Wie Leef Brands die Cannabis-Industrie in den USA revolutioniert

Leef Brands, das größte Extraktionsunternehmen für Cannabis in Kalifornien, verfolgt eine beeindruckende Wachstumsstrategie mit vier Säulen: Eigenanbau auf ihrer 187-Acre-Farm, fortschrittliche Extraktionstechnologie, Expansion nach New York und eine Bitcoin-Treasury-Strategie. Die Firma stellt Konzentrate für die Top-30-Cannabis-Marken in Kalifornien her und plant, ihr bewährtes Geschäftsmodell in neue Märkte zu übertragen.

• Entwicklung einer der größten Cannabis-Anbauflächen in Santa Barbara County mit geplanter Ernte 2025
• Drei verschiedene Extraktionsmethoden: Ethanol für Destillate, Kohlenwasserstoff für Konzentrate und lösungsmittelfreie Verfahren
• Konzentrationsprodukte machen etwa 50% des Cannabis-Marktes aus, einschließlich Vapes, Esswaren und Dabbing-Produkten
• New York als erster Expansionsmarkt außerhalb Kaliforniens mit 1,5 Milliarden Dollar Marktpotenzial
• Bitcoin als innovatives Zahlungsmittel zur Umgehung von Bankproblemen und als strategische Reserve
• Potenzielle politische Katalysatoren wie Schedule-3-Umklassifizierung und Safe Banking würden erhebliche Steuervorteile bringen
• Unterstützt von NBA-Spielern wie Jimmy Butler und Rudy Gobert als Investoren
• Mitarbeiter halten 29% der öffentlichen Aktien, während die Marktkapitalisierung bei nur 22 Millionen Dollar liegt, obwohl allein die Farm auf 40 Millionen geschätzt wird

Chapters

• 0:00 Vorstellung der Gäste
• 2:47 Leaf Brands Geschäftsmodell und Strategie
• 6:30 Extraktion und Produktionsverfahren
• 12:51 Farm-Expansion und Kultivierung
• 21:26 Expansion nach New York
• 27:46 Cannabis-Gesetzgebung in den USA
• 32:08 Bitcoin-Strategie von Leef Brands
• 36:03 Investorenbasis und Kapitalbedarf
• 42:48 Investitionsgründe für Leef Brands

Transcript

AktienTalk: 0:00

John, hello and welcome to a new episode of the accent talk today. My guest is the company Leef Brands, and I have two guys from the company here as my guest is Jesse Redmond and Mike Anderson. Hello and welcome to the show. Excited to talk today, guys, before we start, please take your chance and introduce yourself to to the community.

Micah: 0:27

Sure. My name is Mike Anderson. I'm the CEO of LEEF Brands. I've been in the cannabis industry for quite some time. I'm here with my coworker, Jesse Redmond, and I'll let Jesse introduce himself.

Jesse: 0:43

Yeah, thanks for having us. My name is Jesse Redmond. I'm head of Investor Relations and business development at Leef Brands. My background is I spent about 20 years on Wall Street, about half of that managing funds in the hedge fund industry. In 2016 I pivoted to cannabis, and I ran a dispensary in California for about three years, and then most recently, was a head of cannabis research at a company called Water Tower research, and I just joined Leef brands in January of this year. So for me, 20 years of Wall Street and about a decade in the cannabis industry, and just joined the firm A few months ago.

Micah: 1:44

yeah, so Leef Brands, you know, essentially, we've been, we've been operating in the licensed cannabis space for close to a decade now. My history in cannabis, so I started in Prop 215 in California, which started around 1996 which was a non profit industry, and then about eight or nine years ago, the state transition to a new set of laws, prop 64 which reset the way that the industry works to where we are now in a for profit industry. So recreational cannabis laws for profit and so to, I guess, just to answer your question, there's really five things that we're focused on over the course of 25 and rolling into 26 so our background and what we do in California, we're the largest extraction company in the state, or if, if not, the largest, we're in the top three, I'd say. And so we focus on creating concentrate products for many of the largest brands and retailers in the state of California. And to give you guys a sense of just the size of the business, so we our extraction facility consumes about 200 acres worth of cannabis material on an annual basis, and historically, since the inception of the company, we relied on farming partners throughout the state of California to supply material to us. We take that material, whether it's frozen or dry material, bring it to our facility, and we run it through, really three main types of extraction lines that we have. So one being an ethanol line, which is what we use for distillates, so different types of oils, a hydrocarbon line, which is using volatile solvents. And there's a whole array of different types of concentrates that are popular in the marketplace that are created through this line. And then the third one being a solventless line, which is really kind of an old school method of extraction, where you're using ice water, there's no solvents. You're using water and ice as a solvent. So those are the three main things that we focus on. And if you look at the the marketplace in California, and really throughout the the entire country, about half of what's sold in the Canvas industry is flower products, and the other half is concentrated products. And those concentrated products are made up of vape pens, beverages, different types of dabbable products, tinctures, topicals, anything that uses an oil you formulate it, and with whatever you're you're creating. And so they're about 5050, maybe not exact, but in California, that's about rough math, what it is. So we focus on the concentrate side of the coin, and that's what makes up our business. So if you walk into a dispensary in California, you're going to see all these different types of products, most of the larger, I'd say the top 30 brands in the state of California, almost 100% of them are our clients in some way, shape or form, not necessarily saying that they rely on us exclusively, but to a certain degree, we are providing them some sort of concentrated product that they need for their brand. So to compliment our business. Like I said, historically, we've, we've been purchasing product from over 250 different farms throughout the state of California. It's a full time job. We have an internal team that does nothing but works on work on procurement. So reaching out to farms. Hey, when are you harvesting? What strains Do you guys have? We need, you know, 40,000 pounds of dry material. We need 10,000 pounds of frozen material for for our lines. And so there's a lot of coordination that takes place, and it's worked thus far. But the company's definitely at the point now where it's like, we've, we've reached this scale where it made sense for us to bring cultivation in house. So about about four years ago, we started the licensing process in Santa Barbara County, and we and with the goal being like, we need to go out and try and win the largest cannabis cultivation permit in the state, if it's possible. And so we're pretty sure, I mean, we're definitely the largest in Santa Barbara so we won the license. We purchased a 2000 acre ranch to, kind of to house this 187 acres that we now have. This year will be the first year that we cultivate for ourselves. So next week is a planting day, which is exciting for the company. And really what that does, just to kind of simplify it, is it's going to simplify and streamline our business in a way that we haven't for almost 10 years, have not had available to ourselves, so our cost of goods are going to go down dramatically. We're starting with 70 acres. We're not going to plant the full 187 taking it in bite sized chunks over the next three years. So 70 acres in the early spring that's going to be planted with what's called an auto crop. It's a very it's a purposed crop for oil production. So we'll harvest that entire 70 acres that'll all be dried and put into our ethanol line for distillate production, and we'll immediately come back in and replant the same 70 acres with different types of products, so more of a diversified genetic profile that will then go into our different types of extraction lines that we have lot of that is decision is made up on a handful of different things client demands, like what we know works well through our extraction lines, and Also what's what's popular in the marketplace. So the farm, I guess, to start like our business, we're an extraction company. We're definitely one of the largest in the state of California. In California, we're focused on getting this farm operational and executing on that this year. Over the next three years, we'll be scaling into the rest of the farm. The third thing that we're excited about that we're working on in California is a piece of extraction technology that we have, or the To our knowledge, we're the only company definitely in California, but if not even in the in the United States, that has one of these, and that going too far into the details of what it does that basically, that it helps with our yields. So we're seeing about a 20% increase in our yields, which is dramatic. I mean, that's a differentiator that we have, that we think really separates ourselves from the rest of the pack, other companies that are doing something similar to ourself. So it gives us a yield increase, streamlines a lot of efficiencies, and helps target what types of material we should be putting into our extraction lines, and then I guess the next thing would be so like I said, we spent close to a decade building our business in California, getting it to the point where it's at, and now we're definitely at the point where we feel like it's time for us to take the knowledge that we've created and take the show on the road. So we're in the process of acquiring a license in New York, which is exciting for us, because it's the first time that we've ever expanded outside of our own state. So in the US, when people are talking about cannabis, when they talk about especially public markets, there's a term that's the MSO is. It's the multi state operator. So I guess technically, that puts us into the MSO position. New York would be the first, first expansion state that we've done. We believe that we're going to be successful. We've already we've been in market for about six months already, through a contractual agreement, or acting as a contractor, teaching someone else how to do what we do while we close on our own license. And so the idea that we'll take all of our equipment, which is already in New York, stuff that we've accumulated over the past eight or nine years, move that into our own facility, and then we own it and are in control of it, leveraging a lot of the relationships that we've built in California. So a lot of the lot of the brands that I've talked about, that we that we sell to, they're not only like number one, two or 345, in California, but they're also the top brands in a lot of the other states. So leveraging those relationships and trying to get it towards like, hey, let's take our top five brands in California and move into other. It's giving ourselves predictability on the sales side, and also giving our

AktienTalk: 10:07

the community, right? So Leef Brands has long clients predictability. And then the last thing I would just say since established itself in the US cannabis industry, where and that we're excited about, that we're working on right now as a Bitcoin strategy. I think maybe we'll get into that a little bit later in the conversation, but we've been accepting bitcoin as payment, found that to be a useful tool for our industry. what are the company's current projects?, You know, our industry kind of similar to the Bitcoin industry, has been marginalized by the banking industry because of the fact that our industry is still federally illegal in the United States, so being able to use Bitcoin as a payment method has been advantageous towards our business, but we'll get into that later. Jesse, in addition to to Micah, what do you think? Why does Leef Brands focus on outdoor cultivation?

Micah: 10:49

yeah. So for us outdoor cultivation, it's, it comes down What arer the major differences to indoor cultivation? to a few different things. One of them is it's the costs are good. So for us to grow a pound outdoor versus indoor. It's a lot cheaper for us to do that so like we're purchasing material on the open market right now, for anywhere from call it $25 to$50 for us to cultivate that material on our own farm, using round math here, but it's anywhere from $8 to $15 depending on what type of pound it is and what you do with it, it, you can't get your cost of goods that low with indoor material. So outdoors, literally, you know, row cropped, commercial ag farming, no different than corn or peppers, that's how we cultivate and we're able to get a high enough quality product and get enough of it to be able to run through the hundreds, hundreds of 1000s of pounds that we we go through on a monthly basis. So the main thing is cost of goods, indoor cultivation. It's really targeted more towards the other side of the coin that I was talking about a moment ago on flower sales, flower sales in California and in New York, for the most part, indoor kind of owns that the market. It's expensive, though. You got energy costs. You're running high powered, 1000 watt HPs light bulbs or LED lights that are, you know, running an indoor, controlled climate facility. And I guess the benefit to that is that you get multiple cycles throughout the year. So you can get up to five harvests a year on average, but the cost of doing that is very high. So those products typically go towards a different market segment than what we cater towards. And our business for the scale that what we what we do, and for us to be able to give the clients the amount of product that they need outdoor is really what works for our business. Yeah. How does leaf brands differ from the other companies in the cannabis industry?

Jesse: 12:55

Yeah, so I would say we're pretty unique in the cannabis industry. I'd say first, we're unique in the fact that we focus on large scale, bulk, bulk extraction. So there's a lot of companies that do extraction, but there are few that are dedicated to it like we are, and there's few that do it at the scale that that the scale that that leaf does. So I'd say number one is that we're focused on large bulk extraction. And like I mentioned, we power many of the top brands across California and now in New York. And so I'd say another unique factor is we're operating in the largest cannabis markets in the world with the biggest revenue opportunities. So California is about a $4.2 billion market. So it's the largest legal cannabis market in the world right now, New York is expected to do about 1.5 billion in revenue this year, and that's a fast growing market. And we think over time, there's a potential for New York to be even bigger than the California market. And as Micah also mentioned earlier, concentrates are big in those markets. In California, it's about 48% of the mark market. In New York, it's more than half of the market. So dedicated to extraction, focused on the largest markets that have that have a significant amount of concentrates being made. And I'd say maybe where we are most unique in this environment is that we are we expect to have improving revenue and generally improving financial performance. So we'll get to this a little bit later, but this is a hard time for a lot of people in the cannabis industry, and I think unique leaf is unique in that we have this unique set of fundamental catalysts that Micah touched on planting the farm, the advances in extraction technology, moving to New York, using the Bitcoin Treasury reserve strategy, and we expect that to have a meaningful financial impact on our business. And specifically, we think we can grow revenue at 30% annually over the next two years, and do that while margins increase at the same time.

AktienTalk: 14:45

question

Unknown: 14:53

Yeah, so it would be disingenuous to say that things are going great. So the M was an ETF in our sector called MsOS, and that's the largest ETF, and that peaked at over $55 a share on February 10, 2021 so just over four years ago today, that ETF that once traded at $55 is down to about $2.55 so you know, what is that? You know over a 90% approaching a 95% drawdown. So that's because of a few different things. There's been some fundamental issues, and there's been a real stalemate on political progress, which has caused a lot of that damage. But we've also seen some challenges in terms of growth opportunities for some of the larger operators. Yeah, this is specifically last year we had an opportunity for Florida to turn to adult use, and we just barely fell, fell shy on that boat. We needed a super, super majority of 60% and we got 56% so if Florida passed, that would have unlocked another state for adult use, which is currently medical only. There's some other states that have had slower rollouts, like Pennsylvania and Minnesota, and broadly speaking, those are cause, causing more muted growth, growth across the industry. If you look at the top five largest cannabis companies in the US the big, diversified players, we call them tier one, multi state operators, or MSOs, is the acronym, acronym that we use those are expecting, on average, 567, 8% growth this year. So still a growth industry. But because we didn't get Florida, a lot of that glow growth has been tampered and so while that's disappointing for the industry at large, and has caused us compressed compressed share prices, it also, at the same time, makes leave stand out as being unique, because we're not levered to Florida, we're not levered to Pennsylvania, we're not levered to the delays in Minnesota. Instead, we have this unique set of fundamental catalysts that we think will allow us to grow at 30% plus, while the industry is by and large, having single digit growth, right?

AktienTalk: 16:49

Micah, when you mentioned that leaf is moving to New York, what factors determine the success of a new market entry in a new state is that complicated? Are there special challenges?

Micah: 17:05

Yeah, what factors, say it one more time, what factor determine, what the success of the new market entry in the new state? Yeah. So you know, the way that we're entering So New York is the first one that we're going into. And I think that the main reason why we chose New York is New York is going to be a massive market. It's, there was some challenges in the very beginning, but really, what it comes from, it's from our clients. You know, we, we were getting a lot of phone calls from our clients in California that are, you know, ahead of us on expanding into all these different markets, saying, Man, I've, we've moved into New York or New Jersey or Missouri, these different states, but we're struggling. And the reason why we're struggling is because our manufacturing partner is new to it. They haven't been doing it for as long as as we have. And we're also running into situations to where, like our product quality is not the same in in New York or these other Marcus as it as it is in California. Is there any way that leaf would want to move into new markets with us? So that's, that's really kind of what started the thought process around it. I think that when we think about, like, okay, which market should we move into? There's certain things that we've taken to consideration. One is, how hard is it going to be to get up and operational? Some some markets, and, you know, even in California, some municipalities, it's just known you don't, don't go start a business in this municipality or this state, because they are going to be brutal. The licensing process is going to take millions of dollars. It's going to take three years to get operational. Like we're not in a position to where we want to take that. We don't want to go down that road. We've already done that in California. So it's like, learn, learning from those challenges and mistakes. It's like, okay, let's go into areas where there's a supply chain to support our business, where there's clients that we know that we can immediately start generating revenue with, and in states that are easy or easier than California to operate and then so taking all that into account, New York was the first one for us. That's where we were seeing the most demand from clients. So that's really how we're doing it. And you know, I think how often we do this is the kind of one of the questions that we're exploring right now. And I think we're going to spend 202 executing in New York. Probably roll that into 26 as well and learn, you know, it's the first time that we've done it, moving outside of the state and but there are a few other markets that we're looking at, other, you know, same group of clients that we're speaking to in New York, they're already doing well, and a couple of these other markets. And so the goal would be to, like, at least, you know, once a year, if not once every two years, start to plant a flag in each one of these new markets, all the way up until whenever, hopefully, the laws start to change here in the States, and we're allowed to ship our products out of California. So for any of the listeners that are wondering, well, why? Why? If you're if you're so big in California, why would you not. Just ship it to New York from California. The way that the laws work in California is that there's no interstate commerce, so makes it challenging and expensive. Each one of these states has their own set of cannabis laws. You have to go in and kind of read the rules and the regs and make sure that the state allows for the type of extraction methodologies that we use all of that has to be taken into account. But at some point in time that that will change in the United States, and we will be able to ship outside of California. So California the bread basket for food in the United States. Most of the food is grown here in California. And I think that the same thing will apply to cannabis in the long term. And so really, it's like, okay, California is the biggest let's cut our teeth in California and put ourselves in a position to where, when that time does come, we're in a great position to be able to ship our products. And then you're going to have this, like, moment in time when, all we're not going to be selling a widget in California for $1,000 we're going to be selling it and some other state for, for significantly more than that. And that will happen, that will, that will last for a period of time. So we just want to make sure that leaf in a position to capture that opportunity when it does come. And then in the meantime, let's plant a few flags outside of California and learn that process. And, you know, one of the things think the vision for our company, really, the long term strategy, is like we want to see. We think that we have this very streamlined, unique model where it's like, we focus, it's very niche, but it's like on a scaled size. So and it can be replicated anywhere. It can be replicated in Germany, Australia, like anywhere where there's cannabis laws, we think that our model could be picked up and taken into these different markets. And so the goal is like, let's prove that we are excellent at what we do in the United States. And then, as you know, the world continues to go the direction it seems like it's going where more and more countries are now allowing recreational cannabis use. We see opportunity to move outside of the US.

AktienTalk: 22:10

Jesse, we have to talk about the political situation right now in the US. So what do you think? What impact will the latest legalization trends in the US have on your business? Yeah,

Jesse: 22:21

that's a good question and a hot topic in our industry, yeah. So taking a step back when I think about the cannabis industry, especially the US, I always think about it as a state led growth story with a series of hard to time political catalysts, and so we get so we can unpack this a little bit. When I talk about a state led growth story, we have 24 adult use cannabis states. So adult use means anyone over 21 similar to alcohol, can buy legal cannabis. So about half the US that has about has adult use cannabis. That leaves us, you know, 26 states that have still either don't have medical or have medical and are going to move to recreational. So it gives us a lot of tam or total, addressable market to unlock. So that's where the gross that's where the growth story comes to the US is largely from these new states moving either from nothing to medical, or, more commonly, medical to adult use. So we think over three, 510, years, as legalization sweeps across the US, in a state by state basis, there's a real growth opportunity there. That's why we moved into New York. New York. New York is a relatively new adult use market, and when markets flip from medical to adult use, usually sales at least double. So Component number one is that state led growth story, and that's really done on a state by state basis, whether it's a people voting or sometimes it's a legislative

AktienTalk: 23:37

And how is leaf brands preparing for such process. And usually each year we add one or two new states. Last year we got Ohio. We didn't get Florida. This year we should get Minnesota to roll out, and hopefully Pennsylvania as well. So each year we're kind of checking out 123, news, three new states. Point number two is there's a series of what I always call hard to time, and I would underline hard to time political catalysts. And these political catalysts are things like safe banking, moving cannabis from schedule one, which is the highest, to schedule three, federal legalization, and then eventually we get up listing. Because, as your audience may or may not know, these stocks, if you're a plant touching company in the US, you can't legally list on the New York Stock Exchange or the NASDAQ, and so we're relegated to listing on the CSE and then trading on the OTC, the US, and in some cases, they'll also trade in other international markets. So up listing is another big value unlock. But I think the question you're getting at, which is important is, how do we get there, and what does that time frame look like? And what I referenced the MSOs ETF struggling so much over the last four years. That's because when Biden came into the office, he made all these campaign promises about things that were going to happen with cannabis, the stocks ran up tremendously, and ultimately, very little happened. So now Biden is out, Trump is in, and historically, the Republican. Haven't been as favorable for cannabis reform, but as your audience probably knows, Trump is quite a unique guy, and really not your traditional Republican Party, and he's voiced support for moving cannabis from schedule one to schedule three, which is important because it removes something called the 280 e tax burden, which about doubles cannabis taxes for the plant touching operators. So effectively, if we go to Schedule One to schedule three, cannabis companies will see a massive reduction in taxes they have to pay, and that'll also unlock a lot of valuable medical research. So that process was kicked off by Biden. We're in the final stages there, and it sounds like Trump is in favor of pushing that through. So schedule one to schedule three is huge, and we're optimistic that will happen, whether that gets done this year or ultimately happens next year. It's difficult to predict, but we're confident that we're headed in the right direction there. Trump has also voiced support for safe banking. Currently, there are a lot of banks who don't want to touch cannabis, and having safe banking would lower interest rates on the debt side, it would open up custody and brokerage and hopefully bring in a fresh round of investors to the space, and Trump has voiced the support for safe banking again. Timing on that is hard to say. I wouldn't expect that to be imminent, but maybe, if we're lucky, that gets done, be done before the midterms. The big, bigger piece of the puzzle that I think will take more time to unlock is the federal legalization component, which is making cannabis legal across the US. And it would be just disingenuous for me to say what a reasonable time frame is on that, but I would say something like, you know, three to five years kind of stands out. Could be five years or longer, but eventually we will get federal, federal legalization to us. And then somewhere along this path, through Schedule three, through safe banking, we think that we will get to up listings. So we think that us cannabis companies like leaf can go from the OTC and most likely, to the NASDAQ, possibly to the New York Stock Exchange, and again, that will unlock a whole new group of investors. So I don't I wish I had a crystal clear answer and more concrete projections, but what I look into my crystal ball, I'm optimistic about schedule three, I'm optimistic about safe banking. I am optimistic about federal legalization, but I think we need to have a longer time frame from that and that. I think somewhere along this path, probably through the combination of schedule three and safe banking, we can move to the NASDAQ, which would be a big change for us. potential changes in the US and international cannabis legislation? Is there anything you can do you can prepare for?

Jesse: 27:32

Yeah, so I think we're one of the best I think we're one of the best prepared companies, especially for federal legalization. We often talk about leaf brands having a call option on federal reform, but I'll explain what that means. So Micah mentioned that right now we have this massive extraction facility in California where we're one of, if not the biggest, producers of concentrates in California, which makes us one of the biggest producers of concentrates in the in the country. We're replicating that same model in New York, but as Micah mentioned, we really do have to replicate the model exactly the same in New York, different taxes, different regulations, different rules. It's really clumsy and awkward. But when we look over a longer time frame, and we look at this asset that we have with the farm called Salisbury Canyon Ranch, we have a 1900 acre farm. We're planting 180 we can plant up to 187 acres of Canada. Of cannabis right now, but over time, if we think about federal legalization, if that happens, and all of a sudden, the California cannabis can be shipped, you know, to Arizona, New York, Kentucky, Pennsylvania, just like the wine industry does, right? Most of the great wine in the US has grown in Napa Valley and Santa Barbara. That same thing can happen with cannabis, and because we have one of, if not the biggest farms in the state, that's great for just servicing the California market. But if we saw federal legalization, hopefully we can expand that permit size, go for about 187 acres, just to make a number, you know, to 300 acres. We already have the massive extraction facility in Mendocino County, and then we could start shipping those products all across the US. So when I think about it, and this is me wearing my sincere hat, not my sales hat, I don't know of another business, another cannabis business, that's better position for federal reform than leaf brands.

AktienTalk: 29:17

Micah, what role do partnerships and joint ventures playing your expansion strategy. You mentioned that before a little bit.

Micah: 29:26

Yeah, you know, at the moment. So as we move into New York, we had a short term partner in New York and and decided that, hey, this would be, you know, better for our business if we were just to acquire our own license. There's something that is nice about owning it being in full control, you're able to, just for obvious reasons, but control the business, the scheduling around it, and offer a better customer experience to your customers. So I think in a perfect world for us, it's like owning the licenses is optimal. But that being said, we have. Had conversations with, especially with some of the larger MSOs that have maybe over leveraged themselves and bought too many assets and realized that, like, man, it's really hard to be good or great at everything right? If you're doing indoor and you're doing brands and you're doing retail and and then you're also doing extraction, it's a lot of companies the larger MSOs, have struggled with that. And so we've had conversations with some groups that are like, look, we have these assets in different markets. Some of them are actually sitting, you know, idle at the moment, collecting dust. Is there a situation where we could come in and run them? So we're not, we're not opposed to it. And I do like the idea of getting us in some sort of partnerships with some of these larger companies, just for, like, future down the road, type, you know, strategic reasons. But at the moment, I guess, long winded way of saying, we have not done a JV or a partnership yet, but we're not opposed to it. We have had conversations. And so I think it really comes down to, like, let's get through 25 let's grade ourselves on how well we executed, and then reevaluate what would be a smarter decision for the company. Should we go faster and do that through joint ventures and partnerships and move into more markets quicker? Does that make sense, or is it? No, let's, let's kind of keep the cadence I talked about earlier, which is, you know, based a new market or two once every year or two. So I think it's kind of a TBD at this point. Like I said, we're not opposed to it. If it made sense and there was the right partnership, we would do it. We'd say, Yes, you know, and we've had some of those conversations, hasn't happened yet, but that's, that's the way we're thinking about

AktienTalk: 31:45

there are no current or planned acquisitions right

Micah: 31:49

No, I'm not beyond the acquisition of our of our now. license in New York. No, yeah, nothing that I would want to expand on beyond that. We were having many conversations, but nothing that's like you know that I would, I would feel comfortable sharing.

AktienTalk: 32:06

At the moment, we have to talk about the financial situation and financial side of Leef Brands also. So you mentioned that you were one of the first companies I know to invest part of your capital in Bitcoin. So what are the advantages does this offer, and what are the reasons for doing this in a very volatile market right now?

Jesse: 32:28

Yeah, so Bitcoin for us is we're looking at Bitcoin for a handful of different reasons. I think the first thing was, was that we realized that, like, man, there's a this is an excellent way for the cannabis industry to transact with each other. So the fact that we are operating in an industry that is federally illegal does create challenges when it comes to banking. We leaf, you know, we're we're fortunate we have multiple bank accounts, but they're not cheap, they're expensive and they're not necessarily easy to transact with our clients with either so if I want to send a wire to Jesse, if Jesse was in a different company, you know, a larger wire. It takes days sometimes to get the wire through, both on my end and on Jesse then, because you have to go through a lot of hurdles with the bank that you don't have to go through if you were in a different type of industry. It's also, it's also expensive. You're paying a percentage on the fees that are moving between accounts to accounts. And with Bitcoin, it's, it's immediate. It's cost us pennies to send as much money as we want to send to one one another. And then the other thing that's so, I think, for that reason, that solves a banking issue and a new creative rail of sending money back and forth that the banks cannot offer the so what we did is we set up our company in a way To where we could start receiving payments from our clients in Bitcoin. So we've accumulated about four bitcoins so far and but the I think the larger strategy here is we started paying attention about a year ago to just other public companies that have adopted a Bitcoin strategic reserve different industries outside of just crypto, and to see the impact that it had on their business. And what we kept seeing kind of over and over again, is that these public companies that go this direction micro strategies or strategy being the most famous for doing this. He's their CEO. Michael Saylor is really the guy that kind of wrote the blue the blue the blue print on how to do this, their business has exploded and and so for us, you know, Jesse kind of mentioned, just like, it'd be disingenuous for us, not to mention, like, but this has been challenging. The cannabis industry has been a very, very difficult, challenging industry to operate in since they decided. Since we moved the laws around in the way that we did, and the capital market side especially, has been even further impacted. So you've got companies like ours that are trading at a valuation that doesn't really make sense. And so we see it as being two different things. One Bitcoin solves a way for us to transact in a smarter way with our clients, but more importantly, I think it's that it's a way for us to grow our balance sheet. If Bitcoin continues to keep doing what it's doing, we have our P L strategy, which is everything that we talked about, we're going to the extraction company. We sell concentrates. We've got a farm. The farm is going to reduce our cost of goods. That's our P L strategy. Bitcoin strategy is, if we keep adding Bitcoin to the balance sheet, and it continues to go up, even at half the rate that it's been going up. It's a way for us to strengthen our balance sheet that we that isn't offered to us by it, by really any any other way outside of just us running our P and L strategy. So the Bitcoin community is very, very excited about their industry. There's been obvious and real life examples everywhere, just about how impactful it's been for these other companies that have done it. So we're excited about it. We want to be the first cannabis company to go in this direction. I'm highly confident that the strategy will work, and when it does, I there's no doubt in my mind that we're going to see other cannabis companies go in the same direction as ours. We've already had a handful of CEOs from other companies and CFOs reach out to me. They're they're looking at the same thing. We were just the first to kind of take the leap, the step in that direction.

AktienTalk: 36:39

All right, what role do institutional investors play for the company? So I studied your presentation, and it was really surprised. I saw a number of basketball stars from the NBA as investors. So does that came how does that came about?

Micah: 36:56

So, yeah, so you know when, when I think of institutional investors, I think of like large hedge funds, right? Pension funds and huge institutional money, outside of maybe a few of the MSOs. A lot of that money has not necessarily come into the cannabis industry in that way. So leaf, the money that leaf has raised to date has really come from high net worth individuals, family offices, that type of, that type of stuff. The NBA guys specifically came by way of introduction, that that that, that I a relationship that I had, and I was introduced to a guy named Rudy who plays for the Timberwolves, Rudy gobert, and he, you know, sat down with me a handful of different times over the course of about a year, and decided that he was going to invest. And then once one of them did, then I, you know, I was introduced to the next guy and to the next guy. And so I think we have maybe six guys now on the cap table, Jimmy Butler, Rudy, and a handful of others that have come in and significant way, and they're very supportive to the business. And, yeah, looking forward to they're all coming out to the farm once we get going this year, which is great. So it's been good for us. It's they, you know, it's been fun for them, I think so, yeah, leaf has been fortunate to have these relationships. Yeah, and just, just to add on to that, on the institutional side, a little bit in terms of the value unlocks for cannabis, I mentioned things like safe banking and schedule three and federal legalization and up listing along that path, another thing we expect to happen is increase institutional adoption.

Jesse: 38:33

So micah is absolutely right. There are not many institutional investors in the cannabis industry. If you look at the top five multi state operators, the tier ones, the biggest cannabis companies, even amongst them, it's a it's about, it's usually 345, 6% of the investor base, investor base, or institutions, and a lot of that is because of investment guidelines issues. Investment guideline issues where they say, I can't invest in, you know, cannabis in their guidelines, or custody issues, or brokerage or brokerage issues. So we expect, and also being on the lower exchanges doesn't help too, right? Like being on the OTC is harder for institutions versus being on the NASDAQ or the New York Stock Exchange. So we

AktienTalk: 39:12

And are you planning any capital increases or the expect, over time, as the cannabis industry matures, as some of these regulations, like safe banking and schedule three happen, that we will see increase into institutional adoption. And I think that's another potential way we could see share prices go higher is if some of these institutions start to come into the cannabis industry. But today, that's generally 5% or lower for most businesses. League is unique, and that we have the athletes that that Micah mentioned, that's about 9% of our investor base. Another way we're unique is the companies. It's about 29% employee owned in terms of the public shares. So about 38% of our total float is between the is between the athletes and employees, which is something that I like. issue of new shares for in the near future?

Micah: 40:01

I think that we're in solid ground right now. We've, you know, coming out of 24 and into 25 we definitely have invested significantly into inventory, building out the farm, farming, just whether it's cannabis or any sort of ag industry, there's always a big upfront cost as you're getting plants into the ground, and then you see the fruits of your labor later in the year, and we're no different for us, right? So we put a lot of cash into these two initiatives that we have, and we expand plan to see that come start to trickle back in, and starting in q3 the one area that I would say that we are exploring where there could potentially be a capital raise is really to support the Bitcoin initiative we're highly aware of where we're at right now in terms, you know, valuation wise. And know that like doing an equity round right now doesn't really make a lot of sense. It's too dilutive, so we're keeping that in mind, but that would be the one area that we could potentially do some sort of a debt round, do a convertible note so it's not diluted with converts later down the road, but we're still kind of ironing out the details and speaking to groups about it, right?

AktienTalk: 41:07

Guys, at the end of the show, I'm asking my guests, what are the main three reasons why people should have your company, in this case, leaf brands on the watch list. And I want to ask you the same

Jesse: 41:18

Yeah, so happy to take that one, I would say the the first and foremost reason is the set of fundamental catalysts. We talk about having four pillars of growth. This year. Those four pillars are planting Salisbury Canyon Ranch, which is which is our farm, the advances in extraction technology moving into New York. And then fourth is the Bitcoin Treasury reserve strategy. So number one, are these four pillars of growth, which are fundamental catalysts. Number two is the potential for these political catalysts. I mentioned. Timing is difficult to predict, but there are things out there like schedule three, which will again unlock a lot of value to reduce taxes, safer banking, which we discussed, and then over a longer time horizon, things like legalization and up listing to higher exchanges. So series of political catalyst are important to our industry. Then the last is that cannabis stocks in general are cheap. But just speaking specifically to leaf our we recently we have this farm called Salisbury Canyon Ranch, which we discussed today. We recently had an appraisal done of that farm that came in at $40 million that doesn't mean we can go sell it for $40 million today, but that is the independent valuation was $40 million contrast that with our market cap, which is about $22 million today. That when we were recording and so we had this asset which is appraised at $40 million but the market cap of the company is just $22 million so whether you look at it that way, or if you look at the way we expect to see things like revenue margins and EBITDA to increase as these four pillars of growth play out, I would contend that leaves, leave stock is cheaply valued. So when I look at it, I see the three big reasons being the fundamental catalyst, the potential for political catalysts, and then just the compressed valuation of the industry and leave stocks specifically, right?

AktienTalk: 43:04

I think that makes absolutely sense. Thank you for your time, guys. It was absolutely pleasure for me to have you on the show.

Jesse: 43:11

Yeah, thanks so much for having us. This has been fun. Thank you. Okay, thank you. Then next time bye bye bye, guys, see you.