Ben Larson: 0:00

You guys now have a hundred episodes to listen to before you enter the space. But yes, you're right, there's no better time than now, because earlier it would be that much harder.

AnnaRae Grabstein: 0:10

It would have been that much harder.

Ben Larson: 0:18

Hey everybody, welcome to episode 100 of High Spirits. We're recording Wednesday, august 6th 2025. And I can't believe we made it Anna Rae 100. I know I'm so grateful and totally going off script. So here we go. Wow, holy shit, it's just something that we just started to do on a weekly basis. Decided to start pressing record, start calling our friends on to the show and, a little over two years later, I think we've only missed three or four weeks here and there. 100 episodes Feels pretty good.

AnnaRae Grabstein: 0:57

It feels really good. I think that in my life I have always struggled with discipline and sticking to things for myself. When I'm trying to help other people with things, I'm able to be this like great, disciplined shaman and Jedi along the way, and I think I've stuck with it because of you, because we're in it together. I think that if it would have just been me on my own, it would have been a lot harder.

Ben Larson: 1:18

It's been one of those true relationship things where I don't know how many people do couples therapy, but what you often hear is like relationships really fall apart when both parties give up as long as there's always one party trying, and I feel we've had that balance. There's been weeks where we've pulled each other into it. There's been weeks where we've given each other the space to take a break, but we've never given up on the show. I think the further we go, the less likely feel really proud of.

AnnaRae Grabstein: 2:06

We've just been getting constant reinforcement that people are engaged and are listening and are learning and enjoying what we're doing, and so it was your idea to do this Ask Us Anything episode for the 100th, and at first we didn't get a ton of engagement, but then we ended up getting some incredible questions, and so I think it just proves that not only have we've done this together, but there's been all these people that have come along some who have been our guests, but others who haven't and and who now get to be a part of this with us. So I'm really excited for today.

Ben Larson: 2:35

It was funny as some of our guest questions were coming rolling in, I was like, oh, what does this mean? That it's our guests first that are asking questions? But then I thought about it. I thought about who we made this show for and who we tend to go and invite to be on the show, and so the fact that our guests are continuing to listen, I think, just means that we're doing what we set out to do and that's creating content for the business leaders of the space. So I really appreciate everyone sending in their questions and we're going to jump into it.

AnnaRae Grabstein: 3:07

Yeah, and also today if you're just listening and you're not watching on YouTube or LinkedIn we did a little thing today. We up leveled, we got three cameras what's up cameras? So we're just having some fun. We're in person together. It's always more fun when we're in person together. So before we get started, let's just give a little cheers. Yes to all the high spirits.

Seth Yakatan: 3:35

Yep.

AnnaRae Grabstein: 3:36

Yeah, okay, I think we should just jump right into our questions and get started.

Ben Larson: 3:41

All right, I think we have a couple of audio recorded ones.

Seth Yakatan: 3:52

Yeah, let's jump in. Who's our first one? This is Seth Yakatan, wishing the crew here the most happy of hundredth episodes at High Spirits. So, anna Rae and Ben, given the duration that you have had in the podcasting world, wondering for your listening audience, who you have been so kind to educate for the last few years, what's the most gratifying thing that has occurred for each of you as a result of the creation of High Spirits?

Ben Larson: 4:21

Wow, the most gratifying thing I'm going to. I'm going to take the opportunity to do a couple. One is shout out my cohost is just being able to connect with you every week. Talk about business, because what you guys get to hear on the show is the conversation that we have with our guests, but we often have a lot of reflections on what that conversation is. Maybe this is like premium content that we have to record in the future, but just how we decide to carry that information forward and apply it to our businesses, and so for me, it's just the immense amount of perspective that I get for running my business with Vertosa, all these different questions we get to ask. It's just more information that I get to put in my head, and this is not the type of stuff you get off of ChatGPT. This is very hyper-specific, hyper-relevant, usually relevant as into what's happening right now because industry changes so quickly. So that's been hugely gratifying. What about you?

AnnaRae Grabstein: 5:23

Yeah, I guess two things too. I think it's been incredibly gratifying. What about you? Yeah, I guess two things too. I think it's been incredibly gratifying to be in person at conferences and have people come up to me and tell me that they're listening and that they're learning.

AnnaRae Grabstein: 5:34

I had someone come up to me and say that the industry has just been so hard and they've been through the full roller coaster and that there have been times when they've really felt like they couldn't move forward. And when they've listened to our content, it's brought them hope and brought them back to the reason that they're doing this, and it made me feel so validated, because that's exactly why we're doing this is to make people feel not alone and also to help them feel more informed. And then the second thing that is incredibly gratifying is just how I've been able to witness my own personal growth in terms of challenging myself to get better at making content and put myself out there in a more vulnerable way, because we are winning if we make this look easy, because it's not easy. It takes a lot of effort and self-reflection and also just trying to improve little things like the way that we ask questions or the way that we might say, or and too much.

AnnaRae Grabstein: 6:32

Still working on that, still working on it, but it's been gratifying to see the progression. So thanks, seth, for the question, thanks for being like a huge cheerleader for us through this process and being a great guest. Thanks, thanks so much.

Ben Larson: 6:45

Yeah, absolutely.

AnnaRae Grabstein: 6:46

Yeah. All right Eric cue up our next question.

Melissa VonderHaar: 6:50

Hi, this is Melissa Vonderhaar from TradeWorks, from IC Store Innovations and chair of the CSPC store cannabis board, and with the two of you being some of the most foremost experts in the cannabis space and talking about the many problems that exist here, I'd like to know if you had one wish from a magic genie that would help fix regulations to make it easier for cannabis businesses to thrive and expedite the normalization of cannabis in the United States. What would you wish for? And just to make it interesting, you cannot wish for the government to have never made cannabis illegal in the first place. What could we do today that would help fix this mess?

AnnaRae Grabstein: 7:36

Yeah, melissa, it is a mess. You're right, that's not a lie. I had to think about this one a lot and I'm just going to go for it. And I'm going to say that if I had one genie in the bottle, it would be full federal descheduling and legalization, paired with a national regulatory framework that sets clear and fair rules about how cannabis can be grown, sold, marketed and moved across state lines.

AnnaRae Grabstein: 7:59

I want to, within that context, honor what I think is the importance of the dispensary pioneers, because I think that as we think about what normalization looks like, we also need to be intentional about the people who have really jumped through the flaming hoops to create this market. So, really, when I think about that genie and what that full-scale model looks like is a tiered retail vision, and I think that licensed dispensaries should continue to exist for inhalable high potency products, and I also think they should be allowed to co-locate with other businesses. And then I would want to include conventional retail into the mix Think bodegas, health stores, grocery store chains that would be allowed to sell low dose edibles and beverages, topicals and wellness stuff Really like bringing cannabis into everyday life, where consumers are. And then e-commerce I would want that to exist too, because we're talking about the genie in the bottle, and it's 2025 and everything is online, so cannabis should be no different, yeah.

Ben Larson: 9:05

You went all in. All in All right, yeah, all right. Well, I'm going to approach this question a little bit more from a nuanced perspective understanding the world that we're operating in right now, Not the genie like the reality of it's like a genie with today's baseline. Okay, great, right, good, so like we have to the full spectrum.

Ben Larson: 9:26

We need achievement, a step along the way yeah, before I get there, I I would just like to say I know the question is position, a commercialization, all that kind of stuff, but I think it's really important that we don't lose the narrative of like. We need to decriminalize, deschedule and get the tens of thousands of nonviolent criminals out of jail. So that's my first wish. Second wish understanding the current landscape is we need Congress to identify cannabinoids in the FDCNA as its own unique category, so we can stop having the discussion about whether it fits into supplements or as a food additive or anything. They're cannabinoids. They deserve their own regulatory pathway and that allows us to start creating the rules that allow us to then determine whether it goes to the TTB or otherwise. And so that's step one.

Ben Larson: 10:28

The next step after that is what do we do with hemp and cannabis? Obviously, calling it one plant, making sure that was legal everywhere and getting interstate commerce. That is the ultimate goal. But how do we get there? I think we have to survive with a bifurcated market for a little while where we allow for interstate commerce through something like the States Act, so cannabis operators can ship from one state to the next. That we have this heavily regulated system hopefully not as heavily but still regulated for the full suite of cannabis products, the hyperpotencies, all that kind of stuff. And then we have the low-dose category that is sold in the mainstream channels, anywhere alcohol, tobacco and other adult substances are sold. So that's my midterm.

AnnaRae Grabstein: 11:12

Jane Fox Ben just laid out like the actual genie in the bottle path instead of just jumping over all the steps to get there. I really like what you're talking about as it relates to the FDCNA and cannabinoid regulatory path. I wonder why you would keep a bifurcated hemp and cannabis reality within the open construct of what if we could do anything?

Ben Larson: 11:41

Yeah, I don't know.

Ben Larson: 11:42

I try to remain optimistic, but dealing with policy for the last several years has made me very pessimistic as far as what we can achieve in the legislature.

Ben Larson: 11:52

But it's hard to imagine individual states giving up their stigmatized perspective of what cannabis is or what hemp is, and we need to preserve states' rights throughout this path, right here. And so, when I think about the near-term solution, it's like we have to preserve what Tennessee has deemed is right for Tennessee and what Minnesota has deemed right for Minnesota and, I hate to say it, but what California has deemed right for California right. And so in order to preserve that, we have to acknowledge that hemp and cannabis exist in two unique regulatory frameworks, but we need to frame them up better, right Like we need better regulations for hemp, we need the federal government to provide for consumer safety, testing standards, labeling standards, not overdo it. That's my big wish, and that's a big wish, that's a genie worthy wish is to like not have the federal government overdo it when they implement regulations, but they need to kind of stop there and then pass it over to the states to determine how they want to regulate these products.

AnnaRae Grabstein: 12:57

It's fun to think about, but it also kind of makes me feel crazy, because the incremental progress that we've experienced as an industry and as a movement is the focal point, as opposed to these big dreams. We aren't going after these things necessarily that you and I are talking about. We're instead kind of gaining inches. So I think we're going to keep gaining inches and I think there's a later question coming about, maybe what 10 years looks like from now and who wins. So we'll touch on that a little bit later on the episode.

Ben Larson: 13:33

Yeah, yeah. Well, let's progress to later in the episode, shall we?

AnnaRae Grabstein: 13:37

Okay, Next question. Producer Eric cue it up.

Chiah Rodriques: 13:41

Hi, my name is Chia Rodriguez. I'm a small legacy farmer in Mendocino County, California, and I am wondering how can the California cannabis industry correct itself and honor the legacy growers and cultivators from where this industry started legacy growers and cultivators from where this industry started. So, as a small legacy cultivator myself, I'm concerned seeing a lot of my friends go down and close because of an over-taxation and over-regulation. As we know, it's been a challenge and it's also a challenge for the consumers, unfortunately, who aren't spending as much in dispensaries. So my question is like how do we course correct and do you think it's possible? Thank you.

Ben Larson: 14:26

Wow.

AnnaRae Grabstein: 14:27

Yes, first of all, thank you, chia.

AnnaRae Grabstein: 14:30

You're voicing something that's painful and urgent and very real. A system is failing the people who built it, the legacy growers, the multi-generational farmers and the small operators that are trying to do things right, and it's painful to watch that happen. It's painful for it to happen to you and to your friends, and especially in a place like Mendocino that should be the heart of the legal cannabis story in California. So when I think about course correction, I think about voters and policy reform in California, and I think, if we're going to talk about actually creating course correction as challenging, as uphill as it is, I do think we have to go back to the voters in California. The regulatory system that we have now was born out of well-intentioned but deeply flawed ballot initiative out of well-intentioned but deeply flawed ballot initiative and it's created a structure that's fundamentally unsustainable and almost impossible to fix because of the voter initiative itself. So there's a lot of people involved in thinking about what a new voter initiative could look like. I'll focus on three things that I think would be the key pillars.

Ben Larson: 15:38

Yeah, Before we get there.

AnnaRae Grabstein: 15:40

Yeah, and I don't want to derail you. Yeah, please.

Ben Larson: 15:41

We did just have Amy Jenkins on the show. And in that show one of my key takeaways was that it could be a legislative like, brought by the legislature.

AnnaRae Grabstein: 15:53

The legislature could put something on the ballot Right Without having to get all the signatures.

Ben Larson: 15:57

So they need to bring it to the ballot.

AnnaRae Grabstein: 15:59

Yes, so you'd save like you still need the voters to. You still need the voters to fix the voter initiative Proceed, yeah. So you know there's three elements to this that I think are important. Two that people talk about a lot, one that is maybe a new idea for today. So the two that people talk about all the time is tax reform. I think that that is obvious. The tax burden is crushing the industry. It's driving people to the illicit market. It's making it so that people are paying more taxes than actual cost for their weed. It's insane. And then there is a local control problem that has created cannabis deserts and lack of retail access. So those things are table stakes for a new voter initiative. We need tax reform and we need to end local control as a barrier.

AnnaRae Grabstein: 16:42

But the concept that I want to throw out there today, which I think has not been talked about a lot because it's highly controversial and you might disagree with me, but programmatic canopy caps, which means that the state would need to tie the licensed canopy to the actual market demand, and right now California has essentially unlimited cultivation in terms of licensing and square footage and it's crashed the market and even in the largest cannabis economy in the US.

AnnaRae Grabstein: 17:11

The demand is nowhere near high enough to support the level of production that's happening in the market. And the way that I think about this is that right now in the news there's a ton of talk about how the Fed adjust interest rates based on macroeconomic indicators. We've got our president kind of throwing punches at the Fed chair because there is kind of different ideas about where interest rates should be. I think cannabis needs a similar mechanism. Programmatic canopy allocation would protect the value of the plant and give cultivators, especially legacy ones, a fighting chance. This is a concept that I came up with as I was thinking back to the initial concept of one acre caps in California which was thrown out.

Ben Larson: 17:53

Yeah, I was going to say if they had not reversed that and allowed for the stacking of licenses, like we probably would have been fine.

AnnaRae Grabstein: 18:01

We would have been fine. But I don't think we can put that genie back in the bottle and that there has been, you know, thousands and thousands of acres of canopy that's been built out and I don't think that we should take that away from licensed cultivators If we try to rebuild from the ground up. But I think that what we can do is have a process, kind of like we have the Fed at the federal level that looks at what's happening in the market, assesses the demand and allocates how much canopy is allowed to be grown that year and divides that, using some sort of algorithm, to the licensees. And it will be really complicated, but I think it's the key to not creating oversupply in the market, which is the biggest problem that California is facing and that legacy farmers like Chia are up against trying to compete.

Ben Larson: 18:47

Yeah, I don't have any disagreements there. I just think there is this fundamentally just a much larger issue. Right, like? I spent some time on the hill a few years back talking to a lot of the growers up there, and they just just the sheer infrastructure like getting through, like the purchasing cycles of dispensaries going through the distributor. By the time you're able to navigate that, you're already behind the curve as far as what the consumer wants. Right, when the farmers were able to sell directly to the consumer, they were seeing a much faster turn of product and they were able to adapt their crops to what the consumer wanted. And now it's just like things are not aligned. There's the synergy that has been lost between the consumer and the farmer and it's because of all these layers of bureaucracy in between that is required because of the regulations, and so unraveling all that is challenging. At the end of the day, we need to stop treating it like plutonium, right, like it's weed.

AnnaRae Grabstein: 19:48

It's a plant, people it's a plant.

Ben Larson: 19:50

Yes, we need to make sure that people aren't like spraying tons of pesticides on them or that there's heavy metals in the ground. I don't know how we do this in California, at least with the current state of Sacramento and how everything is. There's just so many interests involved.

AnnaRae Grabstein: 20:04

Well. So if we aren't able to actually change the underlying policy and a ballot initiative is out of reach, I want to throw out another concept that I think is relevant both to California legacy farmers, but also to the nationwide small business community of cannabis producers and cultivators, specifically, and many of you guys, if you listen, you've probably heard me refer to my time working in the meat industry and you might have heard of Organic Valley. Organic Valley is a national farmer owned cooperative in the dairy industry and it's a really cool, unique model that is a farmer-led cooperative, and I think that this is a model that could be really interesting for cannabis farmers that are small and haven't attained scale as a way to band together and deal with some of the things that you were just talking about the complications of dealing with the consumer and distribution and compliance, and accounting and HR and all the things that are not about being a farmer and and about getting to market.

AnnaRae Grabstein: 21:06

I think that what it is is. It is a bringing together everyone for shared resources under a single, unified brand, creating cost sharing, bulk purchasing, collective bargaining power. Haven't we seen this already?

Ben Larson: 21:21

Like Mikey Steinmetz.

AnnaRae Grabstein: 21:23

But that was never a co-op. So that was Flocona, and Flocona was its own individual corporation and they were buying from small farmers, but they could turn that off at any time. What I'm talking about is an actual farmer-owned cooperative. That isn't about people getting to buy and then deciding that they just want to go grow it themselves instead of buying it from farmers, and this is a big divergence from individual farmers that have created their own brands that they're proud of, and I don't want to take away from that. Like, that's certainly a path that people can choose to try, but it's a heavier lift Well and bring back the farmer's market.

Ben Larson: 22:04

Let them take their crop, put it in the farmer's market and let consumers go and pick it up. I don't know. I remember the two 15 days where you get to do the deli style and look at it, smell it and decide whether you want to buy it or not, and that's how you chose your strains. It wasn't oh, is it like 34 thc, at least for me, and I I know I'm a low dose, a low doser still, so maybe my vote doesn't count on this one I know I feel you well.

AnnaRae Grabstein: 22:33

So, yeah, chia, I think that we both think course correction is possible because we are resolutely committed and we care about California. But I think it's going to take a lot of different levels. Levers, it's policy, it's business models, it's channels of access, it's all those things.

Ben Larson: 22:51

Sorry, I know you're trying to wrap this one up and go on the next one but can we just talk about taxes real quick?

Ben Larson: 22:56

Because, again, I want to highlight something that came out of our recent episode with Amy was just that in order to get stuff done, we need to understand who the beneficiaries of these tax benefits are, and we need to go and have an economics discussion with them. So I think the industry in California needs to band together and put together a forward looking economic report about, about, like, what is the situation currently, where is it trending? And if we listen to, you know, john d rockefeller and his like thoughts on prohibition and reversing, uh, alcohol prohibition how we might be able to benefit from lower barriers, lower taxes, to create an overall more vibrant industry that we can all benefit from. And so I don't think that conversation has happened yet and I don't think the study has been done, but that is how we get to a future that is viable, amen.

AnnaRae Grabstein: 23:51

Yeah.

Ben Larson: 23:52

Producer Eric. What's next on the list?

Scott Wessler: 23:55

Hi Ben and Anna Rae. This is Scott Wessler. I'm a big fan of what you guys do, a long-time listener. I've got a two-parter here that may be a bit controversial in the current regulated cannabis space. Part one 10 years from now, which market will be bigger ingestible products, beverages, tablets and capsules, sprays, etc. Moving through traditional retail channels or the entire regulated dispensary market? And part two does the current regulated cannabis dispensary model hold up or disappear as alternate channels emerge? Now I want to make clear I'm in no way anti-dispensary or anti-regulated recreational cannabis. I've been fighting the fight in this space for well over a decade, but as both state and federal regulations continue to prevent rational growth, I'm curious to hear how you prognosticate the overall market evolving. Thanks so much, guys. Keep doing what you do.

Ben Larson: 25:01

Thank you, scott. That could be controversial, but it's something that I think about a lot and I jokingly said yes right after he said traditional marketplaces, because I do think generally, that's where it's going to go and that's where we've always wanted it to go, and I think if we're fighting against that happening, we're fighting against inevitability and what we actually all wanted as consumers, and so I do think the answer is in through the traditional marketplaces. But I don't think that means dispensaries go away. So, you know, I mentioned bifurcated from a regulatory perspective of the supply chain, but I'm going to say bifurcated differently here, where it's like I do imagine that much like the alcohol industry in Utah or Kansas or Oklahoma, where you have broad access to these lower dose products and then mainstream consumer channels, and I think you'll see a ton of volume there, a volume that probably eclipsed what we would see in the dispensary channel that I'm about to define. But, like in the dispensary channels, like that's where you get your full suite of cannabis products, that's where you get the 100 milligram, 200 milligram if you're Michigan or more, but like, once you're consuming that many cannabinoids, you're probably pretty comfortable going into dispensary, and so I think this bifurcated model is what the eventuality is.

Ben Larson: 26:23

I think the largest volume and the largest revenue will come from the traditional channels and I think there's still opportunity for there to be some big dispensaries, just the same as there are big chains like Circle K and 7-Eleven. But I don't think every dispensary and this might be the controversial part I don't think every dispensary is going to create generational wealth for its owners. I don't think that's the design. I think, at the end of the day, you're a specialty market and some of them are going to be akin to your neighborhood liquor store. Did I say anything controversial?

AnnaRae Grabstein: 26:59

Yeah, I think that there are things that we agree on and things that we see differently. Scott asks specifically about 10 years and that got me really thinking of like how much policy do I think will actually change in 10 years? And the truth is is that I don't think that we're going to see true interstate commerce and commercial normalization within the next 10 years. I don't think that we're going to see true interstate commerce and commercial normalization within the next 10 years. I don't know.

Ben Larson: 27:24

Look how far we've come in the last 10 years. Have we come that far? Well, last 10 years we were getting ready to celebrate a sweeping legalization of cannabis, but what's happened?

AnnaRae Grabstein: 27:36

federally in the last 10 years? Sure, but like Truly what has happened federally in the last 10 years. Sure, but like Truly what has happened federally in the last 10 years.

Ben Larson: 27:41

Yeah, except for the Farmville.

AnnaRae Grabstein: 27:43

So here's my take that in 10 years the regulated dispensary market and the conventional retail cannabinoid-based ingestible market will be tied, and what that means.

Ben Larson: 27:55

Isn't it kind of tied right now?

AnnaRae Grabstein: 27:57

No, I think that Beau Whitney says that it's tied. But I think that Bo Whitney says that it's tied. But I think that when you talk about like what the data says about where hemp beverages are and where intoxicating hemp edibles are and things like that, it's it's maybe 30% of the size of the regulated cannabis market. It's the data's not there, so I don't know. But I'm going to say that we're looking at like a $30 billion cannabis market today and a $10 billion intoxicating hemp market.

AnnaRae Grabstein: 28:25

People can call me out and tell me I'm wrong, but either way, I think that it's going to be roughly tied and I think that what that means is that the regulated cannabis market is going to continue to grow within its constraints, that slowly, more states are going to come online, there will be more dispensaries. Slowly, more states are going to come online, there will be more dispensaries. Consumers will become more comfortable going to dispensaries. But while that's happening, there will be hemp-derived beverages and wellness formats that are going to continue to hockey stick and they are going to be cannibalizing the new consumer that is interested in finding alcohol alternatives and really kind of creating a new consumer that isn't the dispensary consumer, and that it will keep expanding and it will be expanding at a faster rate than the dispensary market. I'll pause because I can tell you want to call me out. What do you think?

Ben Larson: 29:13

Well, no, I'm just. I'm going to change the rules of the game a little bit. So you mentioned earlier about how licenses should be applied. Right, it's like it shouldn't be. This space is designated for cannabis. It's like this space is allowed to serve cannabis is the style of license. So that is something that doesn't require the approval of the federal government. That can be done on a state-by-state basis, and that has to happen. Like this whole idea of like consumption lounges right, it's like we should be able to issue a cannabis consumption license to someone who serves food or watches move, like serves movies or whatever.

AnnaRae Grabstein: 29:54

Like you should be able to apply for a cannabis license, and the minute we start doing that and start seeing that, then you're essentially accessing the mainstream channels and I do think that's kind of like a hybrid, so I didn't get to tell you all about that.

AnnaRae Grabstein: 30:20

It was mind-blowing. And at that event it was the first time in the history we think of a Grateful Dead-related show that legal cannabis was sold at the concert. And this was because it's at the same venue as the Outside Lands Festival that's happening this weekend in San Francisco. And so the Embark dispensary team that is doing all of the on-site sales at Outside Lands set up a week early for the Dead Show, and so they do this thing called Grasslands, and I will say it's pretty cool that you could buy weed at the concert.

AnnaRae Grabstein: 30:53

But you had to kind of exit the venue, walk through a special secondary area to get another ID check. There was a whole bunch of security that you had to weave through to get into this fenced in area where you bought weed and consumed weed. But you were kind of allowed to just bring your weed in through the security gate and there was lots of weed being smoked. And on the way to Grasslands I must have walked by 25 bars that were right in the crowd, that you didn't have to go to a special place. So it's it's like it shows the exact dynamic of the complication of like, yes, it's cool that you could buy weed there, but it isn't normal, it's not actually integrated or you could just go to minnesota where, at a music conference, they did allow nowadays, which is a hemp derived music festival, not conference, sorry yeah festival.

Ben Larson: 31:43

I go to conferences I don't know about all you heathens, but yeah, it's like a title sponsor with like a big kiosk in the middle of of the concerts and being able to, and that's what I'm talking about.

AnnaRae Grabstein: 31:55

That's what we need, and that's mainstream channel, that's mainstream channel well, and so that brings up this question that scott asks of does the dispensary model hold up?

AnnaRae Grabstein: 32:04

And I think that you said it.

AnnaRae Grabstein: 32:06

I think that it will hold up, but it's not going to dominate.

AnnaRae Grabstein: 32:08

I think that cannabis is going to start popping up in more and more different locations, and if it's cannabis or if it's hemp-derived cannabinoids kind of remains to be seen over the next 10 years what happens and how that all happens. And it's possible we might see a state that actually chooses to create a regulated cannabis program and open up channels to retail access that we haven't seen other states do. It isn't off the table that a state that doesn't have an adult use program yet could decide that Walgreens could sell cannabis at it, even though no state has done that before. So I do think that the dispensary channel holds up. I think it becomes a premium channel for high potency products, for inhalable products, it's a trusted environment for education, curation and it's a place for connoisseurs and medical patients, but that most consumers are going to be excited to participate in more conventional retail channels if they are available, have it actually be legal, because if this were still like a medical market, we'd still call it medical marijuana.

Ben Larson: 33:14

I would understand this highly guarded dispensary kind of like feel highly guarded dispensary kind of like feel. But we've all celebrated this persistent rollout of cannabis legalization and until the intoxicating hemp movement rolled around, I didn't really feel what it was like, what legalization truly was. Like it's faux legalization that we're all living in the cannabis market. And then when you go to minnesota or places like or texas I know it's in limbo right now, uh or tennessee, and you get to order it off of a menu while you're sitting at dinner or go to a bar and have it be a true alternative to alcohol, like that's legalization, that's what we've all been voting for. And until we get there, like we're just in this like purgatory where I don't we're just paying a shit ton of taxes to employ a bunch of regulators to.

AnnaRae Grabstein: 34:06

But that legalization that you're talking about in Minnesota and Tennessee on the intoxicating hemp side doesn't include all the foreign factors that everybody wants, and so you know, yes, you are building an incredible business focused in beverage and beverages winning in those places, but there's some people that like to smoke weed, I know, and they like to inhale weed and they deserve to be able to do so, and we need to create a system that works for everybody. I know.

Ben Larson: 34:32

I think we agree. I'm not saying that only beverages should be legalized. I'm just saying that's what legal looks like it's just that isn't fully legal.

AnnaRae Grabstein: 34:39

That's what legal looks like. It's just that isn't fully legal. That's all I'm saying is that that's like legal for some, not for all, and like if we're talking about legal for all, I think that it's going to end up in this weird. You know, 10 years from now we're still going to have inhalables in some weird awkward dispensary location, likely or behind a counter, the way cigarettes are, maybe. But from a business perspective, I think that it's a tie. I think that and that's a significant that means a significant increase in non-inhalable products in terms of their overall proportional market kind of position, because right now, inhalables between flower pre-rolls and vapes are way more than 50 of of the market, and I think that the future is moving us more towards a 50-50 environment.

Ben Larson: 35:26

Okay, so when we're still recording this 10 years from now, I'll first say that we agree on 95% of what you just said, the last piece about what that split is in 10 years. I just think that you're going to be really surprised at what is accomplished in the next 10 years.

AnnaRae Grabstein: 35:43

So how wrong am I? What proportion of the market will inhalables have compared to non-inhalables?

Ben Larson: 35:50

What proportion will inhalables have versus non-inhalables? I'll say 25%.

AnnaRae Grabstein: 35:57

Inhalables will be 25% of the market, mm-hmm, okay, well, I guess that will be like. How many more episodes?

Ben Larson: 36:08

About 500, I guess.

AnnaRae Grabstein: 36:11

We'll figure it out. Yeah, 50 episodes a year, 10 more years, 500 more episodes. Scott, we'll let you know. Let's go. Okay, I think we are to our last question. All right, we're going to read it.

Ben Larson: 36:25

Our last question, Kimberly Gamboa, out of California, From your perspective. Your perspective. We'll start with you, Anna Rae.

Chiah Rodriques: 36:33

Okay.

Ben Larson: 36:34

Which states are best set up? As sorry reading is my second language, which states are best set up for cannabis profitability for both brands and retailers? What are the market factors driving that? When you approach this question, are you thinking about things like tax structure, licensing limits, pricing stability, consumer behavior or capital access? And what business indicators would you use to evaluate whether a market is truly worth entering? There's a lot there.

AnnaRae Grabstein: 37:05

There's a lot there, and so, yeah, kimberly, what I heard you asking is what states are the best states and where can people make money and we're talking regulated cannabis, just to kind of set the parameters.

AnnaRae Grabstein: 37:19

I think that it's about regulated cannabis. When she's talking about taxes and licensing limits, yes, but maybe we should talk about both. So let's talk about both. I'll start with the regulated cannabis and I'm going to take a realistic, not overly optimistic perspective, and I'm going to say that, honestly, none of the US cannabis states are currently really set up for long term profitability. Okay, that's the truth S cannabis states are currently really set up for long-term profitability.

AnnaRae Grabstein: 37:45

Okay, that's the truth, we agree, not in the least the way that other industries define it. But some states are less broken than others and I can kind of break down what I think are some of the better places to operate.

Ben Larson: 37:56

Yeah, I mean, I would like to know, because you're much more attuned to this than I am.

AnnaRae Grabstein: 38:00

So I think that when you're trying to look for states that you can be successful, the first thing you have to do is look inside of yourself, and we had a conversation with someone today that reminded me of the importance. It was a great metaphor about being a motorcycle and not a semi-truck.

AnnaRae Grabstein: 38:16

And the difference between a company that is a motorcycle compared to a semi-truck is that a motorcycle can park anywhere, they can weave between lanes. They don't have a huge heavy load that's dragging them down. I think that if you're going to be a company that is looking to expand, you have to be able to be nimble and you have to be flexible and you can't be like the DMV. You have to be able to make decisions quickly and actions and people need to be empowered in your company. That's the first thing. But every state is hampered by some level of overregulation and taxation. If I was going to be doing an expansion of a brand, I would look for constrained licenses, meaning that there is not an unlimited amount of licenses and that there's some type of tax reform, momentum or not overtaxation. So some of those states would be states like Maryland, new Mexico and Illinois, the ones that don't come up in the news too often.

Ben Larson: 39:13

Yeah, it's like if, like, no news is good news when it comes to regulated cannabis.

AnnaRae Grabstein: 39:17

Totally. And then I would warn against hot markets that have unrealistic valuation hype and massive capital requirements. Those are states like Florida and California, possibly New York, but I could also make an argument for the state of New York in the category of early consumer sophistication and semi-open distribution. So the states that have a really flexible distribution environment that allow brands to sell into all different types of stores, to have really effective in-person brand activation. And some of those states are New Jersey, new York, maryland, michigan and Massachusetts Maryland, michigan and Massachusetts. And I specifically think that retailers because she asked about not just brands but also retailers can see upside in Maryland and New Jersey where there's like a really strong consumer demand and adult access. Adult use access is something that is creating a lot of growth from the medical transition that both of those states have gone through. So that is kind of my realist take on some of my favorite states to focus on and I can go into business indicators, but maybe we talk about hemp for a second too.

Ben Larson: 40:33

Honestly, I don't know if I have much to add, because what I would have said at the beginning of the year has changed. It's been an incredibly busy legislative session. My head is still spinning about it, things are still happening, and so just absorbing where the cards have all fallen after the last seven months it's tough, so I can't say, you know, even Minnesota, which we've talked about about, like how awesome it's been. They've been rolling out a new regulated structure which I haven't really checked in on about the viability of that, and there's been new rules like constantly being implemented. That seems to be adding more constraints, more taxes, and so it's kind of confusing about where is it optimally. I think the entire market continues to be embattled, but I don't want to go too deep into that because this is 100th episode and we're keeping our spirits high.

AnnaRae Grabstein: 41:32

Well, and so here's.

AnnaRae Grabstein: 41:32

The thing, too is that state by state opportunity is so dependent on individual market fit for the company and on the hustle that the company is ready to bring into that experiment with their expansion.

AnnaRae Grabstein: 41:46

And a example that I'll call out a company that I watch a good friend of mine is their SVP of marketing is Jetty Extracts, and Jetty Extracts recently, in the last couple years, launched into Colorado, and Colorado is traditionally thought of as an extremely mature market with really cheap weed and from the outside someone might think like, well, why the heck would you go to Colorado and launch a brand into market that wasn't there before?

AnnaRae Grabstein: 42:14

But they have risen to the top in their category and are kicking ass in Colorado and I think it's an example of they are a mature organization with focus, with clarity, on who their consumer is and they know how to get after it and how to support dispensaries. And there's a lot of mature markets that have a ton of individual, not very mature brands that are operating that are just sort of there because they've been there, and I think that presents an opportunity for companies that are coming and you're going to do something different and serve consumers in a new way, and it already in an already proven market where you don't have to educate the consumer, you just need to provide them a new option that speaks to them. And there's a shitload of opportunity that's right there in front of you, even in a mature market, if you can make the pricing work.

Ben Larson: 43:03

Yeah, colorado is an interesting market. I've been spending a little bit more time there. There's a hemp beverage coalition that has spun up around, like Vicente, and a number of brands local there.

Ben Larson: 43:14

What's interesting about Colorado is that it's small enough to where you can really wrap your arms around the constituency as a legislature where, like, you can really wrap your, your arms around the constituency as a legislature and the legislature is actually pretty engaged in this conversation. You, you get to speak to the senators and the representatives, uh, the policymakers that that are representing the constituents, and you can have like a thoughtful conversation and they seemingly legitimately want to get it right, like they. They're concerned about consumer safety, of course, but they don't think, you know, maybe this gets to the maturity. They don't think it's like toxic. The stigma is largely gone away and I don't think we get that benefit in california where, yes, we have a mature market, but it's such a large market and there's so many layers of bureaucracy, probably because there's so many constituents. Yeah, I think just Colorado is a really, really special market and I don't know what that has to do with Jetty.

AnnaRae Grabstein: 44:12

Well, I think that what you're talking to, though, is something that is a piece of how do you choose a market like a market that has really great regulatory efficiency is a more desirable market than a place like texas, as an example, that only has a legislative policy making session every two years, and so if you're stuck in a situation where you want to change something and you have to wait two years, and if you don't get it, you got to wait another two years.

Ben Larson: 44:38

We're about to see how creative you can be at the special session, though, sure and um.

AnnaRae Grabstein: 44:42

So let's let's talk about hemp for a minute too, because I think that there are markets that that have presented really great opportunities for hemp businesses to expand into, and even markets where we're both are functioning, and I think we yes, we have talked about Minnesota a lot.

AnnaRae Grabstein: 44:59

Minnesota has been slow to roll out its adult use program, but it's been really great for the intoxicating hemp space.

AnnaRae Grabstein: 45:05

I think that everyone is kind of on the sidelines now who isn't in Texas yet looking like is Texas still going to be great? Because Texas has been great and Texas has proven, better than maybe any other state for hemp, that there is a huge consumer base that is just hungry to access these products in an efficient way, and so having that demand is huge Consumer exception and adoption makes it so much easier than having to educate consumers and introduce people to something that they just don't understand at all. So I'd say some of the business indicators specifically Kimberly asked for, like this is the same stuff that you're looking at in your business on the daily, but when you're thinking about what state to go to next, you want to start looking at the other companies that are there and how successful have they been, and you don't want just a whole bunch of failing companies. You actually want strong competitors to go up against. You want companies that have really healthy margins and are profitable. You want to see like wholesale.

Ben Larson: 46:04

Like true profitability. True profitability, not just EBITDA.

AnnaRae Grabstein: 46:07

Yeah, like wholesale pricing trends that you can predict, even if that means that the prices are going to go down. But you should be planning for that and make sure that whatever your business model is going to work For instance, like New Jersey the prices will go down. You know, if it's going to take you a year to get up and running with your production in New Jersey, you should not expect that you're going to be able to sell a product in a year for what it's selling for today. Overall retail density, like how successful are the stores going to be that you're selling into? Or, if you want to open a store, like how many other stores are there in that community? So, yeah, supply chain maturity and supply availability.

AnnaRae Grabstein: 46:43

I've seen groups try to open processing facilities in markets that don't have enough cultivation supply and then they just aren't able to get the basic biomass and ingredients that they need to produce their products. That's a problem. So there's just a lot of elements like this that go into it. But really any market can be a good market, but it's not going to be easy ever. There is no easy in cannabis anymore.

Ben Larson: 47:10

There is no easy in cannabis. Yeah, but this is easy. It can still be fun, it can still be fun and hard is not a bad thing.

AnnaRae Grabstein: 47:19

Like hard just means it's well-earned. People are still winning, and that's. I think what's important is just to say that just because it's not easy doesn't mean it can't be done, and over and over, time and time again, we see companies that rise to the top, and if you're in the cannabis space, you have a lot of friends that have suffered and have lost jobs or lost companies, and there's announcements about receiverships all the time. But there's announcements about receiverships all the time. But there's also people that are doing well and I think it's important to look at what those companies are doing and learn from them. You don't have to reinvent the wheel every time, but you should go at it your own way also.

Ben Larson: 47:54

Absolutely. Yeah, yeah, mic drop, I think I, you know, especially in the beverage category, I see a lot of people prognosticating it's like, oh, we're seeing a bust, you know. It's like all these, all these brands are going to fail. It's like in a hard industry, in an exciting industry where there's exuberance and investor money, there's always going to be a lot of failure. As long as the industry keeps growing, which it is year over year, yeah, and there's more consumer adoption, there's less stigma, the opportunity is there and and you're right, everywhere that there's challenges, everywhere there's hurdles. That's just more opportunity to create value and to sell, and so this was fun.

AnnaRae Grabstein: 48:40

Yeah, I don't think it's a bad time to be getting into cannabis, but it's not going to be an easy time to raise money so no, it's like no.

Ben Larson: 48:49

Yeah, if your goal is to raise money, probably not probably not, but it's.

AnnaRae Grabstein: 48:52

It's like to not have to make the mistakes of all the groups that came before and get to be able to look at the market for what it is today, and giving people a lot of credit, though, like for them to look at the history and look at all the failures, like they should just call me, I can help them look at those things.

Ben Larson: 49:08

You guys now have 100 episodes to listen to before you enter the space. But yes, you're right there's. There's no better time than now, because earlier it would be that much harder it would have been that much harder.

AnnaRae Grabstein: 49:18

so anyway, um, I think that that comes. That's the end of our questions. We got some others. Thank you to everyone that asked questions. We couldn't answer them all, but I think we'll do this again because it was really fun and y'all had some great questions to throw our way that got us thinking, so I feel really grateful for that.

Ben Larson: 49:37

Yeah, definitely, let us know what you think. Leave comments. Please, definitely, let us know what you think. Leave comments. Please stop pause rate review subscribe, I guess that doesn't help. If they already paused, unpause, now pause.

Ben Larson: 49:51

Go do that that's right yeah anyways, thank you guys so much for being along on this ride with us. I can't imagine what we will be 100 episodes from now. We're just going to keep doing this, going to keep making it better. Send us your requests, who you'd like to see on the show, what you'd like us to talk about. Do you want more of this?

AnnaRae Grabstein: 50:12

Yeah, Thank you to our teams at Vertosa and Wolfmeyer and to our producer, Eric Rosetti who's sitting next to us? Today, you guys can't see him but, he's here, he's real human. As always.

Ben Larson: 50:23

Stay curious.

AnnaRae Grabstein: 50:24

Stay informed.

Ben Larson: 50:25

And keep your spirits high.

AnnaRae Grabstein: 50:27

Keep your spirits high Until next time.

Melissa VonderHaar: 50:29

That's the show.

AnnaRae Grabstein: 50:31

High five.