Welcome And What We’re Covering

SPEAKER_01 0:00

We have an opportunity to create an incredible market in Pennsylvania to do it right, you know. And this is where voters, you know, you have a say this election.

AnnaRae Grabstein 0:29

Hey everybody, good morning, and welcome to High Spirits. I'm Anna Ray Grabstein, and I am your host today. Ben Larson is out. It is October 13th, 2026, and we are recording episode 157. Today's guest is Peter Marcus, Vice President of External Affairs at Terrapin, one of the amazing operators in the Pennsylvania market. And so we're going to be talking about all things Pennsylvania today, which is something we have not covered before. We'll miss Ben, but I think that we're going to have a really rocking conversation. And shout out to my buddy Adam Schroeder, who made this introduction and really inspired me to think about Pennsylvania because it hasn't been a market that I've had the opportunity to work in and that we've covered much, except from the headlines. So we're going to get past the headlines. But before we do that, I want to just give a shout out to my ladies on the Valkyries right now. The WNBA is just rocking and rolling. The Golden State Valkyries have swept the defending champions of the Las Vegas Aces 3-0 in the semifinals. And now they're going to the finals. And this is their second season in the WNBA. And so I am just super pumped. The whole Bay Area, my hometown, is behind them. And it's just really awesome to see these badass women shooting hoops like the big boys. So just wanted to point that out to everybody. And also we're going to jump into some news.

Aurora Bid Drama And Big Tobacco

AnnaRae Grabstein 2:10

I've got two stories for you today. The first one is about the fight for Aurora and BAT, British American Tobaccos checkbook. Last week, CuraLeaf sweetened its hostile bid to $5 a share for Aurora cannabis. Most of that is in CuraLeaf stock, but about four tenths of a share plus a dollar in cash. Aurora's board has told shareholders to sit tight and take no action. They have until December 4th to decide. But then on Friday, Cultivated News broke a story that Organagram has been quietly talking with Aurora for weeks, although neither company will comment. And so here's the twist Organogram probably can't pull off acquiring Aurora on its own. Analyst Pablo Zwanik ran the numbers. It's in an all-stock deal, Aurora shareholders would end up owning more than half of the combined company. So this is where it gets really messy with market cap, enterprise valuation, things like that with public companies. So who really decides if Organogram can make a move for Aurora? And the answer is British American Tobacco, who already owns 30% of our organogram. Zuanic figures that about 60 million Canadian dollars of British American tobacco cash would put a real bid on the table, around six US dollars for a share, which happens to match the CureLef set on its own offer. But CuraLeaf isn't tapped out either. Zuwanik thinks that it could raise the cash piece from $1 to $2.50 a share before its debt would become a problem. Boris Jordan is calling the organogram talks a travesty to the process. But the real question isn't organogram. It's whether Big Tobacco wants to own Aurora. And there's a governance question here too. How do boards evaluate these offers when the market values their companies so differently than they did just a few years ago? So I think this is one deal to watch. Whether or not it ultimately closes, it's hard to say, but I'm paying attention.

Hemp Payments Get Cut Off Early

AnnaRae Grabstein 4:35

Next up is about hemp. You know, we've been covering hemp and the looming federal hemp restrictions for a while, but something is happening this week that illustrates why the consequences of the December hemp ban may arrive much sooner. Square, the payment processing company, has told merchants that they need to remove hemp and CBD products from their catalogs by October 15th, which is this week. And we're not talking exclusively about intoxicating THC products. Square's notice includes CBD and hemp derived products broadly. A company can be selling a product that is still legal under applicable law, which these products are, but suddenly lose access to the payment infrastructure it needs to operate. This sounds probably very familiar to regulated cannabis companies who have been fighting this battle since the beginning, never having had access to the rails of Square and other more traditional processors. And Square isn't Congress. It doesn't have to wait for a federal law to take effect. That's what makes the story so interesting to me. Banks, payment processors, distributors, and retailers are all making their own risk calculations. And these decisions will fundamentally reshape the market before the federal deadline arrives in mid-December. But what happens when the infrastructure supporting these businesses starts disappearing? And if federal policy ultimately changes course and these products see a pathway past the December ban, how much of the infrastructure can realistically be rebuilt and how fast? This has been on my mind as I'm seeing uh brands get out of the space as well, and co-packers uh leave and fill their lines with other products. Rebuilding is not going to be as easy as some people might think. So those are two stories I'm watching today. And um, I'll keep you all updated as things progress.

SPEAKER_00 6:36

We

Sponsor Spotlight On Cannabis Insurance

SPEAKER_00 6:37

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Terrapin’s Pennsylvania Origin Story

AnnaRae Grabstein 8:16

We are now going to jump into our time with our amazing guest today. Peter Marcus is the VP of External Affairs at Terrapin, one of Pennsylvania's original medical cannabis growers and processors. Today, Terrapin runs a 180,000 square foot cultivation facility in Clinton County with about 250 employees. Its products are on the shelf in almost every dispensary in Pennsylvania, and it operates three stores of its own in Central PA. Peter leads Terrapin's communications, government affairs, and community impact work, which means he spends a lot of time lobbying in Harrisburg. Before joining Terrapin in 2017, he spent more than a decade as a political journalist, most recently a senior State House reporter for the Colorado Springs Gazette and Coloradopolitics.com. Washington Post twice named him one of the nation's top state-based political reporters. And Peter, welcome to High Spirits. So happy to have you here.

SPEAKER_01 9:18

Hi, it's a pleasure. I've been looking forward. Yeah. How's it going this morning? It's going. It's always awkward to hear your bio read out loud, but I really appreciate it. Absolutely.

AnnaRae Grabstein 9:30

For sure. Well, so Pennsylvania is a near $2 billion medical market surrounded by adult use legal states. And um, as I've gotten to know you, I've learned that Terrapin story really tracks every part of it from the onset. So why don't you tell us a little bit about how Terrapin entered Pennsylvania and um and where you guys are today?

SPEAKER_01 9:56

Yeah, so um Pennsylvania was actually um one of our um early expansion projects out of Colorado. 2017, though we really started having the conversations there in like 2016, test the waters, see you know what it was gonna be like. Uh we wanted to find knowing how these programs go, that it's about economic development, bringing jobs, you know, um revenue, you know, especially Pennsylvania was still wrapping its brain around whether medical marijuana was gonna work for the state. Um, we chose central rural Pennsylvania where we could really have an impact. So we're based out of Clinton County. Uh when we first had those discussions with like the local chambers and leaders and stuff, like really hard for them to wrap their brain around, you know, like you're gonna do what, where, you know. Um, but they got to know us, they got to know our owner and CEO, uh Chris Woods, who's actually a Pennsylvania native, Bucks County boy. Um, and um yeah, they you know took a gamble, uh, took a you know, leap of faith with us, went through the licensing. We were one of the first two uh producers to get licensed out there. You know, now, like you said, you know, between three stores also in central Pennsylvania, the Grow, about 250 employees, small towns, everybody knows everybody's name when you go into the local diner kind of thing. We've really been embraced by the community and it's really been a success story. I think they refer to us now as a quote, challenger brand, uh, because you know, we're kind of pushing the limits. We're, you know, it's a market with a lot of MSOs. Um, and we're a rare story where we stayed independent, family owned, um, never changed ownership, never, you know, never really changed, didn't have shareholder boards and things like that, kind of marched to our own drumbeat. So it's been a fun story and it's been an exciting success, you know.

Jobs First Narrative In Rural PA

AnnaRae Grabstein 11:58

It's interesting that you that you talked about economic development. Um, it reminded me, I think it was 2017 or 2018. It probably must have been right around then since Pennsylvania was turning on. There was a roadshow of legislatures that came to California, and there was someone, I wish I remembered his name, who was an elected from Pennsylvania who was touring around and learning about uh licensed cannabis businesses. And I happened to be in a room with one of them, and I always remembered that his sentiment was a hundred percent about jobs in the community, especially in manufacturing towns that had lost coal plants or other types of factories that used to really power the towns. And he seemingly had absolutely no interest in cannabis at all, but but saw this as this engine potentially to bring jobs into the community. And it sounds like that um has been a big part of the narrative uh in Pennsylvania.

SPEAKER_01 12:58

Yeah, you know, we're pretty good at what we do. You know, we know what the narrative is around these things, you know. For us, you know, it's about the plant, you know, it's our love for the plant. And, you know, you we we started as a company in 2009, back to the days before licensing. So, like, you know, we got into it because we're passionate about what we do, but we also know what works in terms of getting it done in a new market and then getting the licensing and uh you know being embraced by the community. And so, yeah, it you know, to us.

AnnaRae Grabstein 13:31

On a more personal level, you were a reporter for all these years, and so I'm curious like how the life of a journalist um translated into speaking now to legislatures uh in the the in the way that they want to hear it.

SPEAKER_01 13:46

It's a weird transition. So, you know, as a reporter, uh everyone's wrong until they're right, you know, you gotta you gotta run it all down, you know, you know, excuse me, but everyone's full of it on a certain level, you know, on the lobbying side, going into the government affairs side, you know, it's more, you know, how am I gonna gain access for my purpose, for what I'm trying to achieve and accomplish. You know, it's a it's a different skill set. However, they merged together by, you know, I had all the background. I know how legislatures work, I knew the cannabis industry since the inception, you know, having, you know, I I think I joked to you once that um I was actually the first reporter to show up at a legalization press conference in Colorado, going back to 2006 when the movement was called Safer, Safer Alternative for Enjoyable Recreation. Um, and like my friends Mason DeVert and Christian Cinderberg, you know, the guys who really pushed it over, Steve Fox, um, you know, who really pushed it over the edge, you know, they were still coming into their own. So it's been so fun to watch it just develop over the years, you

Election Stakes And The Cannabis Voter

SPEAKER_01 15:00

know.

AnnaRae Grabstein 15:00

Amazing. Well, I think that the most interesting, newsworthy story about Pennsylvania is to really dive into the politics. We're in this place, it's October, we're getting close to the midterm elections. Uh, there is so much writing on elections all over this country. And for years, I've always really questioned like, is there an actual cannabis voter out there? There are definitely issues that bring single issue voters to the ballot. The first ones that come to mind relate to like pro-choice or pro-life voters often come with single issues. They're going to vote for the candidate that is going to support them on that issue. And over the many years that I've been following elections, I've kind of come to this conclusion that there isn't actually a cannabis voter, that the cannabis voter might have a position on a cannabis issue, but that there's a lot of other things going on. But this election cycle is starting to make me question if that's still the case. We're seeing cannabis come to the forefront of messaging in the Texas election, both for Senate and for Lieutenant Governor. And then what's going on in Pennsylvania is starting to get real here. Um, you know, you guys have had this really interesting stalemate for years going on, um, where you've had a Democrat in the governor's chair, um, but the rest of the trifecta has been fighting. And um, I'd love for you to give us some insight into how you see what's going on in Pennsylvania, some history of where it's been and um where this is all going, and if there's a chance for adult use to come to the state.

SPEAKER_01 16:42

Yeah, so this is where my reporter stuff intersects with the government affairs stuff. Pennsylvania, I nerd out just on the politics of it. So yeah, you're right. Um, it's been 30 plus years since repo uh Democrats have control over the Senate in Pennsylvania. Um, they've had control in the House. They currently have a one-seat majority. Actually, I think they have more because of a special election that happened, but we're talking razor-thin majority in the House for Democrats. You know, uh Republicans have been in firm control of the Senate. Yeah, they're Democrats are feeling like this is their year in Pennsylvania to flip the Senate. They only need three seats in the Senate to have uh control of the Senate, two seats for a tie. Um, they're hoping to pick up like three to eight seats in the House. There's kind of like four target races, four or five very, you know, targeted races in the House, and then you know, four Senate races that are really targeting with the hope of picking up three seats for Democrats. Uh, you mentioned, is there a cannabis voter? I should mention I previously sat on the board of the cannabis voter project, which was which was a sub uh sub-project of headcount. I don't know if you're familiar with headcount, they uh get folks registered to vote. They kind of tied into the live music world a lot, show up at concerts, try to target like young folks to get them to vote. Our thesis is the was there is a cannabis voter. Um, and like we were trying to, you know, empower them to use their voice, not just about weed. It was about like if you can drive folks to the poll because they're interested in the topic of cannabis and legalization, then you can also affect a lot of other change. I think the Democrats have latched on to that in Pennsylvania. Um, I don't think that they or anyone believes is a single issue by any means. Like it's not going to, it's not what's going to settle the election, you know, and give anyone control, but they know it's potentially a motivator. And so, you know, you've seen recently Democratic leaders in the House and the Senate, um, uh Jordan Harris in the House and uh Senator Street um, you know, in the Senate. Recently were talking about, hey guys, we will legalize marijuana if we just get these three seats in the Senate. Oddly, the you know, Republicans are not taking the beat. Um, they're staying firm through the election. I don't think, I think facing this monumental historic change potentially, they're not ready yet to like embrace, you know, super fringe topics potentially. So they're sticking to their guns and saying, we need more direction from the feds. You know, we need uh, we're not sure that our state can run a successful marijuana program because the Department of Health hasn't done a great job with medical. This is all just political pandering type of stuff.

AnnaRae Grabstein 19:59

Well, so you know all these people pretty well. And and maybe I should add the context for those that aren't the a policy wonk like Peter and don't know Pennsylvania quite as well, is that Pennsylvania is one of the states that doesn't have ballot initiatives. And and states that have ballot initiatives have been the first states to bring adult use cannabis online because it is such a wildly popular um uh topic for voters. And I think you mentioned that that it's it's like potentially polls as high as 70% in in Pennsylvania, but it doesn't actually matter because the voters don't get to vote on that issue. They're gonna be voting for these candidates. And you you know these folks, the Democrats are saying, vote for us, if we take the Senate, we're gonna push adult use forward. But if that doesn't happen and the Republicans are able to hold on to their seat, do you have confidence that even within a Republican Senate majority, that there is a future pathway for adult use in Pennsylvania?

SPEAKER_01 21:03

Yeah, it's a great question. I am optimistic because I know what, and you're right. So there's the ballot initiative thing, we would have gotten this done years ago. It polled like 68% on the high end. We've even pulled in Republican, like strong Republican districts, and it polls over 50% in most of those districts. This would have been done, you know. Um, yeah, I think that the problem is Pennsylvania is facing a seven billion dollar budget shortfall. Uh, there's no money, there's only one other revenue stream that they're currently targeting, which is uh called what they call skilled games. Um, it's like video poker and things like that that you find in like VFW halls and bars and things like that. There's a whole Supreme Court case. The state has to take action around that. But my point being is that there's very limited revenue streams to close the shortfall. I think that's Republicans are playing it really safe this election by not wanting to take up the issue of cannabis in case it you know might impact some of their members. I disagree. I think they should embrace it. I think that Pennsylvania voters want to just see a party that can lead, and all they see right now is punting in Harrisburg. But whatever, that's the talking point is they're going with. I think once the election is over and wraps up, they get to budgeting, there's a path

What Adult Use Could Look Like

SPEAKER_01 22:33

forward.

AnnaRae Grabstein 22:33

Yeah. Well, so let's talk about what the path forward is. Over the past few years, I've certainly been paying attention as Governor Josh Shapiro has put legalization into a number of budgets. And when you're a policy wonk, one of the greatest ways to have insights into what policymakers are thinking about doing is to watch a budget. It ends up being like a like a roadmap to their plan. And so every time legalization ended in that budget, the industry noticed, the headlines responded, um, the MSOs that are that are heavily invested into Pennsylvania got excited, acquisitions started happening, all the things, and then nothing. And uh, and most recently, Shapiro actually pulled legalization from the budget, is is my understanding.

SPEAKER_01 23:21

Um it's uh it's a line item in the moment.

AnnaRae Grabstein 23:27

It's a line item, great. Um, but there is kind of a there's a few different pathways that folks are talking about. Um, and when we say legalization, it's important that there is medical legalization in Pennsylvania. Um, but it's super restricted. I was so surprised yesterday when you and I caught up to just be reminded that gummies and beverages and joints are not allowed in dispensaries in Pennsylvania. Um, so the fact that the market has gotten as big as it is with the restrictions, both the requirement to be a patient and then the form factor restrictions, just shows that there is a lot of weed-loving people in Pennsylvania that are going to be very excited about adult use. So talk to me about what that might look like and some of the push and pull with the issues that are really being debated about what adult use transition for existing operators might cost and things like that, which I know is sticky.

SPEAKER_01 24:22

And just to clarify, you're right, the budget this year didn't end up with weed in it, but Shapiro keeps continuously putting it in as a line item because you know that that's his goal. Um, yeah. So um there's a lot, a lot of silliness in the medical program. You know, you did mention no smoking, um, yet flowers being sold. So ostensibly, those folks are going home and vaping, no edibles, things like that. That all goes away with legalization. You know, there's a uh not just intoxicating ham, you know, everybody always talks about intoxicating him, but there's smoke shops and vape shops and um gas stations in Pennsylvania that are just selling straight up marijuana, quite frankly, um, without um, you know, use taking cover with the loophole, you know. Um that all that those are focuses for lawmakers. They want to see that stuff go away, they want the revenue, and they want a bright line when it comes to legalization. We have a lot of lessons we've learned um from the past about markets that have crashed, what legalization can do to get it done, but also have the unintended consequences that come with it, price compression, things like that. So taking all those lessons from other states, you know, we have a program that, you know, will have 30 grand in the legislation that we're currently seeing, and all of this is subject to change. You can see, you know, you're talking about normal possession limits, like 30 grams, 1,000 milligrams for edibles infused per packet, uh, five gram concentrate possessions, you know, uh taxes have uh in the legislation currently have been really totally fair. You're talking 6% sales tax, 8% excise tax. The fees are another conversation in the legislation. We've seen conversion fees that are great. You know, you're talking $250,000 for an operator to convert, $100,000 for a dispensary to convert. We've seen proposals from the governor's office as high as $20 plus million dollars to convert. So we'll have to figure out where that stands. It's not sustainable. You'll see a lot of operators that just can't pay those kinds of high licensing fees. Um moves the program out of the Department of Health by creating an independent cannabis control board. Um, and when we talk about learning lessons from the past, we want to see market analysis when we're handing out licenses. We've discussed when the program starts in the legislation, you're looking at like a couple dozen new dispensaries, you know, a few new grows. But then to go beyond that, what does the market, you know, what can the market withstand? What's the supply demand? So talking about independent market analysis, there's no point of handing out um licenses to new folks if a few years down the line the market crashes. So, you know, just trying to understand that through the legislation. There's some great equity provisions in there around auto expungement, handing out, you know, 15 or so equity licenses right away. It really has considered everything. Um, two bipartisan bills in both chambers, the House and the Senate, ready to go. You know, let's go.

AnnaRae Grabstein 27:55

Yeah. Um, it's it's interesting that you're talking about these conversion fees. And this is something that um some of the the early mature markets really didn't have to address because they had they had no license limitations at all. It just everyone got a license, um, everybody converted. Um, but you're right, the the environment itself became really challenging, both from an oversupply, from a saturation, all kinds of things, be it too many dispensaries or too much weed. Um, and then we started to see um newer markets, much much more commonly in the Northeast, start looking at controlling the conversion from medical to adult use um in more thoughtful ways. That has been um a big part of the conversation in New York. Right now it's it's unfolding in Virginia. Um, New Jersey was was definitely one to watch on this. So you definitely have some good data points to think about in terms of how how people are doing it and and what what worked and what didn't. Certainly, like Connecticut had some insanely high fee. I think it was like $3 million a conversion fee. New York was very high, and and some of the existing registered operators took the state to court over it. But it is it is important to kind of understand what the dynamic is within the market and and how a state can make those decisions and figure out what these golden tickets are that they're gonna get people, give people in order to be able to operate right when adult use turns on. Um, the market in in Pennsylvania is not dissimilar to looking at the kind of the tier one and tier two public companies list in cannabis. Um I I pulled some some data from BDSA leading up to this conversation. And uh it looks like Cresco has the most dispensaries in the state. Um, they have 27, of which nine they just acquired in a big deal from Vera Life that I think was valued around $50 million for those nine stores. And um, while that is less than stores used to be valued for in Pennsylvania a couple years ago, it's actually a very high value for a dispensary compared to lots of other markets. So clearly, a company like Cresco um sees tremendous value in expanding its footprint there with 27 stores. True Leave has 22, GTI has 20, um, Juci has 20, CuroLeaf has 19, Verano has 18, and then we've got a bunch of independent operators that have um have a lot less than those big folks. Um and and you guys uh have three.

SPEAKER_01 30:45

And yeah, well, there's history there.

The Vertical Integration Loophole Fight

AnnaRae Grabstein 30:48

And yeah, and I want to talk about that because people think of Pennsylvania as a vertical market. All those groups that I just said with those 20 or more dispensaries also own production, but that isn't actually how the law was set up. Um and let's let's talk about what happened and how you were involved in in making it possible for there to be more vertical um integration uh and how that unfolded.

SPEAKER_01 31:16

Again, there was some silliness in the program to launch it. So yeah, when you first had got license in Pennsylvania and you had to pick a lane. You were either an uh producer, uh retailer, and you know, that was that. But what they didn't stop was your ability to purchase licenses to become vertical. So what happened is you know, the MSOs just came in and started, if they had a production operation, then they just bought their way into the dispensaries and now they're vertical. So we had to spend a couple of if we actually had to change the law to allow us as an independent producer, they call us independent, um, because we weren't vertical. Uh we had to go spend two years lobbying Pennsylvania um legislature to just let us open those stores. Um, and the compromise that we came up with was so Pennsylvania is weird, they go by permits. One permit is three. So, like a permit to have dispensaries gives you three stores. So the compromise was that we as independents could have one permit at three stores.

AnnaRae Grabstein 32:31

But it doesn't really make sense that so you could have purchased an existing permit that already had dispensaries, you just couldn't apply for one yourself organically, correct.

SPEAKER_01 32:44

Yeah, no, it was it was um nonsensical, very nonsensical, you know. Um, again, it nobody thought everybody agreed that this was ridiculous when we were lobbying the legislature around it. Harrisburg is just a grid-locked place, so everything takes a while, you know, but like there was no good reason not to at that point. Um, and what we kept telling folks is give us a shot. Like, we'll succeed at this, we will bring more jobs to these rural areas. Um, our goal again, there's you know, we we're not big into going where everyone is. We want to find where we can create more access. And so the dispensaries we opened in most uh in each case were in Belfont, Lewisburg, and Lockhaven is where the stores are in Pennsylvania, Central PA, more rural communities, though Lewisburg is a bit of a college town. Um it was like 10 miles in the minimum cases to another dispensary where we opened. So out of the gate, we opened up. We it's been a great story, you know. We've seen the great traffic. Um, it's really helped with our revenue and with our numbers, um, but really has also just added all this additional access for patients because we are talking about a medical program still. So we're talking about patients, you know, who are requiring access, in some cases, having to travel long distances. You know, we were welcomed with open arms in these communities, and we have a huge, we call it flower to the people. I don't know if you can see my my shirt, but um, we have a whole community impact program around it. Um, we we work with local nonprofits and we have all uh a board of employees who engage in volunteer programs and things like that. And it was just like a real handshake from the start.

AnnaRae Grabstein 34:42

Yeah. Going back a little bit to the Act 63 effort to make it possible for a grower to apply for and get a dispensary permit. When you were working with the legislators, did they understand that there was already vertical integration taking place and that there was whether it was a loophole or a mistake or a pathway? I don't think we could debate what it was, but that it was already actualized in the market with the existing operators and that people had well beyond the three stores.

SPEAKER_01 35:18

No, they didn't. Uh no, is the short answer. I mean, it was kind of like a um, it was educated. There was a lot of education that was needed. Harrisburg is kind of disconnected from following it closely, you know. Um, they it as far as they knew there was a program and the program is underway. Everything else about it took like bringing them up to speed, you know. So yeah, I mean, that's why I said it wasn't a hard sell. Once we really brought folks up to speed, that hey, this is already what the marketplace looks like, and we're not knocking anybody. By the way, everybody always talks about the controversies in the cannabis industry, you know, that's always the focus, like you know, MSOs and the small guys, and we're in the fights, and everybody's trying to box everybody out, kind of thing. We didn't see much resistance from the MSOs when we were trying to open stores. We've developed these incredible relationships with all of um, you know, the operators in Pennsylvania because we started as a wholesale operation and people love our product. Like you mentioned, we're in every dispensary in Pennsylvania. Patients are, you know, asking for it. So we've already had these great relationships with, you know, the the bigger guys and through the wholesale operation. So it just there was nothing that was really standing in the way of this happening other than Harrisburg itself as a government, you know.

MSOs, Shelf Space, And Industry Unity

AnnaRae Grabstein 37:00

I I like where you're taking this. Let's talk about the dynamics between the operators. Uh, so we talked about these six MSOs that that control it's about 60% of the stores in the state overall. Uh, and and that the over so there's the six that control 60%, and then you've got another about 20 that have a bunch of different stores, different small amounts. And um, in other states, when you have so much concentrated retail control, there's been a lot of problems with shelf swapping that has made it really challenging for companies that don't have as broad of a retail footprint to compete on a wholesale level because everyone's trying to move through their inventory and make sure that they have outlets beyond their own doors. And there it's gone so far that there has been uh lawsuits in Ohio and Arizona and Missouri that have touched on this issue in in kind of in many different ways. Um, and I'm surprised to hear that you're in all the stores.

SPEAKER_01 38:05

I'm wondering if you've seen not always at every not always all the time, but at one time or another, we're in every story. Yes.

AnnaRae Grabstein 38:15

Well, just like talk to me about the vibe. Is there an openness to transact with each other? Is there issues around shelf swapping and shelf control? Look, let's let's get real here.

SPEAKER_01 38:28

Yeah, you know, I'll be honest, I haven't personally heard too many stories. I know, I know the cases you're talking about and the examples you're giving. I I haven't seen that um myself with the shelf swapping in Pennsylvania. I wouldn't be surprised if there's some of that going on. But generally, to survive, again, different market. You're talking about a medical market. There's 440,000 registered patients um in Pennsylvania in a state of 13 million people, you know? So you're really having to target, and medical patients are different than your average adult use consumer, right? These are folks who are very brand loyal. Um, they find products that really work for ailments and conditions, you know, some stuff works better than others. There's a sense of loyalty. Our patient base is so significantly loyal to us that, and it's what we've seen as soon as we open the stores. We had, you know, I oversee our customer care department as well. We have my great employee Blake, who handles all the customer input and whatnot. They were so thrilled to see us open stores because they were like, finally, you know, I don't have to drive all this way to this dispensary to get your product. The folks who we work with, the MSOs you mentioned who have that 60% of the market or whatever, they know that. Um, they also needed additional product at times, you know, and so I just think truly organically, um, it's been, I don't want to say kumbaya because uh stuff comes up, you know, and there's business interests at hand. But just through the market demands itself, it necessitated this working together. And we all have a common goal right now, which is to see adult use, you know, for the most part, a common goal. A lot of these MSOs have dispensaries that are on the borders now, um, which in some cases can be complicated for them because they can also have dispensaries in Ohio or another state or whatnot. But generally speaking, there's a unified sentiment. We have a coalition, it's called Responsible PA. That's kind of like our arm to go out there and you know, state the case for legalization. You know, we had weekly calls, and everybody seemed like, how can we work together to get this done? So I've operated Terrapin was licensed in seven states at one point, operated in five states at one point. Uh, I've seen the risks, I've been in the middle of them. Terrapin has not always been the favorite of some of these larger operators, politically, policy-wise, things like that. We just haven't had those kinds of fights in Pennsylvania.

Terrapin’s Future And Product Innovation

AnnaRae Grabstein 41:28

Mm-hmm. So I know that you guys got out of some of those other states by selling the assets, moving on. Um, potentially was a way that you could fund expansion in Pennsylvania. I don't know. Um, what is the what's the long tail vision? What are you trying to accomplish in Pennsylvania?

SPEAKER_01 41:46

And actually, so yeah, so we pulled, we are a Pennsylvania company now. We pulled out of every other market through sales. Um, it really wasn't to drive uh expansion plans in Pennsylvania, though that always helps, you know. Um, it was really more just our CEO um and owner, Chris Woods, is just a really insightful guy, can see market trends. He kind of gets in at the right time and gets out at the right time. Um, and also we we're at this nearly 20 years. There's like a kind of like been there, done that in aspect of things to a certain extent. Again, Chris is from Pennsylvania. His heart was in, you know, making this Pennsylvania operation as big as it could possibly be. Um, so yeah, like what are what's our hopes for the future right now in Pennsylvania is we already have a great brand. We're getting noticed, you know, our revenue is growing. Um, you know, uh it's if we can get adult yeast done, you know, it's um, you know, there's a lot more we can work with. We have that big facility that we can just turn, turn a switch and you know, be ready to go. Um, and you know, I don't it's kind of like paint our masterpiece kind of thing. Like all of the lessons that we learn from all these other markets and all the experience from nearly 20 years of doing this and watching everything evolve kind of just really hit it strong in Pennsylvania to close it out.

AnnaRae Grabstein 43:21

I've I've been thinking a lot about this lack of access to diverse range of products for patients in the state and how exciting and challenging it will be to bring to market very quickly all of the new form factors that will be allowed. And we've seen this like in Ohio. Ohio didn't allow pre rolls, and then they did. And it took a long time for pre rolls to ramp up to a market share that looked like other markets. And I think it's still not there, even about a year later. Um, it looks like Terrapin's business is almost a 100% flour. I think my BDSA data showed something like 99% of the last 12 months of sales are flour. But I know that you guys are working on other things. And I'm curious of how you're thinking about innovation, both within the today's restrictions or in what you perceive to be what's coming in the future.

SPEAKER_01 44:20

Yeah, I don't know about that, stat. I can tell you that. Yeah, I mean, our vape and concentrate lines are it's called double bear. That's the vape and concentrate line of things. Um, really successful. People love those products. Yeah, flour is uh bread and butter for sure, um, but definitely have seen significant growth with that. Uh, we brought one of my friends' companies, Leafa. They were a Colorado-based company in their concentrate products, um, live rosin, stuff like that. Nice does really, really well. The patients love it. Um, we're constantly thinking about new brands we can bring in. We actually just started bringing in this company called Cushion K-S-H-N. Um, it's pouches, like think like a Zin pouch, but uh for cabin boosts. Um I mean, we're not trying to win an art.

AnnaRae Grabstein 45:16

How are those being received?

SPEAKER_01 45:17

We just rolled them out, like literally within like the last couple weeks. Um, so far the reception has been, you know, interest, a lot of interest. We gotta grow it, you know. Um, so it's a little too early to tell. Um, but I think that it, you know, I think product diversity is a good thing. I think that patients have been asking for more diversity. Again, it's different because it's a medical market. So folks kind of just find the products they like and stick with it. But yeah, we're already thinking ahead to adult use when there will be edibles, when there will be pre-rolls. And yeah, sure, these things take time to spin up, but um, with the right marketing and the right interest, uh, I have no doubt that you will see some interest from a whole diverse new group of products on the market.

AnnaRae Grabstein 46:09

Yeah, cool. And and I think that probably the reason my data pull was not good is just because I didn't pull on those other brands. I was just looking at the flower.

SPEAKER_01 46:19

Like that doesn't sound right.

AnnaRae Grabstein 46:21

Yeah, totally. There's there's definitely some blind spots there, but but that that makes a ton of sense. Um, as if you have multiple brands. Uh okay, well, so we're getting closer to the end.

Supply, Pricing, And Avoiding Oversupply

AnnaRae Grabstein 46:34

I've I want to think about kind of what what the future of Pennsylvania holds if adult use doesn't go forward. And it sounds like the business is pretty healthy there um on its own today. There have been so many deals in in looking at the Pennsylvania market over the past few years, like just a ton of MA. And um, and people have been ramping up their production. Uh, and at the same time, while that's been happening, the the wholesale price of flour and the price of flour to to um to patients at the dispensaries has gone down a lot um and has become much more affordable. And I would suspect that has that has to do with the amount of supply in the market. And some of that has been companies maybe getting in front of their skis a little bit on ramping up and then needing to move that product through. What do you think about kind of the state of supply in Pennsylvania right now? And is it oversupplied if we don't get adult use soon?

SPEAKER_01 47:36

Something is currently oversupplied. Yeah, you've seen um prices, the price go down gradually. Um, that's just the market maturity, you know. Um I think that the supply is meeting the demand right now. I think the I talked about it earlier, how lessons learned, how when we hand out new licenses in an adult use program, having an independent market analysis every year to determine what the market can withstand is going to be very important. I think that an argument could be made that current production in Pennsylvania will meet the demand in an adult use market when it rolls out, and then more product will be needed as the program matures. Um, you know, I think it's really on the production side that you really have to pay close attention to that. Um, we can handle more dispensaries, you know, they're going to, there's going to be more dispensaries in a recreational market. Um, it's just gonna be really important to study and know what the market can handle in in terms of production. It's not like we're calling for caps, it's not like we're calling for only um the current operators to be rolled into the production side of adult use, but let's at least know what's going on in the marketplace, all those things you just talked about when we're making decisions about what licenses should go out there.

AnnaRae Grabstein 49:11

Yeah, that makes a ton of sense. Um, amazing.

Final Message And Voter Call

AnnaRae Grabstein 49:14

Well, so I think we're at the end of the hour, and it is time for our last call. So this is your opportunity to make a final message, call to action for our listeners. Uh, what would you like to leave them with?

SPEAKER_01 49:30

I would just like to leave folks with the fact that we're constantly talking about the fact that the cannabis industry is on a downswing. You know, I'm based in Colorado. It's literally all I hear about. Let's focus on what's coming, what's positive, what we can be excited about. And I do think Pennsylvania, in many ways, should be viewed as the darling of the cannabis industry in terms of what the future holds. I'm not knocking the markets out there. California, Colorado, everybody out there, you know, we've got our markets already existing. But in terms of what to be excited about, we have an opportunity to create an incredible market in Pennsylvania to do it right, you know. And this is where voters, you know, you have a say. This election, you know, even if it's even if it does, even if the election isn't all Democrats or all Republicans or whatever, I'm not saying who to vote for. I'm just saying know that your voice matters, know that your vote should count, you know. And if you don't like the way Harrisburg is acting in terms of any issue, but especially cannabis, then you know, make your voices heard, get out there, make some noise, and we'll get it done.

AnnaRae Grabstein 50:44

Yes, make some noise. And I love that you're bringing the high spirit to all of this. Um that's that's our vibe, too. So um, it's been a real pleasure learning about Pennsylvania, learning about some of your history, Peter. Um, you've got great stories and great insights. So thank you so much for joining us today.

SPEAKER_01 51:02

It was such a pleasure. Thank you so much. And also shout out to Adam Schroeder for connecting us, one of my besties. So really appreciate it there. Yeah. Thanks, Adam. Have a good one.

Follow On YouTube And Vegas Mixer

AnnaRae Grabstein 51:14

Um, what do you think, folks? If you enjoyed this episode, do us a favor and follow us on YouTube. Just search up High Spirits Podcast. We're trying to hit 500 subscribers by the end of the year. We've really grown this whole thing on LinkedIn. We didn't pay attention to YouTube, and we realized that YouTube is where it's at. So please help us build our YouTube audience so that we can get the word out about our content and about what is happening in cannabis. Um, also, the link for our high spirits morning mixer in Vegas is live. It's in the episode's description. Request an invite and don't miss our party. It is going to be epic. Um, thank you as always for listening. Um, and stay curious, stay informed, and most importantly, keep your spirits high. That's our show.