AnnaRae Grabstein: 0:00

What a wild journey just trying to navigate the difference between what's happening with policy, legislation, and regulation compared to business opportunity. Because it just doesn't always make sense. And like the business opportunity is sometimes short-lived, sometimes there's a long tail on it. And what could happen with some of these regulations really has the opportunity to shift the trajectory of these businesses in a big way.

Ben Larson: 1:01

A lot of headlines hitting the news. We have Ohio and the shit show with the state AG suing major MSOs as the industry fractures over new restrictions. In Texas, medical industry is finally growing while adult use remains off the table. And well, hemp keeps hemping. The ballot initiatives across the state, ballot and legislative, I should say. Mixed wins and losses across Ohio, Maine, Florida, Pennsylvania, and so on. There's federal pressures mounting as the FDA misses their deadline on defining cannabis and its constituents after the November uh bill. And then finally, uh a little bit of good news, I guess, is that capital's still flowing selectively, as Willie's remedy raises$15 million to push TAC beverages nationwide. Uh, but before we get into all that, let me check in with my co-host, Anna Ray. How are you doing this week?

AnnaRae Grabstein: 2:00

I am doing really good. I am busy, busy, busy with work, gearing up for a trip to Hawaii next week. Yeah, but wait, what is behind you? Where are you, Ben Larson?

Ben Larson: 2:16

I am in Hawaii.

AnnaRae Grabstein: 2:18

Incredible, Mahalo. Mahalo.

Ben Larson: 2:21

It is, it is, it is, it looks beautiful actually right now. It looks pretty tame, but it's actually quite windy out here. We've we're right in the middle of a tropical storm. It's been raining the last couple days. The power's been out for the last 13 hours. Uh, but I'm not complaining. I'm still in Hawaii and oh, looking at a beach, so can't complain.

AnnaRae Grabstein: 2:41

Nice. I um I very much enjoyed the Super Bowl festivities over the weekend. Uh oh yeah. Did you get a peek at the the Benito Bowl, the Bad Bunny uh halftime show?

Ben Larson: 2:56

That was literally the only piece of the Super Bowl I watched, and it was it was quite interesting. It was good. I I mean I really enjoyed it. It was like what it was definitely made to be a music video. Like it was just the camera angles, the the scenes, it was really interesting. But what I recognized is that if you were sitting on the sidelines, you probably didn't have a very good view of it because there was all the grass people lining it. I'm like, I'm like, if I'm sitting on the 50-yard line and I paid good money for these tickets, like I would want to see what's happening with the halftime show, but I guess you would have to look at the screen.

AnnaRae Grabstein: 3:27

Yeah, I had the same thought. It definitely felt like it was really like a musical made for the TV audience. But I will say, shout out to my friend Joel Lennenfeld. He um is the CEO of uh Publis Media, Publis Media, and he was there and he was posting Instagram stories from the Super Bowl, and he still had a pretty good view. It looked pretty fabulous.

SPEAKER_01: 3:49

Okay.

AnnaRae Grabstein: 3:49

Um, but I I thought it was just great storytelling, and um, right now, kind of storytelling is the word of the day. People are talking about it in business and in media and in social influencing and all those things, and um and no matter what you think of Bad Bunny or where you fall in this whole debate with the the message, they really did a lot with visual storytelling, um, which I thought was just really fun and entertaining to watch.

Ben Larson: 4:20

So I love should should we talk about the visual storytelling of of Kid Rock making his uh his Super Bowl concert?

AnnaRae Grabstein: 4:29

I don't I didn't see that one, so I I have no comments. I'm staying out of it. I didn't want to be a click on on that. I didn't want to be a viewer.

Ben Larson: 4:38

Uh I mean it's a very old kid rock bouncing around with fireworks going off to let what felt like an AI generated crowd, but uh I don't know. I I I'm glad the Benito show was was great because uh the Super Bowl itself was pretty lackluster, it seemed. Um totally.

AnnaRae Grabstein: 4:58

I'm not a big football fan, but I usually do watch the Super Bowl and I look forward to it being a good game, and it was kind of slow and boring. That's the truth.

Ben Larson: 5:07

Yeah, well, luckily I didn't watch it, just the halftime show.

AnnaRae Grabstein: 5:11

Amazing, cool. Well, so um today it's just you and I. It's been a little while we've done this, but um first time this year, right? I think it's the I think it is the first time in 26. Yeah, uh, but happy to do it and finally felt like there was enough news that we should just dig in and really break it apart and talk about it. So, what do you think? Should we dig in?

Ben Larson: 5:34

Yeah, I'm ready. Let's go.

AnnaRae Grabstein: 5:36

Okay, let's do it. So, for our first story, we're gonna talk about Ohio. There is a lot going on there. Um, Ohio is really becoming a case study, and what happens when legalization meets hemp, meets aggressive law enforcement, meets conservative ideology. At the end of last week, the attorney general for Ohio, Dave Yost, filed an antitrust lawsuit against nine major MSOs that most of you would recognize their names, um, including CuraLeaf, Green Thumb Industries, TrueLeave, Ascend, Cresco, and others, alleging that they colluded to fix prices and rig the system by prioritizing each other's products over local Ohio uh operators. So this was a story. Um and at the same time, if you work in the industry, this is kind of like, well, yeah, everyone knows that this is going. Yeah.

Ben Larson: 6:44

And yet it's still tough to keep a business up and running uh and profitable. Yeah. Um yeah, I I I think the story that I heard is that they were even using the words like cartel, uh, which I do think is a probably a step too far. I I mean we've all been critical of MSOs in the past, but I don't know if they're as far going as far as being cartels, but I yeah, it it's a tough business. And and with these small markets and limited, you know, uh addressable markets, that they kind of it's it's more of a symptom of of the infrastructure, it feels like. I don't know. Like what what are your thoughts? You I know you do a lot of work with with operator operators around the uh around the country.

AnnaRae Grabstein: 7:31

Yeah, vertical integration and limited license markets are like a petri dish for creating an environment for this to happen. There's almost no other way. Um, and because when you're in a market that has a small amount of dispensaries and a small amount of cultivators and producers, like in Ohio, uh you as a producer, you are selling into the dispensaries, they're your customers. But if they if those customers are also trying to sell into your dispensaries, if you are in that wine and dine phase of building customer relationships, it just becomes almost accidental while you're in that discussion of, hey, will you put my gummies on your shelf? And in that same conversation, the person says, Well, yeah, but will you put my flour or your or my pre-rolls on your shelf? And everyone's like, sure, yeah, why not? And it isn't necessarily done in this secretive mafioso backdoor kind of a way, it just happens by accident when wholesalers and customers are sitting on both sides of the table in the same discussion. Uh, and that's that's what happens. So it really is challenging for small operators to break in if they don't have stores. And that's, I think, really what this lawsuit is highlighting. It's and it's happened in Arizona. There was there was a lawsuit a couple years ago about um bud tenders that got charged with some kind of conspiracy because they were selling shelf space to independent operators, because it was so incredibly difficult to get onto a shelf at an Arizona dispensary if you were not vertically integrated and trading shelf space.

Ben Larson: 9:26

Um, that independent operators an interesting one where even just the independent bud tenders themselves were kind of running rogue, and so they were doing it under the noses of of those dispensary owners.

AnnaRae Grabstein: 9:40

But um yeah, because they realized that it was a it was a rigged system, basically, yeah.

Ben Larson: 9:46

Yeah, but in this particular case, they're they're accusing them of like keeping the prices artificially elevated, um, which I don't know, I'm not on the ground there. I would love to hear from people that are in that marketplace. Like, if I'm a small operator, like isn't it harder for me to offer products at even lower costs, like than say like these large operators that have their kind of their big machines like up and running? And so I'm curious as to if that's indeed the case, because I've heard it the other way. I've heard of large operators like here in California, right? Like scaling and dropping the the price to the point where that it makes it hard for the small operators to operate, but this is to say that they're actually blocking them out and charging more.

AnnaRae Grabstein: 10:35

Yeah, I did look to pull some data to understand that a little more, and it does seem that the average item price in Ohio compared to the broad market generally is higher. So we are seeing um average item price in Ohio over$30, and in most markets it is it is not, it is below$30, and sometimes it's even below 20 and some of the more markets. Um it's possible, and also Ohio is a very new market, so that means that the infrastructure costs are still weighing heavy on the shoulders of everyone that built, you know, five, 10, 15, 20 million dollar cultivation facilities indoor, there's no outdoor kind of cheap biomass production going on in that region.

SPEAKER_01: 11:23

Right.

AnnaRae Grabstein: 11:24

And so it cost a lot to get launched. And uh whether or not there was some sort of fraudulent or illegal collusion to keep prices high, I can't speak to that. But I do know that when an operator launches in a brand new market, there is an expectation that they can charge higher prices at the beginning until the market becomes more saturated. So uh I don't know. I guess we'll see in discovery.

Ben Larson: 11:49

I mean, I think the most interesting thing is like just the potential ramifications of you know, if the AG is successful here. Um, you know, first off, it's an AG and not like another private company that's that's suing. Um, but it sets an interesting precedent um of how we evaluate these different markets and the activities that are happening in them. And again, it's kind of this is kind of a symptom of of just an overly regulated, you know, constrained marketplace. Like this wouldn't be happening if we had more of a free market that was um supporting commerce instead of what I've been calling recently like this minimum viable legalization. Like I feel that we're just persistently in this state of like, oh yeah, we legalize you, but we're gonna make it as incredibly hard as possible instead of actually supporting a market that we chose to legalize.

AnnaRae Grabstein: 12:40

Well, when you have a closed market and you create this limited license environment too, it it means that there should be the right balance of supply and demand that you're creating with the licensing. And if this is happening, it's just it's off. And so the over-regulation is not working. And I wonder, like, so what if the AG wins here? And does that mean that there's just going to be even more rules that now every store has to carry every product or you have to prioritize certain product manufacturers before others, and it's just going to create even more rules on top? It's like I'm not sure what the outcome is here and how it benefits anyone. Uh yeah.

Ben Larson: 13:25

You were talking about this. I just think the ultimate. I hope it stays, I hope it stays hyper focused on like the just like the collusion on on pricing, because like like price fixing is illegal. Like there should be consequences for that if that's what's happening, but like I don't think we need to stand up more rules to prevent against it. Like that we we have these rules across all different marketplaces, so there shouldn't be anything special um as far as what comes after this in this market, yeah. Except for opening it up more, except for like kind of working away from the benefit of these limited license kind of frameworks. I I I've just I've persistently been against this this model since I've entered the industry. Like, this shouldn't be a thing. We should be pushing towards more of a free market. Um, not totally free, like you know, it's like it doesn't have to be libertarian, but like the closer we can get to free market, the better.

AnnaRae Grabstein: 14:20

Yeah, you and I were texting about this when the story broke, and and I said, This this isn't gonna fix anything. Um, and you said, really? And I said, Well, descheduling will fix this. That's that's really the only thing, is like we have to literally break it all down and rebuild it. Uh, but I I just I don't see that that is what the AG is is trying to do here, is just break it down and rebuild it. So we'll see Ohio. Um, in the meantime, there's certainly a lot more litigation going on in cannabis and a lot more just like legal battles ahead for operators and governments who are trying to work through stuff. And this is kind of a sexy one that we're all paying attention to today. But there's still other stuff going on in Ohio. This is like not the only thing. Um, so simultaneously, yeah, the Ohio Ohio. Ohio no, seriously, is split because there is a citizen-led referendum aimed at blocking new uh hemp restrictions and rolling back some of the marijuana rules that were passed in the initial adult use legislation. Uh and so they just got uh qualified to start collecting signatures in Ohio. So this may or may not go to the voters, who knows? Um, but the industry is split. I'd say that the cannabis industry, the regulated side, believes that this could really like destabilize the new market, and many are against it, but others are for it. Certainly, um the hemp businesses were seeing like really great performance in Ohio. Beverage in particular was doing great in Ohio, and recent restrictions have really shut that down in a way that um the people of Ohio seem to want to bring back. So we'll see if if that works out for them. What are you hearing?

Ben Larson: 16:20

Oh man, uh there's just a lot. Uh I I think that yeah, I think there's just a lot going in Ohio, and it's it's a it's a major battleground state, it's a big market. You know, we were talking to some of the hemp beverage brands that were selling there, and it was one of their top three markets that they were operating in. And so um the you know, as with anything when there's massive shifts overnight, it causes a lot of turmoil and and a lot of fighting back. And so um, I think there's a lot to be seen in Ohio. I think it's smaller, but it's just another bellwether state for for kind of the progression of everything.

AnnaRae Grabstein: 17:02

Yeah. Well, let's move on. Ohio isn't alone. Uh let's head south, Texas.

Ben Larson: 17:10

Oh, Texas.

AnnaRae Grabstein: 17:12

Oh, Texas. So Texas, I think, is there's some positive news out of Texas. Um the Texas medical cannabis program that people call Teacup, uh, Texas Compassionate Use Program is what it stands for, uh, is adding patients and products and license operators uh following the most significant expansion of its program since its launch in 2015, uh, specifically around adding more qualifying conditions and uh more opportunities for licensees to enter the market. So big big news out of Texas. Currently, the patient count uh was reported by the Texas Department of Public Safety to be 135,470 at the end of 2025. And that's um a patient count with a population of around 31 million. And just to put that in context for other large medical markets, uh, Texas is the number two state by population. The number three state by population is Florida, and Florida has a population of 23 million, so about 8 million less people than Texas, and they have around 1 million medical cannabis patients. So theoretically, if you were to try to create an apples to apples opportunity in terms of patient count, there is an argument to be said that you could 10x the amount of patients in in Texas based on the qualifying conditions. Um access and products, I think that's another another discussion that we should have. But uh, it is looking like the operators that have been slogging it out for the past few years uh maybe have some good opportunities ahead of them.

unknown: 19:01

Yeah.

AnnaRae Grabstein: 19:01

Do you think that Texas is proof that medical markets still matter?

Ben Larson: 19:07

No. Uh, I mean, yes. Okay, sorry. Some good pitchforks are coming out. Um, yes, any form of legalization matters, medical, especially. I think there's a whole nother conversation that should be being had persistently about the importance of recognizing medical separate from that of recreation. When we talk about Florida, I think of Florida more as like the early days of California, where it's like medical, you know, you you call your you virtually call your doctor who's probably sitting on a beach, much like this one, and you get your card, and then you go in and you buy your weed. I mean, medical marijuana. And Texas is from a medical program standpoint is far from that. It's much more medically oriented. No inhalables is a great example of it being more medically focused than other markets. Uh, not to say anything about the efficacy of flowers medicine, but um it's also like yeah, the lack of access, the general lack of traction of an adult use uh you know initiative, contrasted by like this four billion dollar hemp marketplace that spun up. So like the people of Texas want legal cannabis and or and or a more open medical uh cannabis, but um to see how it gets there, it it's it's really challenging. I can imagine somewhere in the middle where you have access to low-dose THC uh through the hemp channels, and then medical just kind of slowly marches into the direction of adult use, but how long it takes to get there is is untold. So look, I mean, if I'm a licensed operator in in Texas, it's already been a long slog. Um, I would certainly be excited by how much it's grown from a patient count perspective, but it's just gonna continue to be a long slog. I mean, like these aren't you're not gonna see an explosion to like a Florida marketplace anytime soon, from my perspective. I don't know. Yeah, what do you think?

AnnaRae Grabstein: 21:11

I think you're right. I I was reading about this in a local Texas paper. I was trying to figure the High Plains Public Radio covered this, and they talked about the recent announcement of Texas Original, uh, who are friends of the podcast. We've had Nico Richardson, the CEO, on before, and they just recently announced that they expanded from a 7,700 square foot facility to a 75,000 square foot facility, uh, looking ahead at this growth opportunity. Um, but at the same time, uh Texas is looking at bringing up the amount of licensed operators to 15 from three. Uh, and they have nine of those additional additional 12 that are in the what they're calling the conditional licensing phase. So they aren't fully through licensing, but they've been identified as kind of the folks that will get the licenses if they're able to pass through a whole bunch of hoops that the regulators are putting out for them. And it's complicated because if those folks enter the market, is there enough business for all 15 of these companies to be successful or to even just break even? It remains to be seen. I think with the amount of patience, probably not. And still, we are just talking about Ohio and some of the challenges of vertical integration. I mean, Ohio, at least, yes, vertical integration is allowed, but it it allows for wholesale. But Texas is one of those markets where these folks are all supposed to grow, manufacture, distribute, and sell 100% of their own products in their own confined uh supply chain. And that just is not good for anybody, but it is very similar to Florida. So we've got a lot of kind of interesting parallels going on here. And what you described of where you think Texas could go to me sounds a lot like where Florida is, like that gets more open and potentially having low-dose beverages outside of the dispensary channel.

Ben Larson: 23:23

Well, and and look, I mean, Florida does have all of it, and so what leads to again, patient growth is retail access. So, like the more retail shops you create, the the more patients you'll have. So I I think that 130 something thousand patient growth growth from like 20,000, I think that's largely just based off the like demand for for cannabis in general. Um, there hasn't been a ton of access over the past couple years, and so that growth kind of started happening on its own, I believe, um, or unless it was a huge surge in the last couple months. Um, but that the more access we start creating, I think you'll start to see that patient count grow. But that doesn't mean that there isn't still greater demand. So in Florida, where we do have 700 like medical stores, so to speak, yes, um, you know, there's still a ton of hemp products uh being sold across retailers, um, and and what have you. So it's like, and not to mention the the the rest of the illicit market. So um I think it'll it's all one market at the end of the day. We've always said this, like whatever you call it, whatever where you find it's one market. We know Texas is a huge market, and so if you only have 130,000 patients in the medical channel, there's a lot of quote unquote patients scattered throughout the the state that haven't been captured in into a legal uh sales channel yet.

AnnaRae Grabstein: 24:53

Yeah, what a wild journey just trying to navigate the difference between what's happening with policy, legislation, and regulation compared to business opportunity because it just doesn't always make sense. And um and like the business opportunity is is sometimes short-lived, sometimes there's a long tail on it. Um, and and what could happen with some of these regulations really has the opportunity to shift the trajectory of these businesses in a big way.

Ben Larson: 25:21

Yeah, I I I think this has been the case ever since we both got in the industry, that the the true opportunity really doesn't come. And I know we'll get to this later, but until there's like true federal guidance and structure for this, like the you'll you'll have some successes here and there, but the true like growth and opportunity really doesn't come until we have that federal foundation.

AnnaRae Grabstein: 25:40

So yeah, and that's that's why I we said about Ohio, like this doesn't get fixed until we knock it all down and rebuild it with descheduling and some sort of federal regulation. And I I don't think that we're close to that, let me be clear, but uh I it it is it is the way to fix a lot of of this confusion, be it uh the access, the broad access question to low-dose products, the struggles with access for patients in Florida and in different all over the country. So um yeah. Uh shall we move on from Texas?

Ben Larson: 26:19

Yeah, yeah. Let's uh well, there's a bunch of other states that we're we're looking at. What's happening?

AnnaRae Grabstein: 26:25

Yeah, not every state uh is on the up and up. I'd say that some are not moving in the right direction, uh, but some but some are. So we're gonna talk a little bit about the the major ballot initiatives and legislative change um in in some of these states. So we touched on Ohio and the ballot initiative that uh is is collecting signatures right now. And then we have in the past couple episodes, we've mentioned that Maine has a group of prohibitionists that have been trying to qualify a uh a rollback to their adult use program onto the ballot. And that one failed. It did not qualify for the ballot, and adult use survives. Yes, one for the home team. So, yes, the the prohibitionists failed on this one. Uh, but then heading south to Florida, uh, there has been a major effort to get signatures to put adult use back on the ballot in 2026. And that appears to have failed as well, uh, notably as a result of a number of uh signatures being contested. And this is a lot of signatures that need to get uh collected for Florida. Whereas in a place like Maine with a much smaller population, it just costs a lot less. People don't realize like the signature gatherers out there are not doing so out of the goodness of their heart. Generally, when someone is asking you to sign something outside the grocery store to get something on the ballot, they're getting paid somewhere between like$1 and$5 to collect that signature. And uh in in Florida, they needed not quite a million signatures, but something like 800,000 signatures to qualify for the ballot. And uh they did not this time. So yeah.

Ben Larson: 28:24

Let me let me clarify. So they went out, did the signature gathering, thought they had it, and then when they submitted it, that they that signatures are being contested.

AnnaRae Grabstein: 28:35

Correct. There was some very Florida thing. This is very Florida, yes. Small signature uh debating the validity of votes, yes, exactly. And this is very much driven by DeSantis, and um, I'm looking to see if I can find the language, but yeah, it was it is contested. They did actually submit enough signatures to qualify theoretically, but a bunch of the signatures were thrown out. Uh, so expect lawsuits over this. Um, but another year without adult use in Florida. And again, truly have spent a ton of money on this effort.

Ben Larson: 29:14

Yeah, I was just gonna say, just like, oh man, coming up with loss after loss after spending so much money that's in a state that you practically own. Um so tough. Uh oh man.

AnnaRae Grabstein: 29:27

And then also more on the voter initiatives. Um, and this one is definitely a loss for the industry. Uh, in Massachusetts, signatures have been accepted, and there will be an initiative on the ballot to roll back legalization. And uh it's just shocking to see. I mean, the Massachusetts industry, I feel so bad for the operators there. People have really struggled. There was overlicensing, there's been way too much supply in the market, the prices have crashed, the operators have been struggling. And so it's like nobody has money to put behind fighting this. But this is this is like a do or die for these operators. If this passes, um, adult use could be over in the state of Massachusetts. I can't imagine that it will pass, but I don't know. I've I don't always have the best pulse on on the American people from where I'm sitting in Northern California.

Ben Larson: 30:22

Hopefully the bar for comprehension is a little bit higher with the actual like voter, the the language around the vote, because I do know the tactics for getting these signatures were pretty misleading, and there that was largely contested. And um I it's like the this uh in contrast to what's happening in Florida is so interesting, right? Like people go through what I can only presume was a legitimate effort to get the signatures and then to have it thrown out because the governor doesn't want it to happen, is my take on it all. Um and now this where you have prohibitionists uh you know being very misdirecting basically people to gather their signatures and then have that be granted like to go to the voters. It's just another uh it just highlights like how broken our political system is and continues to be. And it's just really unfortunate. Um, but yeah, hopefully the good guys win at the end of the day. Like roll rolling it back just is definitely not the right answer, obviously.

AnnaRae Grabstein: 31:33

Yeah, I would say that broadly I do appreciate that there are voter initiative processes in lots of states because our next state that we want to cover, Pennsylvania, doesn't allow voter initiatives and it makes it even harder to change the law. So I'm with you. I'm hoping that the voters of Massachusetts are smart enough to um to keep the cannabis operators and cannabis access going um in the state. Over in Pennsylvania, close by, there is no voter initiative process, and there has been a medical program there for many years. And the governor, Josh Shapiro, has been pushing to transition their medical program to an adult use program for a number of legislative sessions now. It seems like forever. It's been in multiple budgets, and um, it just doesn't happen. Last year's version was a pretty wild and out there sort of state-run system that would have looked a lot more like the way that they run their alcohol stores that are also state-run. Uh, and it didn't, it did not pass through uh the state's legislature. This year he's added again and he gave a speech talking about how much is being lost to all of the border states to Pennsylvania. So we'll see if he's able to be successful in in the budget and in um in the narrative around this effort. He's saying that he would like to legalize by the summer, by July, and have adult use launch uh by January of 2027, which would be incredibly fast. But there has been a number of operators that have been planning for Pennsylvania adult use for some time. And I would say that the infrastructure in Pennsylvania is probably overbuilt for today's medical market. Well, maybe not built up enough for a full adult use market, but it would it would be a great boon to the people of Pennsylvania to not have to drive across the border uh to New York or Ohio um and elsewhere to get their cannabis.

Ben Larson: 33:46

I I I bet those border states and operators have a different perspective on this issue. I I I do wonder if that ever like comes into play. Like are are adjacent operators ever trying to influence the the progress of their their neighboring states.

AnnaRae Grabstein: 34:05

Oh, that's dirty. That's dirty, and it's probably happening.

Ben Larson: 34:10

It's probably happening.

AnnaRae Grabstein: 34:13

But everyone's gonna protect their little piece of the pie, right?

Ben Larson: 34:17

Right. It kind of um it reminds me, like I think one of the the more successful dispensaries in Oregon is right on the border of Idaho, and Idaho is famously uh prohibitionist on every aspect of THC. So just something to consider. I don't know, just what I think about.

AnnaRae Grabstein: 34:40

Yeah, the border stores have been great businesses. Uh, there was one um on the border between Massachusetts and Connecticut, between before Connecticut legalized, that was doing a wild amount of business for a while. I haven't kept up on it, and I wonder if it still is now that Connecticut has launched. Uh, but yeah, it's this is all part of this reckoning, the state-by-state kind of complexity that we're faced with. Um the state battles are messy.

Ben Larson: 35:11

Um state state battles are messy, they'll continue to be messy until we have federal guidance again.

AnnaRae Grabstein: 35:18

But the federal timeline seems to be even messier. Um, we are recording on Tuesday, February 10th, and today is actually the deadline for the FDA. Um, they face a statutory deadline that was a part of the November uh bill that created new language around hemp, and it was a deadline to publish lists of cannabinoids and to define hemp product container rules. But uh, have have you seen anything from the FDA? I haven't.

Ben Larson: 35:53

I was just gonna say how much you want to bet uh that they don't uh don't do it today, that they don't meet the deadline.

AnnaRae Grabstein: 35:59

Yeah, uh it seems that they aren't meeting the deadline. It is uh what time is it? It is about almost it's close to two o'clock eastern time. So I guess they they have a few hours still to do this. And apparently Pam Bondi is is going before some big body of people tomorrow, and it they're gonna push her on why why nothing is happening.

Ben Larson: 36:27

But I this is such a it's it's I mean, this is such a the FDA is so incompetent, like the the requirements were not that hard. It's okay, so since since the bill was signed, uh the FDA was given 90 days to publish one, a list of all cannabinoids known to FDA to be capable of being naturally produced. Like this information is out there. You could do a big data collection effort and just put it into Chat GPT and like it would spit it out, and you could probably even get the quantities and you could draw a line somewhere and be like, this is what is commercializable or whatever. Number two, a list of all tetrahydrocannabinol class cannabinoids known to the agency to be naturally occurring in the plant. Uh, again, that's very simple that just comes off the previous list, and you just take anything that has tetra in it, and then three, a list of all other known cannabinoids with similar effects to or marketed to have similar effects to tetrahydrocannabinol class cannabinoids. Again, not that hard because all the ones that we know, whether created or produced off the plant, generally are have the word tetra in it, you know, it's like or maybe HHC. Um, but like this is not a very hard effort.

AnnaRae Grabstein: 37:46

Yeah, the the states, you know, who are the laboratories of democracy who have legal cannabis programs have also created these lists already. The FDA could certainly reference them. And there is plenty, this information exists. I'm sure the FDA already has all of this information and knows it. It's just what is getting in the way of them publishing it based on their statutory requirements? And for the lawyers out there that are listening, I'm wondering if if the if the statutory requirements in the law that was passed in November are not met, then does the law still take effect? Like, how how can they even enforce like this this list is all theoretically designed to create a pathway for enforcement of the law once it comes to be in November? And so if this list doesn't exist, how can there even be enforcement? How does anyone know what counts as a tetrahydrocannabinal?

Ben Larson: 38:41

I just I just like just it's not they're not even being asked to make a judgment about anything. This is purely a data collection effort. It should have taken them and like maybe a couple operators that understand the space three days to to meet these requirements. Like this is so discouraging because it just proves like why we can't get uh shit done with the FDA. And and God forbid, like schedule three, if it creates any more involvement with the FDA, like this is just a snippet of like how challenging that relationship is gonna be. Not to say I'm anti-schedule three. I I wouldn't go as far as that. I'm just I'm highly skeptical of the benefits that it will immediately bless the the industry with.

AnnaRae Grabstein: 39:32

Well, bringing up schedule three, I was heartened to see an op-ed uh this week from um Gary Weigert, who is the a former St. Louis police sergeant. And this was published in uh the Missouri Independent and then republished by Marijuana Moment. And this is a police sergeant who wrote an op-ed uh supporting Schedule III and supporting um Trump's efforts at rescheduling. He speaks on behalf of the Law Enforcement Action Partnership, which is a group of law enforcement um current employees or previous law enforcement agents who realize that prohibition of cannabis has not been good for anyone, and they are advocating um for policy change in many ways. But specifically, this uh this op-ed was advocating for rescheduling. And um he says every hour an officer spends on simple marijuana cases, an hour not spent on investigating violent crime, stopping human trafficking, or getting fentanyl off the streets, and that the disconnect between federal and state law isn't just a technicality, it creates real problems for law enforcement. So I just I think that this is a voice that's that's important to listen to. And um, yeah, what's going on?

Ben Larson: 40:56

I appreciate the sentiment, but schedule three is not legalization. So um I just want to point out that this isn't gonna stop the criminalization of cannabis. And I am glad, I guess, that you know, someone from law enforcement is confused on that fact. Uh, and based on what was happening when legalization was rolling out across California, I had you know uh uh you know uh highway patrol friends that were basically very confused, right? So they're they just stopped touching it. Um so hopefully this has the same effect, and people less people start getting arrested for it. But this is not legalization, it does not decriminalize cannabis, and so their job theoretically is is is not done, and we're not anymore protected from that standpoint. So uh I'll get off my soapbox on that one. Uh I hear you. I appreciate the sentiment.

AnnaRae Grabstein: 41:48

Yeah, I know. I think I just get excited anytime that I see law enforcement sticking up for the industry. So let's um let's move on from that and um go to our final story, uh, which is about capital. Um despite all the uncertainty, yeah, capital is still showing up um in hemp for of all places. A really big surprising press release came out on Friday. Uh, that Willie's Remedy closed a$15 million series A to scale THC beverages nationally. What?

Ben Larson: 42:28

Um right now.

AnnaRae Grabstein: 42:33

I was really surprised to see this. I have to say, I always is optimistic to see capital flowing into the space, but this one was a big surprise for me. Were you surprised?

Ben Larson: 42:45

Yes, yeah. I mean, for a number of reasons. Um where do I start? So$15 million is a lot of money. That's that's a lot of money for for a beverage brand to be raising right now. Um, the the their beverage brand is not that old. I think they've seen this astronomical growth in the like the last year. Um, I don't know the Willie's remedy team. Uh so I I say this just from like someone who's operated in space and seen a lot of celebrity brands rise and fall. I hope this isn't just like that repeating itself simply because it says hemp and instead of cannabis, but we've seen this this challenge with celebrity brands over the years. Uh, but you know, I hope I hope it's good for them. And my last point is I I I just hope that their investors know something that I don't about the assuredness of of the where we're heading this year. You know, there's a lot of positive signals that that we're seeing on the alignment of alcohol behind the hemp beverage movement and all that kind of stuff. Uh, I we know from talking to different policymakers, but be it at the state or the federal level, that this this category in particular is is much more palatable uh than say the whole cornucopia of.

AnnaRae Grabstein: 44:00

cannabis um but politics there's just a lot a lot more to go here and so what happens if they don't see a clear runway come come November that's a lot of money yeah it is it is a lot of money the the press around this didn't touch on any of the potential policy implications that the brand is faced with which I thought was interesting because I'm sure the investors are paying attention to it and they chose to make to make this bet. Um some of the press shared some stuff about the performance of the brand they say that their top markets are Texas Tennessee and North Carolina they um they have done close to 80 million dollars they say um in there they hit an 80 million dollar run rate and they just started selling cans and bottles online less than a year ago so the growth sounds like it has been tremendous they uh have individual RTDs and they also have a larger form factor uh that is more like a spirit and the company is being run by Juneshine which is a RTD kombucha in a can that seems to be taken on the brand to commercialize it. So we'll be watching Willie's and we hope some of that 15 million goes to support uh policy change in DC to make sure that you get to keep commercializing. So if you need to know who to get behind or what type of policy to support you just reach out to one of us and we'll make some great introductions for you. I I I do hear uh that they have expressed interest in in supporting the cause so um that is great to hear and look in the grand scheme of things do backers like I mean we've seen big alcohol uh brands waste a lot more money on trying to get through the legalized space so$15 million isn't that much money if you're applying that lens to it and as far as confidence levels go you know I I would say in the last several weeks I have heard a lot more momentum coming from the big brands of alcohol so those were the kind of the holdouts right we had a lot of the retailers and the distributors on board uh WSWA uh the wine and spirits wholesalers uh have been very vocal about it there's been a number of beer wholesalers retailers all kind of getting on board and as soon as like this past November there was letters being issued by the major alcohol brands like you know pushing back against the hemp category um but I think I even saw a website with a hemp beverage brand and at the bottom it said Sazerac on at the at you know on the copyright and I was like oh well that's really interesting um and so I think people are getting on board um and and time will tell but there's a lot of legislative process to get through yeah and look we've been talking about uh alcohol prohibition and what was going on during alcohol prohibition and a lot there were a lot of companies building during that time and we're not even at prohibition state yet uh it's it's really November that that would begin if nothing changes or there's no extension that happens but um to keep building right now if you're able is a real flex because I think that most people do agree that there is an inevitability about the category. And so if investors are patient and um they're not worried about what happens in November because they believe that there is an inevitability about the category it's just might take some time. I think that folks that come from spirits in particular or wine are used to uh products taking years to make there's aging involved um you know whiskey sits in barrels for eight years wine often doesn't come become commercialized for a couple years beer and kombucha certainly like faster to market um than those other categories but if you're taking a long long look at the category I could still make an argument uh of why it makes sense to make an investment today.

Ben Larson: 48:17

Yeah I think it's fair to say it's inevitable at this point. It's just we have to push a lot of pushing a lot of pushing. Yeah well I think that's our news roundup for today uh anything else you want to cover that we didn't no I just hope I get power back so I can like charge my computer and get some work done while I'm in this beautiful place. I I just I just got word that uh power is gonna be out until at least 11 p.m tonight so I guess there goes everything in the fridge.

AnnaRae Grabstein: 48:49

Just start barbecuing uh yeah I know that that's what you do when when the power's out is you just barbecue everything that's in the fridge and share it with your neighbors.

Ben Larson: 48:59

That's right. That's right. So I'm gonna go barbecue I guess uh and do that but uh uh we'll we'll we'll we'll try to get rid of all the bad weather so that when you come uh you can have an enjoyable vacation that sounds great and uh I guess we should do our readout now do you want to take it away yeah yeah thank you everyone thank you for engaging for watching listening sharing liking subscribing doing all the things uh really appreciate it thank you to our teams at Virtosa and Wolfmeyer without you guys we just couldn't get it done and of course our producer Eric Rossetti if you've enjoyed this episode please like subscribe share leave us a review on iTunes or Spotify or wherever you listen to your podcast until next time folks stay curious stay informed and keep your spirits high that's the show