Welcome And How To Follow

AnnaRae Grabstein 0:00

Hey, hi spirits listeners. Every Friday morning, Ben and I team up with Jay Rosenthal and Jeremy Burke from Cultivated News and Mark Hauser from Cannabis Musings for this week in Cannabis Live. We get together to break down the top cannabis stories from coast to coast and beyond. If you want to keep up with the business and policy shifts we talk about, Ben and I highly recommend subscribing to the Cultivated Daily Newsletter. It's how we make sure nothing flips off our radar. But right now, let's get to the headlines. Without further ado, this is This Week in Cannabis Live.

Election Results And Cannabis Outlook

SPEAKER_04 0:49

Welcome to This Week in Cannabis Live. That was Bob Marley, obviously, but it was overlaid a topic for only listen to this. A blue wave. That is the big news of the week. There was a, I'm calling it the big, beautiful blue, and then question mark and green wave. Everybody's initial response. Mark, you're up first.

SPEAKER_03 1:12

Um, I mean, I, you know, it's I I don't want to bring my own personal politics into this, but I, you know, it's certainly a positive, it's it's just my style. But it's uh but it it is uh a I think for the I mean it's only a benefit for the industry. I don't think it's gonna change much at the federal level immediately, um, unless the Democrats want to blow up the filibuster, which they're not. But uh, but you know, I think it it's all forward progress.

SPEAKER_04 1:44

I like that. I like that you only look at it from the lens of cannabis policy. Good work. Anna Ray, I nobody that's why we're here.

AnnaRae Grabstein 1:53

Sticking with the cannabis theme, um, I'm watching um Texas, Iowa, Wisconsin, Pennsylvania. Uh these are states that now are controlled by Democrats that all campaigned um on a platform of creating some type of new cannabis access in their state, kind of varies by by which one. So I think that that's what's really exciting. Uh, we have to remember that that broadly cannabis is still a state-by-state industry. So it's these state legislatures and state electeds that are gonna have the fastest ability to impact opportunity in our space. Um, that said, we now also have a blue wave um in the House and the Senate. And um is it possible that some of the federal legislation that Democrats have been talking about for years might be able to move forward? I think that people are feeling pretty optimistic right now.

SPEAKER_04 2:54

Jeremy, I know how disappointed you were with Tuesday night's results. Um, talk a little bit about the election and its uh outcome.

SPEAKER_02 3:02

Uh yeah, very disappointed not to see the red wave again. Um I am kidding. I will bring my personal politics into it. I was living out on Tuesday night, and I will continue to. Um I think I think there's two things at play here. One is in the state story, as Anna Ray and Mark pointed out, is very much real. Uh, you know, Wisconsin has a Democratic governor, incoming Democratic governor who is very supportive of cannabis legalization. Iowa, Iowa, I'll say that again, has an incoming Democratic governor and senator who are both very supportive of legalization. Uh, Texas has legalization supporters running the table. I mean, we spoke to uh incoming Lieutenant Governor Vicky Goodwin on our show, who said she wants to regulate THC-like alcohol in the state. And the lieutenant governor of Texas really decides what bills come to the floor. It's a very, very powerful position. Not only that, the attorney general, incoming attorney general in Texas, also introduced a legalization bill. And James Tallerico, the incoming senator, has said cannabis legalization is one area where the Democratic caucus can really work with President Trump. Uh, you know, two other things on the federal level. Um, it is looking like the Dems will have about 55 seats, maybe 56, uh, depending on the outcome of Scott Collins' race in Mississippi. Uh and look, you know, the filibuster still exists, um, but you know, switching four Republicans over to something that many Republican-based voters support, and that Donald Trump himself supports is a lot easier than nine uh the last time the Democrats had a trifecta uh in 2022. So, you know, I think it's very positive. At the same time, you know, my word of caution is the Democrats did have a trifecta as recently as 2022 into 2023, and nothing got done. And those are likely the same leaders that we're gonna have again in Jeffries and Schumer. And so, you know, I'm weighing all that together. I think it is more than a mild positive, it's positive for cannabis reform. But uh, you know, recent history will show us to temper those expectations.

SPEAKER_04 5:08

Yes, yes, can I can I just say one thing to all that? The other thing we haven't talked about yet is Massachusetts voters said yes no. So Massachusetts voters are more mad at Sam than Germany is generally. Um, and Idaho voters um retain their rights to put something on their own ballots as voters, as opposed to making it a uh the legislature, only only legislative. So, like Idaho voters also had their say. And just we've been doing some analysis here. We're gonna write about it about who voted for what in Massachusetts. It is literally across the board. It's urban, rural, suburban, uh, yes, wealthy communities, sort of the less wealthy communities in Massachusetts. It is all resounding no. There was one

State Wins That Could Expand Access

SPEAKER_04 5:53

tiny town that voted uh yes. It happens to border the town that I grew up in, but it is like it is the anomaly in Massachusetts, of course. I think all I think 350 towns, these towns said uh no, and one town said yes. If those are the odds that Pam wants to go with in Maine and other places, they should go ahead and do that because they will lose again, again, again. Um and then we'll have to see what happens on the federal level. I will say though, uh echoing in Celerico, it is actually one thing that the Senate and House Democrats and the President might agree on. Maybe, Mark.

SPEAKER_03 6:31

Yeah, I mean, again, I think you know, I I my what I I'll push back again on some of that, just like a pushback in 2022, is that you know, this isn't this isn't a problem of democratic leadership, it's a problem of the filibuster. You know, and and you know, we can come, you know, and unless we can convince, you know, what now we we need five more Republicans at least, six more Republicans to get over the hump. Um, you know, I it it's I think that this is that's why like everybody complained about you know democratic leadership in 2022 when when stuff didn't get done, but you know, again, it's it's a it's it's a it's a bigger issue. It's a it's there's a lot more wrapped up in that. Yeah, you can't want to get past a semester. And so also maybe more pressing than what will happen in the realistic.

SPEAKER_04 7:20

I think the other thing, even more pressing, and Anna Ray interested in what you and and perhaps Ben were talking about uh this week, and that is there is something, you know, there is a pressing deadline on the hemp industry, which is now less, you know, a month away. Uh, that deadline. Does Ben or the hemp industry have renewed hope that something can happen in a um in a lame duck session of Congress, given that many of those people they rely on are actually packing up their furniture and books and papers to move out of DC?

AnnaRae Grabstein 7:53

I can't speak for Ben, but what I will say is that um the hemp industry is working as hard as ever to try to make progress before um before the December 11th deadline, uh, because they have put in so much work with the sitting legislature, let us legislators right now. And so many of those folks are going to be leaving. And I do think that there is um some questions about um the commitment to pushing hemp beverage and hemp regulations from from the Democrats. They've done a lot of good work with the red states. And so, you know, I I think it's a complicated time for them, but there is still time. And if the continuing resolution is able to be amended to include hemp language, there is absolutely still hope on the table. Is it renewed hope? Is it more optimism? I don't think so, but I think that they see it as the the hemp, the hemp team is um is looking at it as um as it's not over yet and um that they are still holding on. Yeah.

SPEAKER_03 9:00

Can I can I I'm gonna point out a um the this is me being a little bit of a of a uh trying to think of of a polite word to use, uh of a jerk. Uh, you know, and with all my respect to my friends in the hemp industry, is there were a lot of complaints that the um the loophole was closed in a um, you know, as part of a of a giant bill. It was kind of stuck in there. And everybody in the hemp industry said, this shouldn't have been done in, you know, in a big other bill and it should have been on its own and all that. How dare they slide this into something? And now, you know, we all want this slid into a you know a continuous deal with the realities of how things get done in DC.

AnnaRae Grabstein 9:47

And standalone bills, don't move. Although the Democrats are saying my point, and I love it with their new blue wave that they're going to be running standalone bills that aren't complicated. So we'll we'll see if the new Democrats and leadership can can actually stick to that. No, no, no. I yeah.

Federal Reform Reality Check

SPEAKER_03 10:08

No, no, again, this is me saying this with all love to to you know, just like the the way this you're right. This is just the way, it's just the way shit gets done in in BC. We all need to be realists about it.

SPEAKER_04 10:19

So if they were building, if they were building the new ballroom with hemp creet, that would actually get a lot of attention from the White House. That seems to be all he cares about is is that ballroom, right? You might have an idea there.

AnnaRae Grabstein 10:38

Yeah, I I love that. And I would like to build my house out of my future home out of Hemp Creek.

SPEAKER_04 10:44

Uh so well, there will be a president out of work that can manage the project if you want.

AnnaRae Grabstein 10:50

He's very good at construction management, apparently. Just ask him about the reflecting pool. Excellent.

SPEAKER_04 10:55

Just ask him about the reflecting pool. Um, of of special note, um, Ken Paxton lost. Is that the guy? Oh, the other guy too. The um Lieutenant Government. Dan Patrick, too. That's the guy that said, if I'm gonna lose on THC, so be it. Do it. Yeah. And so it was. And so it was. I actually want to focus in.

AnnaRae Grabstein 11:18

They are ready to have broader access to teach. See, They, I think, were really pissed to get their hemp taken away from them, and the medical program is is not a way to substitute what was lost. So we're gonna we're gonna see some action in Texas.

SPEAKER_04 11:33

And and we will, and we'll see how that goes. It's still it's still Texas, so there's that. But also, I think more uh more closer to home, and when I say home, I mean Jeremy's home, is uh Pennsylvania. And I think that is actually the one that I think folks have been, you know, it's it's they have a Democratic governor, they had a Republican state senate, now they have a Democratic state senate. My understanding is it was the state senate that was always the uh roadblock to anything happening there on adult use cannabis, and that seems to be out of the way. They the governor has put in their butt his budget, I think the past three budget cycles. Um that seems to me the likeliest and fastest way to get another state onto adult use. Jeremy, is that your read too?

SPEAKER_02 12:18

Uh yeah, absolutely. I think Pennsylvania is next. Um, and and you know, there's there's a number of reasons for that. One is that Josh Shapiro there is is wildly popular. Uh he ran the table with his Republican candidate. He almost, it's almost like he ran out of post. Um, and you know, he he has wanted this for three separate budgets. Uh he's called for it. The Democrats have called for it. There is a Pennsylvania uh cannabis caucus who is now calling for it and renewing calls for it. Um and and really, like Jay, you're absolutely right. The Republican Senate was the roadblock in the state. That roadblock has now been removed. And so we will see, you know, bills start to percolate through. That being said, I think there is some disagreement, as far as I see it from the outside, and I'm not in Pennsylvania, um, you know, so I'm sure people in the comments will correct me, but there there is some discussion over what canvas legalization should look like in Pennsylvania within the Democratic caucus there. Uh, there were some proposals for you know completely state-ran dispensaries, others had sort of a more free market vent. And so, you know, I think they're gonna have to work through that. The Democrats will have to get aligned. But yeah, absolutely. You know, Pennsylvania is a state of, you know, I think nearly 14 million people. Pittsburgh and Philly are really big cities, and you know, it's really exciting uh for the industry to look at that market coming online. And it also kind of, you know, it nicely starts to fill in, you know, the Northeast again, with Virginia coming too, like the map uh aesthetically is starting to look good in that region, which I like uh as well. Um and uh, you know, and there's just just one other point to make here, and and um thinking about Pennsylvania in the context of what is going on federally, and and to Mark's point as well about the filibuster, uh, even a I am blanking on the name, which makes my point a hit less hard, but even there was a Republican senator in Pennsylvania who said, look, you know, President Trump's leadership on rescheduling is allowing some of us who are on the fence to move off the fence and go towards uh cannabis reform. Whether that means legalization or not, you know, I don't know, but um it does mean that there is a real federal overhang in a positive direction for cannabis reform. And, you know, given winning 55, potentially 56 seats compared to, you know, 51 seats, one of those being the vice president in the last trifecta, you know, it's a lot less of a hurdle to get over the filibuster with that context. Um that being said, you know, Mark's point is totally true. The filibuster is absolutely a problem for passing cannabis reform. And, you know, this is reading the tea leaves, not real reporting.

SPEAKER_04 14:52

Well, tea leaves are good. Tea leaves are very good, Jeremy. Um, if I could switch. So are cannabis leaves. Yeah, I like this. One other election-related thing to say.

SPEAKER_03 15:02

Oh, I was just gonna- Oh, I think Adoray, you had something first. It looked like you were, I wanna, I don't wanna jump the line here with you. Go fine.

Massachusetts Ballot Shockwaves

SPEAKER_03 15:10

Okay. I just on Pennsylvania, you know, I I one thing I'd heard from somebody who is close to the process in Pennsylvania is that one of the things that is held up on the Republican side at the state senate was was the the extent and sort of nature of social equity uh in in the you know, in those laws. And um you know, and and I think that you know, it'd be nice to see if we could, you know, if states that now may be moving to adult use and have an opportunity to sort of look at what has worked in other states and more so what has not worked. Because as we all know, there's a lot that hasn't worked. Um, but you know, but there's there are some programs out there that I think seem to be more successful and more targeted. Like, you know, I think about like New Jersey has that entire office that is dedicated to helping small cannabis businesses, you know, that it like infrastructure for that, not just sort of giving a leg up in the in the um in the in the lottery, but like providing actual resources to to small businesses and things like that, you know. I think there's a real opportunity here um that that the state that these new new states can can maybe try to build on what's worked and what hasn't.

unknown 16:31

Yeah.

SPEAKER_03 16:32

Go ahead, go ahead and channel that.

AnnaRae Grabstein 16:34

Yeah, I think that that's a great segue. It brings up an interesting point because if we are making an assumption that some of these newly blue states are going to create um new new laws to create cannabis access in their states, um, what what are those laws going to look like? Starts to become the real question. And right now, as the DEA has been issuing um updates around its rescheduling applicants and things like that, one of the one of the items that's floating to the surface is just how um it doesn't really matter what the DEA is saying, you still need to be in compliance with state law, and the state laws have created their own rules and regulations that allow transactions to flow a certain way. And still until those state laws and or regulations are updated to be able to make it possible for um cannabis licensees to be able to participate in the DEA program, it just doesn't work. But for new programs, it presents a great opportunity to be thinking kind of about the future and about the industry's where it's going and creating more allowances or flexibility to align state programs with federal programs or to take learnings from what we saw about hemp beverages and traditional retail and create like multi-channel access for adult use, like taking something like a like a licensed cannabis product, but allowing low-dose licensed cannabis products in traditional retail instead of only focusing on dispensary channels. Like I think that my hope would be that these new state programs are going to be a lot smarter and a lot more kind of progressive in the way that they're thinking about the future of cannabis and what the industry could look like than just copying uh programs that that have been in existence already.

SPEAKER_04 18:28

I hope you're right. Yes. Yet I think I know you might be wrong. Just because every New York had all the same, they could have taken in all all but their own, they could have taken in all the same considerations and didn't and haven't, I guess, is part of my point too. Um can we shift for one second? Because as we were all we, I'm actually here, but still vote in California. Um we were focused on the election. The election is the most important thing that happened this week, unless maybe you are an Aurora, organogram, or maybe Kira Leaf shareholder, because shit happened on election day that had nothing to do with the election. Um which the we can talk about the timing because it was actually Kira Leaf's earnings report. Um and organogram and Aurora earlier in the day, certainly organogram, said they were going to be acquiring Aurora under the, you know, from the uh situation that Kira Leaf caused. Jeremy, we talked to James uh Yamanaka earlier today. Uh give us an update of what happened on, I'll call it election day, but where we are today.

SPEAKER_02 19:32

Sure. Uh so on um Tuesday morning, my days are blending together this week. Uh Organogram announced the bid for Aurora about $7.87.80 Canadian per share. Uh uh Pierleaf is offering $6 per share, so they beat them uh, you know, pretty handily on uh you know the deal price. Um it was interesting for a number of reasons. One is because I think, you know, since our reporting, a lot of us knew the deal was coming. We were kind of waiting for them to cross the T's and dot the I's and see what the actual framework would look like. Uh and I think second is that you know the deal was announced on Care Leaf's earnings and on the day of the midterms when there is a lot of oxygen being sucked up by people in the industry and journalists and analysts more generally. So, you know, the timing is interesting. I, you know, whether the timing was intentional, I doubt it. I I assume that they're working all weekend, and this is just when they could have landed these things. Deals are hard, as as many of you know. Um it was a nice full circle moment for us because we first wrote the story on October 9th, I believe. And it took a couple weeks for us to be proven correct, uh, but

Hemp Deadline And Lame Duck Odds

SPEAKER_02 20:40

we were proven correct, which is always nice. And uh, you know, I thought James Yamanaka was interesting. He answered a lot of questions about, you know, how this deal would be accretive to uh Aurora shareholders who have the option to take stock or cash, uh, you know, what this means for organogram's guidance going forward, I thought was pretty interesting. And, you know, how he's looking at the industry and how this is really, again, positioning for global cannabis export markets, not necessarily, you know, consumer cannabis markets in Canada or the US. So it's a different view of things. It's you know, it's also where organogram can play because they're Nasdaq listed and and they're not necessarily trying to compete in the US consumer market in the same way as the MSOs are. But uh, you know, all that's to be said, I thought it was interesting. Uh, and look, like, you know, CureLeaf on the earnings call did say, you know, while the while people were voting, like, this isn't done for us. Uh, you know, if we have diligence access, we're gonna come in and we're gonna look and we're gonna try and beat the bid. So, you know, I think it's not done. Uh, though, you know, I uh to beat $7.80 per share, that's a high price to pay. Uh so we'll see what happens.

SPEAKER_04 21:46

Mark, Anna Ray, anything from your side?

AnnaRae Grabstein 21:50

Uh both companies rolled out uh Aurora and Organagram rolled out pretty sexy looking websites with the announcement as well that were for the shareholders. And that was one of the things that surprised me the most. I was like, wow, it's it's it's amazing that they just showed up with such a strong campaign to the shareholders right away. But I mean, ultimately, I think big tobacco is placing a big bet here and has chosen organogram to be their play in the space. And uh and my guess is that the other big tobacco companies are watching this very closely and paying close attention. I know that there's a lot that has been quietly happening with other tobacco companies in the space, but organogram making such a large bet uh is is a big deal.

SPEAKER_04 22:39

On that particular note, I actually have a clip of James uh Yamanaka talking about this exact thing because we did ask him about BAT, their role in this, and what it means. Here's what he said.

SPEAKER_01 22:50

I can't speak for BAT. I did work there, but I don't work there now, so I can't speak for them. But to me, what it does is it really indicates their continued belief in organogram specifically. They're putting 187 million Canadian dollars on the table. And the fact that they're doing it this time shows that they have belief in the long-term future of cannabis. So to me, it's uh it should be something that I hope the shareholders take some belief in until you have a very strong cornerstone investor that is willing to continue to invest because they believed in the future of the company.

SPEAKER_04 23:24

So that's what he had to say. I will also note, yes, he does not work at BAT anymore, but had prior to 10 months ago for the previous 21 years, it was widely believed that he was uh put in place by BAT to be the head of organogram. And this is sort of the next, if you look at all the stages of BAT's engagement with organogram, his placement this deal is important to that. Mark.

SPEAKER_03 23:49

Uh I think that this is definitely the funniest outcome from as an observer of all of this. But also, um, you know, I think it proves wrong the the the sort of uh the years of fears that we've always heard from people in the industry that that it was the industry was gonna be controlled by big pharma. That's okay. That's it would never happen. It's gonna be controlled by big tobacco and big alcohol. Um, but you know, that but it's certainly in the US, that is all post, post, post uh legalization. Um, but you know, I mean, the the I mean they're not gonna touch it in the US uh at this point, uh, because again, it's still legal. But I think that this is just, I mean, as En Ray alluded to, I mean, I think it's just setting the groundwork for that down the road.

SPEAKER_04 24:37

Um, Jeremy, I know you have a time horizon on you. We're gonna get to everybody's favorite segment. That's what I'm gonna keep calling it. This, there's plenty of losers this week and loads of winners too. Anna Ray, you are first. Winner, loser, what do you got?

AnnaRae Grabstein 24:57

Um, I'm gonna call out the employees of Zen Leaf Dispensary in Highland Park, Illinois, who uh voted to decertify the UFCW union. And I guess that that would make them the winners and UFCW uh the losers. They partnered with a group called the National Right to Work Foundation, which provides legal defense to help employees get out of unions. And um, this is a very interesting development because the unions have played such a large part in cannabis legalization and then have gone on to unionize lots of employees. So I'm watching, I'm watching these winners um who have gotten themselves out of the union, and um I think it's just a signal of more to come.

SPEAKER_04 25:50

Jeremy, winner, loser, what do you got?

SPEAKER_02 25:53

Um a little bit of a cop-out answer. Uh, the Democrats, I think, were the biggest winner of the week, and it's it's hard to say otherwise. Um, but you know, I will caveat that, and not that I'm a political analyst. Like, I don't know if it was as much a vote for the Democrats on their agenda as it was an anti-Trump vote, right? And the Democrats were just the beneficiary of that. That being said, you know, I still stand by my point that uh this is a more positive federal framework for cannabis reform than the one we just left where we had a Republican dissecta. You know, uh Mark's points are well taken, right? Um, but but again, this is incrementally positive um, you know, for this industry. And so, you know, I'm happy the Democrats are a winner. I hope cannabis policy is the next winner.

SPEAKER_04 26:38

I hope so too.

SPEAKER_03 26:39

Mark, winner, loser, what do you got? I have one of each. Uh this week the winner is Florida, uh, because you know, having uh in another another moment of traumatic irony, having lost uh the bid for uh for adult use two years ago pretty pretty expensively and hard. Uh the given the way the DEA um regulations or at least initial guidance has come out uh last week, which I talked a little bit about my musings, but but not didn't focus so much on this. Uh basically, in in a state, basically, you can only um if you have a DEA license, you can only transact with someone who also has a DEA license, which isn't surprising that DEA is saying this, but it basically is creating a whole separate supply chain. And, you know, where Florida, where you have to be vertically integrated, is pretty much the only place where that works efficiently, you know, at least in the short midterm until those supply chains build up. So Florida is the winner for having lost its ballot measure two years ago. The loser is um is anyone who is trying to uh still again, anyone who is trying to understand uh and look at just the headlines of cannabis company earnings press releases. Uh and you know, when it says robust profitability, but you

Texas Momentum And Political Power

SPEAKER_03 28:00

lose but you have negative net income, um, and you know, it's like really, really, you know, adjusted Ibita is not profitability. I'm just saying. So anyway, we all lose when statements like that are made.

SPEAKER_04 28:16

Well, Ben Larson chimed in with his own loser for the week.

SPEAKER_05 28:19

That's good.

unknown 28:19

Yeah.

SPEAKER_04 28:19

And Coventer Dan Patrick, thank you. Uh Ben, I have uh winner of the week um is uh my hometown of Natick, Massachusetts, voted 77.03% no on question eight in Massachusetts, which I think exceeds where the state was on it. So kudos, Natick Redhawks. Uh way to go. Um and my loser of the week, I'm gonna go with um uh what Ben said, uh, Dan Patrick. If you make it your cause to lead that you're gonna be against THD, may you lose all of your future elections. I don't think that's why he lost, but I do like the idea that he did lose, was so against it. It is a chef's kiss on the election. Um and we're trying to get uh Vicky Goodwin back on uh the Lieutenant Governor elect now of Texas, trying to get her back in the show. Uh maybe we'll have her on on a Friday. That would be super fun to talk with all of us. We are now, oh yeah, I guess we have a comment. Someone else has a winner or loser. Yeah, I guess we're Vandergan right now are winners. Yeah. I guess Kirley might be a loser, at least the way the news stands right now, but we'll have to wait and see. Um, we are less than a month away from uh reconvening this group in real life in Las Vegas. So we look forward to that the first week in December. Um and everybody else, have a good weekend, and we'll see everybody next Friday. Thanks, y'all.

SPEAKER_02 29:39

Thank you.

AnnaRae Grabstein 29:44

We hope you enjoyed this week in Canvas Live. Thank you to our teams at Vertosa and Wolfmeyer and to our regular weekly producer Eric Rossetti. If you enjoyed this episode, please share, like, do all the things wherever you listen to podcasts, and please help us build our subscribers on YouTube by following our channel. Thanks for listening. And as always, folks, stay curious, stay informed, and most importantly, keep your spirits high.