Why Global Expansion Fails Fast

SPEAKER_00 0:00

I think you've got to be able to do something well at home before you can start to look at other international markets. International markets aren't going to save your business, right? I think a lot of people in cannabis are trying to find what's going to save their business. And if you haven't managed to do something well at home, chances are you probably are going to be able to do something in a jurisdiction that you don't understand.

Ben Larson 0:39

Welcome

Welcome And Vegas Mixer Preview

Ben Larson 0:40

to High Spirits.

AnnaRae Grabstein 0:41

I'm Ben Larson and I'm Anna Ray Grabstein.

Ben Larson 0:44

And it's October 6th, 2026. And this is episode 156. That's a lot of sixes. Today's guest is Deepak Anand Vice President of Global Government Affairs at Village Farms International Inc., where we're going to be talking about all things international from the perspective of a world-traveling Canadian. And if you don't know, they're federally legal up there. Henry, are you ready to go to LA this week?

AnnaRae Grabstein 1:13

I am. I'm going to LA tonight, flying after rush hour, and I'll be at Ignite in downtown Los Angeles with a whole bunch of California operators tomorrow, a place where I will feel very comfortable. It's like a reunion when you go to these market spotlights in California for me. So it should be fun.

Ben Larson 1:33

What's what's standing out to you about the show this time?

AnnaRae Grabstein 1:37

I think that all the people that are surfacing, I'm having a panel discussion in the morning with a really great group about selling, merging, or surviving in the market. And I think that's going to be a great conversation. California has truly the best talent in cannabis, in my opinion, my humble opinion. And maybe that's just because we're here. But the the people who work in cannabis here, the brands that come from here, and so many of the businesses that started here just have great stories to tell and lots of hard lessons learned that I think will make for a good conference.

Ben Larson 2:14

Yeah, definitely a lot of grit in the room. I was really impressed. Uh Elliot and Patrick got the good ministerial candidate from the Republican side, Steve Hilton. And he's going to be on stage at the conference. So it'll be interesting to see what this new contender's position is on Canvas, but nice to see them making an appearance. Absolutely.

AnnaRae Grabstein 2:33

And I will also be running into Seth Yakitan. We'll be taking a selfie so that we can promote our high spirits morning mixer in Vegas, which um we partnering, yeah, with Seth and the Ordo Verde team to get all of you guys to our annual reunion in Las Vegas. It's going to be an incredible party. It's always the party to be at in Vegas, bright and early, lots of coffee and snacks. And for folks that are listening that want to come, you can go to our website, highspiritspod.com slash morning mixer and request an invite for our not to miss morning event. We'd love to see you here.

Ben Larson 3:13

Truly bigger and better than ever. And if you were at the last one, that's pretty vague. So I'm pretty excited about it. Yeah, Vegas, that's coming up quick.

AnnaRae Grabstein 3:22

I'm the new outfit. I always get a new outfit for our party. It's a good excuse. So I hope everyone else feels like it's their excuse to go get a new outfit.

Ben Larson 3:30

Thank you for the permission. I too shall get a new outfit.

AnnaRae Grabstein 3:34

Usually. Let's jump into our news for this week.

Ben Larson 3:38

Let's do it.

AnnaRae Grabstein 3:39

All right. First

Schedule III Delay And Market Whiplash

AnnaRae Grabstein 3:41

story is about adult youth schedule three. Just encountered another delay. On September 29th, the DEA administrative law judge stayed the broader marijuana rescheduling proceeding while considering whether to reopen the record to incorporate a new government accountability office report that criticized criticizes gaps in the federal drug scheduling process. The DEA has until October 13th to respond, but the market reaction was immediate. Truly fell 16% the following day. GTI and Cara Leaf also down shortly, sharply. And the industry cannot ignore that the market is paying attention to what's going on with these Schedule III proceedings. And the GAO finding itself isn't anti-cannabis. It actually supports that HHS did the right thing, but this doesn't look good for us.

Ben Larson 4:35

The the more is I don't know if it's not looking good. Look, it's just not it's not questioning the merits of the findings, which I think is positive. In fact, DA has released new news in the last couple of weeks showing that, oh, lo and behold, there have been no overdose deaths due to cannabis. So it's like just further supporting the case. This was purely like an administrative criticism. Like they didn't do the proper steps because they didn't have proper steps to follow. So I think this is just a stay of execution, whatever the positive version of that is a delay. That all to say is indeed these these poor public companies can't catch a break. Have not been performing well either which way you cut it. I think both TrueLib and Glasshouse brands have been receding in their stock prices. I think of this shift. Yeah, it's a tough go, but I don't I don't think it changes anything.

AnnaRae Grabstein 5:30

Yeah, I'm with you. I think that if anything, we just are reminded that it's not about the intent, it's about the process. And there's gonna be a million hiccups along the way in the process, and things that you didn't realize could be hiccups last week, might be a hiccup next week. So we'll see what we're in store for next.

Ben Larson 5:50

Look, if that's the one hiccup that the prohibitionists can exploit, then I feel like we're doing pretty well.

AnnaRae Grabstein 5:56

I'll take it.

CuraLeaf’s Bigger Bet On Aurora

AnnaRae Grabstein 5:58

Let's talk about Kira Leaf and Aurora. We've just increased its hostile bid for Aurora by 25% to $5 per share. Previously it was $4. And that's an 86% premium to Aurora's unaffected August price. The maximum consideration was also raised to $6 a share. Aurora has thus far refused to engage and argues CuraLeaf undervalues its international medical business. CuraLeaf is making an explicit bet that global cannabis scale matters. And what I'm thinking about is, are we entering a new cannabis MA cycle where buyers aren't simply consolidating state licenses, but assembling federally defensible medical international platforms? Clearly, CuraLeaf is hearing that Aurora is making a strong argument for their business being undervalued in the market and that they've got something special, which is what the Cura with the Aurora board is contending very publicly. It sounds like Kira Leaf is buying it, raising their fist.

Ben Larson 7:06

Sure. This is just such an interesting case. I have very little experience with this, so I'm not going to opine on it too much. But it's yeah, of course they're not cooperating. It's a hostile takeover. I guess you keep trying until people start saying yes. Yeah. It's the shareholders at the end of the day who have to make a move, right? Unless it's so sweet that the board is going to be a good thing.

AnnaRae Grabstein 7:26

The shareholders will decide. But as anyone who owns public company stock, there's often times that shareholders are asked to vote on things and there's very low turnout where it's a small group of shareholders that control most of the stock. And those are the shareholders that will end up driving the decision, likely. But you're right, it is up to the shareholders, not up to the board, technically. I wanted to bring up this story just because I think it is relevant in light of what we'll be talking about today with Deepock, who really also has his sites on international export of cannabis from Canada to the rest of the world. And that is exactly what Cure Leaf is betting on here with this bet.

Ben Larson 8:10

Great point. I'm just gonna defer to Deep. Should we bring him on? Uh yeah, I I think there was one more thing that was that was one more story. That's good. Yeah, one more story. New York. Yeah.

New York Hits A Billion

AnnaRae Grabstein 8:23

New York.

Ben Larson 8:23

New York, yeah. They crossed a billion in revenue in total. The Q3 alone was 512.6 million, which annualized would make them about a $2 billion marketplace, which puts them in the kind of third to fourth place ranking as far as states go. So obviously, uh what California, Michigan, and then like Massachusetts is and New York are jocking. We were talking before the podcast, and I was like, wait, what the heck happened to Arizona? I remember they claimed number two for a hot second before like Michigan took over. Um they're way down there now. They're way down there now. But I think the interesting thing about this is not only they are they're now jockeying for third place, they also have the fastest growth rate out of all the states. And so I think they're hitting what, like a 12 to 13% year-over-year growth rate right now. So they could very much find themselves competing for the top two.

AnnaRae Grabstein 9:20

Absolutely. Michigan is on the decline and is sitting at the number two spot. It would be a big bridge for New York to go from around a $2 billion annual run rate to get to where Michigan's at, closer to three. But I think that all along people have thought that New York could be a $3 billion market. So I'm here for it. And I know that the rest of the industry will be too. Yeah, 100%.

SPEAKER_01 9:45

Now is bringing it.

AnnaRae Grabstein 9:46

Yeah, let's do it.

Meet Deepak Anand And Village Farms

AnnaRae Grabstein 9:47

Our guest today is Deepak Anand, and he is the guy when it comes to the intersection of cannabis policy and international markets. He started his career in pharma, became an advocate for patient access, and went on to help build the global cannabis industry. He's advised more than 40 cannabis companies, plus CPG and tobacco players looking to enter the space and helped build operations in Germany and the UK. And three weeks ago, he took his shingle down and went in-house as vice president of government affairs at Village Farms International, a public company that's one of the largest EU GMP certified cannabis cultivators in the world. Deepak, welcome to High Spirits.

SPEAKER_00 10:28

Thanks for having me, Ann Ray and Ben.

AnnaRae Grabstein 10:30

Yeah, congrats on the new gig, too. Thanks so much. It's a big deal.

Ben Larson 10:37

It is so you were consulting. This is how uh I heard about you. I know my team flew out to Europe and it was at ICBC, and Ryan came back and was like, oh, the guy we really need to talk to is Deepak. And I'm just curious, is like, you've seen a lot, you've worked with a lot of companies in the space, and you've been evaluating the international markets. What was it that you saw as a consultant that made you finally take that shingle down and be like, yeah, this is the company I want to get involved with. And I'm curious about the push and pull. There's the pull of like this being an attractive company, then there's the push of those aren't the companies that I want to go in-house at.

SPEAKER_00 11:18

Yeah, look, again, thanks for having me on, both Ben and Ray. Really appreciate it. I've followed your podcast for some time and definitely excited to be here. So thanks for scheduling this. Yeah, look, Village Farms is the largest EU GMP producer on the planet. There's no other company that has as big a footprint as Village Farms does. And I think that was a big reason for me to look to joining their team. I was consulting for them for a couple of years before I fully decided to go in-house. So it's not like I was unfamiliar with the team. But just given a lot of my what I was seeing as being the future of cannabis, which is international markets, coupled with the fact that there was a lot of players perhaps not doing things the right way. I think you guys are in California, I mean Canada, I think we've had the sort of, you know, ability to be able to look at what has happened in our independent markets. And there's been some good actors and a lot of bad that's happened. And I think that village farms really represented to me a lot of the good and a lot of the future, quite frankly, in terms of where the international markets are going. So I think that my expertise combined with their assets on the ground, both here in Canada and the US, as well as in the Netherlands, combined with where the trends are going in international cannabis, really made this almost like a perfect synergy remember. So very excited to be.

Ben Larson 12:34

And just for the sake of clarity, you say EU GMP and the largest grow operation, but that grows actually in Canada, correct?

SPEAKER_00 12:44

That's correct. Yeah. And though for those that may not be familiar, EU GMP is good manufacturing practices awarded by the European Union. It is the standard to which medical cannabis is held globally or internationally. I think in North America, we've done a good job calling cannabis medicine, but have done a pretty poor job treating it as such. And so, yes, the EU GMP is at that good manufacturing practice standards. The facility, one of the facilities that we have at Village Farms is almost a 4 million square foot facility, of which 2.5 million square feet is built out here in Canada and Delta BC. Village Farms, for those that may not be familiar, is a 40-year-old company that was set up by my DJ or our CEO. And they have a lot of experience growing products, including vegetables such as cucumbers and tomatoes. And about five, five and a half years ago, I pivoted to cannabis in Canada and retrofitted a lot of our greenhouses here now.

Ben Larson 13:38

Delta BC. Is that just a coincidence? That seems like a great name for a town that grows a lot of weed.

SPEAKER_00 13:45

You find the puns in cannabis just keep going and indeed Delta BC is our home.

AnnaRae Grabstein 13:52

Well, it

What EU GMP Really Requires

AnnaRae Grabstein 13:53

sounds like EU GMP was a really big part of your hypothesis to gain confidence in going in-house at village farms, but also has been a big part of your work in consulting as you've been taking on the international markets. So I think we should talk about EU GMP a little bit. And if you could just give us more of an in-depth understanding of what it takes to become EU GMP, what changes inside the building, and why EUGMP has become this standard in order to be able to participate in the international markets.

SPEAKER_00 14:30

Sure, Android. As I mentioned, in North America, we've treated cannabis as medicine, but not regulated as such. In Canada, that has a federal framework for cannabis. We still operate to something called GBP of good production practices by a virtual regulatory framework designed by our regulatory health Canada. In international markets, in Europe, being probably one of the more aggressive up-and-coming markets, Germany, the UK, Poland, soon to be France, Spain, et cetera, have all mandated that this product is going to be put into pharmacies, much like any other pharmaceutical product. So I think that's the first fundamental shift from a North American mindset, is that this is not something that you just grow and then you basically put on shelves through dispensaries. This is actually being regulated through the traditional pharmaceutical supply chain and channels. And so in order for these products to make their way into those traditional supply chain channels, this needs to be very similar to the way that other medicines are regulated. So if you have a pharmaceutical product that is sold to pharmacies, it's regulated in a very similar way. Now, guaranteed we are we're talking about dried flour and extracts and oils, and we're not talking about tablets or pills in many cases, but the way that those products are manufactured is identical. And that's really the heart of what GMP basically gets at. Typically, GMP is harmonized across a variety of different countries. What that means is the US FDA, Health Canada and Canada, and a bunch of regulators in Europe, the UK, Germany, et cetera, basically all got together and said, hey, if we regulate a medicine in our country, it will be deemed acceptable by you as the other country to accept that we've licensed somebody for GMP. And therefore, there's something called a mutual recognition agreement that's all of these countries basically sign up to. Cannabis is not covered under that mutual recognition agreement. And so what that means is if I want to be able to sell cannabis in Germany or the United Kingdom, I need to go to their regulator and actually get the GMP certification awarded. So that means is a German inspector needs to come to Delta DC, inspect me, and make sure that I'm operating to that good that is action practices standard. And that's basically how companies in Canada, such as ours, have gone about getting GMP. There's a handful of probably 10 to 12 companies in Canada that currently have this EU GMP certification and probably another 10 companies globally that also have gone down a similar path.

Ben Larson 16:57

Wow.

Can US Cannabis Compete Globally

Ben Larson 16:58

So there's this interesting conversation happening this year, obviously, because the US is going through Schedule 3 and there's a lot of pontificating on what that actually means for our industry. And also in US cannabis, especially California cannabis, there's this other conversation about the small operators, the small cultivators from Northern California, and often the pressures that they're feeling from large-scale manufacturing. And there's always been this dream of like global California cannabis or U.S. cannabis. And what I'm starting to hear is that there's like some structural disconnects between the dream that lives in Northern California's head and what the actual global cannabis stage is evolving at. And I sitting up in Canada and working with all these companies and probably hearing all the interest of US companies entering this global landscape. How are you thinking about it? How are you thinking about the U.S.'s uh competitiveness on this global landscape?

SPEAKER_00 17:59

Yeah, look at, you know, the US has done a phenomenal job. I think you look at California where you guys sit, or you look at any of the US markets, I think they are very mature. And I think the world typically follows the trends that emerge, whether it be in product formats, whether it be in cultivar varieties or any of that. I think California really leads that. So I think there is definitely this capability by American producers to be able to take advantage of international cannabis markets. It isn't, however, a one-size-fits-all solution. And I think that what has been lacking in the US so far has really been this federal level of regulatory frameworks and compliance that operators had to face, right? And what I mean by that is twofold. On the cultivation side, you've got states basically that are regulating cultivation activities and really it's very limited to even lower than what we would call GACP or good agricultural collection practices. So I think that's the first thing in the US is that operators really need to get their heads around operating in a federally compliant manner. And sure, I think that when we see rescheduling actually happen and all of the legislation that will come up as a result of that, the FDA and the DEA, I think that will raise the standards for sure in the US. I think what that will also mean is you don't necessarily have every single operator that would be compliant with that. I think that's they may be operators that are going to find it hard to comply with that. The second piece is, and I say this often, is what is your right to win? Just because you have a license to be able to cultivate cannabis doesn't necessarily mean that you will be successful. And I think it more so applies to US operators. You've still got states in the US that are still legalizing, and the argument can be made: do we double down on a US market that is opening up and our home base versus trying to understand all the stuff that I'm talking about, GACP, GDP, GMP compliance, EU GRP compliance, and what's the size of the prize in terms of the total addressable market? It's definitely a live conversation. And back in my consulting days, one that would I would have quite frequently, including with the US operators. And I think that it is worth doubling down on that right to win. What makes you successful and what makes you successful at home isn't necessarily what's going to make you successful at international markets. So I think there's companies ought to look at that very carefully. And there's certainly, Ben, you mentioned craft cultivators. I certainly think there is a there's room for all-sized players. I think we are certainly a sizable player in the market, but there's always room for smaller craft players, and even the international European markets definitely look at craft cannabis products. So I think just because the regulatory restrictions in there is a high doesn't necessarily is not a reason to say you want to or not don't want to play in a market. I think you have to look at what's a right to win? How are you going to be able to produce these products? Are you going to be able to comply with the strictest level of compliance? And that's the one big piece for US operators to really get their heads around. Makes sense.

AnnaRae Grabstein 20:54

It's interesting

Shiny Object Pricing Versus Real Compliance

AnnaRae Grabstein 20:55

this right to win and talking about what the size of the international market is, because my understanding is that the size of the international market, almost totally fully combined, is still maybe not even the size of the California market. And we are just talking about where the New York market is at the top of the hour. But California is a $4 billion market. Michigan is over a $3 billion market. Is international expansion a shiny object that isn't really prime for the pump? Or is there really an opportunity because there's so many barriers to participate that if you are able to get that golden ticket of that EUGMP, that the that there's so few players that you can have a really large piece of the pie?

SPEAKER_00 21:40

Yeah, I think it again, you raise a really good point. And as I mentioned, I don't think it's necessarily right for every single operator. Is it a shiny object? I don't think so. I think that for real companies that are serious about putting out a consistent, compliant product into the market, it is a sizable opportunity for us at Billers Product. It certainly represents a Growing chunk of our revenue, and it definitely is something that we are quite focused on. But it may not be right for every single player. I think you will see more for US MSOs start to jump on the international bandwagon and it will work out for some and it may not work out for others. And I think it really goes back to your core and actually understanding what you do well. At Village Farms, as an example, I think we have understood cultivation really well. It's something that we do at scale, repeatedly, time over time, in a compliant fashion. And I think that's a big chunk of what we get right. And so I think it really comes back to your core. And cultivation, by the way, is one aspect. I think that if you are good at, as an example, extraction or manufacturer gummies or vapes, I think they there are certainly sizable opportunities in international markets. I think the other piece is, and this is where often confuses people, and this is the shiny aspect, is that there is a significant premium for the products that are being put onto international markets. Product that, you know, the price that you'll get for a live resin product or a live resin gummy, as an example, in Australia, is significantly higher than what you would get in the United States. However, the regulatory compliance of you actually being able to launch that product in that market is what catches most people off guard, right? People look at that shiny object and go, like, oh wow, I can get 15 bucks for 15 gummies as an example or whatever it might look like. And if you get chasing that shiny object is where most people tend to go astray. And then they come back and look at, oh, you've got this whole EU GMP, Australia GMP regulatory requirement that basically requires me to turn my whole business upside down. And it may not work, right? I often say this when I was in consulting, I used to tell people, I'm like, are you prepared to have your whole operation flipped on its head? Because what you need to do to be able to service Canada or the United States is completely different from the way that you need to set your operations up to deal with international markets. Everything from like how people enter your facility and the gowning process, an example, and the cleanliness and the SOPs, it's vastly different and could really increase costs for people that don't necessarily need to have this if the core market is a big chunk of your business.

Ben Larson 24:10

So let's

Germany Tightens Rules On GMP Washing

Ben Larson 24:11

talk a little bit about eye of the price size of the price. Eye of the price. Size of the prize. It's usually about two parts, right? It's there's the size of the population, which a lot of people famously quote Germany is the 80 to 90 million people. And you have the policy. And in Germany, people have been very excited about their methodical rollout. However, there seems to be some friction this year, and you probably know it a lot better than me. But one of those elements is them cracking down on GMP washing and maybe not being encouraged to accelerate the adult use rollout. So Jason Adelstone was on recently. He said people are really good at watching the policy and not the politics. And being in the seat that you are, I'm guessing that you follow the politics pretty well. So, what are your thoughts about where Germany is heading in the actual size of the prize for that market versus maybe another country that's starting to take your level of interest to the next level?

SPEAKER_00 25:09

Yes, I'd say Ben, generally, I think the cannabis industry has been pretty good at finding a way around things. I think compliance has always been this nice to have thing that not necessarily everyone has followed, and people have found ways around that. And I think GMP watching certainly is one of those topics and is very timely at the moment because what you are seeing is regulators really clamping down on that. For us, obviously at Dillers Farms, we have our EU GMP certification. In fact, we're up for our two-year renewal, and we've now twice renewed our EU GMP certifications. It doesn't really apply to us, but I think what you are seeing is regulators starting to track down on these activities that are happening across the industry and are quite rampant. I think that people that don't necessarily meet the necessary compliance requirements are going to find it hard to be able to get products into certain international markets. And Germany certainly is one of those examples. I think that's a good thing.

Ben Larson 26:04

Just for the sake of clarity, the the intent of the rules is that it's EU GMP manufactured from basically seed to sale. Is that correct?

SPEAKER_00 26:14

That's correct. Yeah. And then your sale product could be dry flour, as of the case in Germany, and we can get into the nuances of the market because every international market is very different in terms of what your finished product or your final product actually looks like. So in Germany, it's basically dry flour and oils, and then you get downstream manufacturing activities like dummies and vapes that are not necessarily produced in Canada, but then using the inputs, either flour or oils are then manufactured at the pharmacy level because of the nuance that they have in their legislation. But it is exactly it's from seed to sale. So typically most people, this is where they get tripped up is GMP, and there's different interpretations of where GMP starts. And there was a timely article actually today that I was reading about this. But generally, everything that is involved with cultivation of a plant until that is physically separated from the plant, when you actually have flower that's that gets removed. Any activities up until that point of removal of flower is a GMP activity. And then drying also is considered a GMP activity. So basically, you have GACP on the cultivation side and then you have GMP that kicks in post that that point. So it is really a true seed to sale process. And this is why I say when you completely redo your operations when you're getting GMP, it is a big chunk of that, right? Because when you're putting product out for a California market or a Canadian market, it's quite different than you starting to put out products for the international market. So you really need to look at that eye of price, you need to look at that size of the market, you need to look at all of those different elements that go into this and reverse engineer your business to be able to deal with that.

AnnaRae Grabstein 27:47

And when

Why Imports Keep Growing In Europe

AnnaRae Grabstein 27:48

we think about the long tail of what export of cannabis means as an opportunity, I saw in the most recent Village Farms financials that were released that you guys have been experiencing extraordinarily extraordinary growth with your international exports. I think it was like up 72% for quarter two. So clearly there's been a lot of success and growth in that area. But it also makes me wonder is how long that can last. At some point, is Germany or the Netherlands or some of these other countries going to decide to actually try to keep the cannabis cultivation closer to home? Or will they keep the doors open the way that they have so far?

SPEAKER_00 28:31

Yeah, I don't know. It's interesting. I think there is about six cultivators currently in Germany that cultivate, and I think they cultivate less than six, seven percent of what the market actually can consume. So in theory, it sounds great to be able to limit that. But I think what we are seeing is you have Germany on April 1 of 2025 basically descheduled cannabis, right? So what it means is it came off the narcotics list and became just a regular pharmaceutical product. And by virtue of doing that, it basically allowed imports to occur. I don't necessarily see the dialing back or the rolling back of that legislation anytime soon. There's many camps that talk about trying to limit telemedicine and how prescribing occurs. But I think the one fundamental thing, at least from our perspective, is cultivation of cannabis is generally in short supply. I think EU GMP cannabis in particular is even further in short supply. So when you look at markets like the United Kingdom, you look at markets like Germany, you look at markets like Australia, there is generally a shortage of EU GMP certified cannabis. I don't necessarily see this being shut down. In fact, what we are seeing is the opposite. We are seeing new markets open up. We have seen more enforcement, like the GMP watching piece that we just talked about. And these new markets coming online are also all requiring EU GMP flowers. So does the growth necessarily in Germany slow down? Perhaps. Does a new market open up like France or Spain or Italy or any of these other sizable European markets that still have been watching on the sidelines not opened up yet? But do they open up? Yes. And I think the what's the common fundamental that all these markets actually need is that European Union GMP certification. And it's easy to talk about a certification, but really what that means in practice is you've got your strains that are all have stability. So when you look at a product like Pink Cush, which is one of our products and probably the most sold product in a legal market globally, both Canada and internationally, what we have on our Pink Cush as an example is stability to show that one year later, our potency on that product, if we claim that it's 25%, it is still 25% after that one year. And I think every new market that opens up rules that data. And I think what we've built is a really solid foundation to be able to say that any new market that opens up is going to need that basic level of regulatory compliance. Talk about EU GMP, Australia GMP or Brazil GMP, but any of these markets that are opening up all agree to that base standard of a pharmaceutical product. That we've done a really good job developing. And I think up here that also have a EU GMP certification have done a similar job, right? So I think you look at all of the competitors in the Canadian market, I think, that have EU GMP certification, they have all gone down the same path. I think you were talking earlier on the channel about PureLeap and Aurora. And I think the reason why PureLeap is going after Aurora is because of that EU GMP certification, right? I think UPREA's drawn quite well on the international side, but I think what we're missing is that EU GMP asset. So it really speaks to what we've built as a base. And so we're not concerned necessarily about the slowdown in one market, but they will be opening up of more markets.

AnnaRae Grabstein 31:34

I

Next Markets To Watch In Europe

AnnaRae Grabstein 31:35

love to think about being in all of those countries that you just name dropped, like France and Italy and Spain, and just having more cannabis in the air. I'm excited. Which one's coming next? Which one can we look forward to?

SPEAKER_00 31:48

Yeah, so listen, I think France definitely has been talked about as having the largest number of cannabis consumers in Europe. And so it's certainly a market that is opening up. It will look a little bit different in terms of the types of products that can be sold. I think what we are seeing is, and we're familiar with this in Canada, is cannabis legalization is a process. It's not only that, right? I think this is the one thing that people often forget. And so I think what new markets coming up are learning is do we want flour? Do we want oils? Do we want vapes? Do we want gummies? I think so the formats of products will continue to evolve. So France definitely is an interesting one, but also Spain. I think they opened up and are allowing cannabis to be sold through the hospitals there. So those are all very interesting markets. And of course, we've got the Netherlands as well, of which we have one of STEM licenses for coffee shops. So it's only a market that we are quite at.

SPEAKER_01 32:39

I love the idea of formalizing the coffee shops in the Netherlands.

Ben Larson 32:42

That's a full circle moment. Because they're a really interesting structure in the early years, right? Right, where they had only like considered the legalization of a part of the process or the supply chain. Yeah. Really interesting stuff. So as as I want to go back to what Anna Ray was asking about the transfer of where cannabis is growing.

Big Tobacco And CPG Move In

Ben Larson 33:02

It also makes me start to think about the players that get involved in the competition and all that kind of stuff. So as this kind of stuff opens up, it starts attracting more larger capital, right? And that involves big pharma, big tobacco. And we know they've been involved. There's GW Pharma, there's been invested in a number of cannabis companies. How do you anticipate that landscape shifting over the next couple of years? Do you anticipate big tobacco, big pharma getting even more involved as these prizes grow?

SPEAKER_00 33:38

Yeah, I think that's a super relevant point. And I think what we're seeing most recently is I think what we saw in Canada early on is a lot of the BEM alcohol companies decided to really place their bets on the sector, right? We had Wilson Cruz and Constellation brands with canopy, and the list is analyst with respect to a number of BEV alcohol companies that enter the sector. And so I think the beverage category is certainly interesting. I think regulations needed to catch up with where this trend was moving towards. I think in Canada, we have since done a decent job trying to regulate beverages and start to finally allow six-pack beverages to be sold, which was not permitted in the early days of legalization. But I think that if you look at tobacco companies as an example, their existing legacy business is dying, right? I think if it wasn't for the snooze or the pouches as it's called, their business would be significantly suffering, right? So you've gone into these differentiated reduced risk products that the tobacco companies have embarked on. And I think they've looked at cannabis as hitting pretty much every definition, right? Is it safety use? I think tobacco companies in particular have been really hammered on the relative safety. And I think tobacco and cannabis are very different substances, even though they are a similar plant or come from a plant substance. They're very different substances in general. And so I think from a safety perspective, cannabis is arguably far more safer than tobacco is. And so I think that the tobacco companies looking at the sector, and you mentioned BAT is one of them, and there's certainly many others that are very active also in the sector, are all looking at cannabis as being the future, as being the next generation of a product that they would be able to meaningfully adapt. And I think whether we like it or not, they will be part of this industry, right? We're certainly seeing the BAT organogram deals through. And I think there is a lot that's being done at organogram with British American Tobacco. They have something called the PVC, which is the product development corporation, that involves a lot of RD being done in New Brunswick. And certainly seeing these tobacco players look at the sector and say, hey, this is a sector that we see up and coming. It actually fits a lot of our categories. We manufacture vapes, we manufacture cigarettes, we manufacture a lot of the similar type of commodities. So can we bring our expertise and do we then get involved with some of these companies? And so you are certainly seeing CPG companies and tobacco companies get involved. I think the other piece that you're starting to see internationally is a lot of the regulations favor these types of products. So what I mean by that is you look at a market like the Yang Pingdon, you can actually get a CBD beverage at Whole Foods in the UK. And it's because their regulations allow for that product format to be sold at retail, right? You can go to any high street store in the UK or grocery store in the UK and pick up a CBD beverage. And there's no DA kind of weird regulations depending on the state where you're at and all of the complexities that the US has. It's just federally legal. And so it's very easy for them to place that on that. So you will see more CTG tobacco companies get involved, particularly on the international side, because it allows them that safety and that regulatory certainty that they are after.

AnnaRae Grabstein 36:46

It's

Schedule III And The Capital Question

AnnaRae Grabstein 36:47

interesting to really think about the timing of when BAT started to put money into organogram over the past couple of years, because it was at a time when American cannabis was experiencing a really intense capital crunch and watching organogram receive capital from a big tobacco company in pretty large amounts, like substantive amounts, to be able to really change the trajectory of the business, to invest in RD and innovation. It just kept reminding me while that was happening of how far behind the US is because of not having federal legality that allowed an international company to be able to come in and put capital into an American company, which is really a bigger opportunity financially today, as opposed to having to bet on the future of these large international legal markets. And I know that you've worked with a lot of these companies and have helped them understand the cannabis landscape and probably to think about where investment would make sense. Do you think that what's happening with Schedule Three will be a moment that will create a capital opportunity for American companies to be looked at the same way that BAT decided to invest in organogram? Or is it not good enough? And we need further federal policy progress beyond Schedule three to really be able to inject capital into the US market from international global companies.

SPEAKER_00 38:20

Yeah, I think that's a super, again, relevant and timely topic. I think that rescheduling is a great start. And I think that certainly signals to the capital markets that there is certainty from a US government perspective with respect to investing in the sector and really allowing companies to meaningfully participate in the commerce of these products. And so far, there was there's been a lot of sort of disharmony, and particularly against any sophisticated company, a leave alone, a tobacco or a CPG player, really any meaningful company of scale needs that basic level regulatory certainty that, hey, I'm not going to go to jail for an activity that the US federal government considers to be a criminal offense, right? So I think that's just table stakes, right? Having said that, we've got this whole industry in the United States that is developed quite meaningfully and it is relevant. So I think that as long as companies in the United States get understand their right to win, there is going to be that capability. I come back to Village Farms as an example. We've got a sizable asset in Martha taxes, and we certainly are looking very closely at the scheduling and the rescheduling process. And it does offer us the opportunity to be able to be a meaningful player in the market. I think if you look at our EU GMP certification, our international experience and exposure that we've had by virtue of the legal market in Canada and what that's done to be able to allow us to both participate in the domestic market, but also international markets, it really gives us a significant leg up ahead against a lot of the US operators. So I think that, and again, Q relief, I think is quite similar. So I think that rescheduling goes far enough, but I think it needs to be a far more from a regulatory perspective, and one that I'm keeping an eye on, because if you're in cannabis on the international side, you're paying very close attention to regulation. I think the one thing that we haven't seen so far is what is the DEA going to say beyond this application portal that basically has them come in and inspect you? Where is the export permit that I can apply for? What's the timeline for that permit? This is stuff that we deal with on a day-to-day basis in regulated markets. And so I think we need a bit more meaningful regulatory understanding of what rescheduling actually means, besides the fact that, okay, it's medically legal now, but okay, where's the regulation that actually talks about am I operating through GPP, GACP, GMP? Is the FDA licensing that? Where's that framework look like? So I think you need to see a bit more of that, but I you will see capital just by virtue of the United States, its size, it's your involvement on the international stage. I think you will see more capital flow in. And again, companies like ours that have been around will certainly be benefiting from our experience in the international markets while the US is really stalled on the federal reform state.

Switzerland’s Adult Use Pilot Blueprint

Ben Larson 41:00

I'm getting sense that Deep gets to watch the roller coaster instead of ride it, so to speak. And so Deepoc is as Anna Ray and I are hopelessly mired in uncertainty with federal regulations in the US. I'm happy to hear that you have some exposure through through your Texas facility, but it although it sounds like you're able to be patient with it. Aside from like US policy, what do you anticipate happening in the next call 12 to 18 months with international policy that you're excited about? Where while you're waiting for us to wait and see what happens in the US, like what are you actually anticipating happening elsewhere?

SPEAKER_00 41:40

Look, I think, Ben, growth continues on international markets, right? I think nobody's waiting for the United States to legalize cannabis. The markets have shown for the last three to four years already that they're moving ahead. And so I think that I predict that international markets, like I said, France, Spain, Poland will continue to develop their regulatory frameworks. We didn't really talk about Switzerland, but that's a really interesting market that has both medical and, in their own sense, adult use frameworks in place. And I think they're really pushing the envelope around what a regulated adult use market can look like. And I think that for those paying attention to the adult use conversation on the international stage, Switzerland's a phenomenal market to look at because they have figured out how do you comply with UN treaties, how do you make sure that you are doing a pilot project, how do you make sure that you allow imports, how do you make sure your medical program isn't suffering? And these are not easy things to grapple with. Arguably in Canada, we've done a number of things, right? And we've certainly moved ahead on policy, but I think we failed at a couple of things, right? So I think that again, back to my previous comment around cannabis legalization being a process, not an event. You're seeing countries pick up from the mistakes that were made in Canada or in California as an example. What can we learn from that on taxation on the black market? To answer your question, markets are moving ahead, whether the US gets its act together in the next year or two years, I think it certainly hamstrings a bit the incumbent players in the United States. But as you're seeing with players like us, or Cure Leaf as an example, that hasn't stopped the American companies in many ways to be able to go international and be able to take advantage of some of those opportunities, albeit not shipping a product from the US to these markets, but finding a way either to Canada or even international markets to be able to participate in that. So the markets are going to go ahead. I think there is going to be more opening up. I think GMP is going to be at a base level. Companies are now starting to pay attention finally to actually getting that UGMP certification the series players already had, but you will see more of that.

AnnaRae Grabstein 43:37

So as

What Great Cannabis Operators Do Differently

AnnaRae Grabstein 43:38

you're talking about all of this complexity in the global market, these triggers that are happening in all these different countries. And I know how many companies you've been under the hood in. It sounds like you've consulted for close to 40 companies all over the world. I think there's few people who have a better perspective to give us some insights and what separate. Great companies in cannabis from the rest. And I am curious because we talk to so many people, but also just from where you sit as you're thinking about the future of cannabis, what are the signals that tell you that a company or a leader truly are great and are positioned to take their company to the next level in this fast-evolving landscape?

SPEAKER_00 44:25

Yeah, I think Already, if you look at the basic concepts like what is your right to win, I think just saying that you have a license and then looking at a new market opening up doesn't necessarily one plus one is not equals two. You got to figure out what is my right to win just because, and I again look at American companies all the time, all excited about international cannabis markets. And I'm like, well, it's great that you now are able to potentially play in the international cannabis market. But what makes you so successful? What are you doing really well at home that will give you that leg ahead? Right. And I think it's when companies sit back and look about it. And certainly that was the questions I asked when I was joining this organization was what makes village farms great at what they do? And I think the answer really was that nobody cultivates cannabis at a great quality at scale as Village Farms does, and then do that in a compliant fashion, like EUGMP. I think that is a winning recipe for this business, right? So, and again, they are other winning recipes that are working for other companies, but really it comes back to the core of what are you doing so well that you feel like you've really conquered your home base? And I think you've got to be able to do something well at home before you can start to look at other international markets. It's not at international markets aren't going to save your business, right? I think a lot of people in cannabis are trying to find what's going to save their business. And if you haven't managed to do something well at home, chances are you probably are going to be able to do something in the jurisdiction that you don't understand. So for me, really it comes down to that really basic level of business fundamentals around how is your business run? What is your PL? Are you profitable locally? Are you, despite all of the regulatory issues, you know, one thing the industry loves to complain about is tax itching and regulatory issues. And I'm not saying these are not issues, but how do you still manage to be successful despite all of those challenges? And if you can come out the other side and say, despite all these challenges, we're still able to figure out a way to be able to be compliant and I think then you've got something that is a recipe to success. And I think what we are seeing in North America is a number of companies are certainly, I believe, one of them, but there's other companies as well that I think are starting to come out that other side. And the fact that you've been in the California market or the Canadian market for the last five plus years, and the fact that you've, you know, held true, clearly you're doing something right. And if you are profitable and you're paying your bills and you're paying your taxes, most importantly in Canada, you are doing something right. And so I think you need to double down on that and then focus on the next phase of growth. So I looked at that when I evaluated companies.

AnnaRae Grabstein 46:58

So

Vertical Integration Reality Check

AnnaRae Grabstein 46:59

just take it one step further. What you're saying reminds me a little bit of when I was in business school, they used to talk about focus on the thing that you do best and really go all in on it. And I used to think about that a lot when I started working in cannabis and vertical integration started really exploding as the strategic path to success in so many states around the US because it seemed like within the context of vertical integration, there was just no opportunity to be really excellent at anything. You were just being good enough at all the things. And I'm wondering, in light of what you just said, what your position on vertical integration is.

SPEAKER_00 47:38

Look, I think vertical integration is great for companies that are able to handle the plethora or the gambit of things, right? It's very similar to me looking at the early days of cannabis when you had these big companies that raised billions of dollars and they were going to be the best zig, gummy, edible, beverage, dried flour company. And it's you can't be great at everything, and you can't be also great at vertical integration. And very similarly, Annary, we had in Canada, we had companies that were buying everything along the value chain and want to be vertically integrated. I think there is room for certain players to do it. And I think very few have proven that they can do it well. So yeah, again, basic business fundamentals, right? I if you can be good at one thing and then look at targeting the next thing and doing that well, I think there is room for that. I think capital has clearly decided that it's going to start to be getting allocated to companies and reward companies that are doing these things well. And I think that we're still a ways away from seeing a truly well-functioning, profitable, vertically integrated cannabis company. I think we'll get there, but we're not there yet.

Ben Larson 48:39

Okay.

India Brazil And CBD As The Bridge

Ben Larson 48:40

As we wrap up the show, I want to let you look a little bit further out into the future and detether from all the here and now that we've been discussing. You've mentioned in the past the opportunity for a place like India to become a major cannabis market. We get, as I stated before, we get pretty excited when we start talking about 90 million, 100 million people in population. India is like 1.5 billion. And now there's a lot of like interesting economic classes and everything to consider when it comes to a marketplace that large. But how do you think about the globalization of cannabis in that way and opportunities to unlock something like India?

SPEAKER_00 49:20

Yeah, look, these markets in India in particular, I was born and raised in India. I'm from there, I have family there, are definitely markets that are prime well. I think they also have a huge history of cannabis in those countries. And so it's nice to see them embrace this. And I think we will start to see more and more countries come online. I think everyone's path is going to be a little bit different than the other. And again, it's a process not at event, but I think everyone will evolve in their own unique way. But I'm keeping a very close eye on sort of the bigger markets, right? And I think Brazil is really a classic example of a sizable population, a country that's really starting to evolve. And I think CBD certainly seems to be the way that some of these markets are coming around, right? There's been a lot of stigma historically promoted by the West around the harms of cannabis, the war on drugs, etc., right? Despite them being an ingrained in culture, as in the case in India, I think that has had a lasting impression, and probably a bigger impression than we would expect. So I think you are starting to see countries look at CBD in particular as the starting point, right? To be able to get their head around being able to regulate cannabis.

Ben Larson 50:29

Is there evidence in a market where CBD has evolved? There's been a direct correlation from CBD being the starting point and then that evolving into acceptance of the intoxicating side of the plant because we can't draw that direct nexus in our journey here in the US.

SPEAKER_00 50:45

In the U. Yeah, or in Canada, for the example. And I think the challenge has been because of just the overuse and a lot of the a lot of the products that are being sold as CDD products that perhaps didn't have CBD, didn't have as much C BD. And I think that you look at a market like Australia, and I'll give you an example, Ben, to your question, is the answer is yes. And so you look at a market like Australia, they have basically allowed CBD to be sold as an over-the-counter product. And what that means is you can go to a Walgreens or a CDS and be able to pick up CBD. The only condition they placed on that was before you can put that product as an OTC product, you need to do the research. So if you've got an accounting CDD or CBN cures insomnia, go into the clinical phase one, two, and three studies. Not necessarily the same level as being a pharmaceutical product that has efficacy and animal studies and all of that, but you still need to do one, two, and three studies to show me the regulator that CDD is beyond just anecdotal evidence, going to be beneficial for sleep. And if you can draw that conclusion, we will let you put this on an over-the-counter shelf. And I think that's a great way to force the industry or companies to be able to look at that. So there is one company in Australia right now, and there's one more coming up soon that have passed phase two or three studies on CBD and are looking at launching this as an over-the-counter product. So really it's coming back and doing that hard work. I think we've, for better or worse, managed to get around just placing products on the market and being able to make marketing claims and perhaps abusing and overusing those claims around what can cure indications. But now international regulations are forcing the industry to double down on that. So the answer is yes in international markets. I think you will see more and more of that happening. And I think that's how you also get around the stigma is if you have someone that is an elderly patient that has sleep issues and they can say, yeah, taking X, Y, Z product that's gone to a clinical trial and can show me that beyond there, beyond just reasonable doubt is able to actually help me with my sleep and it's not intoxicating. Is that a way to be able to regulate cannabis? I think that's how international markets come around to this. India, China, Saudi Arabia in particular, because of the stigma that has been inculcated, as I mentioned before, I think this really allows a sort of a quick way to be able to get around to regulating cannabis as a substance.

SPEAKER_01 53:03

Really interesting. Yeah.

AnnaRae Grabstein 53:04

Yeah. It's wild to hear your call out that the reefer madness and kind of drug war narrative that started in the US has actually spread to these other countries and affected the drug policy that's unwinding there.

SPEAKER_00 53:20

Oh, yeah. I've lived and breed this. I can tell you in India firsthand, it's had a lasting impact, particularly on the older generation, right? Look at my parents' generation, and it's had a significant impact on them with respect to just lying leaf all over the West. The West says this is a problem. Clearly, it's a problem, right? And no one's really questioned it. I think you've got the younger generation now saying, hold on a second. I think there may be issues with that. But it's had a bigger impact, Anna Ray, than most people actually realize. And it's had a significant impact even on politicians of that same generation that are trying to get their heads around the war on drugs or America's legalizing cannabis. They've come full circle on this. So it has.

Last Call And Vegas Reminder

AnnaRae Grabstein 54:01

All right. It's time for our last call. So, D C Deepak, what is your final message for our listeners? Advice, call to action, or closing thought.

SPEAKER_00 54:11

Two things. One, I think that I'm very excited about international cannabis, and I think that it will grow as you can tell. I'm very passionate about it. So very much looking forward to that. And the second thing, Ben said to look forward. I'm very much looking forward to the highest spirits mixer in Las Vegas at the Army at. So definitely looking forward to that one coming up.

Ben Larson 54:32

Amazing. All right. International is growing, and get your booties to the morning mixer. I like I like that. Deep Akadon Village Farms International. Thank you for spending the last hour with us. This is super informative. And I've got more questions for you, so we'll connect offline. Thanks for having me. Amazing. All

Subscribe On YouTube And Sign Off

Ben Larson 54:52

right, everybody. You heard it. The morning mixer. Invitations are starting to go out. So look for them in your inbox and request your invite. That doesn't make any sense, but whatever. If you've enjoyed this episode, do us a favor and follow us on YouTube. Just search High Spirits Podcast. We're just over 300 subscribers right now. Just getting going. We're trying to hit 500 by the end of the year. Help us achieve our goal. Please. We'd love to celebrate it at the Morning Mixer in Vegas in December, I think. Early December. Thank you for listening. As always, folks, stay curious, stay informed. And most importantly, keep your spirits high.

SPEAKER_01 55:28

Until next time.