SPEAKER_02 0:10

Welcome

Welcome And Week In Review

SPEAKER_02 0:11

everybody to this week in Cannabis Live. Today is Friday, what is it, May 29th? 29th. That sounds right. It's been a hell of a week. I'm Jay Rosenthal. That's Jeremy Burke, my co-founder and our editor in chief here at Cultivated. Mark Hauser is here from Cannabis Musing. And Ben Larson from High Spirits. Hey y'all.

SPEAKER_00 0:30

Hello.

SPEAKER_02 0:32

It's been a week, like a real week. I just got back. Yeah, I just got back. I had a whirlwind 24 hours, but all in one day. Uh no overnights in Chicago for the Midwest Cannabis Forum. We'll talk about that in a bit. Uh

New York Funds Track And Trace

SPEAKER_02 0:47

let's go to New York first, Jeremy, because that's where you are. Um, this has been a story that's been uh talked about over the past week or two on our platform or other places. What is this $10 million for? What was it uh what was the need? And it sounds like it passed.

SPEAKER_00 1:03

Yep. So the the budget passed. Uh we got a nice little stoop on it. Um a couple lawmakers uh had actually heard in the industry's concerns about the conversion to metric, the uh track and trace system in the state. Um as part of the contract, a little bit of background. There was these 10 cent per retail ID tags, which caused uh all the operators to take on a lot of extra expense, and that rippled through the supply chain. We reported about it uh with um, you know, our writer Chris in January. That story made some waves, uh, and and we think some lawmakers heard us. Uh so we spoke to assembly member Landon Days last or two weeks ago now, who said he was working on getting uh track and trace funding to help these operators comply into the state budget, and they made it into the budget. And so uh, you know, we we took a look at the budget on what was that, Wednesday night, um, and we kind of backed out the math. It looks like there is about a $10 million jump in the contractual services line for uh the OCM Office of Cannabis Management's cannabis management program, which is how it's written into the budget. Uh so you know, did a lot of control F and finding the numbers, but uh that has passed. Uh the one thing I will say about it is uh you know the assembly member uh wants it to be continuous funding. Uh it will have to be reappropriated next year. And so, you know, there may be some handshake agreements among lawmakers and with the governor's office that it will be in there, but um, it is not by law continuous. And so uh, you know, it's not a done deal, but it goes a long way into helping these operators actually comply with track and trace. And uh, as all of our viewers know, as all of you know on on the panel, uh, you know, track and trace is crucial to ensuring the supply chain is safe. And so look, I think this is a win for New York, and I think it's it's nice to see lawmakers actually do something to help the industry and get it done relatively efficiently rather than the end of the way around.

SPEAKER_02 2:57

I I agree with that, but Mark and Ben, I just want to get the timing straight because New York has been a market for like three years, and this is just coming into effect this year, five years, whatever it is. Like a go, yeah. This this sounds like uh the horse was put before well, the cart was put before the horse a number of years, and it's taken a very long time to catch up, which has caused lots of I'll call it chaos in the system in New York, which cannot be a surprise. But like this just seems like this is great. Love everything Jeremy said, but also the timing seems like it could have been five years ago, no?

SPEAKER_00 3:35

Yeah, my my response is gonna be yes, and uh many and so it's like first off, like every time I hear the word like ID tags and stuff, I really want to strangle someone, and I think someone at Metric is gonna look back on those days as the founder of like cubicles looks back on things and just like totally regret their contributions to life. Um and then Ben said it, not me, just for anyone watching. In addition to that, like over 10 years ago now, when I was in the tech industry, we used to have the saying it's like if you have to have instructions, it's probably bad design. So if you have to assign 10 million dollars to help people follow a program, it's probably really bad design. And like the fact that we're still here is probably why people like John Lynch at CushTracks is trying to uh eliminate metric. Um, so that's my counterpoint to the news that's interesting.

SPEAKER_02 4:35

I'm sure you will hear from someone today on this kind of thing. Someone's gonna call you.

SPEAKER_00 4:39

Yeah.

SPEAKER_01 4:40

Mark, uh similar, similar sentiment to Ben. Oh, I have nothing to add a bit beyond that. Um no, yeah. No, I I totally agree. I mean, you know, it probably if they'd if they had sort of started, everybody started building their operations with this, you know, sort of in from the ground up, it probably would have been a lot easier to implement. But you know, tacking it on, I mean, you know, it's it's a lot harder to to put that large effect into the system that already is working.

SPEAKER_00 5:12

Yeah, I'll I'll say this. I mean, look, like I I definitely totally hear Ben points and and personally agree, but I wouldn't say, you know, if a faucet's leaking, it's better to put the duct tape on it than not. And and that's uh that is what's happening, right? And the I mean yes, definitely. Yes, and I I totally I totally hear you and and and agree with what they're saying. I mean, these, you know, philosophically, uh, you know, New York's program is needlessly complex in so many ways, just with the way it's regulated, all the compliance costs, the bureaucracy around it, and just the general difficulty of of politics, both between the city and Albany, makes you know, uh rational changes very difficult. And so, look, like I'm happy the operators are gonna get some help at the same time. You know, if I'm uh Abigail Svanberger in Virginia, I'm looking at this and saying, huh, like we can do maybe a little bit better. Um, but uh, well, you know, that's a conversation for another day.

SPEAKER_02 6:07

That's it. Well, it's a conversation we had last week as well, but I'll hopefully for another day in Virginia.

Curaleaf Reverse Split And Uplisting

SPEAKER_02 6:12

I want to move on because um there was lots of conversation this week about publicly traded companies, specifically about Cura Leaf. Mark, I want to go to you. They had a reverse split three to one. Those are the things I know. I know they're doing it, and why I I know what they say that why they're doing it, but give us your take about Curie Leaf's reverse split. Is it do I have the terminology right? Three to one.

SPEAKER_01 6:32

You do, you do. And you know, it it's their their press release made it uh abundant, you know. They they basically came out and said, we're doing this in anticipation of if it is possible to up list uh our stock from the um Canadian securities exchanges to US-based securities exchanges, um, which was a surprising statement to make in a press release um because that isn't happening today. Uh it's you know, if they are a given access to a US exchange, it's not gonna happen for a while, uh, presumably. Um and so, you know, i to come out in a press release uh with this was um was uh as a as a former securities lawyer, uh surprise. Um, you know, I'm not uh it it's it's it's a bold statement. Um it's sort of like say, you know, this is probably gonna come off a little harsh, but it's sort of like saying I'm gonna get a haircut in case, you know, a supermodel hits on me on the street. Um, you know, it it's it's like it could happen. Um, but there's also a lot of legends over there. And, you know, it look, I mean, you know, it it's it's uh, you know, it on a certain level, though, it's a savvy move. Um, you know, I've been critical in my musings about uh uh the way press releases are have always been done by this industry. Uh this is not a new thing. Um, you know, we have a tendency to issue press releases on a you know an a non-binding letter of intent, um, or even an intent to sign a binding non-binding letter of intent. I mean that you you don't do that. And so I it's um but look, I mean, the and the the market I you know kind of didn't read it that way though, and it traded down. I think they they saw this uh you know as in anticipation of maybe raising more money. I, you know, it's a little surprising though, because it was um the you know, a split doesn't change the the economics of anything, it's just reducing the number of shares or increasing the number of shares uh in order to uh you know basically you're changing the numerator and changing the denominator, but the but it's all the same. And so um but look, you know, everybody's excited about the prospect of up listing, um, you know, with Schedule Three. It's a lot more complicated than that. Uh the the X, you know, at least the NASDAQ is, from what I understand, uh warming up to the idea of potentially listing a medical-only uh uh entity. Uh, you know, it's still very much uh unclear whether they'd be willing, it's even less clear that whether they'd be willing to uh to list at this point a dual, you know, medical and adult use. Um, they would definitely need a nice fat legal opinion from a major law firm to get comfortable with that. Um but even then, you know, also I mean the prospect of uplisting, the traders love it because it'll mean more liquidity, but you you still would need to then uh convince institutional investors uh to, you know, to to to you know to invest in the company in an offering. Um because institutional investors are, you know, when when a stock is trade uplisted to another exchange, uh it just means those are all secondary trades. That's not money into the company. You then have to convince investors to then invest into the company to then that they can then sell on those their shares on those exchanges. And so there's still gonna be another step to in convince investors that these businesses, these medical-only businesses, are investable. Um and uh, you know, and and this has not been a terribly investable industry for a number of years. Part of that is because of the exogenous factors of 280e and the illegality and all that, but you know, it's not all of it. A lot, you know, a lot of the problems are internal as well.

SPEAKER_02 10:38

So anyway, that's my it makes Twitter more interesting when things like this happen. Yeah, yes, that's for sure.

SPEAKER_00 10:45

I mean, I think I think part of the read, just going off what Mark said, like part of the read is in a lot of the MSOs are specifically sending these press releases to retail investors, right? Like they're trying to gin up excitement, and that's that's why the uh, you know, I don't want to say rephrase them thing, but that's why it's generally a little bit different than what you'd see in a much more stayed, less emerging industry, right? Like they're trying to gin up excitement and and you know, for better or worse, like they should do that. They don't have access to institutional capital, but um, it does lead to situations like this, which are bizarre. And like, you know, if if up listing was really around the corner, you wouldn't expect care of stock to fall on the press release, right? And so I think that's just an interesting dynamic to watch, personally. Yeah.

SPEAKER_01 11:32

But and I don't have any insight or or, you know, non-public or any sort of real information here, but I would expect that all of the major MSOs are trying to, you know, with large medical state presences like Florida and Pennsylvania and the like, are working to figure out how they can get this done. Um, you know, they've been doing it for a long time. And uh, you know, there's been a few companies that have restructured themselves like like um Terracent did to get on the Toronto Stock Exchange and the host of attracting more capital. But you know, that didn't necessarily pan out the way it was hoped. Um you know, but but yeah, I mean it wouldn't surprise me if we see some of these companies figure out how to sort of spin out the medical only and list the medical-only operations.

SPEAKER_02 12:21

Yeah. In hopes of yes. Yeah. Yeah. I

GOP Moves On Hemp THC Recriminalization

SPEAKER_02 12:27

want to scoot over to a late breaking story, at least uh on marijuana moment, which is this um that there are uh GOP lawmakers file amendments to prevent federal recriminalization of hemp THC products this year. Uh uh there's three uh amendments or bills being discussed that would either push off the ban, do away with the ban altogether, and the third one is to defund any enforcement from the DOJ. If I have read this story very quickly, but also accurately. I don't know. I I don't, it's very difficult to predict what's gonna happen in DC, obviously, but there seems to be, and these are all Republicans, uh, doing this. I don't know. Do we want to do you wanna prognosticate of any of these things happening? Ben, any any of these?

SPEAKER_00 13:17

Well, I I don't know. I didn't read the article, I don't know specifically what these are. Three is a lot. Um, there are not many that are going to have a snowball's chance in hell at getting through. Um, and if anyone tuned in to Haifa's uh weekly call this week, uh they had Senator Ted Cruz on there, and he was he was not super bullish on on anything. He said Mitch McConnell is still like an impediment. Um, you know, the question is like the later this gets on into the year and maybe even next year, which I know is problematic for a lot of people, um, it's like Mitch McConnell's relevance, you know, wanes, and so then it becomes really important about who is bringing these bills um to the table. And so if we're talking about bills brought by like Wyden or Rand Paul, you know, like people not historically super popular getting bills, especially bipartisan bills, uh, through Congress. Um, but there is some momentum around folks like Andy Barr. Um, and I don't think his bill has been officially released, so I don't know if that's who they're talking about in the article, but um, you know, it does seem like he is engaging, you know, uh his stakeholders in in Kentucky, be it alcohol, hemp, um, the, you know, all across Congress, Democrat, Republican, the White House, and so something like that where you know, someone's doing the legwork to bring something that's actually passable, um, that that speaks to all the stakeholders and reaches across the aisle, then maybe it has a chance, but it's not going to be easy. Um, and it's not gonna be done quick. And so the question is like, how does appropriations work into all this? How does the midterms work into all this? And then, you know, any continuing resolutions and all that, which a November deadline still stands in in those cases, and and you know, that becomes problematic for a lot of operators.

SPEAKER_02 15:11

Yep. And it's it's just to just to reiterate, it's May 29th. The election is the first week in November, and and and a lot of time in the summer is sort of taken off from DC, certainly for during an election year for Congress. Uh, and it's you know, not a ton has happened in Congress, period. I would pass.

SPEAKER_00 15:31

But I will say that's like there's a lot of lot of things happening. There's a lot of interest, there's a lot of eyes on this, and if for anything, that might preserve some goodwill to be like, all right, well, let's try to figure something out because the president has, you know, made these executive orders around the CMS program and therapeutic camp. And there has to be changes to at least allow for those programs to work.

SPEAKER_02 15:55

Right, right. And I mean, it would seem to me that like a delay or not or a not enforce uh a build to non-enforce seems to be maybe the easiest way to go, but that also raises other questions about what happens down the road. It was actually part of the conversation yesterday. Mark, what say you?

SPEAKER_01 16:13

So, yeah, I I think you know, to me, the build to not enforce would probably be the worst case scenario for the for the industry. Um, because you would then, you know, you probably a lot of what's been built has been built uh in the industry, in the hemp industry, has been built on um the participation of the alcohol district distributors and retailers, uh, and the ability to ship uh DTC uh uh across the country. And if if we if it's if hemp revert you know reverts back to Schedule One Um but is not enforceable, uh I still think there's a big if whether those, you know, whether those industries will continue to play ball with with hemp. And so then you're instead you're gonna be, you know, so if the whole drinks category goes away or you know, really sort of dies, you know, shrinks down significantly because they don't have the distribution either through the mails or common carriers or through alcohol. Um, what you're left with is the gas station weed, so-called gas station weed, that you know, that the Congress doesn't that Congress is really worried about. So, you know, it's sort of I to me that's actually like it would be even it would be more counter-productive. Yeah, it would be counterproductive.

SPEAKER_02 17:35

That suggests to me that's probably the one that's most likely. Jeremy.

SPEAKER_00 17:39

Um, could you just uh just a point to me? I haven't read through the bills yet. Um there there was reporting earlier this week that Ted Cruz told a hemp industry trade group uh uh you know that Mitch McConnell was the problem, right? And so I uh you know, I think there is some, you know, she she likes his politics or not, he's a smart guy. And I think there's definitely some signaling there that that he's giving, knowing that these comments will be reported. And so um I think uh, you know, there might be a little bit of a sea change once McConnell is out of office, plus the fact that he is getting replaced by Andy, or may get replaced by Andy Barr, who has been sort of a hemp industry champion. The calculus will change very quickly, but uh, you know, maybe not in time for November. So being simple.

SPEAKER_02 18:21

I like when Republicans snipe at each other. That's like one of my favorites.

SPEAKER_00 18:25

Busted crew snipes at everyone. Um so he is he is interesting to talk to, uh, but uh sorry interesting to listen to, uh, but uh we would not necessarily want to talk to everyone to give the bad thoughts.

SPEAKER_02 18:38

Could you think of a guy you'd less want to have a hemp derived THC coverage with?

SPEAKER_00 18:42

He's also he's from Alberta, so we should ask him about uh yeah, it helps.

SPEAKER_02 18:48

Speaking of which, it actually made its way into the uh HP. Well, now finals. Um just a terrible, terrible guy.

SPEAKER_00 18:57

Jay, I think you gave me an idea for a new podcast. It's like what is it?

SPEAKER_02 19:00

Oh, have a drink with Ted Cruz?

SPEAKER_00 19:02

Well, how yeah, just have conversations while drinking hemp beverages with people that you really would not think to have conversations with.

SPEAKER_02 19:09

Heineken had a I think maybe Heineken had an ad campaign like that, where like a YouTube show where they sat down people with diametrically opposed views, and like then they have a conversation. So it was more stage than anything, but I still wouldn't want to sit down with Ted Cruz and have that conversation, no matter how high I was. No, there's no there's no scenario where that would be a fun thing. Speaking

Midwest Cannabis Forum Takeaways

SPEAKER_02 19:30

of being high in conversation, um yesterday we had the uh Midwest Cannabis Forum. It was put on by us, uh Cultivated, and uh Brad Spearson from Grown In. And um, I want to show you a picture because the event space was pretty unique, and this will give you sort of a sense. It's like uh it was an event space within an um uh antique store called Salvage One. This is like so everybody, all the seats, all the chairs, everything there is like also for sale, but also sort of really beautiful antiques. Um, so also the lighting was quite great because yesterday was a beautiful day in Chicago and there was these stained glass things uh along the windows. But it was a really uh good day of conversation. We intentionally like jam-packed it from I think it was from one to six. We talked about the Illinois market. There's a bill, an omnibus bill uh being considered between now and the 31st. Some uh tweaks to the Illinois program around um uh security, around um uh uh purchase limits, um, around uh a whole bunch of other things that uh hopefully will be considered on the behalf of the uh industry. A lot of conversation around hemp. We had people from Kentucky there, uh, but also other markets. Very interested to see what's happening, obviously in DC, but also how it impacts direct-to-consumer businesses that are already in place and hemp-arrived. Um, we had a finance, banking, lots of conversations that we're always having, um, how rescheduling impacts that. If it does. So thank you to everybody that showed up in Chicago. We probably had throughout the day more than 200 people there, which was great. The team from Grown In was amazing. We had delicious Chicago specific food um at a great location. We look forward to getting back there uh for the next Midwest Cannabis Forum Date TBD. Um I love makes me remind me of uh Michael Scott, TBD determined, I think is what he said uh on the show. Um but it was um ASAP as possible. Um, but it was um it was a great day. So I want to just give a shout out to the folks there, including some of our partners at Banks and Fund Cana and Azoka and uh who else was there? Uh Shield Compliance uh um and a bunch of our other good friends. So uh thank you all for being there. We really enjoyed it and uh look forward to getting back. Um it's now time of the show where we talk. Uh oh, I have a video to set this one up. Sorry, I always forget. Winners

Winners And Losers Roundtable

SPEAKER_02 21:56

and losers. Is everybody ready? Mark, you're up first. Seem to have do you have a loser or do you have a winner this week?

SPEAKER_01 22:02

I do have a loser, but also it creates a winner. The loser is is um smart approaches to marijuana and its cohorts in the CBD case. Um they, as many know, uh they filed a federal lawsuit to blocked implementation of the um of making CBD available under Medicaid or Medicare. Um they were uh they all of the plaintiffs lost their lawsuit on standing grounds, um, which is you know the funniest way to lose because it doesn't even get to the merits of the case. Um you know, it's it's sort of like you got stuck at the starting line. Um, you know, and and I, you know, you read the opinion and it was it was actually very well thought out um opinion, you know, that these the basis of it is basically is that um there's no actual, you know, potential actual harm, real sort of in the immediate harm to these organizations or the handful of sort of you know uh individual plaintiffs. Uh so you know, and it was the right result. They'll the appeal, but it you know, it probably uh you know it was it was a well-written opinion to sort of create the basis for it. So I think we all kind of win um for this.

SPEAKER_02 23:20

So fair enough. Ben, you're up next. Winners, losers, what do you got?

SPEAKER_00 23:25

I mean Kevin's a bet getting a loss is just worth the double down on this because anyone that's been doing this for a decade plus, like it's just Kevin. You you you don't have to keep doing this. Like, I know this has been your career for like 20 years, but just take the loss. And and and then again to Mark's point, we're all winners. Like, uh I think I get to be on a panel with Mr. Sabet in about two weeks at the Canberra conference uh uh in Oklahoma City. So if if you're going to the uh the Canera external stakeholder event, come see me that's gonna be on a panel with a big fat little tickets. Well, even Oklahoma.

SPEAKER_01 24:12

Maybe a popcorn day. Does like everybody start eating popcorn just to watch the uh what's gonna happen? Exactly. He's so good.

SPEAKER_02 24:22

Something Jeremy, that's Jeremy's best friend on Twitter.

SPEAKER_01 24:24

I mean, I'm I am actually kind of impressed that he is willing to you know get in front of that crowd. I mean um sure.

SPEAKER_00 24:35

He also agreed before he lost. He wants attention. He's he's an attention. He's he's a perfect lobbyist for the Trump era in the sense that all press is good press. He wants attention. He's so thin on the material, it's so easy to poke holes, it's just written perfectly for the 2020s. I am not a fan of him or his organization, said at least.

SPEAKER_02 24:57

You don't say, Jared, you're up next. Winners, losers?

SPEAKER_00 25:00

Uh winners. Yeah, I'm gonna be very New York themed. I I think Assemblymember Landon Day, I think, you know, it was very interesting to talk to him uh about 10 days ago. I I think more former cannabis operators, attorneys should get into politics, right? Because they're clear fixes and clear wins. And it was really refreshing to hear him come from a perspective both rooted in social equity with his, you know, personal run-ins with the law as a teenager, but also as an operator, as a business person, trying to help make it easier to actually grow the industry. So I thought that was a refreshing perspective, and it's a big win for him to get this in the state budget. Second winner, uh, as you all know, I'm on the Knicks bandwagon. Uh, they are they are cooking uh, you know, OG and anobi, former raptors, and playing out of his mind. Uh, and so I'm I'm excited to see who comes out of the West on Saturday. But uh I'm I'm all in for the mix. And if anyone wants to pay a hundred grand for me to go to the game, uh my wallet is open.

SPEAKER_02 25:57

So you and Timothy Chalamet can sit together.

SPEAKER_00 26:00

Yeah, we look just alike too, so everyone will mistake us. Yeah.

SPEAKER_02 26:04

Well, if it's OKC, do you are you are you torn a little bit between uh people with comedian?

SPEAKER_00 26:09

No, the more OKC loses, the more Shy Gilders Alexander says, huh, I want to go play for the Raptors. So I don't think they lose.

SPEAKER_02 26:17

I don't know if that's gonna happen. Uh, but I do he is great to watch. Um my winner, because I was just in Chicago, uh, two winners. One, just people in Chicago, love Chicago, great to be there for the day, but also Illinois operators that have stuck it out. Holy man! Uh, kudos to you. You are winners. They've had headwinds all along, and uh many of them have stuck it out. And uh wishing them luck over the next couple days of legislative session to get the tweaks and fixes they need. Um, someone did have a quote. I have to look out the exact quote. She said, My security guy makes 2x what I do because they have to have a third party dirty there. Um, so shout out. Hopefully that gets dissolved in Chicago. And uh my winner, Jeremy, this one's for you. I think you might have said this last week, but uh Mitch Marner, uh Las Vegas. He is on his way to the Stanley Cup Finals after leaving Toronto, and uh he uh he's on a tear and he's smiling uh and he's going to the Stanley Cup Finals. Several things he didn't do in Toronto.

SPEAKER_00 27:20

So uh he might be the playoffs MVT if the Golden Knights pull us off. I mean, they won what 40 games this season and they're in the final with the well I went to their game uh during MJ Biz.

SPEAKER_02 27:33

That seems like a million years ago is in December. Um but uh no, and and he was not as present on the ice as he is certainly now. So uh for those non-hockey fans, I'm sorry we're talking about hockey, but um tune in because this now it's it has always been good, but now the finals will start next week. Uh uh Carolina is up 3-1 with Montreal, unfortunately. So hopefully Montreal will come back and pull it out, even though you're not supposed to say that in Toronto, you're supposed to root against Montreal. But I pulled for Canadians, so uh, and the Canadians in this case. So that's enough hockey, probably enough basketball, even enough hemp conversation, and probably not conversation about publicly traded cannabis companies as well.

Final Thoughts And Sign Off

SPEAKER_02 28:14

Mark, Ben, Jeremy, thanks for being here on this Friday. We will see everybody next week, which we're end of June at that point. Thanks, everybody. Have a good week. Bye y'all.