Welcome And Life Updates

Ben Larson 0:20

Hey everyone, welcome to episode one hundred and forty-two of High Spirits. I'm Ben Larson.

AnnaRae Grabstein 0:27

And I'm Anna Ray Grabstein.

Ben Larson 0:30

And it is June 23rd, 2026, and we have an incredible episode for you today. We have Graham Ferrar, president of Glasshouse, coming on to talk about California weed, up listing, schedule three, all the things, global cannabis. Uh, really excited to have this conversation. It's very timely, especially Anna Ray, after hearing your tales of ignited Chicago and how everyone is thinking that things are moving faster than they are. But before we get there, how's the train ride? Was it worth it?

AnnaRae Grabstein 1:05

Yeah, if you follow me on LinkedIn, you can see pictures of my train ride from California to Chicago. It was amazing. Uh yeah, it was great. You know, I would I think that the takeaway for all of us in business and in leadership is that sometimes we need to slow down to speed up. And doing something the slow way gives us time to think and process and creatively prepare professionally. So I would recommend that anyone do it. And especially if you can do it for work, it's highly productive.

Ben Larson 1:34

I'm digging it. I'm digging it. I uh yeah, yeah. And I I bet the family was excited to have you back.

AnnaRae Grabstein 1:40

The family was, but I'll tell you, my son is obsessed with trains now. He has uh aspirations of model trains and all kinds of things. So we'll we'll see what it turns into. And uh, you got big family stuff coming this week too. The baby's on the way, huh?

Ben Larson 1:56

I do, I do, yeah. It was a it was a special Father's Day weekend this past weekend. Happy Father's Day to all the fathers out there. It was uh yeah, I I had a nice uh day. Actually, spent most of the day to myself, which is a funny way to, I guess, celebrate Father's Day, but took myself on a really long bike ride and and tried to completely empty the tank. And you know, when I do that, I find it's a a really great way to get perspective, clear the mind, and just come at everything fresh. And um, it gave me that moment of pause to really think about like what's ahead, not just for the company, but also, as you pointed out, um our our new baby that's on the way at the end of the week.

AnnaRae Grabstein 2:33

So yeah, big stuff for sure. And big stuff all around. I mean, we've we've been doing this show now for three years and we usually do news updates. And there have been times when it's felt like there isn't a lot of news over the past 12 months, but that is not the case anymore. And um, instead of doing the news update, I think that we just bring on Graham and we start talking about all the things that are going on in the industry. And as it relates to him and his role at Glasshouse, we'll be a great way to dive into all of this. So let me queue

Meeting Glasshouse President Graham Ferrar

AnnaRae Grabstein 3:05

him up. Um, we're gonna bring on Graham Ferrar. Uh, like you said, he's the president and co-founder of Glasshouse Brands. Um, also, he has one of the coolest titles in all of cannabis as the chief cannabis officer. I'm not really sure what that is, but I think I want to be that. Um, you know, Glasshouse has been around since um 2015, and they have the largest legal greenhouse in the world, I think, uh, down in Carpentaria, California. So really excited to welcome Graham here today. Thanks. Thanks for joining us.

SPEAKER_01 3:41

Chief cannabis officers, what you get to do when you start a cannabis company and can make up your title. So I thought it was a cool one as well. And uh if there's something I'd love to be, it's somewhere between Chief Cannabis and Chief Music Officer. So I'll put that put that one here and uh hope to use the music stuff at some point as well to put together with it.

Ben Larson 4:00

Oh, and another music head. You guys are are prolific in the industry. What's what's the uh the band of choice?

SPEAKER_01 4:07

Oh, that's a good question. Uh, I like all music. I think I would say I like any music that's good. It doesn't matter if it's techno or gospel, if it's good, it's good. Um, I have no real music making uh skills um other than uh a bit of hobby DJing, which uh is nice. It's kind of like the equivalent of taking a photo versus painting a picture. I'm definitely not going to paint a picture, but I can uh take some uh good photos and I can curate and play other people's great music. So um I was on the board of directors for the Santa Barbara Bowl, which is the local music venue in Santa Barbara for about 18 years uh helped them build that up to their absolute fantastic uh place to see a concert. It's my favorite spot on the uh on the west coast outdoors up at a canyon in Santa Barbara. So uh like I said, I'm never gonna make music, but I can play music and I certainly appreciate music and maybe even a little bit more after smoking a joint uh as well. So music, food, and wheat.

Ben Larson 5:02

My man, chief cannabis officer gets to spend time in in Santa Barbara and Carpenteria, like that. You you have designed a good life, my friend.

SPEAKER_01 5:12

No complaints, no one needs to feel sorry for me.

Deconsolidation And The NYSE Path

AnnaRae Grabstein 5:16

Well, so let's get into it. The big news is that uh you and Glasshouse to deconsolate the use business of Glasshouse and apply for the New York Stock Exchange uplisting that uh TrueLeave just recently went through. So why don't you explain that to us in plain English? Um, what exactly are you splitting off? Isn't everything that you guys do adult use?

SPEAKER_01 5:40

Yeah, sure. So maybe um I'll take one step back and just give the 30 seconds on I'll call it the historical glasshouse at this point, and then I can talk about what we changed uh on the go forward basis. So historically glasshouses started about 10 years ago. We're 100% California, uh, don't have operations anywhere else. We've always been kind of building for the idea that cannabis was going to be normalized and destigmatized, which means you do in cannabis what you do in every other CPG product. And one of the things that makes the United States of America the United States and makes it, I think, the greatest country on the earth, on earth, is because what we do is we take the best that anybody has and we share it with everybody. So if the best oranges are in Florida, you grow them in Florida and we eat them in California. If the best strawberries uh are in California, we grow them in California, you eat them in New Jersey, uh, mine from Napa Valley and cannabis from California. So um we have been historically uh vertically integrated to California. All of our farms, we have three farms here, all California, Southern California based. Uh we operated 10 retail stores as well as an MSA on an 11th. We have three brands: Glasshouse Farms, Oswell. Um, those are the most consumed cannabis brands in the state of California. Uh, we also have plus gummies, which is typically top five, top 10 um edible brand in California. We've got manufacturing and we've got distro. Um, so historically vertically integrated, meaning we do everything from the seed all the way to selling it to the consumer uh into their ashtray. What we did recently is uh what they call deconsolidation, which means that we broke off our retail operations from the rest of it into its own separate company. We remain a majority owner of that, but do not actually manage or control it. And it's no longer in our financials. And the reason for that is in California, the only place that there's truly distinction between adult use and medicinal is at retail. So all of our farms are medicinally licensed, all of our processing, all of our manufacturing, and all of our distro is medicinally licensed cannabis. The only place where you see adult use is at retail. Retail is no longer part of glasshouse, meaning that glasshouse, the public company, is 100% medicinal. And per the final order that was signed by the federal government in April, medicinal cannabis, state licensed medicinal cannabis is now covered under Schedule 3, which means it's no longer federally illegal, which means if you're a company that is only federally legal cannabis, then there's no reason that you can't be on a U.S. stock exchange, NYSC or NASDAQ. Um, and so after doing that, now that we are a fully federally legal uh medicinal cannabis company, we asked the NYSC um we could be listed on their exchange instead of an exchange up in Canada, which is where all the other US cannabis companies are. Um, and the indications are positive. So we're waiting for the final final, but uh we hope to see that happening pretty soon here.

Ben Larson 8:40

Wow. Uh there's so many questions that you just uh yeah brought to mind. Um I I don't even know where to start, but like I I think this whole presumption, or not, I shouldn't that I that word is loaded, but I I the medical-only cannabis company in California, and a little bit of this narrative is is uh is um yeah, it it it kind of it gets to a lot of the confusion in the space. I see a lot of like talking heads, a lot of lawyers, you know, debating about what is California gonna do, how is California gonna help? Um we're uh at Vertosa, an operator mid-supply chain. We actually did adapt our license to be medical only and have also submitted for a DEA license. And so um, yeah, I'm it makes me very happy to hear about your confidence. And I'm curious as to what are you potentially hearing um that others in California need to hear, or what can help build their confidence?

SPEAKER_01 9:47

So um uh and I should have mentioned in there um that we also did all the DEA stuff. So we have submitted all of our, it's called the bulk drug manufacturer's license. Um they actually DEA also created a portal specifically for dispensaries, so we should get submitted those uh prior to the deconsolidation as well. But um the most interesting or exciting part that's most aligned with our strategy um is the bulk drug manufacturer form. It's called the form 225. So based on uh being medicinally state, state medicinally licensed for our forms and manufacturing, we submitted under the new drug codes that they created. Um, and I think uh getting to your question, I think that's important um in two ways. One is the bulk drug manufacturer form 225 is not the that is what Tylenol, Codeine, testosterone. I think it even covers things like cocaine and morphine. Um it's been around for a long time. This is how the DEA operates. And I think one of the things that I've heard, um, and I get it, right? In cannabis, we have PTSD. In my head, it's always Charlie Brown and Lucy with the football. When Charlie Brown thinks he's gonna pick the ball, take the ball, and Lucy pulls it away and he falls on his ass. That's happened to us for the last decade in cannabis, right? So most people are waiting for that football moment. Um, the difference here, uh, and I think it's important, right? There's a lot of what might happen, and then there's what has actually happened. And in this case, I'd say for the first time, what has actually happened is that the federal government, the attorney general, um, has signed an order that reschedules it's a done deal. It's happened past since it has rescheduled medicinal cannabis to schedule three, it is now federally legal, right? So that like that is a put it in the history books thing, not a byte app and not a they're reviewing it, not a there's a hearing done. Right. Um so based on that, the next question is does it mean a couple, right? And there's a lot of ways where that could happen and not mean anything, right? And I I got this administration a lot of credit um because they've done a bunch of things and they're very smart and they show a very good understanding, uh, and I think they show intention. They could reschedule things to schedule three and then say, great, you need to get an FDA approval. That would effectively mean it means nothing, right? At least today. Um the reason for that is an FDA approval is gonna take you five years if you're lucky and it's gonna cost you 50 million bucks. So cannabis could be rescheduled, requiring FDA approval, and nothing would actually change. They didn't do that, though. They put in a very important set of words which said FDA approved or state medicinally licensed, right? And that means all of us who have state licenses that are medicinal are grant are paid, right? Like we don't need an FDA approval sidestep 50 million bucks in a half another half a decade. Um, so that the next question is is anyone gonna do it, right? So that could happen, and then the DEA or uh DOJ, I'll call it killer with bureaucracy. And it's actually one of the things that was most worrying to me because you can fight against a no, you can't fight against it's harder to fight against a non-answer, right? So then the question is anyone gonna do it? The answer to that appears to be yes, and the reason I say that is you take this existing schedule three infrastructure that exists, and the DEA has proactively added new drug codes to that form, right? So you have existing infrastructure, you don't need to build this. The DEA has made proactive changes, though, to submit it. And I know that because the day after this was announced, um, I was on the phone with California making sure all of our licenses were medicinal. And the next day I was trying to submit this 225 form and finding that I couldn't quite figure out how to fill it out because they hadn't yet updated the drug codes. A few days later, they updated the drug codes. We submitted the form, and I think that's important because it shows prolactic changes happening. The next thing I would say that's a good sign is the DEA has then followed up and asked for further information on our application, right? So they had a rule from the federal government that if you were submitted within the first 60 days, they had a maximum of 60 days to process the application, fully prepared for them to wait 15, nine days or whatever it would be to do anything. Again, four days later, they're asking questions, they just paperwork, nothing big. Uh, but now we've also seen that they're starting to do inspections expensive, right? So two data points for mid three proactively added drug codes, after follow-up information, starting to do inspections tells me that they're working on this and that their boss, President Trump, wants this done and they're going to deliver on it, right? So I would say at this point, I believe that they are working towards that 60-day, I'm sorry, six-month window to process these applications. Another point that tells you they want this to happen is it's called dependency. While they're reviewing your application, once you've submitted it, during the review period, you can operate as if it's approved. Once again, something you don't see, like this is not normal bureaucracy. This is saying submit the application, get it in within the window. We promise we'll get it done in six months. And while you wait for us, you can go ahead and operate as if we've said yes. So a few, but that's what's happening.

AnnaRae Grabstein 15:01

A few comments on what you're saying. And and you're right, it is really unique. Um, this getting to operate as if um is not something that the DEA usually does. And for those out there that are listening to this and thinking about if they should still get their application in in this first 60-day window, I think the whispers in the industry are that it really is worth it because even though they have extended the application period indefinitely, you won't get that priority processing in six months if you don't get it in. I think it's by the 26th.

Ben Larson 15:31

Uh you got three days.

AnnaRae Grabstein 15:35

Yeah, you got three days. And and the reason is that if you don't get priority processing, the legacy of how long it has taken the DEA to generally process applications like this is often years. So it really does make a difference

DEA Form 225 And Schedule 3 Reality

AnnaRae Grabstein 15:50

to get it in in this, in this first, uh, in this first go round. And so, Graham, you you made the clear argument of why you guys feel strategically that up supply chain from retail counts as medicinal. The license is medicinal, the product doesn't become adult use or medicinal until the point of sale at retail when somebody either purchases it with a medical card or chooses to purchase it just because they're over 21. So I hear that and I get that. Um, I

Interstate Commerce And The Dormant Clause

AnnaRae Grabstein 16:20

think that that where I want to take the conversation then with that as the foundation is about what that means about interstate commerce. You guys have had this hypothesis about California cannabis being um the future of the industry. Uh, you talked about the language in the executive order about FDA approved or uh or medicinally legal in the state. Do you think that that state medicinally legal is enough to open the door for you guys to start having real conversations with out-of-state medical partners to bring glasshouse product into other markets, let's say uh Pennsylvania or a Florida that are still medical only?

SPEAKER_01 17:09

So um I'll say yes to the latter half because we have started having real conversations about it. Um, the conversation is not the same as being able to do it compliantly. So I think that's the more interesting part of the answer. Um, I think in a federal level, the answer to your question is yes. I think there are three things that are required. So that's only one of them. The three things that I think are required, um, and I'll I'll call to another jurisdiction. And by that I'm encompassing other states as well as other countries. So I think you need three things. You need the federal government, who's now said yes. Um, you need the shipping state to say yes. In our case, that would be California, and then you need the recipient jurisdiction to say yes, in which case it could be Florida, Texas, or Germany, right? Um, so we have one of the three green lights. Um, California needs to give guidance on how you would move a product, you know, by definition, to be compliant with your state license, which is a requirement at the federal level, um, is in metric, and the current regulations say that you're only to work with other um licensed operators. What they need to do, at least in my opinion, is expand the definition of licensed operators to not just DCC licensed operators, but DCC and federally licensed operators, right? So, for example, once you have your application for your bulk drug manufacturing and with the DEA, you now have what's called the DE control number. So we have DEA control numbers, Ben's got a DEA control number. I think that the state of California consider the federal government license a valid license. If they make that change, then they would say in metric, you know, rather than your other metric licensee or your other DCC licensee number, put in the DEA control number of who you're transferring this to, manifest it over. We need to know where it's going. Now it's with the DEA and the same controls that use for testosterone or morphine, for example, right? Like it's good enough for those, it's good enough for cannabis, would now govern how you transfer that product around. Um, so that would be the second three might. And I think the state of California wants this. Uh, I would reference uh the letter from Clint Kellum, who's the head of the Department of Cannabis Control in California, uh, sent a letter to the federal government advocating uh for the full rescheduling for of cannabis. So they I think they want to see all of this move to Schedule Three, not just medicinal. Um, and there is no reason that they do not want California operators to be able to export the cannabis that the rest of the world wants. No, any different than they don't want you know, mine makers and Napa, Napa to not be stuck within the state. So fully expect their them to support that. The third thing you need is the recipient jurisdiction. So if you're in Germany, they're already doing it. So the answer is yes, there. Um, if you look at the states, I think you're gonna be a spectrum of answer. You're gonna get a state that has an industry they want to protect who will try and say no. I think they will lose because of the dormant commerce clause. You will have some states who don't have the industry but want it, and they don't want to have to regulate the entire supply chain. I think they'll enthusiastically say yes. And you might see some states that currently have hemp that they wish had a bit more regulation on it, and this might be a good way for them to replace that supply chain with a tested and regulated supply chain without taking their citizens' access away that they've gotten used to.

AnnaRae Grabstein 20:35

Well, so let's let's kind of double-click on the dormant commerce clause and some of your peers in the public cannabis space, who are also the largest cannabis companies in the world, um, who have invested tremendous amount of uh resources and dollars in building cultivation assets in places that are not very good to farm. Um and they have kind of a disproportionate uh reason to try to protect those expensive cultivation assets in places that are too cold to grow outside, too cold to grow with greenhouses. Um and I I believe that they are going to try to make sure that those assets are protected as best as they can and get in the way of interstate commerce. And and it sounds to me like from talking to lawyers that really to poke a hole in it, it's going to take somebody that is willing to bring a lawsuit um against one of these states that's trying to stop it. And I'm wondering if that's going to be you guys and if you guys are gonna be willing to poke the bear um with the other MSOs that are trying to protect their their state cultivation assets and block out interstate commerce.

SPEAKER_01 21:54

Sure. Um, so I'm not inherently a litigious person. Um that said. And I am happy to fight for the consumer. And I think in this case, the consumer would be the loser if free trade is not allowed in cannabis like it is in every single other product in this country. Right. And I would reference a few things. One is the truth always happens. And the truth is cannabis shouldn't be locked up in states. The second is the consumers get what they want, and what they want is California cannabis. And the third is nature always wins. And it makes more environmental sense to grow cannabis where cannabis likes to grow and put artificial regulations around it and burn coal in Massachusetts to grow it in a warehouse replacing the sunshine. So I think all those things are eventualities. None of them tell you the exact timing, but I promise that all of them will happen. And I would also reference the fact that we are now a Schedule 3 drug. There is no Schedule 3 drug that is not sold in all 50 states, produced in any state and shipped via interstate commerce. So you would be making cannabis a one-of-one of every product in the universe that is limited to a specific state.

Ben Larson 23:09

So well, I think we already have that special designation. I said I think we already had that special designation of a one-of-one, unfortunately.

SPEAKER_01 23:19

Except for we also we also carried the designation that we're the only schedule one product drug that was tolerated, right? So we were living, and the only reason that the dormant commerce clause has not been brought to bear already, the sole leg that it just had to stand on was the question is does the dormant commerce clause apply to a Schedule One federally illegal product? That is no longer the case. The dormant commerce clause absolutely applies to federally legal products. So now you get into the realities of this, right? There is no doubt that some states are gonna be resistant to this, they will be able to slow this down. But I would ask people to think through the reality of what that means. Like let's just let's pick the Florida. Florida's gonna market, let's say Florida doesn't want California cannabis. Think about what happens. Florida says we don't want California cannabis. What does California do? Maybe we don't want Florida one. Okay, um, maybe we don't want um Jerry's mesh, right? California's the fourth largest economy in the world. Who wants to lose California's market? If you say you don't want our products, what are the odds that that doesn't turn into a trade? International market, that's what happens every day. So it's gonna happen here. And then are you still the United States of America if you are specifically disadvantaging other states relative to one another and fighting internally? I would say that you're not, and I would say you just took away what made America great. So I do not think that that will stand because of cannabis. So I have I would be willing to bet all my money that the Dormas Congress Clause eventually puts cannabis from all 50 states in all 50 states, because if it breaks that then it won't stop there. There's no way you can make cannabis the unique thing in that sense. So we'll be living in a world of a fractured state and country, and it will suck. So I don't think it's gonna happen.

Ben Larson 25:24

And and Ray, I I I'm curious from your perspective because you came back from Chicago singing a tune of like, oh yeah, we're probably only like 12 to 18 months away, uh, which was a lot more um I guess ambitious or optimistic than than I had previously been. I'm curious if you heard anything else in addition to what Graham is saying um that would further reinforce that.

AnnaRae Grabstein 25:52

I I think that that I heard optimism that within 12 to 18 months that somebody is going to start trying and that they're going to try to participate in interstate commerce. Uh and instead of necessarily asking for permission, um, they will deal with whatever comes from it, I think is what I'm thinking. And that people are certain folks are ready to push the envelope, and other folks are loudly convinced that it is not possible at all. And that the um that the language around uh state level medicinal licensing will not hold up, and that the lack of FDA approval for the products will be the thing that will will get in the way of interstate commerce. So I'm not really sure. What I will say is I don't want to bet against Graham in this because I am with you in that and that I I do believe that that the the future is a more open market and that it is what will be best for consumers. But I I'm not really sure how it's all gonna pan out in the next in the next 12 to 18 months. And what I'm excited to um to know from from Graham is is is like how soon are you guys gonna get started? Uh these conversations that you're having. Like, are you thinking that that that it's that it's Florida or Pennsylvania or Texas? Or are you are you setting your eyes on Germany instead? Do you think that it's simpler to go out of country um as opposed to going out of state first?

SPEAKER_01 27:36

Yeah, so um I so two things on that. One is I do think that international will likely happen uh sooner. Um, not sure about that, but I'm sure it will happen sooner than some states. Um, the other thing is I would encourage people to think both legally, and for that, I would say, you know, look to people. Um like there, there's some really good dormant commerce clause uh attorneys out there, not cannabis specific, just in general. Um, I think uh Mikos, M I K-O-S is a good one. Um, but there's some really good stuff. And the dormant commerce clause has been challenged many times and it has never not prevailed. And I would point out that even in cannabis, the dormant commerce clause has won. There have been many residency requirements that states attempted and lost it on under the dormant commerce clause, where they said, hey, you can only apply for a Massachusetts cannabis license if you're a Massachusetts resident. That's not how the U.S. works, right? If we go to Nevada, all of us can go in the casinos, not just Nevada residents. And the same thing, if you're want to apply in Massachusetts, you don't have to be a resident in the dorm. They tried May Lost. So um the other thing is think about it practically. Let's say that uh Texas says, okay, you can import California, cannabis, or Tennessee, or North Carolina, because they don't have a program, right? What's going to happen when there's California weed in North Carolina to all the surrounding states? Is there going to be California weed in those states? Absolutely. Right. So are we it's not you the the flow isn't is gonna be unstoppable, right? Like, and it's not just one lawsuit's gonna happen, it's probably gonna be 10, right? So any one of those tens that gets decided favorably will become the precedent for the rest of them, right? So maybe Florida has the best strategy, or maybe um North Carolina caves early, right? Like as soon as it falls, it's gonna fall for all.

AnnaRae Grabstein 29:38

So again, I I know that one thing that will help unlock it is if the regulators across all the states get together and they standardize quality control standards so that there isn't different standards for pesticide or mold or different things like that, um, in different uh there's an organization called Canarich, which is a cannabis association national regulators or something.

SPEAKER_01 30:04

Regulators. Yeah. So there isn't a group that does that. Um, the other thing I would point out too is that there is a way to avoid um that at least in the beginning, which is to ship bulk non-final four packaged product, right? So for example, uh California has pretty strict standards. Uh I think this most strict uh as far as I'm aware in the nation uh for pesticides, 102 pesticides now, parts per billion measurements. Um so you could ship bulk cannabis to Florida, for example, and it could then be tested to Florida standards, which are if it passes California, it's gonna pass Florida, and then be packaged to Florida standards, much different than California white black and white packages only, et cetera. So you could ship bulk California cannabis to Florida, test it and package it in California to their state standards, and then put that on the shelves, and you wouldn't actually need true interoperability. You just need to make sure that the product you grew was grown to the highest of all 50 state standards um and be accepted by any of the rest of them. So I think there is a path that uh could speed that up at least in the beginning. Ideally, we use the same measurements like we do with alcohol, uh, and you don't need to do state-by-state stuff, but you certainly could.

Ben Larson 31:17

Yeah, so I was I was recently in Oklahoma City for the CANRA uh external stakeholder conference, and there were two uh points of conversation here. Uh one uh being the dormant commerce clause. And so this was a slide that was presented uh by Vicente on one of the panels just talking about how clearly this becomes um a case for this, and and just that there's like two real like key filters here that um would not you know would not be able to be uh defended against. And so second to this is that the uh various operators or regulators that are members of CANRA, there is a big push on this committee for uh for harmonizing uh testing across states. Um so it does feel like it is working in this direction.

SPEAKER_01 32:12

I really don't see I don't see how good it because exactly what a state would want to do to protect their industry is exactly what the dormant commerce clause says you can't do. That is the whole point. It has nothing to do with dormant commerce clause, does not have anything to do with cannabis, it has to do with commerce, and it says you can't set up rules that make it so someone in Florida doesn't want to buy strawberries from California and someone in California doesn't want to buy float oranges from some in Florida. That's the whole point. The cannabis uh application is instant and direct.

AnnaRae Grabstein 32:50

So I love that you've uh go ahead, Ben. You go ahead.

Ben Larson 32:53

No, I was just gonna say I I I kind of want

Global Demand For California Cannabis

Ben Larson 32:55

to set aside uh US interstate for a bit um and talk a little bit about the international landscape because yes, the broader administration has has done some good things uh for progress on the plant this year, it seems. Um, but uh something that might counteract that on the international stage is just general sentiment towards US companies, right? And I've heard in a number of different ways um, you know, certain businesses and certain countries preferring to do business with non-US companies or like Canadian companies. And I'm curious as to what level of differentiation you think we can create for California-based cannabis versus broader U.S. cannabis? Is there a premium that specifically gets applied to California versus the broader US?

SPEAKER_01 33:47

Yeah, so um question first on your question. The companies that prefer working with non-US companies, what opportunity have they had to work with a U.S. company? Fair. Yeah, this is all hypothetical.

AnnaRae Grabstein 34:03

Yeah.

SPEAKER_01 34:03

It seems like they're all playing soccer and we're not allowed to go on the field yet. So um, they're playing football, we're playing soccer. Yeah, fair enough. That's why we need Canada so we can standardize the semantics and all call up the same thing. Um so I for a long time have thought the California cannabis, the Appalachian map. Um it clearly there are gonna be people everywhere. Instances that there are gonna be some individuals who grow Austin wheat, right? Like I don't pretend that California has some monopoly on it, but like you probably don't have a favorite tequila that's not from Mexico, like you'd probably say I'd rather have Napa wine than New Jersey wine. Um, like that you'd probably have champagne from Champagne, France. Um, when it comes to cannabis, 99 people out of 100, if you said you can have the weed from California, you can have the weed from Tennessee, they're gonna pick California. Um I'm happy to say that after going to Berlin, first time I've done an international trip for cannabis, that was mirrored back to me a hundred times out of it. There is nobody there that we talked to who didn't say, Oh, yeah, we'd be ecstatic to have California cannabis. People ask it for us all the time. Uh, people would prefer it, people would pay a premium for it, it'd be a differentiator for us versus our competitors if we were the only ones that had it. So whether it's marketing, whether it's the culture, whether it's the innovation, whether it's the nuance, whether it's the history, whether it's the sunshine, you can say whatever answer you like. But I will say that we did not talk to anybody who was not very positive and worst, neutral on California. And I would say, at least relative to us, California also brings the benefit of the best climate, the best growers, the best genetics, the best uh innovation. So not only can we grow a product that people have a preference for and are willing to pay a premium for, but we can grow it more efficiently, more consistently, and at a higher quality for less money. So even if all that is neutral, I still think that the cannabis we grow here in the California and really the West Coast. Like I'm I'm not trying to be California arrogance. So the West Coast of the United States, California in particular for us, grows the most vest weed and we can do it for the least amount.

California Market Shakeout And Strategy

AnnaRae Grabstein 36:35

So I think we've been talking a lot about what if uh interstate commerce, what if global commerce. I think I'd like to come back to California and level said a little bit here about the market dynamics. Uh, you guys had a tough year last year with some things that really seemed to circle around some ice raids and some labor shortages. Uh, you guys hit a $182 million of revenue in 2025. Your guidance for 2026 is uh is 235 to 245. And that is predicted to come from the California market, which um is a market that many of the MSOs participated in a few years ago and exited because they claimed to not be able to compete with mom and pop's, which I always thought was a wild thing that Boris Jordan said, because I think the whole point of scale is that uh you would be able to compete with mom and pop. So something strange was going on in the market at that time. Uh, you guys have invested wholly in California and even some big partnerships that have been announced, uh strategic partnership with Vireo and Ease to broaden your retail footprint. Um, there's a lot of MA going on in California. Retail is consolidating very quickly, kind of at the top with 10, 10 operators or so that all have 10 to 25 stores. Uh, what do you think is going on in the California market right now? You think it's healthy, you think it's growing? How do how do you see it?

SPEAKER_01 38:10

Um, yeah, it is interesting, right? And as far as I know, I don't think there's any MSOs left in California. So I know uh Cura uh truly Cresco.

AnnaRae Grabstein 38:21

Uh I think Vireo counts as back or in with ease.

SPEAKER_01 38:26

Yeah, okay. Yeah, I guess on the on the on the retail side. Um I don't know that's actually kept close, close. Yeah, maybe right. I'll give it to you. Anyway, retail uh on the operations and cultivation side, I know that Cure was here, I know Cresco's here, I know True Leave was here, and I believe they all left.

AnnaRae Grabstein 38:43

They all left, correct.

SPEAKER_01 38:44

Um, and I do think it's it's interesting because as of right now, like there's been some thoughts of like, is that gonna change? We the dynamics have been actually changed. I I think when you see some of the things that we've talked about here happen, um it's it's not gonna, it's also gonna have an impact on California. I think maybe maybe sometimes to get that, right? Like if Germany is paying two grand a pound for wheat, people from California can ship wheat to Germany, they're gonna to the point that California is gonna be short on weed, and California prices will be impacted upward because people here still are the largest cannabis market on the planet, they're still consuming four-ish billion dollars of wheat a year. Um, and if all of a sudden that supplies go in somewhere else, uh the mark economics tells you it's gonna you know sort itself out. Cure for high prices is high prices, cure for low prices is low prices. Um, so there there will be changes there. But as of right now, I don't anticipate seeing other MSOs uh come back into this market. Um, as we talked a little bit about before, I think this year uh supply is actually a bit thinner uh in California than has been in previous years. Um when we bought our SoCal farm, there were 8,000 cultivation licenses in the state. There's now uh under 4,000 licenses. So there certainly has been attrition. Um part of the reason that we have expanded is because uh we believe that the most best weed for the least amount of money, which is another way of saying the best value for the consumer, um, is a good strategy. So as there's been attrition, we I think have filled that um space to some degree uh with our expansion. So we continue to love the California market. We have resisted many requests to go uh into other markets because we think long-term um cultivation in California is the right um first principles decision. And we anticipate that at some point we are going to be able to give consumers what they want, which is we talked about as California cannabis around the planet. So uh growing here in California has always been our focus. Uh, this is the only market we've ever operated in. Um, the rest of the markets look pretty uh uh tasty and juicy and appealing. So we look forward to being able to participate in those too. But um, in the meantime, you know, none of our forecast has anything outside California, doesn't even have the CBD flower stuff that we're working at, uh working on in it. It's just our normal business um expanded um based on new greenhouses and our greenhouse two uh expansion, which has supplemental lights for the first time, which is pretty cool. Um, so that's that's our business until our business is more than that, which is closer than ever, but hasn't happened yet.

unknown 41:25

Yeah.

AnnaRae Grabstein 41:25

In the California business, how do you look at the proportion of um of bulk to CPG? What does that look like for you guys?

SPEAKER_01 41:34

I mean, for me, the tip of the spear is CPG. Um, if I could snap my fingers, everything we grew would be sold in something with uh one of our brand labels on it. Um that aren't due in California, um, but I think it'll get much easier when we get bigger markets. No matter what, though, because of the seasonality of growing with the sun, we are always gonna have cultivation capacity that exceeds our brand's needs. And the reason I say that is if you talk about say January versus August, because the sun longer days, more intense sun, we're gonna grow 40% more in August than we will in June. To be able to supply my brands, I need to have enough supply at the lowest part of the year to give the brands everything they want, which by definition means at the highest part of the year, a brand's consumption is not gonna go up just because it's summertime. Um, at the highest times of the year, we're gonna have more supply. So I think what you will see from us is we will have our brands, and that will be like our supply chain is the wood behind the uh the tip of the spear, so to speak, for driving CCG. I want to see our brands on the shelves everywhere that tobacco or alcohol are sold everywhere on the planet. Um, and then we're gonna have a few deep relationships with partners who we will work with um to make sure they get the weed they want, with the quality that they want, the volume that they want, the price that they want. And that will be how we merge the seasonal fluctuations so that everybody's happy. So we'll be the Intel Inside for a handful of folks, uh, and then we'll make our brands um with our supply chain and be able to do that, I think, at a scale that no one else can be able to match.

Ben Larson 43:14

Yeah, when

Hemp Convergence And Where Regulation Lands

Ben Larson 43:15

you when you talk about your business gram, I'm imagining the different levers that you can pull to kind of like just access the market where it is today. And any good operator in the space is thinks of it that way. And it's been a really interesting couple of years, you know, with the we've had this proliferation of hemp, we've had hemp beverages, we've had some side conversations just about what's happening in that space. And then Anna Ray and I have been talking about the the regulatory convergence that all this has created. And this year kind of being like, you know, uh a boiling point for for this entire discussion with um the federal language that's being passed down for for hemp and all that. Crystal ball, you know, where does this all end up? Like how How how do we imagine you know the the regulatory landscape looking like for cannabinoids, whether it's hemp or cannabis and and kind of like this this federal infrastructure? Is it all schedule three uh in the future?

SPEAKER_01 44:14

I mean, so uh I'll tell you what I think, which is certainly colored by what I want. Um I want cannabis to be descheduled. So I want it off the schedule. Um, I can think of no justification to regulate it more tightly than either uh tobacco or alcohol, um, neither of which are scheduled at all. Um, I think that you know adults should be able to put in their bodies what they want in general. Um, I think we should have testing. I think we should have truth and labeling. I think we should have age gating, uh, but which is what we do with tobacco. I actually don't test tobacco and alcohol, all that much, certainly not in the standards of cannabis, but nonetheless, I think we should know what we're putting in our bodies. I think it should be labeled, I think it should be restricted to adults. Um, I think uh it makes sense there should be some reasonable level of taxation on it. So I think that's what we should do big bag. Um that said, I think there is an entire plan that makes sense with cannabis. It doesn't make sense with alcohol and tobacco, and that's the pharmaceutical uh we just saw recently with a cannabis-derived pain um drug in Germany that's showing great um effect. We've seen it with epidilex, which is a cannabis-derived epilepsy drug. Um, we've seen uh MCDO reports, they're you know, limited studies because of the Schedule One nature of cannabis around Parkinson's, PTSD, a bunch of other things, right? You can see in the data that when you legalize cannabis, uh opiate deaths go down. I think that's a good thing. Uh, you can see Medicare Schedule D, which is where prescription drug uh happen, spending go down. I think that's a good thing. Maybe not if you're a pharmaceutical company, but it is if you're a citizen, it is if you're a tax fare, because that's getting paid for uh by Medicare. Um cannabis uh reduces in the billions uh the amount of money spent um on pharmaceutical drugs when it's available. Cigarette smoking goes down, alcohol consumption goes down, all those things I think are good things. So um I do think there is a medical lane for cannabis, but there should also be a descheduled buy at the convenience store lane. Um every state, I think I'm accurate when I say this. I think every state step through medical on the way to adult use. So I am zero percent surprised that the federal government will step through medical on the way to adult use. Um, I think it may take five years. Uh, you know, I don't I don't know, but I think we're gonna see adult use in this hearing that's coming up. We'll go under schedule three, and then I think people will get used to cannabis, and then the studies will come in and we can do it in California for 30 years, and now 45 other states and hemp, which is cannabis, and now the rest of them and all the above. Uh, and like, you know, nobody's been able to find a trend that really is concerning. Um, team use doesn't go up, car accidents don't go up. If anything, alcohol and tobacco decrease, and then all the other things I just mentioned happen. So I'm pretty sure cannabis makes the world a better place. Uh, it doesn't mean that no problems happen, but the question isn't do no problems happen? The question is, is it a net pinup? And the answer to that I think pretty clearly is yes. So I think more cannibal it's in the world make the world a better place. Uh, and the truth happens eventually. So that's essentially what we'll say.

AnnaRae Grabstein 47:35

I I heard you just slide in there that you think that adult use will come under schedule three in the hearings that are starting next week. Yeah, I mean, I the government of the master then why did you deconsolidate the business if you're confident that adult use will come under schedule three?

SPEAKER_01 47:50

Part of our deconsolidation is as soon as that happens, it snaps back any. So um what it does is it decouples us from the timeline, and it means that I can watch with interest, but not with uh uh vulnerability. Um, and if and when that happens, then the pieces just snap back together. I think um I the government can be a master of intellectual inconsistency, but I see no way that you could rationally look at where we're at and have a different answer come out of that hearing. So

Last Call Advice And Closing

SPEAKER_01 48:25

that's what I think is gonna happen.

AnnaRae Grabstein 48:27

Yeah. Well, shoot, we talked longer than we said we were gonna keep you. So uh I guess it's time to wrap. Uh, it's time for our last call. So, Graham, this is your chance. Final message for the listeners, advice, call to action, closing thought for our audience.

SPEAKER_01 48:45

Keep on pushing. If you're in the industry, uh, don't give up for closer than we've ever been. Um cannabis makes the world a better place. So if you're working on it, you're helping, helping things. Uh, we're certainly not giving up uh 10 years in the glass house. I think I started cannabis uh when I was selling weed as a sophomore in high school. So I've got 30 years in the industry. Uh we got big by starting small. Uh, we got an amazing team. Um, they put passion and love into what they do. Um excited for them to see the rewards, excited for the world to get access to uh the great weed that we grow here in California. Um, I think we really are uh making the world a better place. So if you're fighting the fight, keep it up. And if you're a consumer, uh the world's gonna get even better. So stick around.

Ben Larson 49:31

Keep on pushing. Amazing. Graham for our glasshouse brands. Thanks for spending the last hour with us. Yeah, thank you so much. All right, we'll talk to you soon. What do you think, folks? Pretty awesome. Uh, you're gonna put all your money on Interstate Commerce. I love that bet. All right. Thank you to our teams at Virtosa and Wolfmeyer, and of course, our producer, Eric Rossetti. If you've enjoyed this episode, please share, like, review, do all the things wherever you listen to your podcasts. Thanks for listening. And as always, folks, stay curious, stay informed, and most importantly, keep your spirits high. Until next time, that's the show.