SPEAKER_02: 0:00

I must admit that I found myself uh reading a lot about the prohibition days of late. And like, what did Anheuser Busch do from 1920 to 1933? And are there companies that actually not only pivoted and came out intact, but actually grew? And there are actually a lot of examples of companies that did. And so I encourage everybody to do some research. And you know, what we have in low-dose beverage is pretty special and has its place in society. And I think it's completely undeniable.

Ben Larson: 0:49

Hey everybody, welcome to episode 124 of High Spirits. I'm Ben Larson, and with me as always is Anna Ray Grabstein. We're recording Tuesday, February 3rd, 2026. We've got a great show with you for you today. Uh, we have our friends from Seniorita and Rhythm uh making headlines in Chicago. We'll dive into everything about that journey in hemp beverage. But before we get there, Anna Ray, how's your week going?

AnnaRae Grabstein: 1:21

My week's been good. I've been deep in my spreadsheets. Um my eyes have been spinning, trying to slice and dice numbers all week. And um, I'll tell you that lots of times the spreadsheets say good stuff in cannabis on the other end. I've been um Do they I have been I have been seeing light at the end of tunnels um as told through spreadsheets. So I always tell people, you know, it's like take take the plan and try to make it real in the spreadsheet. And if you can do that, then then you've got something real. So that's that's where I'm at today.

Ben Larson: 1:56

It does help, it does help to write it down. You do tend to find your way through when you actually put things down on paper. Um, otherwise, this industry can feel pretty damn chaotic at times, especially if you're maybe straddling the hemp and cannabis line and uh dealing with hemp bans and regulations dropping into states and cities and the the whack-a-mole that or spending time in DC with policymakers like you were last week.

AnnaRae Grabstein: 2:24

Uh last time we recorded, you were about to leave for DC to go to the National Governors Association event about cannabis. How's that?

Ben Larson: 2:33

Uh yeah, my my main takeaway is that it's cold everywhere else in the country. It was there was like there was like definitely at least a foot of snow covering DC, and that town is not made to operate in the snow. And so it was great people watching, great uh actually watching cars get stuck. That was that was a lot of fun. Um, but no, like the the meeting itself was was great. There was a I think 11 states accounted for everywhere from Tennessee, which is famously non-cannabis, but heavily or not heavily, like pretty loosely regulated hemp, up to like 30 milligrams per container, uh, to California, our home state, which is heavily regulated cannabis and hemp banned. So uh a diverse perspective coming from the uh from the hemp and cannabis regulator side, um, but there were also operators in the room. So I saw Vince from Navis, uh, our other friend from California, uh John Sullivan from Cresco, uh, you know, spanning the gamut of of hemp and cannabis operators. And the interesting thing about a room like that, you know, is that it takes an effort to be there. You have to chisel out the time, you have to fly to DC, but the people that elect to be in that room, I think, are the reasonable minds that actually want to push policy forward. And we have found ourselves over the last forever, uh, kind of in this deadlock of how do we move this forward? Like, what is the right path? And I think in general, everyone wants the same endpoint, they want the same horizon, but they have a different idea of how you go about getting there. Um, but I will say, and I'm gonna tie it to the today's episode, I think the one thing that is generally accepted across all almost everyone in the room, is that this low-dose beverage movement is something really interesting, really special, and most likely has a place in society.

AnnaRae Grabstein: 4:34

Oh, it has a place in society. The other thing that I've been doing, not business related, is I I've been watching season four of Bridgerton. And um, Bridgerton is all about society and this fake England, which is great. And I was just envisioning how how a low-dose THC beverage would fit perfectly into English society. Um, you know, I I I really appreciate your your takeaways from DC. And I think that when it comes to policy and moments like what you described, it's also a really unique uh environment because these are folks that from a business-to-business perspective might be competing in the market. But when you all come together around policy, you really get to lock arms and be truly aligned. And I have found that that's where some of the most impactful business relationships get formed is is through policy that then end up leading to other business opportunities, be it MA or partnerships or just doing business with each other, buying and selling each other's products, because you get to connect on this real human level and and realize the the good intentions uh behind, you know, behind the work. So yeah.

Ben Larson: 5:46

Um yeah. I I I I I will say I'll give one takeaway. I'm not really supposed to talk about what we talked about in the meeting. Um, there is a kind of you know, a cone of silence, so to speak. But I will say that one thing that I think people need to hear is that there are humans on the other end when it comes to the the regulatory side. And when you sue policymakers and states and cities, like I know there's there's a place for business in it, but like just be very thoughtful if you're gonna if you're gonna sue like a municipality, because it really does not earn you any like goodwill uh from that that end of the conversation, which we need uh to push policy forward.

AnnaRae Grabstein: 6:31

We do need goodwill. Amen to that. Well, let's jump into today's news update. Uh, we're gonna lead with a real inflection point for THC beverages. Chicago's United Center announced it will begin selling hemp-derived THC beverages at concerts and live events, making it the first major U.S. arena to do so at scale. And specifically, they're going to be selling rhythm and seniorita products. And one important detail here is that the United Center is independently owned and operated. It's not a live nation uh venue. It's controlled through a joint venture of an ownership group of the Chicago Bulls and the Chicago Blackhawks. And uh it's just a really, really important, big and impactful place to be integrating THC event uh beverages into the live event experience. So it's it's a fun story, fun to be talking about this and very exciting.

SPEAKER_01: 7:28

Yeah.

AnnaRae Grabstein: 7:29

Um, and some background is um that this this didn't come out of nowhere. It's happening um alongside important shifts in the beverage landscape, um, including how Signorita became part of the broader rhythm portfolio. Uh, in late 2024, Agrify Corporation acquired the Seniorita brand, uh, which is uh created by the winemakers Charles Bieler and Joel Gott following a financing deal from Green Thumb Industries. And following the financing, the Agrify board appointed Ben Kovler, chairman and interim CEO. And Kovler uh continues to retain his leadership role at GTI. Um, but then in 2025, uh Agrify acquired brand IP, including Rhythm, from uh GTI and rebranded as Rhythm and set the stage for a more consolidated and focused beverage and brand-driven company. Uh and that brings us to today, where we have guests, um Rick Shepp, the GM of Beverage for Seniorita and Rhythm, where he oversees the beverage strategy innovation and go-to-market execution. Um, Rick comes from traditional beverage and strategy roles at Beam Centauri and at BCG. And we also have Charles Bieler, the co-founder of Seniorita and an experienced beverage entrepreneur and winemaker, who a long time, his longtime friend and collaborator Joel Gott, has spent decades building wine brands and uh is now building the brands and the flavors and the products at rhythm. So really excited to dive into this big news story and this big event with Rick and Charles. So welcome to the show, guys. Thanks for having us.

unknown: 9:16

Yeah.

Ben Larson: 9:17

Awesome.

SPEAKER_02: 9:17

Super exciting. One thing that that just to add to the uh the big news of the United Center, you know, uh ownership, the Wurtz family, are big uh beverage alcohol people um owning breakthrough words beverage. Um so I think there's kind of another element that's kind of really interesting about this. Not only is it a huge, high-profile venue, but um sort of an endorsement from uh major alcohol industry family.

Ben Larson: 9:44

Yeah, well, I it's jumping right in. I I I think it's amazing that the deal was done with the ownership instead of Live Nation. I mean, Live Nation has kind of been dipping their toe around the category for for quite some time now. I think that's a natural fit, obviously, music, but I think the big leap forward will be when we get it into those those sporting events, right? And so knowing that the Blackhawks and and the Bulls have eyes on what's gonna be happening in the United Center, that's super exciting. Um, you know, I I've talked to a number of venue owners over the years, and they're just super excited to see this category explode in into their stadiums because frankly, they think uh they're gonna save on on some some other issues that are going on in those stadiums. Absolutely.

AnnaRae Grabstein: 10:32

I'd love to just jump in, Rick, and you share with us how this all came about. Uh, how long did you guys work on the deal? And um were there, was it a hard yes the whole time? Did it take a lot of convincing?

SPEAKER_01: 10:44

Yeah, uh none of this happens overnight. I'll say that much. Um, you know, really this goes back to as green thumb, we've always been looking for ways to further integrate cannabis and our brands into mass culture and kind of break outside of the dispensary walls where consumers are able to really interact with those brands and find ways to bring our brands to life with consumers. Um obviously we've been looking at that a lot as green thumb industries on the regulated cannabis side. Um, but as we came into hemp beverages, you know, that really opened up the opportunity for us to market and talk about our brands and even now sell them in a lot more places than where we have been able to on the uh regulated cannabis side. So um from the hemp beverage side, you know, venues I think all of us know THC and concerts kind of go hand in hand for many people. Um, you know, whether that's you participating or you being at a concert and seeing that all around you, um, you know, it's it's really just a natural place for THC beverages and cannabis to exist. So, you know, we've been working with venues, you know, throughout Chicago, um Tennessee, Georgia, um, and sponsoring smaller venues for some time, um, including here in Chicago, the Salt Shed, which is one of the kind of premier concert venues in the city right now. And we've seen that when we have the products available, we're able to sample, introduce consumers to the products. It really adds another option for consumers beyond alcohol, soda, right, or or water. Um, so we we saw great success at Salt Shed and the other venues that we've been sponsoring. And um, so naturally we've just kind of continued those conversations with you know a lot of partners at you know, potential partners that you mentioned, uh venues kind of across the country. And you know, what we saw with the United Center group was a really forward-looking uh group that said, yes, this is happening. Um, you know, people are consuming THC today. How can we bring that to the experience when our consumers are continuously asking us for you know new new offerings? Um, so so far, you know, we we just got the products in recently. We're we're kicking off tomorrow um with the Boys to Mend and new edition show. Um so we're excited to really kind of officially kick that off and see it in the United Center. Um, but yeah, we're really bullish and it it doesn't happen quickly. Took a lot of conversations, but um, yeah, we're excited to be here at this point.

Ben Larson: 13:08

That is an amazing jumping off point because those groups are the target demographic, I'm assuming, of like one of the most popular demographics consuming these beverages, right? Like we're talking about women like you know, 35 to 40 to maybe even 50. Uh I don't know. Yeah, check 45. I'm like, how old am I? Yeah, exactly. Anna Ray's gonna be there, she's gonna be parting.

AnnaRae Grabstein: 13:35

Is this an invitation? Yeah. Well, so if you guys have been um in the venue space for a while, you mentioned salt shed. I'm curious what you have learned about the mix and the purchase behaviors at live events for THC compared to alcohol or non-alcoholic, and if that has given you any sort of predictions of you know, for every 10 beverages purchased at United Center, like how many do you anticipate might be a THC beverage?

SPEAKER_01: 14:08

Yeah, it's uh it's a good question. We've seen uh we've been tracking this very closely, all the shows we've been activating at, where are we activating sampling versus just where do we sell that have the product at the bar? And I'd say the biggest factor that we've seen is is that sampling, because for us, everything comes back to awareness. You know, a lot of people don't even know that THC beverages are a thing and that, you know, it's not some you know, gas station product that isn't actually going to have the effect that you expect. Um, so just letting people know about yes, what are these beverages? And then two, that they're available at the concert venue itself is really the the biggest factor. And you know, we believe that you know, over time this can be five, 10% of you know, sales at at any given venue. We've seen numbers that kind of start to get up towards that level. But also we have um concerts that that might have a different mix of uh consumers where you know it's it's a much smaller part and it's not as much um kind of front of mind for them as part of that experience. So overall, we think you know, five, 10% of total sales is definitely possible, but that's really going to take the awareness and kind of building that comfort for people that you know you don't have to make a choice is it just THC, alcohol in your life, but how do each of these products kind of fit in over time? And we see that really it's a complimentary product for many people. It's not only THC or only alcohol, it might be, you know, some some mix of those two, or you know, within one night, or just choosing different days, different products. So, you know, we see this as complementary to the offerings that they have today and just giving consumers another choice.

Ben Larson: 15:46

Yeah. Charles, um, we've been working together for for a couple of years now, and uh I've I've gotten to hear some of your origin stories, and I'd love for you to share a little bit about that. But uh the the preamble is that you've worked in emerging markets before, and and you've kind of seen an on-ramp period, you've you've done the the pounding of the pavement to get it out there, maybe in a pink suit. Um and I'm just curious as how this moment is comparing to to what you've done in the past in in the alcohol sector, and if is it history repeating itself? Is it a completely different beast? Um, yeah, kind of let us know. Yeah, yeah.

SPEAKER_02: 16:32

Yeah, I mean, I I've um you know, I'm I'm a winemaker. I um I uh you know I started um in 1999 working uh with my dad who had a failing winery in the south of France. Uh he was making lots of rose um with this vision of selling it to the world, and uh quickly realized that the world really didn't know what rose was. And um and actually people saw pink wine and they assumed it was sweet or was white Zimfandel, and um, and which was very different from what he was making. So um I jumped in to help him. Uh he actually asked me to to drop out of school to uh to join him uh for just a year. He said after this year you can go do anything else you want. Um, but I just need your help. I'm I'm running out of cash and um I I need somebody with energy and and and you're really cheap. So so get after it. And I, you know, um I I actually didn't really understand what what the issue was because like dad, the the wine's delicious. You know, I'm I'm just a 21-year-old knucklehead, more or less at the time. Um and um yeah, I it was just it was a category that people um certainly not only do they not know, but were kind of intimidated by. So certainly there are parallels to to this universe. And yes, I I bought four vintage pink tuxedos. I bought a 1955 Cadillac Deville convertible, uh painted it pink and loaded up the trunk with with uh rose and drove around the country uh pretty much nonstop for two years. Um and uh the the Cadillac would make people smile, and and when people are happy, you have sort of 30 seconds to tell them something, um, and you know, they might be open to something that they were sort of normally not you know not so much uh interested in. So yeah, that was the origin. Um and you know, the the over the years, you know, Joel and I have uh collaborated all sorts of different wines, and but but me uh particularly um have always been attracted to um the to new categories, new products, um whether it's whether it's different formats or what have you. So I there they're um you know, we I mean the how we got into senior reader, how we uh got into this space, we um we were just observing that our kids, if we put out on the, you know, we have college-age kids, um if we put out on the the the table a beer, a wine, a cocktail, and some sort of THC thing, a vape or drink, whatever it might be, you know, where do they start? We leave the room and and the the 20-year-olds are there. Where do they start? And they almost always start with the THC option. Um and they then they start grazing through the others. That that was the observation. And and um Joel and I um have kids who are interested in in getting into the business, and we thought um, you know, we we we ignore what we're seeing before us, you know, at our at our peril. So um we're drinks guys, and um we had learned of what what you guys had pioneered in this this you know fast onset, low flavor, you know, nanoemulsion technology at at Vitosa. And like, you know, we're like, I wonder if we can make something that's delicious um that um you know that that is also has THC and and um you know we didn't have really business plan, we just um you know followed our curiosity and um you know it was really to prove to ourselves that um there was something to it. We started in Canada um where we felt we could make lots of mistakes and and no one would ever know. Uh and uh and then it sort of developed from there. So it's um and it was actually four years ago almost, Ben, that that we started working with you guys. So um, you know, we we we took our time, you know, we have we have our day jobs. Joel and I still love wine and um make a lot of wine, and um, but it's been a real compliment. And and you know, over that time, just seeing this expansion is not, you know, it's not just the uh you know, the the college-age kids who are who are sort of exploring alternatives to to alcohol, but you know, a lot of our friends uh who just want to you know take Wednesday night off or Thursday night off, people in the alcohol industry who just uh want to pause from alcohol now and then and and but looking to relax. And it's really you know, we we didn't anticipate that that part at all. We certainly didn't anticipate um the development of hemp, nor you know what's what's happening now, so that's a whole other conversation. Um but um no, I I I definitely think that um you know my early experiences um you know bringing to market and making um sort of non-traditional things in wine uh very much set this up. And and I do feel like um you know, Signorita sort of brings back a lot of the um a lot of parallels with with actually the development of rose. You know, it just was not, you know, it was not an overnight you know to the moon. It it took some time, a lot of uh a lot of ticks and shovels and and a lot of uh a lot of time in the Cadillac, just telling stories, introducing, getting people to try. I mean, you know, I think as Rick said, you know, one of the really important things is just getting people to taste, to believe, like holy cow, this can be delicious. This this feeling um is really interesting. And and um, you know, I I I could go on, but I I might I just I'll add um you know I I know some people in the alcohol industry feel like um, you know, I'm a bit of a trader. You know, you're you're a wine guy. What do you you know, what do you what are you what are you doing over here? And uh Um, you know, I I I still love wine. Um I I just I see it as a compliment, not um not a not a competitor, not a replacement. We're we're we're giving opportunities for um for for people to have um high quality um alternative experiences when when alcohol doesn't suit them. We're we're helping you know retailers um have you know have more reasons for customers to to step in. We're we're helping our our wholesalers fill their trucks. Um it it it's a it's a real compliment. It I just I I do I really resist this idea that um it it is a reason for alcohol uh downfall. It's it's uh you know the the reality is there are more and more people looking for for uh you know moments that don't include alcohol. And um I don't understand that, but um, you know, I'm uh I'm I'm sort of uh consume everything kind of person, but um you know we we so so um no really uh it's been a really exciting journey and we're just getting going. Love it.

AnnaRae Grabstein: 23:07

It's it's cool to hear about the origins of Signorita and how you guys got started. And so it does, though, sound like you you got started before the acquisition of Agrify in 2024. But since then, uh from getting to know you a little bit more last week when we chatted, it sounds like you're taking a more active role in the broader portfolio and and getting involved in um the rhythm beverage brand and in thinking about the future of what this category could mean as well, beyond um beyond the maybe the SKUs that you're offering now with flavors or potentially other brands. I'm curious um from really from both of your perspectives about what you see as the opportunities that are being kind of well covered in the space from a flavor and a category perspective, and where are there holes and opportunities that people are missing out on? Jump shot, either either, yeah.

SPEAKER_01: 24:06

Go for it, Ray. Yeah. So, you know, overall I'd say for us, we're we're trying to both watch the hemp THC beverage category, what are people doing there, but also really watching what's going on in the broader beverage category because you know, consumption here in the THC beverage world is impacted by who's in today, you know, and what are people looking for today. But you know, we very much see this continuing to grow and expand as people find out about the products, try it, build comfort. Um, so in our view, it really is looking at the broader, um the broader beverage landscape. And I think that's you know one thing that you know with Cindurita, we have a you know fantastic lineup of of great tasting, you know, THC cocktails, you know, largely agave-based. We have margaritas, a paloma, a ranch water, um, and really, you know, focusing on on those social settings and what are the drinks that people are are consuming with friends and kind of maintain that social um kind of energy. And then compare and then as we thought about you know additional brands, uh, we brought brought the rhythm brand over from cannabis. And as we started to think about what what is this drink and what makes you know rhythm unique in this space. The one thing that that we saw is that you know, when you go to the THC beverage aisle, most products are THC beverages, kind of, you know, just leading with that as the main effect. Um, but what we know about cannabis is that cannabis consumers reach for different products depending on the moment, the occasion, um, time of day. Um, and we really wanted to focus on that and bring that into beverage because which effect you're going for can can shape you know which product that you're choosing and vice versa. So with rhythm, what we really tried to do is focus on that effect, one that that um mirrors the sativa strain a little bit more. So more uplifting. It's a product that has 70 milligrams of natural caffeine, and the product is sort of that energy drink um positioning, and then more of the wind-down occasion, which we have rhythm kush, which has CBD and Ltheanine to sort of promote that wind down occasion. So that's one area that we've been really focused on. Um just to highlight that. But I do think there's a lot of opportunities as we think about what is the mix of flavor profiles. We've obviously seen teas having their moment, uh especially this past year and in RTDs. Um so you know, certainly taking a look at that uh spirits, um, those products have really taken off. We'll kind of see with regulation how that all uh plays out. But um I think there's a lot of room to bring in, you know, what's going on in beverage more broadly and and bring that to THC beverages because really the consumer is just figuring out what can I do, what can I expect from these products? Um and I don't think the consumers truly know you know how this fits in over time as people build that comfort with THC.

Ben Larson: 26:58

You you mentioned rhythm coming out of the dispensary channel and and the regulated market. And I'm curious as to how you're thinking about these two different markets having had like feet in both, and how the consumer might be different, how the like product approach might be different, like what belongs in dispensaries versus this this hemp channel, and kind of like what's your just broader vision? Any way you want to take it, but that's that's kind of what how how I'm thinking about it right now.

SPEAKER_01: 27:26

Yeah, I mean, for us, um, you know, both have you know a reason to exist. Um, you know, I think the thing that excites us most about you know hemp and what you can do with you know hemp derived products, namely beverages, is that you can bring it out of the dispensary. So consumers that might never be willing to pull up to a dispensary, park their car, maybe have somebody driving by see them as they're walking into a dispensary. Um, you know, a lot of people aren't comfortable with that experience. So, but they are comfortable if they see a four-pack of THC beverages when they're out buying, you know, their groceries or or liquor or wine. Um, they're very comfortable saying, Oh yeah, hey, I'll give that a try. I'll put that in my cart. So um for us, that's that's really the the key is it's the availability. And that really our view is that this brings people to the category. You know, those can most of these consumers are not, you know, trading off um, you know, a joint or you know, if they they're a flour or vape consumer. It's not necessarily a trade-off for beverage in in that way, but we see this as a way to really bring people into the category to learn about THC and have a better experience, not just the I had an edible, I didn't feel anything, an hour later I ate a second one, and then it was too much, right? Um everybody knows that story, and we really see beverage as a way to you know break that that stigma and that experience down because it is much more controllable and a better experience. So, you know, overall, that's really the what we see with hemp. Um, you know, we are supportive of you know, low-dose products like beverages um existing outside the dispensaries because of that, you know, kind of funnel towards understanding what THC is. We think the dispensary will remain very important for you know most of the product formats I've been talking about and the high dose products that um you know a lot of consumers do need, uh especially medical consumers, but might not be, you know, the product you want somebody accidentally reaching for at Benny's total line, you know, name your retailer. Um we see kind of that um separation around dosage and product format is really the key differentiators.

AnnaRae Grabstein: 29:29

It all seems very pragmatic and logical the way that that you explain it and the low dose outside dispensaries, the higher dose inside dispensaries. Uh but you know, there's been some, I'm just gonna break it open. There's been some real challenges ahead with what's happening from a policy perspective. And if I would have talked to you in October of 2025, one of my questions would have been, you know, are you planning to triple and quadruple your business like everybody else that's working in hemp in 2026? And then mid-November came and the appropriations bill got pushed through with some really potentially existential constraints on hemp derived products, um, with that's this one-year timeline that now everyone is looking at. People call it the hemp ban. It's not exactly a ban, but it's some, it's very close. Massive constraints that will really um it's changing the trajectory of hemp derived product companies this year. And uh, you know, I think it's important to talk about how that affects the ability to plan as businesses and to be able to execute on things um that we envision our our brands and our products being kind of right fit, right moment for. And and I did appreciate when I read about the United, um, the United venue deal that it it specifically called it a multi-year deal. And I thought, well, that's interesting considering that potentially after November of 2026, this might not still be allowed.

Ben Larson: 31:07

But I'm sure in the city of Chicago is having their conversation going on at the exact same time. That yeah, they were thinking. Sorry to interrupt, but I'm like, I'm wondering what also happened in the middle of the conversation. Like all that news was coming out. I was like, wow, this is chaotic.

SPEAKER_02: 31:22

Balls of steel, I'd say.

Ben Larson: 31:24

Exactly.

AnnaRae Grabstein: 31:26

It's like, yeah, you guys are not the only ones in this position. There are, you know, more than a hundred brands that are similarly like, what the heck 2026? What do we do now? Uh and I'm I'm just wondering how how you navigate this place as business leaders with high aspirations, who are watching the category, understanding what you want to do next. Do you just keep moving? You keep signing a multi-year deal and hope that it works out? Um, kind of what is the strategy? Yeah.

SPEAKER_01: 31:56

Yeah. I mean, I think the way we look at it as um, you know, setting aside all of the potential, you know, things that could happen. If we just look at November, there's a world where either an extension or regulation is put in place and it codifies, yes, these products are still, you know, federally legal, available, you know, past November. Um, so that's one scenario where, as we look at it, yeah, you want to be pedaled down because if that comes to fruition, you know, consumers are still entering the category. You still want to be introducing your brand, you want to draw attention to this category. Um, so you know, from that front, yes, you know, you want to stay pedaled down and do everything that you would have done that you were planning in October for this year. Um, but you can't ignore what's going on. So, really for us, it's a lot of scenario planning. Um, you know, we're we're very lucky that you know we do have a very strong balance sheet. So, you know, we are able to keep investing, keep you know, pursuing sponsorship deals like this, you know, getting our brand out there and really activating. So we're certainly doing that, but you know, everything that we're doing, we are trying to scenario plan of okay, if if X happens, you know, what are the things that you know, if your worst case happens, you're really in a bad spot? Or, you know, if if the worst case happens or the best case happens, would you have rather done something different today? And you know, every conversation we have, you can look at it from from both sides and make an argument, yes, keep going with with formulation, you know, new product development, whatever it may be, um, or kind of pull back. And that's just a conversation we have every day. It does make planning exceptionally difficult when talking to your you know supplier partners about uh juices. We use some very specific ingredients um in Cinder in particular that you know we need to make sure we have supply in that best case scenario. Um so there's there's no kind of magic bullet. I, you know, I'm oftentimes you know commiserating with with everybody else in the category of it's tough, every decision. You're just like, I don't know. I I hope this is the right one, and and you push forward. But um, you know, from a company point of view, what we're just trying to do is maximize optionality um, you know, in in either scenario. We're gonna continue to invest. We believe in this category, and ultimately we believe that you know, THD beverages will exist in you know in retail environments in this country over time. Now, will there be a temporary hiccup come November where you know that regulation is still kind of being worked through? You know, potentially, but um everything we're doing is that is really focused on we really believe in our brands, you know, we've got a great team that we want to continue to lean into, and we want to keep setting up our brands and our business for that that future you know state where we believe these beverages will continue to integrate into you know all you know beverage occasions um in the US moving forward. So that's kind of a little bit of the tension. But Charles, anything to add from your side?

SPEAKER_02: 34:55

I mean, I I must admit that I found myself um uh reading a lot about uh the prohibition days uh of late and and like you know, what what did Anheuser Busch do, you know, from 1920 to 1933? And you know, were are there are there companies that actually uh not only sort of pivoted and came out intact, but actually grew? Um and and there are actually a lot of examples of companies that did. Um and there so it's I encourage everybody to do some research. And um I think we all, I mean, you know, your opening remarks, uh Ben, that uh you know what we have in low-dose beverage is pretty special and um has its place in society. And I think it's completely undeniable. So the question is, does that get resolved uh year you know this year? Um, or is it a few years? I think it's undeniable that it will it will be. Um so uh you know, we have this, you know, this incredible fortune um, you know, with with the strong leadership um at GTI and Rick and Ben and so forth to um you know to um I mean shoot, we're we're you know, Rick's still hiring. You know, we're he's not just signing you know deals at United Centers and so forth, but you know, the teams are expanding. We we're continuing new product formulation. You know, we're it's pretty optimistic, you know, but at I think at the same time um you know also considering, okay, well, you know, how do we how do we keep the this incredible team that's been amassed intact for a period of time? And um, and I I don't think we're gonna break any any news here today, but there I think everything's on the table. Um and you know, whether you know whether things move to the regulated side or there's more stuff we can do within the existing team, um, you know, the the the view is very long term because the opportunity is undeniable. It's just how long does it take to get there? And that's that's the the muck that we're in, right? Um I hope your test the testimony was incredibly good last week, Ben, because you know we we uh we we we we want the the fix within the next 10 months here.

Ben Larson: 37:05

Well, yeah, I mean so to your point, I'll I I also support researching uh prohibition, you know, uh or going on an old forester tour in Kentucky and and hearing their story because they actually I think were the longest running contiguous uh distillery, and so they actually went a medical route, I think, uh through the years of prohibition and and we're still selling and uh distilling and selling product, interestingly enough, another parallel for the cannabis industry. Um but then coming out of Prohibition, another interesting factoid is that we started with three percent beer, and so it's like that was the one product category that we started with, and now look how many different forms of alcohol we have. Sure, it took a long time, and we're the alcohol industry is still lobbying for more form factors and all that, but um it's not this is not a message to you guys, this is a message to everyone else, is like it's okay if we have to do incrementalism after a win, right? Like we don't have to get everything all at once because that might not happen. Okay, so uh I'll get off that soapbox, but um a big part of making sure that we don't have to have a pause, that we don't have to work on that scenario, that that we have to get this done is is aligning voices. That's what generally I I do when I I go to DC. But Charles, you were mentioning something earlier about talking to your uh colleagues in the alcohol space, and some of them are liking it, some of them are drinking it, some of them are calling you a traitor. And as we circle the wagons, we have gotten beer dis beer wholesalers on board, not all of them. Come on, NBWA. Um, we have gotten the convenience store lobby on board, the uh retailers have created their own coalition now, Bamco. Um, and famously, like who aligned with us earliest was WSWA, the wine and spirits wholesalers. Um, notably, out of all this conversation are the suppliers, the brands, the the winemakers, the distillers. And I'm curious about your perspective about what it's going to take to kind of get them on board so that we can all be rowing in the same direction. Because I do feel like we're at that point now. If we get them on our side, we could potentially avoid that that November shutdown. Yeah.

SPEAKER_02: 39:33

Well, um uh you're asking a big question here. Um I'll I'll I'll I'll do my best. You know, um I the the this is uh you know so obvious, but um you know the the distilleries, the the wineries, the breweries, they're they're under real pressure right now, right? And they're um so I think they're in this phase of uh pointing fingers, really, um as opposed to really looking inward to like what's happening, consumer behavior, so forth. Um and it's easy, like, oh well this THC has popped up in the last few years, so that must be responsible. And I, you know, I I get that. That's a natural uh reaction. Um they they see that you know the taxing structure doesn't look fair, it looks different. You know, the all the regulation that the distilleries and breweries and so forth are are held to. Um, you know, this this new industry um doesn't have to deal with right now. There are a lot of things that doesn't feel really fair. So starting with this, you know, a little bit of panic, you know, this anxiety of what's happening, um, and sort of the unfairness of the of the current structure. Um so so you know that's going on, and that that's gonna be um you know something I think we have to hear. Um and um, you know, but but um we also need um our wholesaler, it's a three-tier system, right? We need our wholesalers to have a robust staff and have their trucks full. We need our our we want you know more distributors, not not fewer. We um we you know we we want restaurants to to be active and and profitable and um you know and if people are are there choosing um not to drink a beer or wine or spirit for whatever reason, that you know they have options that um make their customer happy and um that uh makes them eat more, um, that uh you know makes them relax. Um you know, they're uh there it is a compliment. Like this ecosystem that we all operate in, um, you know, for it needs to be healthy. And um and I think that there's a place that um you know THC drinks that that are regulated. I mean let's be honest here, like you know, we we need that that framework. And I know all the you know, we we police ourselves and and but there needs to there needs to be a framework, and and that that's gonna be, I would say, critical to get any um to get the alcohol industry supporting because it's it's currently looking real loose and and really unfair. Um yeah, go ahead, Rick.

SPEAKER_01: 42:14

I was gonna say, I think that a lot there's a lot of parallels to what Charles said with the cannabis industry as well, right? Of you know, Green Thumb's a cannabis company, you know, when we were looking at this, we said, well, this isn't fair, you know, selling THCA flower, all these products outside dispensaries without the endless regulation that we've signed up for to, you know, quote unquote do it the right way through the um state programs. So I think there's that fairness and and how do I play in it? Um, you know, obviously a lot of the AlkBab suppliers have federal licenses and um you know, stepping into the THC space brings a whole world of you know potential risk to their core business. Um so I do think that the regulations and clear, you know, lanes of what products are okay, where can they be sold, how, and you know, allowing the participants to then all work off of one framework will, you know, enable people to think differently about it. But it's hard when you're sitting on the outside saying, all these other people get to do these things, but I'm over here held to a different standard. So, you know, I think the more we can hopefully move past the, you know, today, how do I feel about this, and more think about the future, you know, these products provide, you know, on the cannabis side, a great trial opportunity to bring people into THC and cannabis more broadly. And from the out dev side, you know, this is the network that that they're used to, right? A three-tier system, you know, the retail environment that, you know, there's room for for more players here. And certainly when there are regulations, we know, you know, those big suppliers will come in. So, you know, from our side, we just hope to, you know, have that constructive dialogue about what should this look like so that we can all, you know, have that discussion together because the consumers want it. Like we've talked about, a lot of wholesalers are seeing the benefit, retailers, and that's just what gives us the confidence that this is. You know, it's too big and too many people see the value that this is providing for this to not exist in the future.

SPEAKER_02: 44:07

This isn't a great analogy, but you know, I I make wines in in France and the United States, and and with the uh you know, one of the arguments uh for um US distributors and and uh wineries, wines that are are imported, are that you know, because there's because there's this thinking, oh well, you know, uh less imported wine just means domestic wine sells more. Well, um and and may maybe maybe there's some of that. Um but uh again, get back to this like healthy distributor, healthy retailer, healthy restaurant providing what consumers are after is is really important, this this ecosystem that just take away the imported side, um just brings a boon for uh for for for you know US operations. And it it's just it's just not so clear as that. It's um you know, people have different tastes and for different occasions, and um you know it it's uh and obviously we're we're all in agreement, uh THC needs to be a part of that. I mean to you know, talk to talk to the stores that had been over the last several years um losing foot traffic, losing dollars, um, and then started working with um you know THC as an additional set in the store and and starting to see improvements. The people people coming back. I mean, we've heard some amazing stats um about total and you know who's buying THC there um is uh and I I I don't remember the exact uh fact.

Ben Larson: 45:34

Uh Rick, maybe you do, but but 30 30% of THC customers are new customers to Total Wine.

SPEAKER_02: 45:41

Yeah. I mean that's that's pretty astounding.

AnnaRae Grabstein: 45:44

Yeah. Yeah. Well, and the the optimism on the parallels with regulated cannabis to the alcohol brands is that over the course of the past 18 months or so, there have been a lot of large cannabis companies that were initially very opposed to hemp derived products that have started to be supportive of low-dose hemp derived beverages. And I think that it's been a mix of things, but but the biggest thing has been them realizing that they should just instead of fighting against it, they should participate and compete in the space and that people have been creating their own products and seeing this on-ramp that you guys have both talked about as a way to introduce people to new product categories. And if there's any beverage brands that are out there, it's like our arms are open and welcome for you. Like come and check it out and meet this new consumer and participate with them because this ecosystem that needs supporting is is is very large. Like we want to keep open hospitality venues that might have less people coming in because they don't want to drink traditional cocktails anymore. And this might be a way to get people into those spaces and to continue, you know, participating in the economy in a positive way. So it seems like like it's possible to bring people in because it felt impossible to bring the regulated cannabis companies in to the hemp discussion in a productive way. And it is, it's happening now. So we're we're we're a lot closer than we were, and it's it's like a two steps forward, one step back kind of situation. But I I think it is possible, and I think that people like you, Charles, are are great examples that that you can live in both. You can still support alcohol and support product creation in alcohol while also participating in in THC.

SPEAKER_02: 47:47

Yeah, I'm I'm living proof, Anna Ray.

AnnaRae Grabstein: 47:50

Yeah.

SPEAKER_02: 47:51

I you know, uh just a couple weeks ago in uh I was in uh Atlanta for a few days, and we we did a series of of um of events that included uh scenery at a rhythm and my wines. And some people came for the wine, some people came for THC drinks, and both sides sort of discovered the other. And it was uh it was a boon for for the for the retailers involved, um, and really kind of eye-opening, I think, for for both sides, because you know, we we we live in a world where everything is so channeled and um and here there's their um it was they were they were much better events than they would have been otherwise.

AnnaRae Grabstein: 48:29

Yeah, I think you know, Rick, you uh you alluded to the strength of the balance sheet. And uh you guys have both touched on your desire to keep innovating, but unfortunately, there are companies that have been building in hemp beverage that don't have the strength of your guys' balance sheet. And as a result, the policy uncertainty has put folks in a in a tough position uh who were earlier in their journey or or were thinking that 26 was going to be the year that they would bring in their first round of capital uh to be able to scale their brand, but they have good products out there. And I think that this is creating this opportunity for MA that we hadn't seen previously, because actually the valuations were were really high and the situation is a little bit different today than it was. And you guys talked about the innovation that you're doing internally. I'm wondering if if either of you could talk about what you're seeing in the space and if you're even looking at potentially buying products or brands that might already be in market, because it it is a good time to buy.

SPEAKER_01: 49:37

Yeah, maybe I'll hit a top line and then Charles can kind of share some of the things he's looking at. But um I'd say overall, yeah, it's a really tough time. And I talk to operators all the time about, you know, what's the plan? How are you guys kind of thinking about that, the same situation we are, but from a different, you know, context. And for a lot of brands, that that fundraising has dried up, you know, it's very tough to underwrite an investment in the space right now when you do have that, you know, federal uncertainty. So um it's really tough. You know, many brands are focusing on just profitability, you know, how if if I believe in my brand and the products, okay, how can I make sure that if the worst case happens in November, that my business, you know, can survive until I am able to come back and we have those regulations in place. Um so you know, it's a that that's really the whole discussion with a lot of a lot of teams right now. Um, you know, for us, we're we're always open. Um, you know, our kind of approach is we always will we'll take any calls, you know, talk with talk with operators. Uh right now, you know, like everybody, it's tough to underwrite investments in the space. Um, but there are a lot of really great brands, a lot of really great products to your point that you know certainly could that have a reason to exist in the future and you know could exist within our portfolio as well. Um, you know, given the uncertainty, you know, we we have two brands right now with Cinderita and Rhythm. And, you know, it's it's tough to build one beverage brand really well, much less two, three, four. Um, so you know, we're trying to be mindful of that and you know, how much can we take on as a business, you know, regulate regulatory uncertainty aside, uh, to make sure that we're able to bring these products and build them into the brands that you know we think they should be. So that that's oftentimes what what we're looking at. We're always you know on the lookout for you know interesting products and and ideas and brands and and again, always talking to companies. Um, but for the time being, we're really focused on how do we strengthen the portfolio we have, our current products, um, you know, what's that next in kind of wave of innovation that that we want to do? And you know, obviously then keeping in mind what's most likely you know to get through regulation and how does that you know change your innovation priorities between a spirit and you know another RTD can that maybe the five milligram RTD can is more likely to survive in the initial regs than the spirit. So, you know, it's a constant game of prioritization there. Um but there's there's a lot of great products, and you know, as people are coming into the market, they're seeing what's out there and what's not there and trying to find that point of differentiation. So I think it's a fun time for the category from that product point of view because there are so many new ideas, new people coming in. Um, and then for us it'll just be a matter of how much can we take on when, and you know, what's the right time to launch given the you know uncertainty and where the full supply chain is.

Ben Larson: 52:26

You know, all the all the uncertainty is not necessarily a new phenomenon for for those of us operating in the space. And I I think over the last decade or so it's been like preserve optionality, you know, always think about these scenarios and like where do you press, like if something happens. Um, and that's been a a pretty normal exercise over the years. This year definitely feels different. It feels like there's a point in time where it could be like a fork in the road, right? And something I've been spending a lot of time doing is like, all right, we have to prepare for like what happens if we're unsuccessful, right? And we have to right size the business and make sure that we have the right resources to be able to withstand that alternative, but simultaneously, we need to be ready for the lights to turn be turned back on and go faster than ever in the complete opposite direction. How are you thinking about that? Like, do you am I right or wrong? Like, do you think there's a point in time where maybe there's some clear legislation or a two-year extension where all of a sudden it's like gas pedal down to the floor again and everything's just full bore? Like it's it's it's a little chaotic, uh, if I if I if I'm telling the truth.

SPEAKER_02: 53:44

I'm open to that chaos, Ben. I'm open to that chaos.

Ben Larson: 53:46

Yeah, yeah, exactly. Right.

SPEAKER_02: 53:48

I mean, that's a that's the kind of chaos we welcome.

Ben Larson: 53:51

Yeah, I guess that's this that's the benefit of having a strong balance sheet, but in that upside scenario, how are you envisioning it? Like that that next day after like a bill drops or gets approved, like is it just like it's all systems go?

SPEAKER_01: 54:08

Yeah, I think I think the first thing is you have to make sure that you know where where it's actually going, right? We've seen bills come through that look really good and it it advances. You know, Ohio is a great example of had a clear you know adjustment to the hemp band, beverages were carved out, you know, very clearly. Everybody thought that was a go. Everybody kept, you know, started moving fast in Ohio. And then, you know, a single you know, line item veto changed that you know overnight. So I think first is you have to be very confident that yes, you actually know what is what is happening. And um, so I think that's kind of one thing just caught up front. But I I think then a lot about okay, where are your weaknesses as a company? Um, you know, we we do have a very healthy sales team that you know, if if retailers um come back to the table, right, they see that clarity. There's a lot of retailers that have been on the edge that maybe that tips them, tips them overline to enter. Um, you know, do you have the people ready to partner with those customers, especially the increasingly, you know, the chains and the really sophisticated customers that it's not just uh you know stop in and sell the product in one time.

Ben Larson: 55:16

Uh I think that's a that's an important clarification. I read read recently in an article is like your customer is the chain, your customer is the distributor, right? Like don't get that confused with the consumer.

SPEAKER_01: 55:28

Right. You have to focus on both those. The customer, you have to be ready to support them. Um, but then to me, I think depending on what that looks like, the real question becomes supply chain and production, and you know, are you ready to scale? And that's a hard thing to balance right now as people are in in many ways looking what's the windown plan. Um, but if you simply you know focus on that with that other side of it, you know, what is what are your next two steps, or do you know who those three next you know manufacturers are that you would need to you know upgrade to or move to or uh ramp up with, you know, to to handle that that other side that I don't think you can ignore both because if you're staying in the game, right, and trying to survive um past any potential negatives, you also need to have confidence that you can capture those positive inflection points that you know we certainly hope are coming in the near future.

AnnaRae Grabstein: 56:27

Wow. Um this is a lot. We could talk about so many aspects. I've got tons more questions, but I'm gonna have to hold them and we'll have to have you guys back um once we get that clarity and we know what happens next to learn more about how uh you're gonna move forward. And in the meantime, it's time for our last call. And I want to give each of you guys a chance to make a last call. So um why don't we start with Charles? Uh and you guys can each give us a final message for our listeners, some advice or a call to action. This is your closing thought. Charles, what's your last call?

SPEAKER_02: 57:06

What we're doing, it's undeniable. Um, and it may take a little time um and um you know prepare for for all eventualities. Um and um I hope you're lucky enough as I am to have extraordinary um partners in Rick and and Ben Kopler and the others. Um, because the the the mettle of of these people are really coming through right now in this moment, you know, with all this uncertainty. Uh so um yeah, that's what I got.

SPEAKER_01: 57:41

Cool. And from my side, you know, I would just encourage people to to talk about this, right? Like if you're a fan of these drinks and your friends don't know about them, family, like talk about it. Get people to understand what this is, and it's not some scary, scary thing that's unregulated. Well, to some extent it is, but we're looking for regulation. We're looking for those operators who are doing this the right way. And and I would say, you know, so let people know about it, because the more people that know about this, you know, the more conversation there is about it. And certainly communicate to your legislators, whether that's within your within your states, you know, argue that that we need regulation, we need a path for these products to exist. And and certainly at a federal level, you know, let you know, House representatives, Congress know, you know, how consumers feel about these products, because I know I would personally be devastated as a consumer if these products go away, much less the business side. So, you know, the more that people understand how consumers feel about these products, how they use them, and it isn't some scary thing that needs to be in a back corner, the better. So, my my overall call is just communicate. Let's talk about this, let's talk about what's going on and make everybody's voice heard because these products deserve to exist.

Ben Larson: 58:54

Incredible advice. I would say people are listening, people keep going. What I'm hearing now is that people are getting tired of talking about hemp in DC, which is a good thing. Keep bringing it to them. The only way they get to stop talking about it is if they give us what we want. Um amazing. Rick Shepp, Charles Bieler, Rhythm and Seniorita, Agrify, GTI, all those things. Uh, thank you guys so much for spending the last hour with us. It was really, really fantastic.

SPEAKER_02: 59:26

Thanks for having us. Loved it. Yeah, thank you.

Ben Larson: 59:29

All right, we'll talk to you soon. Anna, let's go grab a Bevy, huh? I'm I'm thirsty. Yeah. Let's go. All right, folks. What do you think? Thank you for leaving your comments, for sharing, liking, subscribing, doing all the things. Thank you to our friends and family and teammates at Virtosa and Wolfmeyer, and of course, our producer, Eric Rossetti. If you've enjoyed this episode, please drop us a review on Apple Podcasts or Spotify or wherever you listen to your podcasts. Thank you, thank you, thank you. We have a lot more great shows in the hopper for you coming up. Stay tuned, and as always, folks, stay curious, stay informed, and keep your spirits high. Until next time, that's the show.