Set Aside Your Ego

Ben Larson 0:00

Yeah, my my last piece of advice, if you're going to go do this, make sure you have that step in your process of setting aside your ego and being completely open to whatever it is that you receive back. And knowing that it's a gift, right? The critical feedback is a gift to help you, your team, and your company be better. That's it.

AnnaRae Grabstein 0:21

Mic drop there. Set aside your ego, no big deal, right, guys? Just no big deal. Set it aside, no ego.

SPEAKER_04 0:28

Smoke some weed.

Welcome And What’s On Deck

SPEAKER_03 0:49

Hey everybody, welcome to episode 146 of High Spirits. I'm Ben Larson. And I'm Anna Ray Groundstein. And we're recording Tuesday, July 21st, 2026.

SPEAKER_04 1:01

We have a cannabis business news roundup for you today. Just the two of us uh gonna check in, uh see what's going on in each other's worlds.

Ben Larson 1:10

My world is vastly different than it normally is, and what's happening in the cannabis world, of course. And Anna Ray, uh, you were up in Sacramento this week at

Cannabis Comes To The State Fair

Ben Larson 1:20

the California State Fair. Was that as exciting as it sounds?

AnnaRae Grabstein 1:25

Well, I am a county fair, I guess now state fair fan in general. I love a good kind of regional meetup to celebrate crafts, animals, you know, farmers, all the things. And um, for the last handful of years, the California State Fair has had a cannabis activation, and I had never been to it before. So it was time to do that. And so yeah, I went to Sacramento. It wasn't quite 105 degrees as it often is there. Um, it was in the 90s, so pleasant. And um it was the award show day. It was amazing, actually. Really cool. Uh, it one of the larger retailers in California embark is the event organizer that makes it possible for retail sales to be happening in the area. So just like many state fairs, if you've been, there's all these little areas. There's the area where the cows are, and there's the area where the cannabis is. Uh, it was a place that you had to check an ID before you could go into the area. So there weren't any kids in the zone, but it was really big and they had exhibits, um, a yeah, history exhibit, a science exhibit, lots of brands were set up. Uh, you could purchase and consume product. They had the World Cup, uh, that was the third place game while I was there that was playing in the background, which was pretty fun to get to consume a joint and watch the World Cup with a bunch of people outdoors. I loved it. Uh yeah.

Ben Larson 2:56

So, I mean, usually when you're entering a cannabis space, i.e., a dispensary, like it's pretty noticeable. There's a little bit of that kind of stigma of like, do I want to go in here? Like, how did they do? Like you said they were they were carting to get in, but like, did it feel like it was a part of the rest of the state fair?

AnnaRae Grabstein 3:14

It absolutely did. Great question. And I do have some pictures. Um, Eric, Mr. Producer Man, pull them up. There's a picture of um, this is a picture of one of the um science exhibits, but I've also got a picture of myself right at the entrance, a little selfie that I took. And it didn't feel very like it didn't feel like there was a big stigma at all about it. It really felt like it was just any other place in the state fair, kind of like the wine area where you also had to check an ID if you wanted to go and hang out in the wine zone. Um, and it was big. I mean, it was not off in the corner with a dark shadow, you know, down a hallway that nobody saw. It was right off the main entrance of the fair. And um, it seemed really well attended by people that were attending the fair and checking it out. And the the cool thing too is that it was the golden bears are the name of the awards that the state fair gives to folks that compete in the competitions, which have been going on for over 50 years.

Ben Larson 4:18

So, not not so not just the cannabis awards, like the awards in oh, very cool.

AnnaRae Grabstein 4:23

Yeah, so like best cow or um best tapestry, or you know, all of the things that people compete in, best jam, all of these different awards. And uh, and so they had a whole bunch of different categories for cannabis, uh, different categories of flour and edibles, and they awarded the golden bears there. And the, I think the president of the State Fair Association came and gave a speech and talked about how um how proud the fair is to be including cannabis um as one of the state's most important agricultural crops. And I'd say that it was really pretty cool for the folks that won those golden bears to have that type of recognition, because in particular, um, one of the farmers that got called up for best flower uh is from Northern California, from the Mendocino area, and remarked in his speech about how long he'd been doing it for and how just important this type of recognition was. So, I mean, yes, was this like a monumental moment for the industry? I would say probably not, but but was it really sweet and a great way to just feel like cannabis is becoming more a part of our culture and accepted? Um, I think I think it was really a win for that. So I I really enjoyed it.

Ben Larson 5:42

Yeah, and in in the videos you showed, I would say it's fairly high production value. So it seems nice to be included with everyone else for one. So yeah, where we can often be pretty critical of the state, uh, good on you, California. Uh thanks and thanks for the normalization.

AnnaRae Grabstein 5:59

Absolutely. And the state fair does go until August 2nd. So um, if people are in California, they can go to Sacramento and and go and check out this activation every day that the state fair is open and the on-site dispensary and consumption area is available. So it gets me excited too about what public consumption could be in a social situation. Uh, they don't allow alcohol and cannabis to be commingled. So for those that wanted to have a beer and a joint, that isn't allowed, but you know, one step at a time.

Ben Larson 6:33

I haven't been to the state fair since I was probably 12 years old. Where is there a lot of people that go to the state fair? Is it is it like is this a thing?

AnnaRae Grabstein 6:44

It's totally a thing. As a parent, you should be taking your kids. Um, we often go to the Sonoma County Fair. I hadn't been to the state fair, but yeah, you've got all the um carnival games, and which I think is sometimes it's feels like it's gambling for children, uh, because they just take your money and you rarely win. Uh, but you know, there is a promise of winning a massive stuffed animal or whatever. Yeah, um, lots of rides, uh, little roller coasters, ferris wheels, stuff like that, stuff that you spin around and get real nauseous, lots of delicious food that is very unhealthy, like funnel cakes and um huge turkey legs that you can hold in your hand. Uh, yeah, state fair is is super fun and um a great way to support the local community, lots of small businesses and farmers, and it's kind of like the place where the state shows up to have lots of pride about the people that are from here and and the cultures and kind of a lot about agriculture, yeah. Plus carnival.

Public Consumption Without The Stigma

AnnaRae Grabstein 7:46

Yeah. Okay.

Ben Larson 7:46

All right. Well, anything sounds exciting these days that are outside of the the four walls of my home. Uh yeah.

AnnaRae Grabstein 7:55

Well, talk about what that's like. I mean, you're in the throes of family leave with the new baby, but at the same time, I also know you. Here you are doing this podcast, and you're still doing a little bit of work. What does that feel like to be trying to like have one foot in paternity leave and one foot in CEOing? Is that a verb? CEOing?

Ben Larson 8:19

Sure. Yeah. I'm gonna probably say many words that are not words today, but uh it's hard, yeah. I but like you know, cannabis certainly doesn't stop, especially this year, and so right now is an incredibly difficult time for me to step away. Not to say that my team doesn't have everything handled at the office, it's just more that things move at light speed, and it's really hard for me to like let go of that. Um, however, uh, I have just this immense amount of appreciation for the whole concept of paternity or maternity leave because the context switching when you're on just massive sleep deprivation is really challenging. Um so funny story. I won't name names, but if they're listening, they'll absolutely know that I'm talking about the meeting we just had. Uh so you know, my schedule's all messed up. I I know I don't know when I'm going to bed, I don't know when I'm waking up. Um, I have two older kids that I try to get to camp at some point in the day. But I'm like, okay, I can do an early morning meeting. So I I put a meeting on the calendar for like 7 a.m. And last night I'm like getting ready for bed. Uh like, what time do I have to wake up to look presentable for this meeting? So set my alarm for 6.20. And we had a night where the baby was just having a rough go of it. And finally my alarm went off at like 6.20. I was in no mood to get up and like, why is my alarm going off? I don't have to get the kids to to camp until like 8 a.m.

SPEAKER_05 9:55

And I reset I reset my alarm for 7 a.m.

Ben Larson 10:00

And then when it goes off, there's not only alarm going off, but a calendar item, like you know, on the home screen, be like, oh, 7 a.m. with with said partner and very important person. Let's just say I was on that call by 7:02, which is well within my realm of flexibility of like three minutes.

AnnaRae Grabstein 10:22

Amazing. Did you have pants on in the meeting?

Ben Larson 10:26

Some sort of pants. That's a very valid question. Um, but yeah, that was my morning. And and I was just like not only that aspect, the logistics of like being in two different like worlds at the same time, but just like the that that brain fog, the the the switching from like just keeping a baby alive to like actually thinking about business is is a tough switch.

SPEAKER_05 10:53

So yeah.

Ben Larson 10:54

If you can, if you're a business leader and you don't have kids, but you're being asked about paternity or maternity, like just know that it's hyper valuable to those that are going through it.

AnnaRae Grabstein 11:07

It's like going through it yourself is the very best way to teach you empathy for others that are Yeah, yeah.

Ben Larson 11:14

But you know, to your point, CEOing, it's hard to turn off. And and what I really do appreciate about this time is that it's given me a time to like step out of the day-to-day and really think about the higher level things. And so um, you know, I've been thinking a lot about visioning. You know, we have our our annual team off-site in August, and so like giving me this time leading up to that to really think about the big picture, what this year means for everything, because every year in cannabis kind of either slightly or dramatically changes what the future looks like for

Paternity Leave And CEO Brain Fog

Ben Larson 11:46

you. Um, but also uh I like to do you know a lot of outreach and understanding to kind of help paint that picture for myself. So um I send a questionnaire out to my team, which is some prying questions, and really ask for just radical transparency, ownership, like basically no holds barred, um, you know, no reaction coming from me, just like tell me what I need to hear. Um, and I do that with our clients as well. So I'll send out um questions to our customers and just get a full basically 360 of how we're showing up as a company, how we're showing up as a leadership team, and using that for guiding us as we go into your favorite part of the business season of like you know, establishing the strategic plan, the operating plan, all that kind of stuff.

AnnaRae Grabstein 12:35

Yeah. Well, so first of all, I'm so curious about the customers and their willingness to even be responsive. What do you find when you reach out to customers and ask them to participate in a process like this? Do you get a hundred percent response? Do you get 20% response? What does that look like?

SPEAKER_04 12:54

Uh, I think I think 20% is probably uh the the right number, 20 to 30 percent.

Ben Larson 13:01

If I if I were to go back and look at my my inbox, what I do recognize is that I'm incredibly flattered and appreciative of how much thought and time people actually spend, you know, put into it. Um, people that I would not expect, right? And sometimes it's new relationships, sometimes it's long long relationships, um, you know, get a lot of flattering commentary, but also like some really helpful critical feedback. And and I try to, you know, I try to ask things in ways of like, okay, maybe they don't have a direct criticism now, but like, you know, what's something that you might see in the future that we should avoid, right? And it's just really helpful to first know what people appreciate about us, like what's you know, what's the value we're creating, and how does that compare to what we're think we're doing for them, right? It's like you have your value proposition that you think you're out there selling, but maybe it's something completely different. And and these types of of opportunities like really kind of highlight how you're showing up for your customers. And then if you ask the right questions, you can understand what their anxieties are about the future. And again, in cannabis and hemp right now, like there's probably a lot of that. And so it's like asking, like, how who do you think we need to be for you next year? Yeah, you know, not just right now. Um, and so I I I really try to use that to make sure it's like, you know, everything that we're building towards, everything that we're investing in, like, is it actually aiming to create the most amount of value possible, not only for our customers, but also for our employees?

AnnaRae Grabstein 14:32

Yeah, I love it. I mean, what you're talking about is is design thinking, it's centering on the customer and truly learning about them and then iterating around them and layering in the employee piece. And I want to talk about that too, but I'm I'm not done talking about the customers because I think it's so interesting and such an important lesson for cannabis leaders out there because I think that within the onslaught of regulatory compliance and the lack of marketing and things, that there's very few cannabis companies that I have worked with that I've seen implement this type of customer feedback loop. And so I think it's really powerful and worth talking about. So, as I I want to ask a couple more questions about it. So you said that you're getting uh feedback from folks. You've been really public that that Virtosa's business is both in regulated cannabis and in hemp. So a lot of the customers that you're talking with right now are probably faced with an incredible amount of stress and uncertainty or shifts in their own business. And are they giving you good ideas about ways to adjust and shift your business in a way that's kind of proving that this process is is useful for your own strategy?

Ben Larson 15:44

Yeah, absolutely. And and actually it's helpful for reinforcing, you know, questions I've asked myself about like how loud or how visible do I need to be? I mean, obviously I'm on here every week, but that's different than me showing up on LinkedIn and writing articles and doing all that kind of stuff that I have done in the past, but notably have been a little bit quieter this year just because it felt like so much uh is out there in the ether. But one thing that just keeps coming back is like, you know, Virtosa talks to a lot of a lot of people across the supply chains, um, is very involved in the politics, all this kind of stuff. It's like the people want to hear what our what we're seeing and hearing in the marketplace, and they want it on the regular. Um so almost is like our opportunity to be kind of like a strategic advisor to folks, which is very different than just selling you know reliable ingredients, right? And so um really thinking about how do we take the visibility that we have and make sure that we're persistently putting it in front of people and probably accelerating it right now because there is so much uncertainty. So it's like the more stability there is, maybe you're thinking more about like you know, just consumer insights and what what the trends are. But like right now, it is actually what is like the current events that are affecting people's businesses. And I shouldn't assume that they're getting that information elsewhere, right?

AnnaRae Grabstein 17:09

Um Yeah, the onslaught of emails are not always the ones that people click on just because they're there doesn't mean that they're reading them and you want a trusted source, and it sounds like what they're saying is that they trust you as a deliverer of the message. It's interesting.

Ben Larson 17:25

Yeah, yeah. And it's um, you know, I think there's so many times where I'm like, uh it's like people don't need another article from Ben. They don't need another lengthy LinkedIn musing, right? Um maybe they don't, but our customers, our partners do need um just more like the what what what the boots on the ground are are hearing and seeing as far as you know where everything's heading. Yeah.

Customer Surveys And Real Market Signals

AnnaRae Grabstein 17:53

Uh well, so then let's talk about what the employees are saying. So you reach out to your customers, you talk to them, and then what about what are you asking your employees?

Ben Larson 18:04

Uh yeah, so I I ask a lot of prying questions. Like the first one I know that's on the form is like, what's something I need to hear um that I'm probably not hearing? And so that will is it's just like something that's very open-ended, very thought-provoking. You know, uh other ones are like, what are we currently doing that we probably shouldn't be doing anymore? Or that you might question why we're doing it. Um and I ask probably like, you know, seven or eight of these types of questions. And and then, you know, because it's a Google form, it comes back in this giant matrix. Um, and right now it's it's a matrix. I haven't actually like dug through a whole lot of it. I've kind of like, you know, just kind of spot checked here and there. Um, you know, the beauty of some of the tools available to us these days is like I could read through it all, I could drop it in Chat GPT or Claude and have it like be like, what are your key takeaways? What are what are the whispers? Like, what are people not saying directly, but that are you know resonating across messaging or tone. Um, so I'm really excited to kind of like leverage some of these not new tools, but tools that are becoming part of our our our daily life. Um and what I'm recognizing actually now is like we've had a history, and and not to brag, but like we've had a history of just really positive like reviews and all these opportunities for people to give feedback were often like just ideas of inspiration. Um, and I can already tell this year, and likely driven by a lot of the uncertainty and the quick shifts we've had to make in the business because of the shifting uh regulations, is just needing a lot more communications, especially about the vision and how it connects to the daily actions, like that we need to be communicating as leaders. And so, um, you know, I I'm saying all this not just because I feel like opening the book on what's happening at Virtosa, but because I think it is actually very important for every business leader in cannabis right now to be thinking about like how are you leading your your teams through all of this uncertainty and what are the levels of transparency and communication you're you're having with them because that that is kind of already what I'm recognizing as the key takeaway.

AnnaRae Grabstein 20:18

Yeah. I think that what as as we assess culture and think about how to lead culture and and also execution and all the other things that we're trying to do in a company, uh, especially in cannabis, there is this level of instability that cannabis employees have been living with for years. It's like if you've been working in cannabis, you have just never felt stable in in your job because who knows what might happen or or what might get shut down. And even in legal cannabis, regulated states, like the companies have been through so much financial up and down that there has not only been not an investment in culture and employee benefit programs and things like that that that are on par with other industries, but but I think sometimes the leaders think that they're shouldering all of the uncertainty and the stress themselves, but the employees feel it. They do. And and it gets in the way of people being able to get shit done and to stay on task because they're worried about if they need to be worried about how they're going to be paying rent or if they can go home for Christmas because of how expensive plane tickets are or whatever. And and so it's it it makes sense that in a year like we've had, that even after many years of your employee happiness being incredibly high, that you might be seeing some new questions that could speak to an undertone of of some fear related to how stable is is my job? How stable is this industry? Because it's stuff that feels very out of control. Of frontline staff.

Ben Larson 22:03

Yeah. And I feel, you know, because our company's eight years old at this point, and we've been through a number of these kind of cycles and waves. And you know, we we leaders, I do think, naturally seek to kind of shoulder a lot of that, or at least be a buffer to the that uncertainty and create the buffer of you know create some stability amongst the uncertainty. Um but at a certain point the unknown like always like gnaws at people. And um yeah, I I think right now I've been I've just been thinking about a lot of that. We have a we have an incredible team that we've curated all over all those years, you know, all the ups and downs, like we always come out stronger um with an even like larger, more stable core. And you know, I think we're at a at a point with our trajectory where it's like and and maybe it's not just our trajectory, maybe it's just everyone needs to start really thinking about like how do you just give more ownership and and realize that we're all adults and that like people have the ability to to sh shoulder that stress with

Employee Transparency And Leader-Leader Culture

Ben Larson 23:04

you. And so, um like you know, this we we talked about like um you know, I'm having our leadership team uh read this book right now called Turn the Ship Around. And it's it's like it's based on like true stories about like uh warfare and like how you take leadership from you know your your lower ranks and and let them kind of like really lead the way. Yeah.

AnnaRae Grabstein 23:30

Yeah, the I think the concept that the book talks about, just in quick summary, is this idea of leader follower versus leader leader and and this idea that um that you can turn your staff into leaders, move from a leader follower model to a leader-leader model, but that it actually takes a lot um from the the first leader at the top to kind of change the culture so that people can can lead um on their own and and feel empowered to do so, which I think is is really powerful stuff.

Ben Larson 24:02

Yeah, and then like you know, I I have to give credit to a particular person uh, you know, on our team last fall, like pointed out to me was just like like Ben, like too many people look to you for the answer in too many like conversations. And I'm like, I'm like, I don't want that. Like how how do I, you know, like how do I remove that like remove that desire for people to have like my buy-in, right? Um and I don't know if I have all the answers, but it it's it has it has had to have been a deliberate process over the last seven months um to kind of try to to remove that kind of impulse of like, oh well let's get let's get Ben's approval or let's get Ben's uh buy-in before before we act.

SPEAKER_01 24:52

Mm-hmm.

AnnaRae Grabstein 24:53

Yeah, that it plays into the whole not just trust, but clear strategic alignment and and also communicated boundaries, I think that that it's really common for, especially in smaller companies, for the CEO or for certain leaders to be these bottlenecks. But part of that also has to do with there hasn't been systems that create ability to empower folks, especially I see it often as it relates, and I don't know if this is a problem at your company or not, but related to um budgets and financial engineering of when a company has an actual budget that they can manage against, then there's ability to empower leaders throughout an organization to act on things. And that when companies have, because they can release the resources that are needed based on predetermined and agreed upon constraints that are resource related. But when companies don't have a budget and you're in a constant state of financial distress, it creates this endless cycle of needing to put everything through, like kind of micromanage uh minute approvals over and over.

Ben Larson 26:06

Man, you just yeah, you just uh punch me on the chin right there. Um, because I I was I was thinking about these little points in time, probably multiple, and they all probably coincide with these these recessionary cycles of like me being like, I don't know, we're just on zero-based budgeting right now. And and that's just had to be the case in in in cannabis for for a lot of folks for so long. You know, it's just you're you're you're in crisis mode and it's like you only spend if you absolutely have to, and so at a certain point, people are just like, Can I? Um yeah, yes, so moving away from that could yeah, totally, and I I get why it's hard, you know.

AnnaRae Grabstein 26:48

I have I have a client that runs their books on a cash basis instead of an accrual basis, and I've never seen a company of their science run books on a cash basis as opposed to accrual. And yet I totally understand why they've made that choice, and it's very much a reality of the cannabis world that they are operating in, and it makes more sense for them because there isn't a $500,000, $2 million credit line to be able to get in front of bills in a different way, like the they don't have access to the same amount of capital that they would, and and so they're basically trying to make sure that they are running their books based on the money that they have in front of them, but it's just it's which is oddly responsible, oddly responsible and makes a ton of sense. It's just kind of break the traditional finance and accounting um rules, you know. So um good stuff. This is some big adult CEO stuff that you're talking about. So I'm hoping the people are inspired by this because it is. We are moving towards planning season and this feedback loop of getting out of our own heads as leaders and looking back at the people that we serve, our employees and our customers, and understanding what they want and need and see is such a powerful lever to create clarity and an understanding about what the next phase in year should look like.

Ben Larson 28:19

Yeah. My my last piece of advice, if you're going to go do this, like just make sure you have that step in your process of like setting aside your ego and being completely open to whatever it is that you receive back. Um, and knowing that it's a gift, right? The critical feedback is a gift to help you, your team, and your company be better. That's it.

AnnaRae Grabstein 28:43

Mic drop there. Set aside your ego, no big deal, right, guys. Just no big deal. Set it aside, no ego.

SPEAKER_04 28:50

Smoke some weed.

AnnaRae Grabstein 28:52

Yeah. Um, all right. Well,

Vireo Growth Distressed Asset Acquisition

AnnaRae Grabstein 28:55

uh, we've got kind of two-ish news, newsy topics that we're gonna dive into and talk through with everybody today, which I think are important signals for the industry. Um, the first one is another acquisition announcement from Vireo Growth came out via press release yesterday. And uh Virio Growth has announced that they are picking up cultivation, production, and mostly retail operations from the cannabis company, formerly known as Columbia Care, um, across the states of Colorado, Illinois, Massachusetts, New Jersey, and West Virginia in a deal that is priced as up to $35 million. Um, they are putting in a little under $19 million of cash at closing with another 16-ish million in sellers' notes. The transaction adds 25 dispensaries to the portfolio and then one cultivation and one production asset, which I think is interesting because it really is very retail heavy as opposed to um to production. And probably that's because Virio already has production and cultivation in some of these states. And this will push Vireo's footprint to roughly 230 dispensaries across 15 states, making it the second largest dispensary network in the country, second to TrueLeave. But TrueLeave, notably is so heavily focused and concentrated in Florida that this footprint that Virio now owns is very substantial. And um yeah, I think that another thing that's useful to think about and to understand about this is that this is absolutely a distressed asset sale, um, not a merger of equals or even just like a clean and regular acquisition. The cannabis commenced restructuring proceedings in Canadian court back in March of this year. And uh part of that was a strategic review that landed on uh the need to offload these specific market assets. And uh it's also interesting because the cannabis has been trying to participate in different types of MA deals for a while. Um, they tried to merge with Cresco back in 2022, and that deal fell apart. Um, but before it did, we got to see that PuffDaddy was interested in being a strategic investor into that deal. If Cresco and Cannabis were gonna come together in a couple markets, there was gonna need to be some divestiture of some assets, and uh Puff Daddy was going to be the acquirer of them uh before his legal troubles uh took over all the headlines.

SPEAKER_03 31:44

Slip through the fingers.

AnnaRae Grabstein 31:46

Yeah. The Cresco and Cannabis merger did collapse um under market pressure and regulatory pressure. Uh, but it looks like some of the cannabis assets are finally finding a home um with Vireo. So um, you know, Vireo is is on a massive acquisition, just roll-up sprint. They have in the last 18 months just completely shifted what the company was compared to what it is today, um, especially in Colorado. They have made a number of Colorado acquisitions, um, Schwazy, PharmaCan, Ease, Green Dragon, and now some of these cannabis assets. And so they've got over 50 dispensaries in the state of Colorado, also, which is interesting considering that Colorado has been such a brutal market um for operators for for some time. So they must think that they have an opportunity to really turn around these distressed, uh distressed businesses in the state by by achieving scale of some kind.

Ben Larson 32:56

Yeah, it's an interesting play. Uh, you know, when you're talking about it, I immediately be like, why Colorado? Um, but I'm trying to string together a bunch of the conversations that we've had over the last several weeks. And Colorado is interesting in the fact that, you know, we've done a lot of research into Colorado, and they have a very engaged regulatory body uh and legisl uh legislature. So when you're talking about cannabis and hemp issues, like you're actually talking it's collaborative in in ways, right? Um and you it there seems to be a certain level of sophistication in that regulatory body and and legislature around you know, when you're talking about these bigger issues, maybe interstate commerce and all these things, that maybe Colorado does eventually end up being a strong hub. I don't know what that means or how like a whole network of dispensaries helps you in this particular case, but you know, from my lens, like it can make Colorado an interesting place. I you look at these types of companies a lot more frequently than I do. I look at a scoop up of a bunch of distressed assets in the disp kind of dispensary layer. I'm like, how does that not just maintain as a distress, like you know, a distress asset? Like, how do you actually make that better and and you know make it more efficient? Um, because I I it's not immediately obvious to me.

AnnaRae Grabstein 34:30

Yeah, it's such a great question, a great point, because we talk about distressed assets, and I think people have an assumption that if an asset is distressed, that that means that it isn't profitable as a standalone business. And I don't know the individual financials of each of these 25 doors that uh were the cannabis and now belong to Vireo. But thinking that a distressed asset means that the business isn't profitable is is not necessarily correct. Usually the reason that an asset becomes distressed has to do with something that is more complicated than that related to debt. And so maybe the business got into an early debt relationship that had certain covenants or payments that were going to be due or that were at a super high rate, and that that rate and the debt is not sustainable. Um, and that when you layer in the debt with the existing operations of the business, it doesn't work. But if you're able to take away the debt, that the business on a standalone basis uh can be healthy. And so I think that that that's a big part of what Vireo is so good at is about restructuring debt. And with the CEO coming from Chicago Atlantic, which is the largest debt provider in cannabis, they certainly understand the way debt works and then the triggers and the levers that debt creates for these companies. So that's what I know that they're looking at is that when you take the debt off the table, what does the company look like? And so I think that's one thing to understand when you think about distressed assets. But then it is possible that distressed assets also are bad businesses as standalone, once you scrape away the debt. That that happens too. And I think that that is more um more of a philosophy and approach that these companies are thinking that with scale they can um eliminate costs potentially, being more efficient, um, or that they have something else that's unique and magical that's gonna be a way that they can um win the consumer in some different way. Maybe um maybe they have a different brand strategy or a pricing strategy or an integrated marketing approach, that they have a strength in their own ideology that they're gonna be able to grow the business beyond where it is today. Um, so that's that would be my take on this stuff. Yeah.

Ben Larson 36:54

Yeah. This is this is probably a lot of the stuff I would have learned had I gone to business school or something like that.

AnnaRae Grabstein 37:02

I mean, I will tell you that I didn't learn this stuff in business school. I very much learned it just by doing of understanding um how to how to get through diligence of a deal and and what are we looking for, and even just understanding well, why the hell do people keep talking about Ebida? And you know, EBITA like strips away the debt, um, strips away taxes, it strips away these things that make it so that you can see the business in a way that some people will argue is pointless because obviously the debt and the taxes do matter. If you're a business, you still need to make those debt payments. But if you're someone that's thinking about, well, what might it look like without debt, then that number starts to become um more interesting. Gotcha. As it relates to Colorado, I just pulled up some data. It looks like um so Colorado is the 12th largest of the US um cannabis states by reported sales. Um, it did 1.2 billion in 2025 of cannabis retail, but that is down 9% year over year. So to think that it's been tough in Colorado, the data certainly supports it. Um, it's a real market, it's over a billion dollars, but it's been shrinking. Um, it there's over 600 dispensaries in the state, and there's over 30,000 people that are working full-time jobs um in the state in the cannabis industry. So, yeah, I mean, I think that we'll we'll see uh what Virio is able to do at this point. The acquisition um train has been moving so fast that we haven't really had any longevity to see like, well, what is what is a consolidated balance sheet look like for the Colorado companies and how have they been able to create value? Um, but but we'll be watching.

Ben Larson 38:54

Yeah, I remember you coming back from Ignite at Chicago and just being like the only thing anyone's really talking about is consolidation um in light of the the the schedule three movement. So there you go.

AnnaRae Grabstein 39:06

Well, okay, and so now we're we're schedule three and the DEA is gonna be our next topic, but you had said, you know, why a bunch of retail stores and that you think Colorado is interesting. And I did think, huh. I wonder if a company like Virio is starting to think that retail is more valuable than production in states with high production costs, because maybe interstate commerce is something that that they're thinking might happen sooner rather than

Interstate Commerce Lines Get Drawn

AnnaRae Grabstein 39:36

later. Um, I posted a very uh lively thread on Saw that about interstate commerce.

Ben Larson 39:43

And is that is that what they call going viral?

AnnaRae Grabstein 39:46

I don't know. But yes, lots. I I knew when I did it, I was trying to bring people into the conversation. And um, yeah, it was it was a post about a prediction that I have that the fight between those that are for interstate commerce versus those that are trying to protect the existing state borders is going to get more heated and more lively than even uh the regulated cannabis versus hemp debate that we've been in for the past 24 months or so.

Ben Larson 40:12

Okay, so we we share a similar lens on that. I feel like that's an obvious statement, but were there people that were pushing back on this?

AnnaRae Grabstein 40:19

I don't think anyone was pushing back on the debate. I'd say that um there are some They're choosing sides. Yes, people are kind of choosing sides or or people have various levels of um belief in the ability for it to actually happen. And there has been, and even you brought up ignite it when I was at the conference in Chicago. I I saw MSO executives on stage say that good luck if anyone thinks that interstate commerce is gonna happen. And then you've got a whole bunch of other people that are like, Well, of course interstate commerce is happening. Hubris is a bitch. So you know, I I think that the what what becomes really interesting about this, and shout out to Dave Daly from Grov, who we've had uh here on the show before. He he lives in Texas. Grov is um a company that's in involved in states all over the place as a glass company, and they also do make cannabis products. But he pointed out, he said, huh, you know, maybe the MSOs are gonna feel different about interstate commerce because they just got licenses in Texas and they're not gonna want to build out cultivation assets in Texas. And I think that these are the type of signals that end up being these levers for the way that the markets um might mature, is that whereas, I don't know, maybe TrueLeave might decide that they want to put up an argument to protect their state borders in Florida, but now faced with the opportunity in Texas and the need to build a scaled cultivation asset in Texas that easily could cost 20 to 50 million dollars to reach the level of scale that they would need in a market like Texas. Maybe they become more open to the idea of working on creating some sort of interstate pack or a pipeline from one of their existing assets into Texas. So I I think how these things um end up playing out might might surprise us.

Ben Larson 42:35

And yeah, it kind of gums up the system a little bit and creates some protection. But um, yeah, I think I think it's kind of like water is just gonna find it find its way where it wants to go. Um, you know, like capitalism in general.

AnnaRae Grabstein 42:51

I think I think that's true.

Schedule III CAMU Tests Explained

AnnaRae Grabstein 42:53

Uh well, so as it relates to schedule three, I thought it would be useful to talk about a key element of what the DEA's Schedule Three hearings over the past couple weeks have focused on, and that is the five-part test and the two-part test. Uh you with me? You know what I'm talking about? Kind of, kinda.

SPEAKER_03 43:17

I'm gonna nod my head yes and let him no, I don't think so.

AnnaRae Grabstein 43:23

So basically, um the the whole DEA schedule three hearings were about does cannabis have a currently accepted medical use? They've been the acronym is CAMU, C-A-M-U. And um, there has been this traditional standard by which the DEA made an assessment on um a currently accepted medical use, and it was called the five part test. And it requires known reproducible chemistry, safety studies, um, expert acceptance, known reproducible chemistry, though, has been. The killer, because it is built around a single synthesizable molecule. And um cannabis, a plant with dozens of active compounds, can't satisfy the five-part test. It just can't get through the way that the chemistry is analyzed. And so this single molecule versus whole plant problem in a nutshell is the core of why the DEA and the DOJ created this new part test, which they call the two-part test. And um it is a different way that they can assess the currently accepted medical use question. And under the two-part test, cannabis was able to validate, or HHS and the DEA believe that cannabis was able to validate itself as having a currently accepted medical use. And so the whole DEA hearing ended up being this fight about the opposition claiming that the two-part test isn't valid and that the five-part test is a better assessment of currently accepted medical use, uh, and people from the FDA even accepting or admitting that cannabis would not have passed the old five-part test. So it's it's interesting because it's it feels like it's this fight about trying to hold on to a process that was clearly outdated and didn't work versus a process that created a pathway for cannabis. And it's gonna be in some ways up to the judge to decide if the opposition made a strong enough argument that the two-part test is illegitimate and that this old five-part test about single molecules is um is a better way to judge medical use.

Ben Larson 45:58

This is where my brain just starts to break because I'm like, for so long, we're like, yeah, we should be talking about the individual molecules because they all have different effects and CBD should be treated differently than THC. But then we have the Controlled Substances Act that just calls it all one plant, and therefore it's Schedule One or Schedule III, which is where like ketamine and all these other like molecules live. And so it's like the federal, you know, the the divide within the federal government is what is creating this consternation. And like, I don't know, I think it would be an evolved conversation if we could get to the point where actually talking about the individual compounds because there's so much interesting stuff happening inside the plant.

AnnaRae Grabstein 46:40

Yeah. And this this like full spectrum experience that anecdotally and through lots of research is is one of the things that makes cannabis so powerful. Uh, is not just about single molecules, though. It really is about the whole plane.

Ben Larson 46:58

But we could probably find medical applications for every cannabinoid that's available. Like, here's what you use TAC for, here's what you use C B D for, CBG, CBN, C B C, CBL. Like it's it's yes.

AnnaRae Grabstein 47:09

And what has gone through the FDA are two examples of single molecule drug approvals, and that is epidilex and um uh marinol. Um and and that's yeah, CBD as a single compound or THC as a single single compound, molecule, excuse me. That's that's the whole point. Compound versus molecule. Um so I think that that this this is going to be really impactful to see if the government goes back on its assessment of deciding to go forward with this two-part test. I think that if the two-part test wins, um, the path to schedule three is straightforward. But if the five-part test is determined to actually be a better standard bearer for determining medical use, the path to schedule three is less straightforward. And um, it seems like all the noise around what happens next is going to be focused on this test. So it seems important for all of you out there who are listening to start thinking about what this test is and the implications of it ultimately to the access and the opportunities that the industry is facing on the other side of Schedule Three and these ALJ hearings.

Ben Larson 48:34

And sorry, for the sake of clarity, this is cannabis inclusive of adult use.

AnnaRae Grabstein 48:40

Correct.

Ben Larson 48:41

Okay.

AnnaRae Grabstein 48:42

Yeah. And uh so yeah, it's I know it's it's a head trip and it's a bit of a tingle. Um, but it it is it is very much what we are up against at the moment. And and I think that the other element within all of this, if we now take ourselves out of the schedule three hearings, um, and we start thinking about the FDA.

FDA FD&C Act And CBD’s Limbo

AnnaRae Grabstein 49:04

And if we get over the hump and the two-part test holds, cannabis is ruled to be in schedule three broadly, not just medical, but as the plant, schedule three. Uh we kind of need to talk about the Federal Food, Drug, and Cosmetic Act. That matters too.

SPEAKER_03 49:27

Oh man. Yeah.

AnnaRae Grabstein 49:29

Often called the FDNCA, and it governs whether a product can legally be marketed as a food or drug in the first place. And this is something that's enforced by the FDA. Whereas the Controlled Substances Act, which is what we're debating for Schedule Three, is enforced and overseen by the DEA. So these are two different federal agencies that both have a big part to play in the future of opportunity in the cannabis industry.

Ben Larson 49:55

Yeah. Yeah. I've I've had a number of these conversations over the last couple of years. I think it started at at CANRA uh two years ago in Minneapolis and talking with Norm Birenbaum about what would need to be done. And the FDCA or FDNCA was like a critical piece. And, you know, right now there are there's food, there's there's drugs, uh, supplements, cosmetics, you know, all this kind of stuff, and and there are all these distinct categories. And I think in cannabis we talk a lot about it's like, oh, can cannabis needs to be treated like a supplement, or it's also used in food. And um what needs to happen is that there needs to be a cannabinoid section. And this needs just to be holistically written with all these considerations, um, because we're never going to choose one by which it kind of like fits the mold. Um, and I think we've seen some effort uh in that in some of the language that's been drafted over the last couple years. Um obviously nothing's really gained traction. Um, but yeah, this is the next big step. And if we can get our own section in the FDCNA, then we can or F D N C A, um, then we can uh you know basically uh deliberate over how cannabinoids show up in all these various uh supply chains or marketplaces.

AnnaRae Grabstein 51:17

Yeah, and and this this call out that the FDA has never approved a botanical cannabis or cannabis-derived product um is not because it's impossible. It's just it hasn't happened. And what you're talking about is the path to doing it and the path to getting away from these single uh molecule medicines being the only FDA-approved um cannabinoid treatments. So um if cannabis is rescheduled, it's not the same thing as FDA approved, uh, but it it does open the door for a lot of the research that has made it harder, I think, to become FDA approved to take place. Uh, but even to say that research isn't happening in cannabis because of the scheduling is um is very glib in that there is a lot of cannabis research that's going on um all the time and has been um for many years. So we we probably have what we need. I don't know.

Ben Larson 52:22

Yeah, I think I think regardless, it's it's it's always gonna be a lot more work than everyone realizes because I mean the the biggest example of all this is just CBD, right? Like CBD became legal, so to speak, or off the controlled substances act. Um and and I mean true CBD, like nothing kind of trying to be baked into there. Um, and you had you know brands like recess and day trip and and um vibes and stuff like that on the marketplace. Um and in talking to those brands, they never got like wide-scale distribution. Um and you could say whatever you want about like product market fit and like it being a category and all that kind of stuff, but regardless, it was never easy to open doors because the FDA never actually weighed in on on CBD, and it's like if we got rescheduling, like we would still need to be told by the FDA about where these products are allowed to be consumed.

AnnaRae Grabstein 53:18

Yeah. It it is wild to see how there are still, though, maybe not widespread distribution, but there are still some major companies that are selling CBD products in the supplement area of of the stores.

Ben Larson 53:32

I think like Whole Foods often has major, like what their top line revenues 20 to 30 million dollars at most.

AnnaRae Grabstein 53:42

At Whole Foods, you can buy C BD products and they're owned by Amazon. I think that that's like one of the biggest companies out there, and uh, but but they present some liabilities for the companies that are selling them, potentially. Um, but it's mostly just because the FDA, it seems like, has just chosen to deprioritize um focusing on whether it's enforcement andor regulation of these products. So big questions out there, who knows? But um fun stuff either way, it all matters if you're in cannabis. All of the regulatory agencies somehow become a part of your dinner table conversation. So well, welcome to that.

Ben Larson 54:29

Yeah, yeah. I my my dinner table conversations are always like, so are things going okay for you?

AnnaRae Grabstein 54:38

I know my husband doesn't want to hear about it anymore. I know it's it's it's like two nuance. He's like, I don't understand what it's like, yeah, we're alive, we're good. Yeah, exactly. I think that's what we've got for today. Uh I don't have anything else.

Ben Larson 54:54

No, I just thank you for giving me some sort of uh normalcy back in my life. I do feel like I'm trying to re-emerge uh from my cocoon. And uh yeah, it is it is helpful to kind of like you know have this hit this touch point with you and with everyone else. Um, so thank

Listener Feedback And Closing Thanks

Ben Larson 55:14

you.

AnnaRae Grabstein 55:14

Yeah, you know, the world appreciates you, Ben, and we want to get you back, even we want to take you out of the baby bubble when you're ready. Half the man I used to be. When I was at the state fair, I again talk to people that listen to us regularly and um so appreciative when people come up and talk to us about the content we're making and tell us that you're listening, it really means a lot. And uh I had the chance to ask some people actually specifically like, well, how do you feel about when it's just me and Ben versus when we have a guest on? And yeah, they like us and that they like to listen to us and that we don't always need a guest. So if if they're telling me the truth, hopefully they maybe we need to employ my customer survey. That's a good idea. Um, folks, let us know what you think. Maybe we will be giving you a survey with a link at some point.

Ben Larson 56:06

Absolutely. Until then, thank you. Thank you so much for listening. Uh, thank you to our teams at Virtos and Wolfmeyer for continually supporting us, and of course, our producer, Eric Rossetti. If you've enjoyed this episode, please share, like, review, do all the things. Uh, we're on YouTube. Our our followers are growing on YouTube. Um, just thank you for listening, wherever that is. As always, folks, stay curious, stay informed, and most importantly, keep your spirits high. Until next time, that's the show.