High Spirits: The Cannabis Business Podcast
Hosts Ben Larson and AnnaRae Grabstein serve up unfiltered insights, reveal their insiders' perspectives, and illuminate transformative ideas about the cannabis industry for people who want to make sense of it all.
High Spirits: The Cannabis Business Podcast
#054 - Cannabis Business News Round-up | August 7 2024 | Harris-Walz, OH Rec Opens, No MO Hemp
๐๐๐จ๐ข๐ง ๐๐ฌ ๐ญ๐ก๐ข๐ฌ ๐ฐ๐๐๐ค ๐๐จ๐ซ ๐๐ง๐จ๐ญ๐ก๐๐ซ ๐๐๐ง๐ง๐๐๐ข๐ฌ ๐๐ฎ๐ฌ๐ข๐ง๐๐ฌ๐ฌ ๐๐๐ฐ๐ฌ ๐๐จ๐ฎ๐ง๐-๐ฎ๐ฉ!๐ฟ
It's been another eventful week in the world of cannabis, and we're excited to talk about it. Here's some of the topics that are top of mind:
๐บ๐ธ Kamala taps Gov. Tim Walz of MN as her running mate
๐ฐ Ohio launches adult use sales
โ Missouri bans Delta 8 and unlicensed retailers
๐ Q2 earnings are out and companies are refinancing their debt
โ More!
As always, High Spirits is more than a podcast โ it's a dynamic conversation among leaders in the cannabis industry. We film live, and your participation is what makes our discussion richer and more meaningful. We invite you to contribute to the conversation and let us know what's important to you! What topics should we delve into? We welcome your questions and comments, so drop them into the chat and join us as we dive into the current events of the cannabis industry!
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High Spirits is brought to you by Vertosa and Wolf Meyer.
Your hosts are Ben Larson and AnnaRae Grabstein.
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THANK YOU to our audience. Your engagement encourages us to keep bringing you these thought-provoking conversations.
Remember to always stay curious, stay informed, and most importantly, keep your spirits high.
Hey everybody, welcome to episode 54 of High Spirits. I'm Ben Larson and with me in person in person, is Anna Rae. Hi, it is August 8th Thursday. Thursday, august 8th 2024. And we're here at the Virtosa headquarters in a different background than last time, but always good to be in person.
Speaker 2:I am so stoked to be here and Virtosa is celebrating today.
Speaker 1:We are celebrating Really fun. Hopefully no background noise.
Speaker 2:It was so fun to get to give high fives to your team before we started this. Everyone's in a great mood and you got your whole team team in in town today, right?
Speaker 1:whole team is in town uh, days full of just celebrating each other meetings, uh, a lot of presentations from one department to the next, uh, and then, of course, some evening events, which has resulted me in being a little hungover this morning.
Speaker 2:So sorry, sorry sounds like you were enjoying more than just thc beverages, then huh uh, that's where it started, with some yeah, um but you don't get hung over on those no no, those did not cause the hangover.
Speaker 1:Uh, that was the sake and karaoke at ramen shop last night. A shout out to ramen shop if you're ever in the berkeley oakland area um, fantastic little restaurant what was your karaoke song yesterday?
Speaker 2:I wish I could remember there were.
Speaker 1:There was many songs. I I don't know if I actually selected one, but I participated on your team.
Speaker 2:Is there anyone that deserves a shout out for an excellent karaoke performance? Um?
Speaker 1:I I would say, like george uh, who's one of our director of operations on our team, um, his, his uh fiance is uh a manager at the restaurant, and so the two of them not only do they both uh cook amazing food, but also incredible karaoke singers and just a ton of fun. So a huge thank you to george and chelsea for organizing that and doing all the things, and then, of course, our chief of staff, michael finkbeiner uh, who's been the master of ceremonies the whole week.
Speaker 1:Um, awesome it's just, it's my favorite week of the year. It's like being able to celebrate the team and our ability to survive yet another year in this crazy fucking industry sorry.
Speaker 1:So it's an anniversary week that you do every year, and then you also do team in-person development, team building yeah, it's like, you know it's uh, for the most part we're a pandemic slash, post-pandemic company and you know, we we were around for about a year and a half before before the pandemic hit, and so we became very virtual, very dispersed, um. But culture has always meant a lot to me, and so it's like finding ways to really maintain the culture that we intended to build with the company. It's been a constant exercise.
Speaker 1:But, this week. You know, also, while having limited resources right, it's expensive to fly an entire team in and house them for a week, but it's the one thing that we have prioritized every year. So well, I think it's the one thing that we have prioritized every year, so well.
Speaker 2:I think it's interesting, though also, you are not the only cannabis company that was basically started and was a pandemic company. The whole industry has grown so much over the past couple of years, and those years of 2020 to 2022 were such crucial business creation times and even if businesses had started, certainly were growing during that time. People loved their weed during COVID.
Speaker 1:Absolutely. It was actually one of those. I remember the summer of 2020, like how chaotic it was, when you know, march and the shutdowns hit and people were scrambling to cut costs and they didn't know how long it was going to last and what was going to happen in the industry. Here in california, we rallied the troops really fast and had as many conversations on um with sacramento as we could and it was like a three-day period where we convinced the politicians that, hey, you, you called us medical we're, we're essential we are essential and we got to flip the lights back on within the week.
Speaker 1:Yeah, it was huge um and then and then, sales went through the roof it was like oh amazing people, uh, consume weed when they're stressed. How about that?
Speaker 2:sales went through the roof, and then so did the stocks yeah it's that's when all the cannabis public market stocks peaked um and it's been all downhill from there.
Speaker 1:We'll talk about that. We'll talk about that. Yeah, earnings reports are out.
Speaker 2:But what I wanted to touch on with the whole hybrid thing and having the team in town is I have started to see an evolution where, as most of the SG&A corporate jobs in cannabis have been remote for the past couple of years, it's starting to substantively shift back to more hybrid and in-office roles.
Speaker 2:And one of my favorite ways and this is an insider's tip, folks, if you're listening to learn about the strategies of what companies are doing is to read their job posts, and often you will hear things about new process development, ERP implementation, communication strategies all types of things that you won't hear in an earnings report or publicly out of CEO's mouth when you start reading job posts.
Speaker 2:So I do it all the time and because I like to try to find all the backdoor inside Scoop. And I was just noticing this week that a number of MSOs that have high level VP jobs posted are saying that they're hybrid three days a week in the office in Chicago or four days a week in the office in Massachusetts and things like that and I think that that shows that people are ready to have teams collaborating in person, but also that there is a belief that the talent pool is willing to show back up in the office and for a while. I think that lots of CEOs that would have loved to have their teams right outside the wall or in the room with them were feeling like they couldn't attract people that were willing to come. And now it seems that that's starting to change, and it's not just in cannabis. We're seeing this, I think, in all business.
Speaker 1:I think it's interesting that they have to state it, though like a three-day hybrid, I mean, we're constantly working on our space that we're sitting in Um, and my goal is to never have to state what a policy is, but like, if we want people around us, that we should make it attractive enough for people to want to be here. Yeah, and that's a big part of what this week is. It's like, you know, it's like a for the people that can't be here because they don't live here. Like give them a sense of, of a home and a location, something to look forward to, come see. It's kind of like the nucleus, but for the people that are here, I know that every time we make an improvement to the building, it's like it's that much more of a draw for people to want to work here.
Speaker 2:I hear you. I think it's aspirational, like, let's be real, a lot of your team doesn't even live in California. So, as nice as you make this amazing office space which I will be co working in all day today after this podcast yeah, I mean, people don't live close and there's something to be said for getting to live in a rural place and get to have a salary for a California Bay Area company.
Speaker 1:I mean, look, talent is everywhere and we don't want to limit ourselves and if we can find a way to run our company and be effective and efficient and do all the things, and I, honestly, I look at what our team does and the contributions from all of our remote employees and, um, I, I, I don't think I'm going to be one of those CEOs that that pushes hard to get people back in place. We are also a manufacturing company, so we do have a contingent of people that have to be here every day which is a little different.
Speaker 1:But yeah, I, I mean I, I live 20 minutes away and I'm pretty remote. Yeah most days.
Speaker 2:I mean, I love working from home and I do it most days, and I don't work at home when I go on site to meet with clients. Do I anticipate myself ever paying rent for an office again with clients? Do I anticipate myself ever paying rent for an office again? Um, no, uh, will that possibly change? I'm open to it, but yeah, I, I.
Speaker 2:I like this new world that we live in and I realized that I couldn't have gotten there without covid yeah absolutely so um on with the news, yeah so a few months ago we hung out and had a great time together in Minneapolis but also of a new, emerging way to think about cannabis regulation, which is really like a one plant cannabinoid regulatory system that provides outlets for different potencies and form factors of products in different parts of the market.
Speaker 1:And also just a true like vision of the future, of like what normalization looks like. Absolutely To be able to see THC on a restaurant menu and just order it, instead of ordering alcohol or some other product.
Speaker 2:Just sensible. And, as everyone has been talking about Minnesota this week, all the people are so nice, nobody's gone crazy because they can buy THC at a restaurant.
Speaker 1:And tax dollars are flowing in.
Speaker 2:Yes, so big news. This week we got the governor of Minnesota on the ticket, tim Walz on the ticket, with Kamala Harris as Democratic presidential candidates, and it is very exciting, exciting. I think we have the most pro drug policy reform, pro thc ticket in history.
Speaker 1:Yeah, first time ever, both the vp and the presidential candidate are supportive of drug reform, criminal justice reform like it's massive it's huge, absolutely on top of that, like tim walls has shown that he can use the power of like a, a democratic weighted government, to affect change and do it quickly. And I think, just because of what a trump administration has shown that they're willing to do when they, when the cards are stacked in their favor, like if, for some reason, we end up in a realm where harris walls get elected and if we get a few more heads on the house and senate, like I think we could see, like change happen really fast and I know I I know we democrats take the senate and the white house yeah what about the house?
Speaker 1:I don't know, I I just. There's so much momentum right now like I heard this new group being launched uh, republicans for for, republicans for harris for harris, yeah yeah and it's uh, it's taking a lot of the nikki haley contingent and stacking momentum there. But, like you know, if the, if the Democratic presidential race is starting to be really strong, like that's going to bring out voters, that's going to bring out a lot of momentum which could start to swing some of the House and Senate races.
Speaker 2:Yeah, it's huge, and we had a great conversation last week with Jason Ortiz and we talked about Kamala Harris's both record in terms of kind of her past with drug policy and cannabis, and also the potential future. There is a lot less debate to be had. This is a guy that has been a leader in his state of creating very sensible regulation, being very open-minded to listening to new information, charting a new path, creating a position of his own, really. So he just seems great. He seems like the Ted Lasso of the Democratic Party. It's like how do we? I listened to him speak yesterday and he's got that football personality.
Speaker 1:He's fired up. I love it. My one fear is that the two of them, they're both pretty liberal. Together they're very liberal. If we're talking about the one issue that I like to vote on, uh, which is cannabis, um then it's all great. But when you bring in all the broader politics which we're not going to do on this show, um it it gets a little less. Uh seems a little less strategic. In in that factor is's like is it going to scare away? You know, the close to center Republicans.
Speaker 2:Totally agree. There's a lot of things that we could point to that are controversial. I think about both of them, both Harris and Walls. But yeah, walls is a. He's an old school liberal, for sure, and former Republican.
Speaker 1:Oh, I hadn't picked up on that and everything I've heard yeah, there's a story about um him attending a bush rally, um, and he got into some sort of scuffle, uh, at the rally, because he stood up for someone else who was wearing a carry pin that was trying to get in. And, you know, security said said to that person that oh, you've been flagged as a threat, you can't come in. And Walls stood up for him. He was like no, he's a student of mine, I'm a teacher. And then security basically said oh, you've also been flagged and you're not allowed in. Wow, and that was his like. What do they call that His origin story? Right, it was like that's when he became a Democrat or a villain to the Republicans.
Speaker 2:Well, so also there was a lot of speculation, and I was in the camp. I thought Josh Shapiro was going to be the VP nominee, and we've been talking a lot on this show about how important Pennsylvania is to legalization. Pennsylvania is just as important in the presidential race for the same reason, because it's a very large state by population, which translates into lots of electoral votes, and Josh Shapiro was looked at as someone that could help deliver Pennsylvania to the Democrats. There turned out to be a lot of controversy, I think, around him, and he is very much closer to center than than maybe Paris is and certainly than walls is. I wonder, if I don't know, I wonder, I wonder what would have been the best path, or what will be the best path, and only time will tell.
Speaker 1:Yeah, I think it would have turned the whole. Next, like, how many months do we have? Four months something like that yeah, august, september, yeah, um it would turn the next three to four months about Israel and they just decided that wasn't strategic.
Speaker 1:Yeah, I'm, and they just decided that wasn't strategic. Yeah, I'm kind of, you know, from again from a cannabis lens, I'm, I'm. I prefer taking that out of the equation and creating some opportunity. There hasn't been any indication that it'll be a part of their platform but, um, there's an opportunity for it to be cannabis, to be part of the part of the discussion.
Speaker 2:And from the cannabis lens. I think that we couldn't have chosen a better VP candidate.
Speaker 1:Honestly, I'm stoked. I've been having dreams about the Minnesota ecosystem just expanding all across the United States, which I know is way too optimistic, and I know we've trained ourselves in this industry not to be so optimistic but I'm allowing myself to to enjoy this moment yeah, and just having legislators and people in government that have experience firsthand with um, with the cannabis market, with with thc in an open commercial environment is it can't hurt.
Speaker 2:No, so I love it yeah go.
Speaker 1:Tim walsh, let's go, let's bring minnesota to the people let's bring de-scheduling and legalization and all the things to the people we tell the people as elliot lewis says and you said de-scheduling.
Speaker 2:Rescheduling is what we've been talking about. Um, there is also speculation that, as a result of Biden stepping back from the presidential campaign, that it is potentially more likely that rescheduling could move forward because he's as focused on the campaign. Do you think that we'll see any substantive action from Biden now? He's not worried about the November election.
Speaker 1:I don't think so. Yeah, I mean uh, yeah, just I think him getting out of the bed in the morning and, and you know, making breakfast is probably a win at this point and so, oh sorry, I mentioned I was hung over and just like a little he doesn't make his own breakfast. He has a chef for that obviously all right.
Speaker 2:Well, let's move on yes, please to another big win for cannabis this week, and that is ohio ohio, we had aaron gore on what that was six months ago probably six months ago, and they, they finally had their first retail sales I don't not garden society, but oh, the state of ohio
Speaker 2:right um, yeah, it started yesterday apparently there. It was highly inefficient for all of the retailers. People had to wait a long time and the transactions were complicated. Figuring out the difference between medical and adult use retail has not been easy, but um, adult use is now available for anybody of age. In the state of ohio there are dispensaries. Go to them, buy weed buy weed.
Speaker 1:Yeah, it's uh not surprising, unfortunately, that a state rollout what is? How many? How many state rollouts have we witnessed now? And they still can't go smoothly and they still haven't learned how to do it.
Speaker 2:I just don't know why it's so complicated. Yeah, it's. It's interesting to see like in in California, when we transitioned to adult use from medical, there wasn't a lot of focus put on maintaining a patient ecosystem and keeping products separate. There was some ways that were optional, that retailers could opt into doing so, but then what we've seen with more of the more recent transitions from medical to adult use in places like New Jersey and now in Ohio, is that in order for retailers to get approved to do adult use sales, they've had to put together plans of how they promise to ensure continued ongoing medical access for patients and to make sure that those products are available. But in reality, with the market dynamics, there ends up just being way less patients than there are adult use consumers who want to come to the store and it's messy and complicated from an inventory perspective just from a prescription or a recommendation for medical cannabis when they can also buy the product Same product Same product, same store?
Speaker 2:Maybe they have to pay taxes where they didn't. Medical, you know, depends on the market.
Speaker 1:It all works itself out eventually yeah, yeah, it's unfortunate, though, like that, a the medical focus has gone away. I think we've talked about that in the past. It's just it everything moving to recreational, like retail, it kind of removes the focus of, like, a lot of people that do use uh as medicine.
Speaker 2:Right, yeah, and and I hear you because I believe inherently in my core that cannabis serves many medical uses and can improve people's lives for the better from a wellness perspective. And yet I don't think that cannabis needs to be behind a prescription wall. I think of it. It's it's an over-the-counter medicine. It's something that people can choose. It doesn't have like a high degree of um of potentiality for an overdose, for a terrible um interaction with another medicine.
Speaker 2:And as a result like an over the counter environment where people can figure out what works for them. I think makes sense, and that once true medical products are developed, then prescriptions for those products can make sense.
Speaker 1:And that's going to be for more targeted, specific um symptoms, conditions and form factors yeah, I just I I do think there's a market for the in-between and I've actually we've, at vertosa have been having a number of conversations directly with doctors that have patient networks that are open to prescribing cannabis, but they feel that they they just don't like sending their patients to dispensaries and yeah, like of course they like they don't know what's going to be at the dispensary, they don't know what to recommend and, like the products that they don't know what to, they don't know what products to recommend because they're all kind of geared towards more.
Speaker 1:You know the the recreational use and, um, there are some good products out there. Don't come out with the pitchforks. I I recognize that people have created products that that can speak to doctors, but, um, there's a gap. There's there's a gap and we've actually been thinking about it. You know, because of the hemp opportunity and it's like oh is, can you create a more wellness? You know hemp brand, yeah, um, but because of all the limitations on the hemp side there's also, it's like you can't do medical dosing right at like a 0.3 percent by dry weight, because you want kind ofa more pure product sure it's like oh like.
Speaker 1:If you're following a certain rule set, you have to add all these ingredients to achieve that 0.3%.
Speaker 2:Well, and what we're seeing in Germany is much more what you're describing is doctors prescribe an actual product and patients go and get it from an actual pharmacist. I think that it's all going to be on the table. I think that it's all going to be on the table. I think that rescheduling is a trigger to be able to open up a lot of different product innovation because of research and making cannabinoid product development more accessible for pharmaceutical companies. How fast they move into it, I don't know, but there are some products out there like Epidiolex is an example. There's not a lot that have gone through the FDA process, but yeah, a doctor doesn't want to send their patient to a dispensary they probably never did and I just think that it's the wrong place to be going for a very specific prescribed condition.
Speaker 1:Right, not to mention from the brand side. If you were to create said product, it would be such a limited customer base and you'd have to get your products into all dispensaries, so it just doesn't make sense, right? That's why these products don't exist.
Speaker 2:And also the cost of true medical products that move through the FDA, which is this whole issue that we see that's been going on with weight loss medications and brand new medicines that are just recently approved. That will cost thousands and thousands of dollars, and it's because the process to get drugs approved in this country costs so much from a development standpoint, and so it's very likely that true cannabinoid medicine is going to be similarly inaccessible financially to many patients, who then will continue to choose to self-medicate themselves, unless there's something that is so unique about said pharmaceutical medicine. You know it's a complicated world we live in, um for sure.
Speaker 1:Yeah. So let's legalize, let's go back to that. We just, we just need to legalize. Yeah, All right. Moving on and kind of going on the hemp thread, missouri, their governor decided to do an executive order to ban Delta 8 and kind of in a way intoxicating hemp by mandating that it goes into the dispensary channel. So hemp basically out of Missouri at this point, it seems through executive order.
Speaker 2:And from your perspective, as someone that's deeper in hemp than I am, do you think that this has legs?
Speaker 1:I mean, yeah, has legs. I mean, yeah, it's, it's you know we we keep. The big battle right now with hemp and cannabis comes down to like states rights and federal preemption.
Speaker 1:and the cannabis industry has proliferated the way it has over the years because of the notion that states have the right to do what they want to do and this is historically supported by you know, conservative, you know voter base right, which is kind of an interesting dynamic that's going on right now because hemp is very popular in a lot of conservative states and the operators in hemp there's a lot of conservative-leaning folks versus the more liberal-leaning folks in cannabis, but a lot of the hemp folks are leaning on federal preemption to kind of continue the proliferation of hemp products throughout the states. And so we just find ourselves in this really weird political dynamic where you know, obviously it's just talking your own book and very self-interested, but it's like I I I generally am supportive of states rights and that comes rooted from what we've benefited from in the cannabis industry and so if we are to remain consistent in that and that's what missouri wants to do, then that's what missouri is going to do, it all coming down to one person, the governor.
Speaker 1:I, I don't like it, um, especially because there's things like lobbying and campaign contributions and we're in an election year, and so there's probably things happening behind the scenes that I'm not going to pontificate on.
Speaker 2:But yeah, well, and let's let's be real that something like this only has legs if enforcement follows. And I I don't have numbers in front of me right now in terms of what the hemp space looks like in Missouri, in terms of how many hemp stores there are and where the outlets are that people are selling intoxicating hemp-derived products, but are those people going to stop selling products in those channels? And if they don't, then what happens? And it's not dissimilar from you know what has gone on in new york city with all of although I did, I did hear, I did hear hokal is shut down like a thousand oh yeah, they've been shutting them down, but it took, you know, the last two, two years to do it
Speaker 2:and so there was a good run there where all of these illicit dispensaries were able to continue to operate. Because when we talk about compliance and if you've listened to the show, you've heard me say it before, but it really is a spectrum it's about what happens when you break the rule, not just what the rule says. And if nothing happens when you break the rule, is it really a rule? Yes, it's a rule, but I think that that's what remains to be seen is that there's a lot of online transactions that are happening in the hemp space. It's going to be really hard for Missouri to shut, shut that down how will they try?
Speaker 2:will they try? What are they going to do with the retailers that are selling these products? Yeah, how much legs will that have? So, um, I I'm with you that I think that that this is absolutely a states' rights. This is a new side to states' rights is like states prohibiting.
Speaker 1:Yeah.
Speaker 2:And so if you're for states' rights when they get to allow, then you have to be for states' rights when they get to prohibit. I guess. Really, I just like access.
Speaker 1:Right, yeah, we had the Texas discussion a couple weeks ago. We're going to be talking about Georgia, is that next week? Yeah, next week Georgia. Yeah, that'll be interesting.
Speaker 1:Probably pretty similar to Texasxas, I'm feeling yeah but I I think this is just the world we're gonna live in. It's funny because it's like I I I spent a lot of time talking about this, especially, like you know, with the, the various groups that I'm involved in, and I keep thinking about, like well, what happens if we actually do just legalize cannabis. I'm like this whole, like all this nonsense, does it just go away? Because then we have, like open access to intoxicating, intoxicating cannabinoids through the cannabis plant. Um, wow, what a wild world that would be to finally just like, oh oh, it is the same plant.
Speaker 2:It would be so much more efficient.
Speaker 1:We'd have high THC plants and high CBD plants that we extract THC and CBD from, and all the other beautiful cannabinoids.
Speaker 2:There's so much there. I think that even within that utopian dream of a one plant policy and a regulatory environment, it still begs some complicated questions around interstate commerce and the supply chains that have been built up on a state by state level and the amount of investment and infrastructure that large companies have made to support a state-by-state model. And I think that many of those companies that have invested hundreds of millions of dollars into infrastructure will want to protect the value of those assets.
Speaker 1:I'm sensing a good segue coming in.
Speaker 2:Oh yeah, Should we talk about earnings?
Speaker 1:Oh, that wasn't on purpose. Really good. Yeah, let's talk about earnings, because there's a lot of companies most companies losing a lot of money still, some still making money. You follow this stuff a lot more than I do, yeah well, let's first just talk about how much money they're making.
Speaker 2:So we've seen earnings reports come out for I think at this point recording today, I think it's probably like seven of the top 10 public cannabis companies, and of those we've got three that have crested above a quarter billion dollars in revenue in Q2. So it's significant. Curaleaf brought in over $340 million in Q2.
Speaker 1:So very likely they're doing over a billion for the year.
Speaker 2:Yeah absolutely Trulieve $303 million, green Thumb $280 million and Verano's close behind. They're not quite at a quarter billion, but they are over 220 million. So collectively, just between those four companies, it's about $1.2 billion in revenue, and there's obviously lots more companies than those top four. Um, so there's just. There is significant, substantial economic activity going on in cannabis. Um, in the us market.
Speaker 1:Yeah, but they're still losing money like to the tune of like 100 million dollars yes, um, thank you for pointing that out.
Speaker 2:Um, I will say uh, green thumb industries does not fall into that category. They are profitable um, but they're yeah, go gti there, but they're the only ones um yeah only one.
Speaker 2:Yeah, I think that cure leaves loss.
Speaker 2:This last quarter was somewhere around 48 million dollars on $340 million of revenue.
Speaker 2:So it is substantial, and the privilege to be able to burn that much money, to invest that much into these companies is something that many companies that are not publicly listed and have not reached the level of scale that Cura Leaf has just do not have the privilege to do. People cannot lose 40 plus million dollars a quarter and continue on as a going concern. So we're starting to see just this real big divide between the companies at the top and the companies in the middle and in the bottom, who just don't have the same access to capital. They don't have the same access to the rates of capital. The public companies a number of them have been making announcements about refinancing of debt also as leading up to earnings, and I'm seeing interest rates that are in the 12 to 12 and three quarter percentage points for debt refinancing, and a lot of cannabis companies that go out for debt right now are seeing rates that are north of 20%. So this is a real big difference than what the public companies have access to.
Speaker 1:Yeah, I remember earlier this year it was talking about a lot of the debt that people were holding coming to term this year.
Speaker 2:Yeah.
Speaker 1:And fear. I don't know if it was fear or excitement, but like wondering if those, those, those debts were going to be able to be refinanced. And hearing this, I guess, for me my initial reaction was like, oh well, that's good, because then we're not going to have this catastrophic, cataclysmic event in the industry. That would certainly break a lot of confidence, but in some ways I think people were open to the idea of the MSOs feeling some pain and maybe going away.
Speaker 2:Yeah, I don't know.
Speaker 1:You think they're are they too big to fail? Is that what we're seeing? I don't know. I mean, I would love a 12% loan right now that would be. Yeah, that'd be really nice.
Speaker 2:That would be great. I think, though, at the same time, there is in in that, in that muddy middle with the public companies, some of the most promising earnings reports are coming from companies that have not crested the $100 million a quarter yet. So Merrimed posted really great results. I'm trying to remember what they are. Let's see I had them right here. I think that they're up though Quarter over quarter. Merrimed had some of the better growth. I think they're around $40 million of revenue for the quarter.
Speaker 2:And they're up 10% quarter over quarter. Most of the MSOs are pretty close to flat, and so there are some companies that just they have more space to grow. Yeah, uh, the msos that are at the very top. The ways that they can grow is looking into new markets that they're not in, but they're in a lot of markets and a lot of those markets are becoming a lot more competitive as other folks come into them. Like like verano is uh, has has benefited from an early mover advantage in New Jersey over the past six to 12 months, but New Jersey is becoming more and more competitive, and so they acknowledge that their top line revenues from retail in New Jersey is not going to be able to sustain what it did in the past in the past.
Speaker 2:So a company like Verano has made a big announcement in the past seven to 10 days that they have made an acquisition of one of the Columbia Care licenses in Virginia, because that was a state that they're not in and they see Virginia as very opportunistic, with a big opportunity for growth.
Speaker 2:Virginia is very early in its market development, highly restrictive medical program still, and so I think the hope is is that Virginia could be not the next New Jersey, but a state like New Jersey, that by getting in at the medical during the medical market, that they will be opportunistically able to participate as an early mover when adult use comes, so that it's it's a strategy that has worked for these companies.
Speaker 2:But then you've got companies like like Miramed Grown Rogue we've maybe talked about on this podcast before Aaron Edelheit, who came on as the big investor. There they're just, they're taking a different approach, like I think they're most they're they're earning their way into the market, markets that maybe they don't get to be the first mover but they get to win for some other reason, be it quality of product or efficiency of operations or focus, whatever it may be. So I think that what the top 10 companies look like today on the public markets and cannabis, I I believe that five years from now that there could be a reshuffling, that there are a number of companies that are at the heels of these companies, and once we have every market in the U S turned on and fully mature and at adult use, it's going to be a different competitive game. It's not just going to be about being the first one there.
Speaker 1:Yeah, I've always thought it to be a really interesting approach, because we're here, a lot of us are here fighting to create access to the plant and making it more accessible, to create access to the plant and making it more accessible, and mso's win when they control the access, um, and I just think that's, frankly, diametrically opposed to what we're trying to do from an advocacy standpoint, um, and thus a losing proposition. But, but, um, you know, and I and I think about a lot of the conversations that are happening right now, I know a lot of the MSOs are lobbying to maintain the control and to demonize, you know, everything that's happening on the hemp side of the plant, something that has created a lot of access and normalization, um, like we were talking about in Minnesota, and so I just I think about this dynamic a lot, um, and and why I'm really actually hopeful that we just move towards legalization sooner than later, um, so that we can stop the nonsense, um, and yeah, there's going to be a lot of pain financially for a few companies.
Speaker 2:Yeah Well, I'm with you on stopping the nonsense and certainly I obviously support legalization. I just think that the market has a tremendous impact on what that legalization will look like and while I appreciate your perspective, I think that it's undeniable that limited license markets have provided a very fruitful economic opportunity for those that have those limited licenses. Obviously, obviously, it's pushed a lot of folks out, but we've got to figure out something that works, because the markets that haven't had limits to their licenses have been diametric failures in many ways, like we've seen. We've seen massive oversupply.
Speaker 2:We have seen companies just fold left and right and look at like california and oregon and colorado and some of these mature markets, where um the culture of cannabis is intact but um the souls of the entrepreneurs have been broken and uh yes, I mean okay.
Speaker 1:So there's two responses to that one. Yeah, free market's a bitch and like it figures itself out. Um does it we're not in a free market is my other thing. It's like this is definitely not a free market and the government has fucked us 10 ways to sunday I don't even know if that's a phrase, but I just just made it one. We're going to have to put an E on this episode.
Speaker 2:Yeah, sorry, there's lots of kids that listen to high spirit.
Speaker 1:My kids actually do. My son, my son seven. He's like dad. I listened to the next new episode.
Speaker 2:He's like yeah, he's talking about my seven year old-old also says this is his favorite podcast, but he doesn't actually listen to it.
Speaker 1:So that's good.
Speaker 2:Yeah, I'll take that um free market, free market, yeah, so yeah, this isn't a free market. And you?
Speaker 1:I mean, we see it in some cases with the hemp industry, maybe a little too free. I'd like to see a little bit more consumer protections and regulation as far as product safety and that kind of stuff. But I think you do see it and I think you see the opportunity to create products that speak to certain demographics. You're able to access those demographics through online media and you ship it to them, and so we see brands like Breeze, which a two and a half milligram THC product infused with lion's mane doesn't speak to everyone that consumes cannabis. But I think recently I saw that they did two and a half million dollars in revenue in a month, in a month.
Speaker 2:Yeah.
Speaker 1:And I'm like that's fucking amazing and like if we had the opportunity for everyone to do that above board and like create THC products that spoke to their demographics. Like that's the dream, like that's what we need to be working towards and we shouldn't be happy until we have that.
Speaker 2:Yeah, amen, amen. I think that I just I realize how important it also is right now for there to be some companies that have means to support legalization and so if everybody's broke ass, nobody can be making the contributions and paying the lobbyists and getting involved in the trade association. So there's some just sort of happy medium in here.
Speaker 1:Like I want to see big wins across the board and I think that the more open access we have, I'm going to say it like this is why I've been so full-fledged beverage is because we can make friends through the beverage channel, where we can actually fight for what we believe legalization should look like and not leave it to the MSOs to define it for us.
Speaker 2:Yeah, I think that's. It's a smart Some people are scared.
Speaker 1:Some people are scared about that proposition. They're like they don't want to hand it over to alcohol, which strange bedfellows is.
Speaker 2:My response is just like yeah, I mean I don't want to hand it over to like the three-tier system and in alcohol distributors who run the world, but like if it gets us legalization and product easily accessible to people, uh, everywhere alcohol is sold well, whatever you're doing, I think you're doing something right, because I continually hear time and time again about an openness from large players who are over-invested in adult use, regulated cannabis, of being open to a beverage carve out, and I think a big part of that has to do with not feeling like beverage is actually competitive to their success, because they have been so unsuccessful identifying a customer for beverage inside the dispensary channel. So it's working. Who the strange bedfellows are that become your partners in this next chapter? I'm sure there'll be new issues and new challenges as that unfolds.
Speaker 1:Yeah Well, I mean, I think I can say this I don't think it's a secret per se liquor retailers like ABC, spex, total Wine, bringing in distributors and just other influential folks that have a lot more money than us, and hiring those top tier lobbyists on the hill to make sure that there is a voice.
Speaker 1:And I will say that there is an immense amount of receptivity and we're not doing a. I don't perceive it as as creating a carve out and I know a lot of people do and people take offense to it actually, especially on the hemp side of the industry. But the way I approach it is I'm putting myself in the shoes of an alcohol retailer or an alcohol manufacturer, and they are looking for ways to diversify their portfolio because they have softening sales and we're offering them a product to add to their books and they, they want it, they want it in a big way, and so it's like they aren't comfortable yet going the full cannabis kit and caboodle um, but they are comfortable with a low dose beverage, and so it's like, if that's the tip of the spear, if that's our foot in the door, if that creates normalization, if that creates like a familiarity with your, your dose, that will be the tip of the spear.
Speaker 1:Yes sure Sorry. I didn't mean to turn this into a pitch about this.
Speaker 2:I mean, I think that what like a natural evolution of that conversation. So if you're saying that beverage becomes the tip of the spear and we've got these large players at the table having conversations with us, going back to the one plant idea is like at what point then do those large players that have respect and generations of kind of Washington-based allies help start to understand how inefficient hemp manufacturing is? And if we could just use full potency plants to create the ingredients to make a low dose beverage, that everything would be so much more simple.
Speaker 1:Yeah.
Speaker 2:And get them on the legalization. One plant regulation, forward movement tip and have it not be so all about hemp.
Speaker 1:Yeah, I think, if, if logic worked in politics, I think we'd be in a much different place. But you know we we have to work through the incrementalism and the in the pathways that work and you know, people realizing that a THC beverage, be it hemp or cannabis, is, is is not detrimental to society, uh, and in fact can be a benefit, um, then we can answer the question about sourcing. So it's like just get it into people's hands. I don't care how you make it, just get into people's hands, get them familiar with it, and then we can talk about logic. Hopefully, sure.
Speaker 2:And consumers don't know the difference. Anyway, people know that there's THC in this product and they consume it, and they don't understand if it's hemp or cannabis, and that's part of, I think, what's causing situations like what just happened in Missouri is it's just wide, so much widespread consumer confusion.
Speaker 1:Well, and this is why we need and when I say we, I mean the contention of folks in the cannabis industry we need to stop like demonizing THC derived from hemp, like we need to have a conversation about what makes sense and how, like consumer safety, whatever, but like to like I've heard scare tactics and like people like calling it like synthetic when it's not necessarily is sure, there are like some synthesized products out there, but there's a lot of naturally derived THC in the marketplace and this is like you're making people scared of the same products that you are selling in a different channel. It's insane, you know, and we're just in a really tough spot right now. But going back to what we were talking about in the beginning of the show, like I am hopeful that we start to make quick progress, uh, in the in the near future, uh, and again, that's coming from a jaded perspective of not thinking we're ever going to get any progress because things are moving too slow. Um, so we'll see. Nove November will be very telling.
Speaker 2:Yeah, I'm, I'm willing to leave it at that for today. I think that I think that hope remains and and there are more people that are getting excited about cannabis every day, and so these these challenges are are part of of working on something that matters. If, uh, if, if there wasn't something to win, if there wasn't, if there wasn't true impact to be made, then, um, there would be no fight to be had.
Speaker 1:Yeah.
Speaker 2:Amen yeah.
Speaker 1:All right, I think that's it. Okay, all right, thank you everyone. Thanks for letting us just jabber on today. We enjoy this.
Speaker 2:We hope you do too we hope you do too.
Speaker 1:It's a little offbeat from our normal shows, which you will be back to our regular programming next week, yes, but yeah, I'm just as we close out, just huge shout out to my team. It really is my favorite week of the year. I was telling my wife this morning, like today in particular, where we're having our anniversary party here at the office, if you're in the Bay area, come find us. This is my favorite day of the year, like more than my birthday, more than my wedding anniversary. No, but it's just I don't know. This team means so much to me and, like you know, when you're in, when you go into battle with someone like you, you, like um, forge this like unbreakable bond and I feel like in this industry we're going to battle almost every day, um, and yeah, it's uh to live another year in this industry. Is is worth celebrating. So, um, shout out to my team, thank you. Thank you for tosa and wolfmeyer uh, yes, my team too.
Speaker 1:Her team too, pretty awesome. It's just not her anniversary day. Thank you to you, our audience, if anyone's watching, which some people are, thank you, benjamin Kennedy and Alexis oh, that's the last name, gootslaw. Hopefully I didn't totally butcher that and everyone else. Don't forget to like, subscribe. We do have this live on LinkedIn, recorded every Thursday. So if you're listening to us here, hello. If you're not, and you want to participate and drop comments while we're recording, you can do so. Or on our podcast feed, you can subscribe there too. Also, like share, do all the things. Yeah, stay curious, stay informed and keep your spirits high until next time. That's the show.
