, and I can talk a little bit about the tools that we use to do it, but just I'll give you a very quick example.

Rick Bashkoff: 19:50

At LitAlerts, we're very focused on we're not just resting on one thing, so we like to commit to prototyping one or two brand new things a year. So in Vegas we got together as a whole team and we sat together. We did a big brainstorm session and we came up with a concept that leverages some of our current technology and we went from that meeting to a prototype in three months and that's with a portion of our time, because obviously 95% of our time is going towards little alerts. But we've got a website with a web form and we've got a very simple email service that runs for consumers. The service is called Turpog. You can visit it at turpogcom. It's largely like kind of we're tinkering with it right now, but the concept is you can, as a customer, you can just subscribe to a very simple email that tells you where your favorite products are available around town.

Rick Bashkoff: 20:45

You know that type of prototyping was not possible 10 years ago, and so starting a company in software nowadays is completely different than when I was schooled in it. Our back office is completely automated. We're six nerds trying to find ways to minimize tasks and using every off-the-shelf AI capability we can on the automation side and we're about to get really focused on the AI applications, on the actual data product that we have. But yeah, I mean, it's completely different now and I wouldn't say that you don't have to raise money. I think that's kind of like an overstatement. I think maybe you know Little Alerts would be open to raising capital if it made sense, if we thought that, you know, we could scale a team. But the terms that are available right now are, are, are, are fairly, they're not advantageous for founders. Let's put it that way.

AnnaRae Grabstein: 21:40

Nerds are so cool. I I'm one also, so I I love that you self-identify, and as does your team, as nerds so cool stuff, you know. Let's let's like dive into talking about some of this data stuff, because data is both important and imperfect, and I think that in cannabis I often hear I work with operators, retailers, supply chain people and folks love to share the data when it looks good and when it doesn't look good, they love to tell me how the data is totally inaccurate and headset doesn't understand or the BDSA is wrong. I would love it if you could demystify a little bit about how the data that we use in cannabis is sourced and even how that might be different from the data that people are used to from Nielsen and IRI and broader CPG spaces.

Rick Bashkoff: 22:35

Yeah, sure, I mean, look, I think I'll actually go the opposite way and just kind of, it's all very similar, right? The concept and you probably remember this from long ago in school, right? Is any market data company is taking a sample of data and extrapolating the rest, right, I don't care if we're talking about Nielsen ratings, I don't care if we're talking about the US census, right, like, anything that you're quoting is taking a sample of data and it's extrapolating, right. And so every time that you read a report that has some data in it that X percent of people do Y, right, you know, scroll to the bottom they interviewed 1500 people, right? And so I think that it's really important to to understand that getting the universe of data I don't care if your headset, bdsa, the fir, like kind of the I'd say, the founding data providers in cannabis or pistol or hoodie or can menus or any of the other I, I, we personally feel like we're all perfectly capable. Yes, we've seen our personally feel like we're all perfectly capable. Yes, we've seen our competitors' data sets. We're all pretty close, to be perfectly honest with you, and the idea here is that there's just different ways of taking a sample of data.

Rick Bashkoff: 23:44

Like Sai from Headset, had a great talk at Benzinga this year, and one of the things we really admire about Headset is they're pretty transparent about what they have right. They even say right on we cover a third of transactions, right, that's what we have access to. So that means that the other two thirds 90% accurate, especially in the face of 0% visibility. So I think that sometimes when I'm speaking to customers, they'll ask me about a similar topic and specifically if it's a right, I'm like listen. The only way this is all a hundred percent accurate is if retailers, out of the goodness of their heart, agree to donate their transaction data to some centralized pool that all of us nerds can develop on Right. But that's not going to happen. And so you know what we try and do is. So we look at.

Rick Bashkoff: 24:51

We use a technique called web crawling, others like Headset and BDSA and do is so we look at. We use a technique called web crawling. Others like Headset and BDSA and others have direct hooks into POS some percentage of that. But what we're looking at on the website is we're looking for changes that happen. So when we get a retailer that comes to us for a demo, they'll say you know, where are you getting my data from? I'm like I'm visiting your website a couple times a day just to see what's happening. Products are changing, pricing changing, available quantities changing, and we've just built a very sophisticated suite of algorithms that takes that information and predicts what's happening in the store.

Rick Bashkoff: 25:23

We're usually in the 70 to 90% accuracy range and we do three levels of checks, as I'm sure our competitors do as well. We look at the state any state reports which are kind of here nor there. To be honest, some states are pretty good about it, Others are not. We have unit tests that run that are looking for anomalies. And then the third is like we have customers who are constantly reporting anomalies to us and we use all that information to just increase the accuracy.

Rick Bashkoff: 25:50

And I think that's another important point, Anna Rae is that when you're working with any type of market data, you should feel the empowerment to reach out to folks at the company when you see something like that, because it's probably an opportunity to learn something about the market, some nuance, something that can help the data set overall. So, yeah, that's my kind of like overall on like how these data tools again, I don't care if this is Nielsen, I don't care if this is the US Census. This is how market data is achieved is by taking a sample of data and predicting the rest. So that's my spiel on it.

Ben Larson: 26:28

So you bring up this interesting point. The states actually have good data because we have track and trace systems in every state and some states do put out reporting, which I think is great, and I know Canada does as well, or at least Ontario. Have the nerds collectively come together and maybe try to lobby the states to unlock the data data that is available in, say, metric. I know we had michael johnson on from from metric and he was saying that a lot of that is because in the contracts the states have like locked up the data and it says it's anonymized. But it's like man, what a treasure trove. If they could just unlock the metric data and make that available to data companies that are crunching the numbers, then we would have hyper accurate numbers.

Rick Bashkoff: 27:16

No, totally. Look. I mean, that is like the dream scenario for us and our competitors is that there is some structured data set that we can just then compete on features and functionality, right, it's important to remember that the merchant data is actually owned by the retailer, and so that's really what stands in the way of any. In my understanding, from a legal perspective, what stands in the way is that the retailers actually have to opt that data in. So when you hear even POS systems talking about their data, a lot of that data actually belongs to the retailer.

Rick Bashkoff: 27:52

Now, if the three of us put on our retailer hat like you have to ask yourself, depending on what you're getting out of a tool, are you in a rush to give up your transaction data? Right, and if you are, what are you? What do you want in return for that? And so I think that you know what we've observed is that retailers seem to be less and less willing to share that transactional data, and that's where I've seen lit alerts kind of win some retailer customers in that they're like you know what. You're visiting my website a couple times a day.

Rick Bashkoff: 28:24

I don't really have to show everyone everything. Everyone kind of understands that this is directional, so I feel more comfortable with this. On the other hand, again, like I would love it if we had some type of requirement that retailers had to deliver data in a specific format. But I think that the ownership and the retailer opt-in, I think is really what I don't want to say stands in the way of that. Because, personally, like again, if we put our retailer hat on, like I get it. I really do understand a retailer who's not in a rush to kind of share their you know their whole that's the treasure trove of their business, right is their customer transaction data, and so, of course, the customers own their own personal, you know, pii, but the actual records of the transactions, that's merchant data.

Ben Larson: 29:08

So, whether it's 70% or 100% in some dream scenario, when it comes to accuracy, it is basically a somewhat level playing field, and some people might argue that, but let's just assume that it's a level playing field between all the data companies of the of the platform and how people are using it, and so I'm curious as to you know, maybe a specific example like what? What's a unique way that that excites you about how someone's using your platform and decisions they're making around around their business?

Rick Bashkoff: 29:44

Yeah, so one of the reasons the company was named lit alerts is that one of the big visions around the product is to actually bring this information to these users without having them have to log into a dashboard, right, and so we started with dashboards, because that's what people are really used to, right. So we have some very simple dashboards in our web app, but we launched a beta feature last year which is a morning email alert for brands and wholesalers, and what it specifically does is it gives them a signal every morning as to whether or not a specific retailer is running low or has run completely out of stock on a product, and so now you have account execs who are located all over a state who are getting an email every morning. That gives them kind of a one look no different than browsing another email in the inbox in the morning of where their opportunities are, and so that, in particular, has been so popular that we will now, sometime early in the fall, we're going to actually pull that out as its own feature, and notifications within our app are going to get far more robust. But I think that kind of set us apart, because that was one of the first kind of like data coming at you experiences A lot of these account execs and account managers and brand ambassadors. Right, you're a brand ambassador, you're going to set up a standup. If you get an idea of your accounts are running low, right, you can, you can make that information available, right?

Rick Bashkoff: 31:18

I'd say that that kind of pushing information out has been one way that our customers have said we've kind of stood out a bit and then simplicity is like our thing, right? It's like people are in and out of this. In five minutes I'm I'm literally parked in front of a dispensary. I open up my phone because I want to know a part of my pitch is how my competitors are priced. Five minutes before the meeting, I'm opening up, I'm looking at a couple key screens that show how my competitors are priced at this store and then I'm walking into the meeting, right? So I'd say that those like really tight use cases that we're hearing about, where people are jumping in, getting an answer to their question improves their pitch, improves the structure of their day, their route. Actually, right, like, which accounts are they going to prioritize? Those are the things that we're after. Very cool.

AnnaRae Grabstein: 32:08

Well, so let's dive into talking about two of these hot state markets. Well, so let's dive into talking about two of these hot state markets New York and New Jersey. And there's been this crazy buzz around these markets and the industry and there's been a lot of challenges, and I would love for you to share what you're seeing. What are some of the key data points that you're watching? You know, I I've, I've wasn't really sure how the MSO dominance that that has been preexisting in the New Jersey medical market was going to play out with the launch of adult use and dispensaries. And and then in New York and New Jersey, there's this proliferation of illicit market cannabis that was being sold in bodegas and smoke shops and all over the place. It's just, it's been a hard to predict market, but it's starting to make more sense. So tell us how you make sense of it. What are you paying attention to?

Rick Bashkoff: 33:04

Yeah, uh, I will talk about New York and New Jersey cannabis all day, by the way, so message to you and your listeners anytime you want to have me back, um, so it's, it's me back. So I've been in the cannabis space for almost six years now, and it was lonely the first three years, right, it was like we're all flying out to the West Coast to get part of the action, and so it's our time out here as kind of like the growth markets. Many of the markets in the West, and maybe even, arguably, a few in the Midwest, are becoming mature now. So everyone's looking for growth and it's here, but it's not as fast as you'd like it to be. So New York now has over 400 retail locations open, and so we're starting to see some of the effects of location density prices coming down as well, and New York's been tough man. The delays on the retail side. They're crushing. They're not only crushing, most importantly from a financial and a mental health perspective, but the right, a lot of these folks who've been sitting on these locations for years. It's now time to open. They've been beaten up for a while, right, and so I think we need to give a lot of these operators a little bit more time than we would expect in other markets to really find their footing, because it's been a very, very bumpy ride. And so take one of our co-founders, nate. He just opened his store Bloom Brothers New York yesterday. It's a three and a half year process, and so they're just getting to welcome customers, and so that fatigue on the market I think you really hear in the operators, both on the brand and the retail side. There's arguments about how many stores we need. Right, it's everything from 1500 to no. I think we'll probably top out at 500, 600. But you hit it, anna Rae.

Rick Bashkoff: 35:02

I think that the highlight of the problems is the illicit stores. My personal opinion is the illicit stores that look like legal stores are the main problem. Right, there's definitely going to be a healthy illicit market, particularly in the New York City area. It's a big part of the culture, a very vast and sophisticated delivery network. But that's not really what I'm talking about here.

Rick Bashkoff: 35:28

I'm talking about standing on a corner in Manhattan and looking in at a beautiful dispensary with deli-style top-shelf indoor buds. None of that, by the way, is available and allowed in the New York regulated market, and so that's what I'm talking about, because I'm blown away that that exists, but the customer has no idea. So they're walking in, they think they're in a legal shop and those are the stores that I think are really hurting a lot of the growth potential for these stores, and I'm in agreement with many of the operators and ancillary providers that are focused on the state who are really pushing for more enforcement there. It's New York, so there's obviously some controversy around it, there's some lawsuits in play, but I just think that if we're being honest and we want to market and you want people to invest their time and their careers, you can't have someone playing by different rules right next door. It's just not how business works, unfortunately, yeah.

Ben Larson: 36:40

Rick, you talk about sitting on the sidelines and watching and visiting us here on the West Coast and taking notes, waiting for your turn. Rough rollouts, a rampant illicit market, finding the balance of what's enough dispensaries. I hate to say it, but this is kind of like a common theme as we kind of work our way through legalization in various states. I'm curious as to what were some of your observations of what was happening on the West Coast and how that kind of set your expectations for what you were going to experience on the East Coast and now that you're living it, what might be different than what you were expecting. Unpack that a little bit.

Rick Bashkoff: 37:22

You know, beyond these challenges, that, yeah, like I said, has kind of become normalized, uh, in the cannabis industry yeah, I mean, look, I, you know pretty, uh, I think I'm known as a pretty upfront and honest person like we didn't listen, you know, like we didn't, we didn't learn much from from the west coast markets and it's, it's disappointing, you know we're, we're definitely we, we've got, uh, you know, one of the states that we're talking about here is talking about raising taxes, right, so we're not learning much and it's painful. So that's my answer. Ben is, I think, the thing that surprised me most from the regulatory perspective. There was opportunity to meet with others who had done it, who had been there, and definitely notes were not taken, definitely not put into play, and so I think we're running into a lot of the same problems that other states are and we've complicated it even further in many cases here in New York, and then New Jersey's done a little bit, has gone a little bit of a different path.

Rick Bashkoff: 38:23

So there, as Anna Rae pointed out, there was a dominance of the medical operators and the MSOs. That's changed in the last 12 months. You've had an influx of some established national brands. I know everyone still likes to claim that we don't have national brands in cannabis, but we do. If you watch the way some of these. If you watch the way Miss Grass entered New Jersey, you know that we have national brands here.

Rick Bashkoff: 38:53

You know if you watch the way that some of the brand, like Rove, how they've entered some of these East Coast markets like there are national brands in cannabis and you know, I think, what has been really exciting about New Jersey and I don't care how much heat I take on this in New York I drive across the bridge to buy weed sometimes because there's pretty serious West Coast growers who have come East and are actually very focused on New Jersey. So you've got the group of, like Clay Nine have come out and they zoomed up the charts on the flower side and it's now basically just them, garden Greens and MSOs. So you've had a bunch of these out of state brands who have found good manufacturing partners and have really found their path in New Jersey.

Rick Bashkoff: 39:47

One other thing that I think is really important to point out about New Jersey is there is this group of independent retailers in New Jersey that are not only just fine operators, they all know each other and they're all sharing best practices. You talk to them, they all know each other and it's really created a pretty awesome community. So some of these folks Molly, ann Farms, primo, nirvana, there's all these stores that have really they're in the top 20, top 25. And not only are they driving serious top line revenue, these are companies that are looking at their second and third locations, and so you know, I think, that there is a lot of them carry MSO products too, right. But there's a New Jersey strong kind of community going here Again. Like all of that positivity is met with, like I just mentioned, there's discussions of tax raises. There's massive opt out issues in New Jersey as well, as you know, as the party's over in terms of premium pricing, so that party's over.

AnnaRae Grabstein: 40:53

So I do want to talk about category trends, but before that I want to put a little bit of a deeper dive into the New York and New Jersey retail store performance. You guys track revenue per store in an aggregate way, where you're tracking performance across these markets, and I'd love it if you could just share some data with our listeners about what you're seeing at a retail store level perspective, about kind of top line revenue that is impactful in the market. What's sort of the range of an underperforming store and overperforming store, what's affecting those types of performance metrics?

Rick Bashkoff: 41:34

Sure. So you know, look, I think that you know for us, the area that you know we're pretty focused on is, let's call it, the Northeast and Mid-Atlantic. And so if you look at, you know the major growth markets in that area New York, new Jersey and Maryland you see some similar patterns. But it's important to note that you know Maryland. So the way we look at it in terms of quartiles right, so like what quartile is your store a part of gives you a. It gives retailers a good sense that's the purpose of publishing this data is like giving a retailer like, okay, across the state, kind of what, where am I in the top 25%? You know, but kind of 25 to 50, like where are we in the state?

Rick Bashkoff: 42:15

And in Maryland that first quartile is leading the pack by a long shot. You know we're talking. You know 1.3, 1.4 million a month in gross sales and Jersey's actually not far behind in that top quartile and in like a couple hundred thousand dollars behind but over a million a month in average retail revenue. But then you look at a state like Massachusetts that mature in that top quartile, falls down below 700,000 per month. And one thing that's a little concerning is that if we look at New York and one thing that's a little concerning is that if we look at New York, new York, that top quartile is not in that neighborhood. With New Jersey and Maryland it's really kind of more on the Massachusetts level of kind of the $600,000 to $700,000 a month. Now there's lots of spread in that top quartile mainly because of Long Island, of spread in that top quartile mainly because of Long Island. So Long Island just for the listeners, long Island is this absolute. There's no better place in the world to try and make money in cannabis right now because it's one of the most populous. It is the most populous. Nassau and Suffolk County are the two most populous counties beyond the boroughs of New York City and they have some of the highest income per family household and there's eight dispensaries on the entire island. And so those stores are, you know, a lot of them are in kind of the stratosphere, multiple million dollars a month in sales.

Rick Bashkoff: 43:43

But as you kind of travel down these quartiles a different story starts to play out. So New Jersey and New York, for example, on the bottom end of the quartiles they're neck and neck and that's kind of like your 50 to 60 grand a month store. But then if you look at and Massachusetts is in that realm as well, but you look at Maryland, they are smoking. So if you're in the bottom quartile in Maryland, you're still pulling in $300,000, $400,000 a month in top line revenue.

Rick Bashkoff: 44:13

So what are the things that we see here that affects this size store count? So if you look across here, the average stores per quartile are incredibly low in Maryland, so lower store count, they're capturing broader parts of that state. The largest stores per quartile are in New York and Massachusetts and that's where you saw that leveling off in that first quartile. So it's very clear that there is an effect of and this is not anything anybody didn't know. This is more confirming, right, that the store density plays a major role in the performance of these stores. Now, what does this not take into account? Of course, this doesn't take into account things we were talking about before, right, efforts to transfer people from the illicit market to the legal market, how those efforts are going in each of the states, right, like I think New York probably has the worst of the problems in that realm. So I think there's a lot of factors that could affect these numbers as we continue to track them.

Ben Larson: 45:11

What about product form factor Like? How does that influence the performance of these stores, especially in comparison to the Alyssa market? Are you making those, those kinds of comparisons?

Rick Bashkoff: 45:22

Yeah. So I'll say this right, like people, when people think of New York, it's hey, I'm walking here, it's New York city, but right. But big state, right, you've got the Hudson Valley, you have capital region, you have the Syracuse and Rochester area, rochester areas, and then Buffalo may as well be in the Midwest. I mean it's a very, very big, big state. And so those different areas are commanding different form factors. You see, in the city, the much more social form factors, the vapes and edibles, are taking up a larger share, whereas you move north, flour takes over more of the share, because those convenience factors become less and less important if you're not in a crowded city, right, you also, I think there's something. So we're trying to look into this. We're still developing a method to do so. But you've got a commuting population, right, that are picking up their cannabis in New York city, but they're traveling back to New Jersey and Connecticut. Right. And because these states are so close, we're trying to understand the effect of they see one set of brands in New York City and then they see a completely different set, in certain cases a completely different set of brands if they visit their retailer at home. That's 20 minutes away. The products and form factors.

Rick Bashkoff: 46:41

Last thing I'll mention I don't know if this is form factors, but New York is incredibly limited on indoor canopy per the regulations, and so the only folks who have large enough indoor canopy to be dangerous are the ROs, the registered organizations. They're the original medical operators and for the most part, you can literally just map an RO to an MSO, and so most of the indoor product is actually still coming from MSO growers. Now that's changing a little bit. And now this is where me, as a consumer, I'm weighing in a little bit. Here You've got micro licenses and micro growers that are coming on, and now, while they do have the option to go fully vertical, many of them are just choosing, and I they these are a lot of these are legacy players that are finding this and coming over and doing small batch with their whatever canopy they can, right.

Rick Bashkoff: 47:40

So you've got folks like lead farmer and collector who have put out some some pretty fire product actually, um, and they have the capability of of of growing indoor, but for the most part, um, the product here is mixed light, greenhouse, um, and we don't have the growth season that the West coast States do, right, and so I don't have to tell you how old some of this weed is that people are smoking, um so so that's kind of some of the product form and product limitations around what could be affecting some of these retail numbers, to be perfectly honest. Because let's get real, if you live in Long Island and you go to the dispensary a couple of times and your dealer has better weed, you're probably going back to that dealer right, well, so let's dive into that a little more.

AnnaRae Grabstein: 48:25

So you talked about the stores, you talked about the form factors, kind of the categories, but what about the brands? I know that you're tracking brand performance and watching as brands move to the top quickly, because we don't have a ton of time left, but I would love to have you call out some of the big exploding surprises as brands have come into these markets. Maybe a couple in New York and a couple in New Jersey.

Rick Bashkoff: 48:53

Yeah, so it's super cool. In New York the three top brands are all New York born and bred Heirloom, which is actually so. I'm from upstate New York, so I'm actually familiar. The company behind Heirloom is Beacon Skift, kind of a staple in New.

Ben Larson: 49:08

York. Yeah, shout out to Matt Huber and the team.

Rick Bashkoff: 49:10

Yeah, apple Orchards. As a kid they've been in the hard cider game. They've got a great business so they're in the top spot. They've done a fantastic job with branding and distribution. Their head of sales, nick, is a total mastermind and so they've done great. Dank, by definition, is kind of the flower brand produced by HPI Canna, and then Jaunty. Jaunty is a great. They're a top vape brand. They also produce gummies and concentrates, but one of the original hemp producers and licenses. So it's a great story that they've taken one of the top spots.

Rick Bashkoff: 49:53

Most of the New York operators are in the top position. You know, if you're looking at just, you know street units sold or revenue sold In New Jersey it's a little bit of a different story. So the MSO has got quite a big start there. So you know you've got Ozone and Rhythm who are still the top players there. But a couple of call-outs that I think are really worth it I mentioned Miss Grass before who really came in and killed it on the pre-roll side, garden Greens and Clay Nine on the flower side are kind of. Now they have this kind of groundswell of awareness and they've really become some of the top shelf go-tos. And then on the vape side, man Fernway. This was very impressive. I'm talking like three months when they entered New Jersey, skyrocketed to the top and they've stayed there. Really, really pretty brilliant piece of work there by that marketing team, marketing team.

Rick Bashkoff: 50:50

But yeah, if you were to break down into specific categories, like edibles in New Jersey, you see the usual suspects taking over. So like Gruen, juana Wild, camino, right, and there are spots that you'd imagine them on the edible side in New York. I'm sorry in New Jersey, but what's curious is most of those brands are in New York as well. And you've got Off Hours, which is a great New York edibles brand. Heirloom, jaunty are up there in the top. But you're starting to see Gruen Wild, camus. You're seeing more of the out-of-state brands have success in New York in the edibles side of the business than in the vapes and um and flower side. New jersey's a little bit more more open. But um, yeah, rumor has it that uh, jeter is launching in new york soon.

Rick Bashkoff: 51:37

So I'm very, very interested to see that uh, that play out um as a, as just kind of like a again as a data nerd, but um, it's really interesting to see these West Coast brands enter the East Coast markets and see the tactics that they use. I mean, again, we're largely just observers as a data company, but it's really interesting to be able to observe and really fun to be able to report on. Yeah.

Ben Larson: 52:02

Well, I really appreciate the deep dive there and I'm imagining all these bar graphs kind of constantly moving over time.

Ben Larson: 52:10

Those visualizations that people create. That kind of like shows things over time Really cool. Rick, as we approach the end of the hour, I just would love to hear your broader observation of the space. You've had all these different roles. You're now the CEO of a data company. You're anticipating a lot of changes as West Coast meets East Coast. What's your advice to operators out there that are working their way through the cannabis industry right now?

Rick Bashkoff: 52:37

Yeah, I mean without swearing, I'll use F, but F the noise is really the bit of advice that I've gotten in my time on earth in a couple of things, personal and professional, and I think that applies here. Most great life-changing kind of world-changing opportunities have two steps forward, one step back, and we are certainly in one step back territory right now. So it's really easy to be taking hits from maybe your friends who went and started a different business and it's doing much better right now, but everything's only as good as the current snapshot. And so I think, like, if you're focusing on your, on being a bottom line operator, you know doing everything you can, uh, because it's, it's never harder, right. Then, uh, then, operating a cannabis business, business, the turn of profit, a profit, right, when I tell friends and families that license holders pay taxes on gross profit, people fall out of their chairs, right, like it's. It's just, we've had so many things against us and I think you know, like I definitely thought 280e would be gone by now.

Rick Bashkoff: 53:41

I, you know, I've been, I've been wrong enough in this industry that I kind of chuckle every time I run across someone who's like I've seen this play out before, this is how it's going to happen and whatever. And it's like man. I've been in this industry for six years and I've gone the opposite direction. If I feel conviction, I now question myself because I predicted so many times, right, that that so-and-such was going to happen, and so I think like that's it. You know, just F the noise. You know, focus on the fundamentals of your business Um, trying not to listen to too many people who don't operate cannabis and your spot of cannabis, right, like, uh, you know I don't have any great advice for cultivators and I don't pretend to.

Rick Bashkoff: 54:18

You know, if you're a software company, if you're an early stage company, I have some thoughts for you that might help. But you know, really, only listen to people in your circle who are doing what you're doing. Yeah, I think that's my, that's my bit of advice is just like there's a lot of noise right now. You know whether it's hemp versus regulated cannabis, what's Trump going to do? You know terrible topics that you guys covered at the top. You know all of it has to be, you know, ingested and taken for what it's worth. But you got to keep your eye right on the numbers and right on the operations and be customer obsessed. You know, just be customer obsessed, whatever, whoever your customer is. That's the way, that's the way forward, because you know technology and features and all those things are going to become commoditized. You know, just focus on the simple things.

AnnaRae Grabstein: 55:03

That's. That's great advice, rick. We really appreciate it. And yeah, fuck the noise. I said it. We already went explicit, so I love it. Just for the last call, you gave some great advice already. What's a good way for our listeners to find you and get in touch if they want to follow up or learn more about what you're up to?

Rick Bashkoff: 55:22

Sure, yeah, just, you can sign up for a free trial for Lit Alerts right on our website. So we give a 30 day free trial. We try and earn our spot in the tech stack. I'm also approachable on LinkedIn. I actually check my inbox and I know everyone's bitching and moaning about it right now, but it's one of the only places we can connect. So uh, I'm there. Uh, I'm checking my my inbox and responding there. So yeah, hit me up if you've got questions about data or you'd like to take a look at lit alerts or anything else about the cannabis industry.

Ben Larson: 55:51

Awesome. Thanks so much, rick. That conversation was lit. Yeah, well done. Good job, joe, ken. All right, we'll catch up soon, man. All right, folks, what do you think? Let us know. Please engage, follow us on LinkedIn, watch the live recording and leave your comments and we'll answer your questions online. Don't forget our 100th episode. We have a little bit of a M-A-A-U-A. Ask us anything, so send in your questions, we'll give you all the links, all that kind of stuff. Thank you to our families, our friends and our colleagues at Virtosa and Wolfmeyer and, of course, our producer, eric Rossetti. If you've enjoyed this episode, please drop a review, a rating Apple Podcasts, spotify, wherever you listen to your podcasts. It helps listeners like and find our content and helps us grow. Thank you, thank you, thank you, thank you. As always, folks stay curious, stay informed and, most importantly, keep your spirits. Thank you, thank you, thank you. As always, folks stay curious, stay informed and, most importantly, keep your spirits high Until next time. That's the show.