SPEAKER_00: 0:00

Assume good intent and embrace hard conversations. I think the more we can all do that collectively, despite different competing interests, the better outcomes we will get. And I think now is the time when our backs are against the wall, fragmentation is dangerous. Embrace the challenging conversations and try to understand the nuance with points of differentiation.

Ben Larson: 0:38

Hi everybody.

AnnaRae Grabstein: 0:42

And I'm Renee Good.

Ben Larson: 0:45

And we stand with our brothers and sisters in Minnesota and are dismayed by the consistent news and video footage that we see coming out of that state. And it's just not the country that we are. This is not America.

AnnaRae Grabstein: 1:04

The people that are standing up for justice are people that we stand behind. And we don't really know what to do or what to say. And we bring you conversations about cannabis every week that we think are important. And we believe that those conversations should go on. But we didn't want to start the show today without acknowledging what's in our hearts. So to everybody in Minnesota, we're with you. And if people are thinking about what they can do and how they can participate, we encourage you to go to standwithminnesota.com where you can get resources to learn about organizations that are helping people on the ground.

Ben Larson: 1:39

Yeah, it's just feels like it's hitting very close to home. It could really be any city in the US, especially a blue city at this point in time, not to make it political. And Minnesota, as we know, have we talked a lot about on this podcast, a lot of the hemp beverage movement, a lot of the edibles, edible hemp movement has started in Minnesota, and we have a lot of operators up there that this is impacting. And so to all of you, no matter what side of the fence you are on, we know it's impacting you, and our prayers and thoughts go out to you. As they say in the biz, the show must go on, and we must keep our spir spirits high. And so we're going to forge ahead, but do reach out if you want to discuss this. We're here for you.

unknown: 2:26

Yeah.

AnnaRae Grabstein: 2:27

So welcome to episode 123 of High Spirits. We're recording on January 27th, 2020.

Ben Larson: 2:34

One, two, three. That's got to be good luck.

AnnaRae Grabstein: 2:38

And there is some news that we want to highlight today, some good news, actually. The first bit of news is that Chicago's United Center became the first major events arena to sign a multi-year deal to sell THC beverages. They just announced a deal with GTI's Seniorita and Rhythm brands. And these beverages are going to be available at 24 different points of sale across the venue, including grab and go stations and bars. So it's pretty exciting. This is a place where big concerts happen in Chicago.

Ben Larson: 3:12

Yeah, this is huge, especially for it to be happening while the industry's trying to figure itself out with the pending hemp ban and everything. And I know how long people have been working to get this into stadiums and venues like this. There was kind of the early announcements in Oregon with the pickles, the baseball team, but this is feeling like the big leagues. And to see, frankly, like Ben Kovler to can continue to kill it and just push the category forward, really love to see it.

AnnaRae Grabstein: 3:42

So yeah. So over the summer, I went to one of the or I went to actually all three days of the Big Grateful Dead Dead and Co. 60-year anniversary shows at Golden Gate Park and Embark, a California dispensary chain, had a permit to sell cannabis there, which was awesome. But you basically had to leave the event venue space and go into this weird fenced-off area to buy cannabis. And on the way to going to that dispensing area, I must have walked by 40 bars that were set up throughout the venue area. And all I could think about is wow, wouldn't it be so cool if you could have actually had a purchase integrated with where all the other adult beverages were being sold? And that is what this is manifesting.

Ben Larson: 4:28

It un unlocks that discovery mechanism, right? Like that ability to really just stumble upon it, decide to explore it, and maybe discover that you love something new. Like this is what we've been missing in the category. People don't stumble into dispensaries, but they sure as heck. They might stumble out. No, no. But I think you said there there was gonna be like 24 locations within the facility by which they would be able to find these. And so that is literally like what we've been fighting for. And I've actually talked to many venue owners, and they're really excited about the opportunity to sell these products because generally people know when you're high, you don't have the tendency to incite violence like you might if you're loaded up on other substances, and it might be better and cheaper for them to manage their facilities if people are consuming these products over other things. So um looking forward to it.

AnnaRae Grabstein: 5:26

Yeah. And so then for our next piece of good news, we've talked about uh ESOPs, employee stock ownership plans before on this show. And that is when a company becomes owned by its employees. And there has been a small wave of eSops that have happened in cannabis over the past couple years. And one of the big benefits to esops is that they do not owe federal income tax, so huge benefits. So it's even better than getting rid of 280E, is like actually getting rid of income tax, and that's what happens with an ESOP. But traditionally, ESOPs are generally funded by outside financing groups, and the ESOPs and cannabis have not until this most recent one, that is Illicit Cannabis, which is a company with 500 employees who are now going to become the owners of Illicit Cannabis, and they operate in Missouri and New Jersey. And Chicago Atlantic, one of the biggest financiers in our space, came in and did 100% of the financing for this deal. So, what that means is that this employee-owned company basically goes into a debt agreement with Chicago Atlantic to buy the company from the initial owners. So it's a really exciting opportunity for employees to have long-term ownership in their company. It creates a really cool tax opportunity, and I think it's a great signal that Chicago Atlantic is coming in to back this deal.

Ben Larson: 6:57

Yeah, really interesting. I think this got picked up by Bouffe de Jour and they had something snarky to say about employees flipping their shares for a dime bag or something.

AnnaRae Grabstein: 7:06

Hopefully they won't do that. And they'll long-term retirement wealth building as a result of this. But hats off to Chicago Atlantic, too. I think it's probably a stretch to go into a new space like this. And I bet it took some work for them. And I wonder if they're thinking about doing more of these, and probably worth having one or two of the guys from Chicago Atlantic on the show to talk about how they're looking at the future of putting money into cannabis companies.

Ben Larson: 7:33

Well, Stephen, we're tapping you. Get on here. Absolutely.

AnnaRae Grabstein: 7:37

Amazing. Shall we jump into our guest? Today's guest is Thomas Wynstanley, and he is the EVP of edibles.com. And Thomas's career has been defined by his ability to navigate complexities of regulated industries. And he has worked in pharmaceutical advertising. He's worked in alcohol, he's worked in regulated cannabis, he's worked in CPG, and now he is leading edibles.com, which is a subsidiary of Edibles Arrangement and has in the last year or so gotten into the THC space. Thomas is a friend of the podcast. We got to hang out with him in Vegas and excited to have him on to go deep into what he's working on. Welcome, Thomas.

SPEAKER_00: 8:26

Hey, thanks for having me, guys. Great to pick up from the Vegas conversation that felt way too short.

Ben Larson: 8:32

It did. It felt like that conversation could have gone on forever. You you're you're kind of a natural, and we might need to consider you as a potential host of the show.

SPEAKER_00: 8:44

I don't know if you guys want that, but I appreciate it regardless, Ben.

AnnaRae Grabstein: 8:49

So you've mostly spent your career in marketing prior to leading this venture with edibles.com. And now you're in, I'm sure it's it's still marketing, but also overall business leadership position. I'd love to hear a little bit about that journey before we dive into the nitty-gritty.

SPEAKER_00: 9:05

Yeah, a lot of it honestly came from being a part of my last company, Theory Wellness. And I joined them in about 2018. We had just two medical dispensaries in Massachusetts. We were vertically integrated. And it was a startup kind of in the heyday of the East Coast legalization movement. And at the time I was their CMO. But obviously, when you're part of a small company going really fast, you have to be really nimble across a lot of different elements of the company from retail design, making sure operational workflows and retail make sense to the consumers. Even the product side, I worked a lot in product development, helped build a 250 product portfolio that was vertical, including high-five. We were one of the first beverage-regulated beverage companies on the East Coast with an automated canning line. And part of the great experience of that job was getting a lot of looks across different parts of a business that maybe a traditional CMO may not have as much involvement in. And really, it was a great parlay into building this, where with edible brands, this is a well-established business operations unit where we've got edible arrangements, which most people know from the franchise side, from the retail side. Our e-commerce prowess for edible singular feeds a lot of that business. And then we have a supply chain division. And so being a part of a larger holding company offsets probably some of the softer skill sets that I don't have. And it's been very symbiotic in terms of trying to build something like this, where probably the biggest gap is one business is very much predicated on strawberry and perishables. This one is now predicated on, I would say, maybe a very dynamic regulatory system and a very complex category of regulation. And so having those resources in a way in which kind of you were building as you were driving in cannabis, there's still quite a bit of that in a much larger market size. And really for me, the ability to get into that market where you're restricted in regulated cannabis, having a much larger total addressable market size really helped shape the lens of what we're building today. And a lot of that experience from theory that building translates here.

Ben Larson: 11:27

Yeah.

SPEAKER_00: 11:30

Yeah, you were part of it. You were part of the early days of high five.

Ben Larson: 11:34

Yeah, Massachusetts was the first state that I think we expanded into outside of California, second to Canada. And it was interesting because they were instating the five milligram cap on beverages, whereas in California everything was accelerating towards 100 milligrams. And we were like, oh, how's this going to play out? Are we going to get people like coming into dispensaries? And then I also know that Theory was famous for trying like the beverage-only dispensary at one point.

SPEAKER_00: 12:03

Yeah, that was actually that was one of my concepts that as we were building our last location out in Massachusetts, our third rec license, we were touring this old Volvo dealership outside of Boston and Medford. And I had casually said to our two co-founders, we've got a lot of space here. What if we were to put a beverage-only dispensary in this door here with a separate entrance under one license? And it was one of those moments that there was a maybe there is something. And so that was a that was a pet project of mine that because beverages were just so interesting. And we, I think we sold about a million units in the first six months in mass alone. And so we felt that that was something that we wanted to take a risk on. And I to date, I don't know what the status is of it, but it was fun to be able to try something novel like that.

Ben Larson: 12:54

Yeah. Like much of the regulated markets, I think Massachusetts has been struggling in general with the regulated market. Yeah. That's true. Anna Ray, you were gonna say something.

AnnaRae Grabstein: 13:04

Yeah, yeah. Massachusetts has been rough, man. The price compression there is it's just hard to make a profit. But you took the leap and you decided to build and incubate this brand new business. And part of that has to have been the marketer in you, and you're talking about the inspiration to do this beverage-only store, about seeing that there's a lot more consumers that were not being served and by the regulated market. And this opportunity that hemp derived cannabinoids presented had to be really interesting. And 2025 was a bang up year for hemp derived THC. It felt like the golden age in some day, in some ways. And I'm wondering if you could share kind of some of the signals that you saw from a consumer perspective, from a business perspective, just what was 2025 like? And and then where are we today and what what's happening now?

SPEAKER_00: 14:01

Yeah, so that's a great question. And I'll do my best to answer it. And I think part of, you know, when I originally signed on for this, I started in 2024 with Edible Brands and I built for about nine months before we took the cover off and said, I didn't tell anybody what I was building. And what was really fascinating at the time was watching from almost two years ago when I first started having these conversations to when we launched, there was this major change. And I think a lot of it was beverage being a Trojan horse. I think it was the embracing of retailers and distributors to create accessibility to these beverages because so much of what was probably 2024 and earlier was D2C. And so what really I think became a huge accelerator was that now all of a sudden you could go and get can at your Total Wine or your any of these stores that are participating now. And I think the other thing that we started to see was this snowball effect with consumers. And I think today, even going from New England, where everybody bought products at dispensaries, you would only think about it there. One of the big changes for me was coming into the South and saying there's no dispensary, so where do you get these products? And even starting at edible brands, talking with folks about being the THC guy that they were not expecting to have on the team. There were so many people who have said, Oh, I'm actually I like these products too. I like to get gummies or beverages. And their approach to access was wildly different from what I had experienced in the Northeast. And the other kind of complement to that was they were the same products. It was the gummies from the wild, the Juanas, the Caminos. And that became really interesting because I think because points of distribution accelerated so much in 2025, the consumer adoption accelerated with it. And I think that in a lot of ways did a ton socially, where a lot of the faux pas we had carried in the cannabis-regulated early days, those are also starting to subside quite a bit. And so I think you had all of these variables that started to lead to a bigger adoption. And I think, you know, what came with that point of distribution was having national brands coming into this category in a way that we'd never seen before. When you see a DoorDash, again, total lines saying we're going to participate in this supply chain, that to me is a signal of permission that consumers needed to know that it was okay to go and enjoy these products and that these were safe and tested. And that's a lot of the thesis back in 2024 when I had these conversations that allowed me to say yes to this project. There's a lot that made me want to say no to something as extreme as edibles.com. But at the same time, I think you need that gravity of national brands coming in to make consumers feel comfortable that there's an alternative way to get access to these. And I think that's where we saw a lot of growth.

Ben Larson: 17:07

I'm curious as to how much you think, I mean, that's a killer URL. Let's just like edibles.com. Yeah. Rewind just a little bit. Where did that URL come from? Was Edible Arrangements just squatting on it? Yeah. Like that is just such an epic. Like, obviously, people are going to go there when they start hearing about this form factor being available. It feels like the first place people might stop.

SPEAKER_00: 17:32

Yeah. So it's really interesting because when I first was in touch with folks at Edible Brands and they said, hey, we have this IP called Edibles, I was like, yeah, like that's a great domain for what I have been doing and what I think is really helpful in the future of where you can commercialize value around an IP, a piece of IP. And what was really heartening about knowing my my original reaction was just a lot of reservation because I'm like, just because you have an IP, have IP or a URL doesn't mean you can make a successful business. There's a lot more you have to do to make a successful business. And the first thing that when I started to Crovo, like, how did you come about this? It actually really came back to edible arrangements. And Tariq Farid, who is the founder, and his daughter Someia, who's the CEO today, they had a lot of IP tied to the word edible, edibles, edible arrangements, all of these different things. And even back as far as I think 2018-2019, they had actually tried a THC or a CBD program called Incredible Edibles. And that was almost early to where the market was heading in terms of what they were trying to build. And so part of what's really interesting about working at a company of the scale is that they have a 25-year history as a privately owned company of protecting a lot of the IP that has grown them so far. And this happened to be something that they were always curious about. And, you know, and I asked Tark directly when I was interviewing, did you read the tea leaves? And were you looking at this as some big thing that in the future would become what it is? And he was very honest. And he said, no, it really wasn't. It was more tied to edible arrangements business and edible, just as a moniker for the primary business. And but I thought that was really interesting. And I really wanted to understand why you are doing this? What rationale and what business do you guys have coming into this category? Because that to me is existential to me of am I going to go build a THC based platform that is not going to be compatible with the holding company? And is there going to be friction there? And when his answer was fair, it was very straightforward, which is I have recognized over the last few years how important these products have become indexed with consumers in terms of health and wellness. Attributes. We are all about providing wonderful consumer experiences that are based around health. You know, instead of giving people candy and all this stuff, we're doing strawberries and a more kind of conscious gifting approach. And we think that we have some really unique attributes that allow us to do this in a way that promotes this idea of access to these products that takes away some of the guesswork, that creates a more cohesive approach to purchasing and shopping and introducing people to the category. And a lot of those variables came into the fold that made me say yes. And ultimately, as I said, you can't build a business off a URL. You have to have supply chain, you have to have a lot of other things working in your favor. And so far, that theory has proved true.

AnnaRae Grabstein: 20:51

So the example and the experience that you're living through of edible arrangements and this holding company coming into the cannabis space is something that I think the industry talks about all the time, but doesn't see examples of very often. Traditional companies deciding to invest capital to come into cannabis. And an edibles.com decided to do that through hemp-derived cannabinoids. And I'm sure that was a discussion. We've got this IP, edibles.com. We could go a lot of ways with it. And you've gone on to build this kind of consumer platform for people to buy products, but you could have done that in regulated cannabis. And you guys chose hemp. And I'm curious if you could talk about that and talk about where that sits today.

SPEAKER_00: 21:41

Yeah. So a lot of where we had to get alignment on the strategy for this took place before I had signed on. And when it was very clear to me, the value that hemp has created in a way that cannabis has has a challenge in creating is this accessibility idea of total adjustable market size and to being to be able to facilitate and connect consumers to these products. And so we were we've been acutely focused on the hemp side because we know from a business standpoint that becomes a nice foot in the door to say, is there a proof of concept for how we envision this going? We also have led really hard on providing a consumer point of purchase that is not based on general just buying five milligram gummies, and that's simple. We really wanted to focus on this idea of health and wellness because for me, as I've gotten older, my consumption habits have changed. I really see these products as health and wellness products, where whether you're looking for very similar to nutriceuticals, if you're looking for sleep support, if you're looking for relaxation, pain management, all of these things. And part of the UX and a lot of the research I had done early on was to facilitate the purchase journey based on desired outcome. And I've always, even in regulated markets, have tried to help create a better consumer journey by identifying what is your intention of using these products. And it for me, it was less about, even with theory, about, yeah, if you want to go get stoned, like that's totally cool. Like that's your prerogative. But I think the real opportunity with THC down the road in terms of national adoption is there are a lot of use cases that people are looking for alternative approaches to their healthcare, whether it is sleep support without taking pharmaceuticals. And we really wanted to try to approach the hemp side using that as the way to help bring down that purchase journey where you're not going into a gas station and seeing these products and getting confused, or we wanted to really create a consumer journey where you're shopping based on an outcome. And hemp really allows for that in ways that regulated cannabis may not always, from my experience. And I will also say, too, I am I think there's a I have a unique lens having spent a lot of my career in this category on the regulated side. We haven't, I wouldn't say we've turned away from regulated. I think we are waiting for the right opportunity and looking for the right approach to be able to have hemp adjacent products as also work within regulated markets. But that's a little bit further downstream. And I think a lot of it is within the first real material year of a business. I've got a five-year roadmap that has a lot of different parts to it. And those parts are constantly changing because of policy, because of regulations, because of product categories. And so I think over time, as we start to blend the line of hemp and cannabis, I think we'll we want to be watching for the signals of how those start to come together. And that's really also reflected in the product portfolio. We have a most, we have a lot of regulated brands today.

AnnaRae Grabstein: 24:51

So let me just go really like push on the question of was part of the decision though at the time that hemp was is today federally legal. And that was an unlock for the business ultimately that you couldn't realize in the regulated space. And that made it possible for even though Edibles, Edible Brands isn't a publicly traded company, they are a scaled large business. Like you said, you have 700 stores, lots of franchisees, and likely are not trying to get involved in federally illegal business lines that could do things like challenge their payment processing and banking and insurance and stuff like that. So was the ability for hemp to scale over state lines and to be federally legal something that made them feel more comfortable?

SPEAKER_00: 25:44

No question. That to me is when I look at the total adjustable market size of hemp at large for a brand, that is a very significant opportunity. When I look at regulated markets, those markets having been through the licensing process, the requirements from a capital standpoint, that that licensing process is really challenging. And I think partially our decision to focus mostly on hemp today is knowing that, well, we can have a cleaner entry into the market. We can have better control over how we're building this without some of the risk that is inherent in the cannabis markets. And having seen a state like Massachusetts, we've seen people are still coming into the market today with licenses, but they're coming in where the market has essentially been downgraded in terms of their revenue and the wholesale pricing. I remember when Massachusetts in 2019, a wholesale market, the wholesale market, the price of an ounce was$200 to$300, and now they're less sub-100. And so I think part of the way that I look at this is hemp is a very specific audience. And I also would argue in some ways that the hemp audience is slightly more nuanced than the just the regulated market audience, where we are seeing this shift where 55 and older female skewed, which is what we see a lot in our business in the Southeast, that's a very different market than the regulated. And so part of the calculus is where we want to start where we know that there are less, there is a lower risk tolerance for a company of our size and scale. We also know that this fills in with our core competency of the pre-existing business infrastructure of an edible brands. This DTC model with fulfillment warehouses, these are all things that we have core competency in. So bolting on a business like this isn't as much of a jump as it would be to go secure a license in an emerging market, build out retail, determine what kind of operations you want to have vertical or just retail. That to me was a calculus that I think we were all pretty universally aligned on. But at the end of the day, my goal longer term is if somebody is looking to get access to THC ingestibles, how can we facilitate a consumer to get to those products, whether it is regulated or whether it's shipped to their door? Um and that's something that I think long term, I'm all about safe and equal access to THC products, regardless of where you are.

Ben Larson: 28:15

So we we are in a period of time where that hand may be forced, right? At the end of this year. Yeah. Not to bring down the energy, but it's like the way you rationalize it and you talk about the demographic that you're accessing. Like we we've heard these conversations, but in sometimes, and I don't think this is beyond anyone listening, that it might fall on deaf ears, right? And it very much feels like uh you have this hemp versus cannabis. You do have some in the middle, but they're largely being drowned out by everything belongs in the dispensary channel or free the plant, which sounds weird saying that in contrary to the cannabis industry. Yeah, but you have this keep the plant free, like freewheeling nature of the hemp industry. And we're in a year where we do need to find a proverbial middle ground. And I'm curious as to how you see that getting done. And obviously, you're not the magic eight ball, but yeah.

AnnaRae Grabstein: 29:18

How are you going to fix access to tears on Wednesday? Yeah, that's what I'm asking.

SPEAKER_00: 29:23

I think anybody who is crazy enough to be in this category is trying to answer that question. And I think we all inherit some of that responsibility to figure this out. I would say, and I think part of what I look at is 2026 is like a do-or-die year, right? This is we are seeing obviously our backs are against our are against the wall right now. The way that I view this as edibles.com and as I've shared with the leadership here is that we're gonna do everything in our power to be rational stewards of how we view this category. And for us, we know that there are our name is literally edibles. So that is an inherent marching order for us of where we have where we have a lot of skin in the game that we want to see conservation around. And we try to use our voice as when we go and we lobby and we meet with senators and those who are making the laws even here in Georgia. We try to use our voice as a responsible voice and to also be a signal to other national companies that are considering this space to show that if a company like an edible brands can come into this category, well then it's probably not as dysfunctional as one might believe it to be. And that there are some rational ways that we can try to preserve this category. And I think some of the things that we have seen, despite the CR that we all know is looming, you know, I spent a lot of time working with our my chief legal officer. Shout out to Doug Knox, who is the Edible Brands chief legal officer, who when I first met him, I was like, I'm I want you to know I'm gonna do this. I'll buy the book, and I'm not trying to. And he was like, You don't need to sell me, like I I know you're gonna do right and we'll figure this out. But really, what we try to do is help be a rational voice in some of these conversations and to also understand and empathize with all sides of this. This is complicated. We know that there are certain parts of the regulated markets who want to see this go away. But on the same time, there are other key parts of the regulated markets who do want to see this succeed. And I think it's really important for us to compartmentalize the wants and needs of policy. We want a framework that's going to solve all of our problems. We want that, but we're not gonna get that immediately. What we need to do is figure out how do we extend this moratorium? How do we give ourselves a little bit more time for thoughtful policy? I think the other signals that I'm fairly excited about, the Griffith bill that was introduced last week. I think that was a very meaningful first step where you know what I heard from policymakers in DC a few weeks ago was you guys want a moratorium, but you have no backfill. So you want a moratorium with continuing the same no regulations. We need something to tie to this. Enter Griffith bill. That is a fairly comprehensive, and I would say it's very close to what I would feel comfortable with, which I think a lot of the trade partners. I'm a member of the Hemp Roundtable I speak with, run into Diana quite a bit from CABA. We've had calls with WSWA, we talk with Haifa, we have a lot of these conversations to try to find what are the pieces that we need to compartmentalize to move progress forward. And I think one of the most important things for me is we have to try to figure out what we can all live with without saying goodbye to it and what concessions can we all make. And it's so much easier to say these things than to do them in practice. But I think a lot of what I try to do is even if I don't agree with somebody's points on what they want, I really want to try to understand because trying to understand somebody who has a conflicting viewpoint, the more you probe and to try to understand where the conflict arises, the more opportunity you find to get alignment. And I think alignment is something that we have to continue to work towards, even if it means concessions on your side, both sides, and to try to find those vehicles. And I think I would be a lot less bullish about 2026 if there wasn't the S3 executive order, where obviously hemp was made a priority from the Oval Office, from the executive branch, telling Congress to get something done. I think a lot of the years of hard work, even before my time in Hemp, has laid the foundational groundwork to get us there. And cautiously optimistic and really encourage a lot of people, whoever I talk to, I want to try to find where is their commonality, where is their separation, and where are the needs and wants, and how can we identify do you want this or do you need this? And what is that kind of MVP model to at least get us an extension?

Ben Larson: 34:03

Yeah. There's also the point that I was talking to Craig Lewis from Flyers this morning, and we were having a good discussion about prohibition, the OG prohibition. Yeah. And how coming out of that, the singular form factor that was allowed was like a 3% beer. Yeah. And after that is how we continue to open up the alcohol industry into spirits, and we're still working on it every day, so like lobbying continues forever. But I'm curious as what to that how that need is reflected into like also the thought about kind of incrementalism after that initial win. And I feel that a lot of tension that's holding us up, especially on the hemp side of the industry right now, is we want it all. Yeah, we need it all. Do you actually need it all right now, or can we like take some of it and build into it? And I think that's where it gets really hard, is because then you're playing this massive game of poker of we need what we can get. Yeah. And and the big question is what can we get? Right.

AnnaRae Grabstein: 35:06

I I was really surprised to see in the Griffith bill that there was any proposed regulations around inhalables. I had been assuming that the regulatory pathway towards hemp derived products would not include any inhalables and that they would be prohibited except in to regulated. So I think it's an example of what you're talking about, Ben. The Griffith bill actually lays a framework for most form factors that I can think of, as opposed to taking a more specific only edibles or non-inhalables or something like that, beverages.

SPEAKER_00: 35:40

Yeah, and honestly, like Ben, you just mentioned prohibition. And I this was something that I happened to see, like Jeremy Burke commented on somebody's LinkedIn post about the Volstead Act. And I, after it was one of those things that I like saw casually scrolling and I was like, huh, that's interesting. And the more I looked into it, I always loved to try to figure out what case studies can we look at. We don't have a ton because we're a new industry. If you go back to the Volstead Act, 1919 to 1933 was the prohibition, 1933, the prohibition was repealed. And then for two to three years, you had a state-by-state regulatory framework without federal policy. And then it wasn't until 1935 that we had the Federal Alcohol Administration Act that started to codify a federal framework for, you know, everything from labels, advertising, trade practices. And I think the similarities in a post-prohibition era of beer and alcohol is very similar to what we're going through in the hemp industry. And that to me, in some ways, I know history doesn't necessarily always repeat, but it certainly takes a similar shape. And I think we're starting to get to a place where, you know, one, this is a national conversation, which I think before the CR probably wasn't as much of a national conversation in this regard in Congress. And then two, I think we're finally starting to see federal regulatory frameworks at our good point of discussion to start actually putting action behind. And while Griffith Bill is imperfect, knowing that it's still a draft text, I think there is a lot of positive signals that, from my view, I hope we can coalesce around. I think having some of these milligram caps is a good thing. I think a lot of the focus is on ingestibles in a ray. I think the inhalable the vape thing was interesting to see in there. I think that is maybe a little bit of a red herring, but at the same time, what I'm genuinely happy about is that I think some of the elements of that bill today is very reasonable. And if our the biggest concern that Congress has is unregulated and consumer health threat, I think this bill does a really good job of preserving the good actors and giving showing a line in the sand of regulated versus unregulated, that up until that bill existed, we did not have a definition of. And now we actually have a working definition that becomes a point of departure for discussion. And I hope as that bill, I don't know when that bill is going to really Congress has a lot on its hands, obviously, with everything from ICE and Greenland and Venezuela, but I do think this is a really healthy starting point. And again, this has echoes of what we saw in Prohibition. And I think everybody's hemp is so hard because of the state-by-state regulatory protocol. Again, you go back to the Volstead Act, that's how alcohol also started, too, and the formation of the TTB. I'm heartened by some of that. It still has a long way to go, but it's a signal.

AnnaRae Grabstein: 38:42

You mentioned that you were bullish on 2026 still, and you're definitely sharing signals of optimism about what's happening with policy. But one of the biggest signals can be actually putting effort behind continuing to operate business as usual and even to launch new ventures. And you shared with us that you guys are launching your first flagship store in Atlanta in the coming month, it sounds like that is a serious signal in the midst of this regulatory uncertainty. I speaking with hemp businesses all the time, and people are really confused about what to do next. It is a highly uncertain time in the supply chain, but you guys are going for it. Talk about the decision to keep going and even any words of advice to other companies that are in similar positions trying to plan the next 12 months of survival.

SPEAKER_00: 39:38

Yeah, the retail store is something that we've we've been really passionate about. And it's been a passion project of mine where, you know, when I left Theory, when I started, there were two dispensaries. When I left, we had about 18 dispensaries. And so retail has always been a very important component to the buying process for us, at least for me, because I do think there's something to be said for that first time. Buyer coming into a place to purchase and having a one-on-one conversation face to face with somebody to navigate the purchase journey. And the way that we're building that retail store is I had built everything from a 23,000 square foot dispensary down to this one is going to be about 600 square feet, more bodega style, more walk-in, shop with your eyes, everything's still behind a counter. But really looking at what does retail look like in this kind of modern age when you don't need a seating section in a dispensary and it shouldn't feel like an Apple store or have an identity crisis where it's complicated and you're shopping 250 products in a dispensary. This is a little bit more of a streamline. So this for us, I will say, also was in the works well before the CR. So I will just to caveat, it wasn't like we just said, okay, we're gonna go do this despite the CR. A lot of this planning had been done well in advance. And I think part of what there was a moment where we said, do we still do this? And it was a resounding, it was a the right question to ask, but the response was, yeah, of course we're gonna continue to do this. Like we have to send signals to show that we are we believe as much as we believe in this as much as we can, and we want to show that with where we are investing in, how we're building access. And I think to go back to what we had shared, you shared the top of the show. Look at what Kovler just did with Chicago and signing a multi-year agreement to be able to have these beverages in stadiums. And so, you know, I think we have to really signal that we're taking this seriously. We want to continue to invest, we want to continue to grow this category. I think those are really important signals for Congress to see to show that, hey, I'm a tennis player. If you're still on a court and you're still hitting serves and returning serves, you still have a chance to win the match. We're still here, we're still operating, we can still get to where we need to from a policy standpoint. I think it's easy for me to say that as a part of edible brands and be a part of an institutional company. I think for the businesses that, you know, and I feel for them, a lot of the brands that are real upstart bootstrap have a significant cap table. I think they have really hard questions to answer. I think they have to really look at the shape of the business and make some determinations based on the triggering of policy, progressive policy. One of the things that I did at the beginning of this year was I basically said, let's look at a Q1, Q2 forecast, and let's look at a Q3, Q4 forecast, and let's not get too far ahead of ourselves knowing that there is some instability in the policy front. I think it's really important if you are an individual brand is to really look at one, you always have to have contingency plans. I had a back in the end of November after the CR passed, I had a two-page, if that, then this contingency planning doc of what would edibles.com be in a variety of scenarios. I think every business has to look at that. I think for a lot of beverage businesses or gummy businesses, start to make inroads to look at potential licensing agreements in regulated markets, look at turning a non-tire non-cannabinoid derived product category. Do you have an audience that might be interested? Maybe now is the time to start beta testing some of those other functional products that are not cannabinoid-based. I think you have to be fairly well prepared in any eventuality. And again, I think I know because I am a part of this massive company, I do not have the same level of risk as these real serial entrepreneurs who, again, have been fundraising. And I think part of what really feel I feel for them is as much as 2025 was this massive year, it was also a huge year for investing in this space. A lot of people took on outside capital to scale, to meet those larger POs, to get into more doors. And I think it's really, if I'm one of those companies, I am getting really detailed on my pro forma on hedging on some of that risk, looking for alternative streams and trying to determine what courses do you have and whether you're willing to replatform and look at some of these other measures. And I know that to me, licensing is a really smart opportunity in regulated markets, at least have some form of a hedge. Economically, it's probably going to be a hit because dispensaries today are selling fairly high dose products. A lot of these products that we love are five to ten. I still think there's a place in all of that, but I think it's now's a really good time to ground your PL and your proformas going into the next year with knowing what is how are you planning for worst case scenario? What is the medium case, and what is we get our way and we can move forward. You have to be prepared for all of those instances.

Ben Larson: 44:46

So as you innovate on your business and get closer to the customer, I I'm curious as to continuing this theme of advice to brands in time times like this, people are being very vigilant about how they're spending their dollars. And a lot of times, we've noticed in the various cycles that we've been through in cannabis that what often leaves is innovation and RD teams or RD investment. And you're a platform by which you're getting pitched by different brands, and they're gonna have to show something different to like really gain your interest, and really to differentiate at the consumer level, it's like how are you gonna lock in the interest of that consumer? So, like, how do you parse that in in these kind of recessive times? Or do we invest in RD and come up with new things? Or like, how should we people be thinking about that, especially when it comes to the consumer?

SPEAKER_00: 45:40

It's such an interesting point, Ben. And coming from regulated markets, you know, what was always it wasn't until probably after regulated markets that I actually truly really embraced the value of CBD. And this may sound like a wild point to make, but truthfully, what I've actually really found is CBD is CBD in isolation, is I won't say it's snake oil per se, but I think it has a lot less efficacy than when paired with small amounts of THC. And what I've actually been gravitating more towards is a lot of the brands that now that we have our varsity squad of the big kind of three in edibles, I've been looking a lot now towards some of these hemp native brands that have done a really interesting job blending some cannabinoid ratios that I think have a lot of value. As a dad now, like I don't like just straight THC. Like that to me is a recipe for raciness and anxiety. I actually love finding more ratioed CBD products. I also think the CBD category has a lot more legs down the road. And I think we're seeing that signaled not just by the executive branch, but I think seeing this kind of emergence of these more functional products where, yeah, one milligram of THC with 30 milligrams of CBD, like that's actually a really interesting product to me because that really does bring a lot more of the benefits. But even at that point, you're still almost just one step away from non-intoxicating, where there's still a really good product in there. And I think, again, what I look towards as one scenario as a potential outcome is you know, maybe THC is gone, but CBD stays. Well, that's a pretty good hedge. There's still a pretty big business you could run around that type of category. And I challenge a lot of these brands who are really heavy on just THC to look at hedging with new product formats or form factors that have more ratioed blends that can maybe get them on a path towards if there's an extinction level event of THC from hemp, there might be actually something still within your IP of making a product that still resonates in a one of the worst or one of the not as great scenarios of legal protections. And I think part of what hemp allowed was in regulated markets, it's very it's not as common to find shelf space for high ratio CBD products because I think there's more ubiquitous, but I think there's a place for that, and I think new consumers like those products because it downplays a little bit of the raciness that can come with just pure THC.

Ben Larson: 48:14

Yeah, it's funny. I I there's the Colorado rules like created this opportunity to create beverages with one milligram of THC and 15 milligrams of CBD or CBG, and you stack them and then you can have three milligrams of THC. And I actually really enjoyed the feeling that it gave me. I'm like, oh, I would actually buy these.

SPEAKER_00: 48:34

That to me is actually my favorite category now. We have a brand that is going to be coming on the platform, the next brand that's coming on, and they make a three T three milligrams of THC, 30 milligrams of C BD, and that is my new favorite product. It's the perfect ratio. It's an easy, it's like easing into the pool in some ways, where again, I think that level of blending and ratios are very much part of the hemp side, but regulated markets don't really do as much with that because I just don't think it moves the same way. And again, I think it's different audiences too. So I'm a big fan of it. I'm glad to hear that from you too, Ben, because I feel like I'm going backwards on my consumption.

Ben Larson: 49:15

Totally.

AnnaRae Grabstein: 49:16

I'm interested, and I know we're getting close to the hour, but I have another question that I really wanted to ask you about. And it has to do with the SKU portfolio that you guys offer. And in the last week or so, I've been a bit of a student of Costco's business model, where I've been reading about how Costco's kind of hard choices and discipline that they've made about limiting the SKUs that they offer. And they offer lots more product categories than what we're talking about here. But I was actually a little surprised this week in prep for this conversation to go on your website and see how few brands you guys offer and how few products. And at the same time, I have for a long time had a hypothesis that that consumers are overwhelmed with choice, they don't know the difference, and that they don't need as many choices as they're being offered. And I'd love to hear you talk about the choices that that you've made in terms of the way that you have decided to curate the products that you offer.

SPEAKER_00: 50:19

Yeah, first off, Anna Ray, I'm thrilled you bring up Costco. The acquired podcast on Costco, I have actually listened to two or three times because I love what I love the entire concept of it from the hotel.

AnnaRae Grabstein: 50:35

I'll send to you after this. So share it with your friends.

SPEAKER_00: 50:40

Yeah, I'm I actually think that the Costco model was something that was looming really large in my psyche building this, mostly because of the efficiency of the business. And I think the second point of that too, I started with regulated products mostly because I had a history with these brands. Joe Hodas was one of my first calls, Jake Bullock was one of my first calls. Like they got the first NDAs when I told them they were some of the first people in the industry who knew what I was doing. And that carried with them one, they have a history of being tested in the market. They know how to meet compliance regulations, they have a lot to lose. This next wave you'll find is continuing on the process of curation, but it's curation within a certain kind of categorical approach to where do these falls within our portfolio. What I don't want to have is a ton of redundancy, where you can buy a five milligram pectin gummy from 20 different brands. I don't think that's a good consumer experience. Part of making a good consumer experience is leading them to the products you think they're going to enjoy. That does not mean turning your menu into a cheesecake factory. This is really being thoughtful about it. And this next wave, really for me, is trying to find these brands that are deserve to be to get some attention. I'll just say it out of office. They are the ones that make a 3x30 product and they have a 2x15 and a 4x16. They have these great ratios. A lot of what you'll see in this next phase over the next few months, we are going to increase our size and scale in terms of offering, but they're all going to fill different needs within the market. Topicals is another one that I'm excited to start to bring into our ecosystem. And so, what I also want to do, again, page out of the Costco playbook, is I want to understand my run rates to be able to be very selective and know what a good forecast and demand plan cycle I need. How much inventory do I have to have on hand? What are the sell-through velocities of these products? And also testing products to see do these things have a stickiness with the market? If so, extend. And so I didn't we get products sent out almost every day, which is crazy. But at the same time, too, I think a lot of these brands that are going to be coming in this next phase are non-regulated market products. These are all pretty true hemp derived companies that I think are really worth consumers getting engaged with. And I'm excited to be at a point in the business now where I feel like I can unlock that next kind of SKU rationalization approach over the next six to 12 months. And we'll probably be closer to 75 to 100 products by the end of the year. Again, contingent on a lot of other things, but I want to scale thoughtfully. I want to grow with the right brands, with the right products, and also be okay moving away from products that maybe don't resonate as well with consumers.

Ben Larson: 53:25

Love that. Okay, Thomas, one last question for me, and it's a bit of a curveball. So I'm gonna go. I'm about to hop on a plane to DC and going to be speaking at the National Governors Association. And I'm curious if you had the opportunity to have a room full of governors and you're talking to them about hemp and cannabis, what do they need to hear? Like, what do we need to communicate to them clearly about whether it's the challenges that we're operating in, what we need to do, their support to push this initiative forward.

SPEAKER_00: 53:59

Oh gosh, Ben, thanks. This is a hard one. I will tell you, I think the message that seemed to really resonate in DC a few weeks ago was the understanding that this is a cataclysmic piece of policy that will not only strip THC, but will strip all forms of CBD out of the entire country. I think what is most important to remember is that the bad actors that they're seeking to alleviate in the consumer market are not going to go away with this policy. And if anything, they will have an adverse health event that is far greater than what they're experiencing today with out external cannabinoids coming in from foreign countries that do not have the quality controls that we have today. That to me is a much more significant out cost on consumer health threat than what we are presented with today. And we have a great bill from Griffith that would seemingly regulate those products and preserve the good actors while still creating space to remove the bad actors. Synthetic cannabinoids from China are a very scary thing, and we are already seeing them today. We those are not going away with the CR. And I don't know that most people understand that.

Ben Larson: 55:11

A plus response. Thank you. I'll get your signature to let me use it later.

AnnaRae Grabstein: 55:16

Not fair. Um not fair.

SPEAKER_00: 55:19

Thanks for doing my homework. No, I know you already knew this.

AnnaRae Grabstein: 55:24

I will say, I know Ben has not written his speech yet to the governor. So we'll see how much he takes your words and recycles them because they were pretty good. The time is up in our conversation. And Thomas, we want to invite you to make a last call, a final message to our listeners, advice, call to action, thought to leave them with. What's your last call?

SPEAKER_00: 55:47

I would say my last call is assume good intent and embrace hard conversations. I think the more we can all do that collectively, despite different competing interests, the better outcomes we will get. And I think now is the time when our backs are against the wall, fragmentation is dangerous. Embrace the challenging conversations and try to understand the nuance of those points of differentiation. We have to do that now. We have to be a united front. We have to make we have to make concessions. And ultimately, I always find the best way to do so is go into every conversation knowing that you have good intent on your side and assume the other person also has good intent, and you will get a much better outcome from those conversations.

Ben Larson: 56:32

I love that one. That's literally the like first piece of advice to teams. If you want to run a successful team, yeah, assume positive intent, embrace hard conversations.

AnnaRae Grabstein: 56:44

Like I love that gold.

Ben Larson: 56:46

Thomas Thomas Wynne Stanley, edibles.com. Thank you so much for spending the last hour with us. You totally exceeded expectations. Oh, you such a kind gave me my talking points for tomorrow. Thank you.

SPEAKER_00: 56:59

No, it's my pleasure, and I appreciate it. This has been a great conversation as always.

Ben Larson: 57:04

Yeah, we wish you the best. We'll see you soon. Miami.

SPEAKER_00: 57:08

Miami, yeah, exactly. Looking forward to it.

unknown: 57:11

Absolutely.

Ben Larson: 57:13

All right. What do you think, everyone? Thank you so much for sticking with us. It was an incredible conversation about hemp, cannabis, and everything, everywhere it goes. This year, it's a big year. Anna Ray, thank you for showing up today. I know a lot's been on the mind, and as we addressed at the beginning of the show, everyone, we know everyone processes everything in a different way. I know a lot of us are trying to focus on our businesses, but please take a moment to visit standwithminnesota.com and share your support. Thank you to our teams at Virtosa and Wolfmeyer. Of course, our producer, Eric Rossetti. Couldn't do this without you guys. Thank you to all our fans, everyone who's liking, subscribing, sharing, doing all the things. Please drop us a review on Apple.com or Spotify or anywhere you listen to your podcasts. Otherwise, folks, until next time, stay curious, stay informed, and keep your spirits high. That's the show.