December 23, 2020 • 32 mins
The war on drugs in America is waning. Cannabis is widely accepted by adults.
As of now, 36 states have legalized medical cannabis use while 15 states and the District of Columbia have legalized cannabis for adult recreational use.
Canada was first to legalize cannabis to combat the illegal market, raise tax revenues, and make the use of cannabis regulated and safe.
On This Back Story Host Dana Lewis talks to Tom Grebenstein, The Chief Revenue Officer, Cannabis Co. Tikun Olam USA.
And Tim Seymour, of Seymour Asset Management, an expert on everything about the billions of dollars flowing from and into the legal marijuana market.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Public enemy.
Number one in the United Statesis drug abuse.
In order to fight and defeatthis enemy, it is necessary to
wage a new, all out offensivedrugs are menacing our society
yes.
To your life.
And when it comes to drugs andalcohol, just say, no.
(00:26):
Hi everyone.
And welcome to backstory.
I'm Dana Lewis in the 1970s,president Nixon and then Reagan,
and first lady Nancy Reagandeclared a war on drugs in
America, heroin, crack cocaine,but many arrests also involve
marijuana cannabis.
(00:48):
At the beginning of my career, Iwas a crime reporter in Toronto
and remember, well, the dailypolice announcements, they had
busted another drug ring so muchso that police stats on crime
solving often involved drugarrests, even as recently in
2018 statistics show four in 10drug arrests in America were for
(01:09):
marijuana and mostly forpossession.
Police made about 660,000arrests for marijuana related
offenses in the 50 States andthe district of Columbia in 2018
amounting to 40% of total drugarrests in the U S that year,
(01:30):
fast forward two years later inthe presidential election of
2020, while Americans couldn'tseem to agree on who should
occupy the white house and stillcan't seem to agree.
They did.
However, clearly vote forlegalization of cannabis.
The New York times wrote drugsonce thought to be the scourge
of a healthy society are gettingpublic recognition as part of
(01:53):
American life, where drugs wereon the ballot.
They won handily, New Jersey,South Dakota, Montana, Arizona
joined 11 other States that hadalready legalized recreational
marijuana, Mississippi and SouthDakota made medical marijuana
legal bringing the total to 35in 1969, two years before the
(02:17):
Dawn of the drug war, 84% ofAmericans thought marijuana
should be illegal.
According to the Pew researchcenter by 2019 91% of Americans
supported the legalization ofmarijuana, either for both
medical and recreational use orsolely for medical use times
(02:37):
have surely changed on thisbackstory, the money and the
medicine of cannabis.
And by the way, the marijuanamarket is by some estimates
expected to be worth about$35billion by 2025.
(02:59):
Let's go to New York.
I want
Speaker 2 (03:00):
To introduce you to Tim Seymour.
Uh, he is the CIO of Seymourasset management.
Hi Tim.
Hey Dan, how are you?
Good to be here.
Thanks for doing this, Tim.
And I know each other fromMoscow because I was a
correspondent there and Tim wasin asset management at a, at
another company there.
And so you have gone from, youknow, very broad asset expertise
(03:22):
and you have really specializedinto cannabis.
Tell me why you made thattransition.
Speaker 3 (03:28):
Well, it's interesting.
Cause you know, I would make anargument that, that a lot of
parallels that I saw of beingrusted in the late nineties and
being an emerging marketsinvestor for the next 15 years,
um, are some of the sameattributes that are akin to
investing in cannabis.
I mean, this is, this is a newasset class.
This is a new, this is a, uh,this is an emerging market.
And yet what would drove a lotof the investor interest in big
(03:52):
emerging markets was this newfrontier, but it was around
demographics consumption trendsand, and I think a rapidly
evolving investment dynamic andthe same thing is happening in
cannabis.
And, and you know, the obvious,uh, macro part of the trade is,
is the, the legislation and thechanges that we're seeing and
we're seeing them around theworld.
(04:13):
And, and obviously, uh, Canada'slegalization North of the border
here was a very big moment forthe industry overall.
Um, but to that extent, toanswer your question, uh, you
know, as an investor findingopportunities where you see, uh,
enormous growth, uh, where thereare, I think, significant risks
and, and some of the depth ofthe markets and some of the
(04:33):
inefficiency of the informationflow to me as an investor is an
incredibly interesting place toinvest
Speaker 2 (04:40):
Enormous growth.
And it's interesting because I'mCanadian.
So I know kind of, you know, thetwo year debate, and then
finally Canada was the tip ofthe spear and the legalization
of cannabis.
And a lot of States in the U Swere saying no way, you're not
going to see it here, except inmaybe California and some of the
(05:00):
other ones that startedexperimenting with it.
And then this election, uh, isseismic in terms of the number
of States who have now signed upand legalized cannabis, uh,
whether it be recreational orwhether it only be for
Speaker 3 (05:15):
The hillside it's, you know, the election was, uh,
as you say, you know, seismicsseismic.
I would, I would characterize itas really Goldilocks for
cannabis and for cannabisinvestors because, um,
perversely, I actually don'tthink a full federal
legalization of cannabis issomething that would be good for
(05:36):
the industry right now.
I don't think it would be goodfor, uh, the development of the
infrastructure.
I don't think it would be, uh,very good for investors because
I still think that there's anenormous amount of regulatory,
uh, you know, bureaucracy matesoverlap of six different federal
agencies that I think would befalling all over themselves.
But what's proven is that on astate by state basis and letting
(06:00):
you know state's rights andletting the States act, and this
goes all the way back to, uh,you know, effectively the Cole
memo under the Obamaadministration, which set the
table for a lot of this, whichis let the States do what they
want to do in cannabis, withoutfear of, of federal
intervention.
And that's largely gone on.
And so if you look at it
Speaker 2 (06:19):
Complicated, right, because a lot of people don't
understand that the S w youknow, the States are legalizing
it, but the federal governmentis still saying no.
Um, and then, you know, I, Italked to somebody who runs a
company in the U S in cannabis,and they said, that's very,
that's, it's very upside down,because for instance, if you
want to nationalize yourcompany, or you wanna, you want
(06:40):
to move cannabis from one stateto another, or you want to move
assets from the sale of proceedsof sale, uh, or health products,
you can find yourselftechnically breaking the law
with the federal government.
Speaker 3 (06:53):
Yeah.
And, and I, I think, you know,some of those legacy laws that
go back in, in, in alcohol, uh,to prohibition of have a lot to
do with some of the things thatcannabis is enduring.
Um, but yes, that's right.
I, I think the capital marketsand the banking dynamics in, in
practical terms, um, also are,are the most onerous and, and,
(07:14):
and punitive in terms of thecost of capital, but also how
difficult it is for thesecompanies to actually, uh, do
traditional banking.
Um, going over state lines is,is I think we're even, you know,
at some point with a federalbackdrop, I think that's still
going to be a ways to go, but Ithink the tax issues, uh, as
(07:34):
they relate to the IRS and, andtreating, uh, any sales and, and
kind of retail orientation fromcannabis as a schedule, one drug
is maybe the most, uh,debilitating, punitive, whatever
you want to say about, uh, aboutoperating in the United States.
But, um, I will say that on a,on a state level, the companies
(07:57):
that are vertically integrated,so that means that they're,
they're, you know, seed to sale,right?
And they're, they're growing theplant, uh, they're packaging the
plant, they're taking it all theway through to a retail channel.
Um, it are very profitable,very, very profitable,
especially those companies thatare operating in the States that
have what we call limitedlicense dynamics to them, which
(08:19):
just simply means that, uh,there's only so many licenses
that they handed out and thosecompanies actually are very
variable.
Speaker 2 (08:26):
Well, there's all this stuff.
I mean, you know, you're talkingabout some companies that are up
24%, another company is up 75%.
So far this month after thelegalization and the vote, I
mean, hundreds of millions ofdollars, billions of dollars,
this is big stuff.
Speaker 3 (08:42):
Well, in terms of market cap, you're right.
And we're getting into theperformance of the cannabis
stocks.
I, I run a cannabis ETF, tickerCNBS, and it's an active
strategy because I think this isexactly what, what, what you
need at this time.
But, but what's interesting isthat the movement in a lot of
the cannabis stocks, uh, goinginto the elections was really on
the back of their ownprofitability.
(09:03):
So what we're talking about, notnecessarily the fact that you
had a very big, uh, uh, state'sfollow-through, uh, remember,
and the elections, again, wewon't go back into that part of
the conversation.
I'll just simply say New JerseyMontana, uh, Mississippi, South
Dakota, uh, Arizona, all turn onthe, the cannabis, you know,
green light.
(09:23):
And so what's, that meant for alot of the companies though,
that either were already set upin New Jersey, for example,
which is, as you can imagine,going to be one of the biggest
markets in the country, this wasa boom, but, but the more
important part of is, uh,despite what appeared to be
growth at all costs, and a lotof companies that really weren't
well-run, and weren't reallymaking any money, especially
(09:45):
those, uh, sorry to say, Northof the border, and it's not,
it's not to indict Canada.
Um, it's truly to say though,that the United States is the
biggest market in the world fora lot of consumer products.
And it is certainly in cannabisand the companies that are set
up and set up with good assetshere are phenomenally
profitable.
And the move in the stocks thisyear, especially off the lows
(10:06):
from kind of the COVID lows, um,is more about profitability and
companies that are actuallywell-run.
And in fact, they're probably intheir third generation of
management teams at this point.
So it's an exciting time in thesector.
Speaker 2 (10:18):
I was going to ask you, I mean, who are these guys
and how sophisticated, butyou're saying a lot of the,
maybe newcomers have beenthinned out, and these are
sophisticated companies that, uh, and some of the bigger fish
are eating the little ones.
Speaker 3 (10:33):
Yeah.
We're seeing a lot ofconsolidation at this point.
Um, but if, if I took the topfive operators in the United
States, um, and, and they wouldbe, uh, curely, which is
actually run by a gentleman, we,we might've run out to and run
into in Moscow, Boris Jordan,who started this company.
Um,
Speaker 2 (10:53):
Truly, yeah,
Speaker 3 (10:55):
Yeah, no, he's, he's built a great business and, uh,
truly, which is a single stateoperator.
And really, uh, I sh I need toactually restate that they're,
they're in multiple States, butthey're known for their
dominance in Florida, andthey're trying to grow outside
of that market, um, GTI, whichis Midwest based, but has very
important assets on the Eastcoast.
And then in Illinois, uh, andsome of the, uh, the Midwest,
(11:18):
um, Cresco labs, also Chicagobase, but, uh, very well
situated in important States anda company called true leaf,
which is mostly Pennsylvania,uh, and now New Jersey.
And because of the profitabilityin those States are two of the
best in the country.
Um, that company has been, uh,that company is up 350% this
year.
So, um, there's your top five.
(11:39):
And, and really in all of thesecases, um, there's new
management teams in place.
And in many cases, uh, CEOs thatwere formerly CPG Titans, you
know, guys that really knew howto build a business that was
focused on a consumer brand, notthe cultivation side of it.
This isn't not a commoditystory, it's not an ag story.
It's ultimately going to be avery sophisticated brand story.
(12:00):
And I think those companies that, that have, uh, elevated
themselves here are not onlyvery well run companies, but
have begun to, to build on thatbranding.
Speaker 2 (12:09):
Okay.
Two quick questions, um, stategovernments, I mean, I don't
want to be melodramatic, but isthis the life ring that they
need, you know, struggling withbudget shortfalls and, and, you
know, a lot of them are, Iwouldn't want to say bankrupt,
but I mean, teetering that waywith, with what's happened in
the COVID-19 economy.
Speaker 3 (12:31):
Yeah.
Look, let's be clear.
This is a very difficult time,uh, on the fiscal side in state
and then the underlyingmunicipalities in many, many
parts of the country.
So what's cannabis mean?
And, and, and what has thismeant for support for cannabis
legislation?
Obviously, cannabis is a sourceof budgetary revenue that is
(12:52):
exciting for a lot of the StatesWashington state, which is one
of the most, um, uh, call it,you know, well, well founded
markets.
It's one of the oldest markets.
It's one of the mostsophisticated markets and that's
today that, uh, they raised,they've raised a billion dollars
in revenues from cannabis taxes,uh, since the inception of the
(13:13):
market.
And again, Washington was one ofthe first, but, you know, half
of that a couple of years too.
Yeah.
That's, that's over probablyabout seven years.
Um, and, and, and, you know,let's be clear, we're talking
about Washington and with alldue respect to our friends in
the Northwest, um, it's not thebiggest market in the world,
right.
So if you think about cannabisrevenues overall in 2019, uh,
(13:34):
the latest numbers are about abillion, nine was collected in
terms of excise and taxes, uh,on the state's levels.
And as you can imagine,California, which is the biggest
cannabis market in the world,much in the way that, you know,
we know it's, it's one of thelargest economies in the world
on its own, um, is, was about athird of those revenues, about
(13:55):
$650 million in, in California,which has been much maligned in
much criticized, probablyaccurately in terms of some of
their regulation.
But leaving that aside, youasked about the impact of
cannabis revenues.
And there's no question thatthis is an exciting thing for
the States and has a lot to dowith the legalizations we're
seeing, and it changed in publicperception.
And this obviously then goesstraight through to Washington,
(14:18):
uh, where you can imagine that,that, especially on the
Republican senatorial side,where we've had the most, you
know, obstinance you're, you'regoing to see a change, and
you're going to see this, this,uh, uh, you know, this vote in
favor of federal.
And, and when that happens, Idon't know, um, last week was a
very important week, uh, both,uh, you know, from a, a, a, a
(14:41):
momentous in terms of theheadline, which is that the
house voted to legalize cannabisright now, that's dead on
arrival in this Senate.
Uh, but it tells you at, uh,where this conversation is going
and, and it's going, not onlybecause I think a lot of people
believe socially, it's the rightthing to do, and it's the right
(15:02):
assessment of, of a drug.
That's not a gateway drug and,and is proven
Speaker 2 (15:07):
I think my second question, which was perception,
thank you for doing that.
It's saves time, but change theperception on the government
side change.
The perception on the publicside is because continue on
please,
Speaker 3 (15:19):
Because, uh, look, I think there's a lot of reasons
why cannabis was made illegaland we call it, we call it
marijuana, uh, which, you know,I'm doing my best to never refer
to the term.
I think it's, you know, I thinkit's a prohibition term.
I think it's a term thatactually was, was actually
targeted to, to, uh, uh, on someof the criminal justice side
against minorities.
(15:40):
And, and I think the, the, thesocial conscience of this
industry is high.
And I, and I no pun intended.
I do think that there's adynamic where there's a better
understanding of where peopleare medicating themselves across
a lot of different products andsome are, are, you know, alcohol
and OTC products.
(16:00):
And some of them are the morecomplex and the more devastating
opioid crisis in the UnitedStates.
And, and, and, and theunderstanding where cannabis
both from, uh, a full spectrumof use cases, but certainly a
lot of the OTC use cases.
And then straight through tosome of the use cases as it
relates to pain management and,and whatnot.
There's, there's, there's noquestion about the efficacy.
(16:22):
Um, like there's betterunderstanding, but, but, you
know, it's clear, more researchneeds to be done.
And this is part of, of wherethe legislation needs to allow
research on the plant.
And it's an incredibly complexplant.
Um, and to be clear, I think thecannabis industry, uh, is out
there saying this isn't aboutaccess of cannabis to minors.
(16:42):
And, and in fact, a lot of, someof the tax money in Washington I
talked about is going justtowards those programs that
keeps cannabis out of the handsof, of minors.
It's, it's, it's an importantissue.
It's important to be regulated.
It's important, like any productto bring the consistency, the
safety that comes withregulation.
And I think that's part of theunderstanding of cannabis.
(17:03):
Then there are the dynamicsaround criminal justice and, and
, uh, awareness of where, uh,clearly, uh, this has been an
unfair, uh, you know, legalenvironment as it relates to
cannabis and incarceration, uh,against
Speaker 2 (17:19):
Certainly there's a lot of trouble with during, when
you take a look at the, thenumbers of people incarcerated
for pretty minor possessioncharges.
And, you know, it's interestingthough, that you talked about
kids, right?
I mean, in, in the Canadianexperience that they talked
about, one of the reasons tolegalize is to move it away from
schools and get rid of the blackmarket, make it safer.
(17:39):
And then a recent statistics at40% of the cannabis market share
in Canada is still held byillegal producers.
So yeah, exactly.
Shake all that out.
Now, it, and I think the black
Speaker 3 (17:50):
Market, the gray market, uh, will continue to,
uh,[inaudible] at least be adynamic.
And look, if you're changingperception, uh, the people that,
at one point we'd had a bigproblem with that, the illegal
head shop down the road was,was, you know, selling cannabis
(18:10):
in through the back door.
Um, when it's generally legal onthe state level and 70% of the
country believes it should belegal.
The, you know, the gray market,the black market actually gets a
benefit here.
Right?
A lot of people just don't carethat it's going on, you know, in
their neighborhood or they,they, they may not seek to, to,
to, to bring in a, you know,enforcement again.
(18:34):
So I, I think there's still alot of work to be done.
And I think it's all about, andI remember when I was 12, you
know, my grandfather used to sayto me, you should legalize
cannabis to get the mob out ofit.
Um, and you've probably seenmarijuana by the way.
Well, I mean, he, his point wassimply that it's there, it's out
(18:55):
there.
People are consuming it, peoplewant it.
And so why not?
Why not tax it?
Why not regulate it?
Why not make it safe?
And, and I think that's, youknow, I think that's, what's
going on
Speaker 2 (19:07):
Anyway, huge growth to come, Tim Seymour of Seymour
asset management, Tim.
Great to talk to you, Dana.
Great to be here.
All right.
I want to take you out toJackson, Florida, and introduce
you to Tom Grinstein, who is thechief revenue officer with
Tikkun Olam.
(19:28):
Hi Tom.
Speaker 4 (19:29):
Thanks for having me.
Thanks
Speaker 2 (19:31):
For doing this.
It says online to Tikkun.
Olam is the most trusted name incannabis.
Speaker 4 (19:38):
We like to think.
So.
Um, you know, we spent, uh,about 20 years now, uh, doing
actual, uh, double blind placebocontrolled research, uh,
pharmaceutical style research onour, uh, strains and our
products.
So we feel that, that gives usthe title of a most trusted
brand in cannabis,
Speaker 2 (19:57):
Tikkun Olam was an Israeli company.
Right.
And, uh, as I understand itfrom, from one of your
colleagues who I know very well,who works in the company, that,
um, the problem is that when youstarted talking about a new
industry in America of cannabis,a new legal industry, nevermind
the illegal one, um, that a lotof people wanted to boast health
benefits, but companies were,you know, six months old or a
(20:20):
year old and suddenly, how couldthey claim any kind of research,
but that's where companies likeyours came in.
And they're not very many ofthem Tikkun Olam that actually
had, had been experimenting fora long time on the health
benefits of cannabis.
Speaker 4 (20:34):
Correct.
Um, so we were actually thefirst company company in the
world licensed to producemedical cannabis.
Now, certainly before we came upto the scene, there were
caregivers systems as inCalifornia and Colorado.
Um, but, uh, as soon as we wereable to achieve our licensure
through a kind of interestingsequence of events in Israel,
(20:56):
um, Dr.
Raphael, Meshulum the gentlemanwho originally discovered THC in
1964, uh, kind of took ourfounder under his wing.
And so we were able to reallystart doing research from are,
are very honest.
Speaker 2 (21:09):
So now you have all of these States on election
night that have come around andlegalized marijuana.
So you have like some 35 Statesnow, right?
The vast majority of them.
Whereas just a few years ago, wewere talking about, you know,
those first few States that werewilling to have legal cannabis.
So is that good news?
Speaker 4 (21:32):
Um, I think it's wonderful news, uh, you know,
from a, uh, from a corporatestandpoint, it may not be, but,
uh, from a compassionatestandpoint and myself as an
active patient as well, youknow, the expanded access to,
uh, effective medicine is, is awonderful thing.
Uh, and, and even for those whodo not have a qualifying
condition, you know, access tocannabis, uh, is, is, is
(21:55):
something that I, I feel is arights that all should have.
Speaker 2 (21:58):
So how much of this is recreational and how much of
it is medicinal?
Speaker 4 (22:03):
Um, obviously that vary, varies from state to
state.
You know, I live in Floridawhere we are technically a
hundred percent, uh, medicalmarket.
Um, but you know, you see Stateslike California, um, Arizona,
certainly having their adult uselegislation coming down New
Jersey.
You know, these are ourburgeoning markets that are
going to convert from strictlymedical to medical and adult
(22:25):
use.
Uh, it's an exciting time.
Speaker 2 (22:29):
What is your, if you don't mind me asking, because
you refer to it, what is yourpersonal story medically?
I mean, how has cannabis beenimportant to you then?
Speaker 4 (22:37):
Sure.
Um, well, I have a few spine,um, which, uh, basically has me
constantly in pain and until Idiscovered medical cannabis, um,
I, uh, had not slept more thanthree consecutive hours in 14
years.
Um, but through horrible.
Yes.
(22:57):
Um, and it's compounded by thefact that I'm also allergic to
opioids, which for most backpain sufferers that you might
actually consider that ablessing because back then
certainly has led people a lotof down the route into, uh,
addiction.
Um, so this has been alife-changing, uh, medicine for
me it's kept me healthy andhappy in my quality of life has
improved a thousand percent.
Speaker 2 (23:18):
So is that where there's the sea change in public
opinion in the U S where, youknow, when the Reagans years you
had this war on drug andcannabis was just another street
drug that they, you know, lockedpeople up for, but really in the
last decade, you know, there'sbeen so much talk about it,
reducing pain about it, helpingpeople.
(23:39):
And so then when it's on theballot, you see, I mean, a huge
percentage of Americanssupporting it.
Whereas if you had done it 20years ago, they wouldn't have
voted that way with that.
Speaker 4 (23:49):
No, very much so.
Um, I think what you're seeingis, uh, you know, the, the
progression or the, thepropagation of information.
So you have so many patientsuccesses in California and
Colorado and, and Israel, uh,you know, as, as medical markets
grew, um, that informationbecomes viral and expands.
And so now you have, um, asopposed to, you know, the Nancy
(24:12):
Reagan era of just say, no,
Speaker 2 (24:15):
I was just trying to find my notes, or because it was
84% of Americans in 1969 thoughtmarijuana, um, should shouldn't
be legal, right?
And then in 2019 pure research,91% of Americans supported
legalization.
Speaker 4 (24:31):
You know, you, you, the, the, the, the success
stories have given birth to whatI think of as the skeptical
boomer.
You know, there are folks outthere who have been told their
entire life, that cannabis isevil, that it's a gateway drug.
Uh, and now the data, uh, isskewing in the other direction.
And it's giving those folks ajustification to say, maybe
(24:53):
there's something there.
Maybe this can help me orsomebody, I know
Speaker 2 (24:56):
What don't you like about this?
When you see all of thesecompanies suddenly opening up in
all of these markets, what arethe pitfalls, do you think, what
I mean, is it standards?
Is it testing?
Is it regulation?
Speaker 4 (25:09):
It's, there's a confluence of a number of
things, and it's all generallypropagated by the folks who, um,
are either a profiteering or donot really understand, um,
cannabis itself, uh, especiallyfrom the regulatory standpoint.
So my fear is, is going too big,too fast, uh, without the, uh,
(25:30):
without the proper sets ofregulations in place, uh,
without those regulations beingset by folks who really do
understand cannabis as medicine
Speaker 2 (25:38):
Like THC levels, because I know in Canada's
experience, there was wildlyvastly different measurements of
THC and the quality of cannabisthat was going to be sold
legally and retail nevermind,illegally.
Speaker 4 (25:54):
Uh, well, I think that there are a number of
things, testing standards, uh,understanding what, uh, can
happen to the plant andunderstanding how legally, uh,
testing should be done aroundthat.
Um, from the consumerstandpoint, yes, I think
there's, there's a hugeemphasis, you know, most
people's experience withintoxication comes from alcohol.
So they associate higherpercentages of potency with, uh,
(26:20):
that level of intoxication.
When that's not necessarily thecase with cannabis, you're
talking about receptor occupancythat can be manipulated by a
number of things aside from justTHC.
So yeah, you can see 30% THCcannabis on a shelf in a
dispensary and think that, wow,that's going to be the most
powerful thing in there whenreally it's a better, uh, there
(26:42):
could be something down thelower teens that's going to
affect somebody's level ofintoxication much differently
because of the combination ofminor cannabinoids and terpenes
affecting receptor occupancy.
Speaker 2 (26:53):
Let me, let me take you to another topic, which I
don't quite understand becausein Canada, it was legalized
nationally with federalstandards in the us.
You have States that have nowpassed it, but federally it's
still, should I use the termillegal
Speaker 4 (27:11):
A hundred percent illegal.
So what
Speaker 2 (27:13):
Does that mean?
How does that translate intowhat happens then in the market?
Speaker 4 (27:17):
Uh, well, uh, in, in a couple of manners, it really,
we're getting into the kind ofobscure, uh, you know, looking
into the crystal ball here.
Um, but currently the federalgovernment, uh, has said that
they will not interfere withstate's rights to regulate
themselves in reference tocannabis.
Of course, that means that thereis no interstate commerce on
(27:38):
cannabis, therefore, um, it doesmake banking a bit of a
challenge because then you'removing, you can be moving money
between States that are theproceeds of, uh, of producing
cannabis, but so far the federalgovernment has, let's just say,
they've been cool with it.
Um, but, uh, you know, as thatchanges, either we go towards a
(28:00):
federal D schedule, which Ithink we're all hoping for, but
should that fail?
I think you'll see statecompacts, uh, where interstate
commerce has permitted, um, orat least not restricted by state
laws.
Of course the da may haveanother opinion on that and
decides to interfere.
But I think you'll see, forexample, you know, uh, if New
(28:24):
York comes to an adult use inPennsylvania and New Jersey, uh,
are all adult use as well.
I think you'll see those threegovernors get together and say,
Hey, we're going to permitinterstate commerce here, um, on
a, on a regulated basis, uh,with a, a nod, a wink and a nod
from the federal government thatthey won't interfere
Speaker 2 (28:41):
Because technically as a, as a producer or, um, a
commercial outlet, then youcould be charged, then could you
buy them?
Absolutely.
So there's risk there and thepeople want it sort it out.
You know, I want to ask youabout something else really
quick, John, before I let yougo.
And that is that in Canada, oneof the biggest arguments by the
prime minister Trudeaugovernment was that, you know,
(29:02):
let's legalize it.
Um, let's, let's take the retailoutlets away from, you know,
kids, schools let's controlquality, let's squeeze out the
illegal market, um, and, andcontrol this on a better level.
So that it's, it's more healthy.
It's, it's, uh, more healthy inall sorts of ways, right.
(29:22):
But 40% of the cannabis marketshare in Canada is still being
held by illegal producers.
So-called illegal producers.
Do you think you're just goingto experience a lot of the same
thing in the U S
Speaker 4 (29:35):
I think you will, uh, for, for a certain period of
time, you know, until, uh, the,the outweighs the reward,
obviously with federal Dschedule as a nation, we'll see
competition rise to a point atwhich, uh, pricing is suppressed
to the black market rate, butthat doesn't happen overnight.
Um, and, and it really is afactor of production.
(29:57):
Um, I think one of the issuesthat has prevented Canada from
getting there is this kind ofconcept of, uh, of
over-investment, uh, which hasled to ghost canopy and
production issues, um, that arepresent.
Um, there are greenhouses thatwere built, um, strictly so that
a company can say, Hey, we'vegot, you know, X, million square
(30:21):
foot of canopy up that weconvergence cannabis on it.
Well, there aren't enough peopleto buy the cannabis that would
be produced by that amounts of,of greenhouses that was just
done as an investment play to,to bolster share price.
Um, as a result of that, you'restill seeing quite high retail
prices, um, which isfacilitating the black market,
(30:41):
um, or even gray market, uh,workings within Canada.
And as I said, the same willhappen here in the U S um, but
eventually prices will be, in myopinion, prices will be
suppressed to the point at which, uh, the gray market is no
longer profitable.
You, the chief revenue officer,last question on revenue.
I mean, everybody thinks that,uh, you know, this is the it's
(31:05):
striking gold.
Now it certainly is for someStates, right.
But in terms of companies andyou guys have been doing this
for years now, I understand, um,there's a lot of challenges in
terms of being able to beingable to make a go of it and do
well in an industry that keepsgetting turned up, turned upside
down every few months.
(31:26):
Right, right.
Um, there certainly arechallenges.
Uh, the main one in the us, uh,would be, you can't operate as a
single entity.
I mean, if you, if you take intoaccount the, uh, you know, DC,
Puerto Rico, uh, et cetera, youknow, if you were to be present
nationwide, you'd need to have52 separate operating entities
(31:47):
all with their owninfrastructure and, and all with
their own legal oversight.
So, um, it's, it's a challengeevery day to, to be able to, or
to have to manipulate thenuances between regulation.
Speaker 1 (31:59):
So in until the federal government gets online
with state governments, that'swhat you're going to face.
Speaker 4 (32:05):
Of course.
And he will continue to see, uh,you know, inflated prices as a
result of that here, because youcan't consolidate operations
from a, not only from a growthstandpoint.
Speaker 1 (32:17):
Well, Tom grievance, Dean of Tikkun, Olam, thanks so
much, Tom.
And that's our backstory forthis Christmas week, 2020 I'm
Dana Lewis, please subscribe tobackstory and share our link
wherever you are, please stayhealthy and safe.
And I'll talk to you again soon.
Public enemy.
Number one in the United Statesis drug abuse.
In order to fight and defeatthis enemy, it is necessary to
wage a new, all out offensivedrugs are menacing our society
yes.
To your life.
And when it comes to drugs andalcohol, just say, no.
(00:26):
Hi everyone.
And welcome to backstory.
I'm Dana Lewis in the 1970s,president Nixon and then Reagan,
and first lady Nancy Reagandeclared a war on drugs in
America, heroin, crack cocaine,but many arrests also involve
marijuana cannabis.
(00:48):
At the beginning of my career, Iwas a crime reporter in Toronto
and remember, well, the dailypolice announcements, they had
busted another drug ring so muchso that police stats on crime
solving often involved drugarrests, even as recently in
2018 statistics show four in 10drug arrests in America were for
(01:09):
marijuana and mostly forpossession.
Police made about 660,000arrests for marijuana related
offenses in the 50 States andthe district of Columbia in 2018
amounting to 40% of total drugarrests in the U S that year,
(01:30):
fast forward two years later inthe presidential election of
2020, while Americans couldn'tseem to agree on who should
occupy the white house and stillcan't seem to agree.
They did.
However, clearly vote forlegalization of cannabis.
The New York times wrote drugsonce thought to be the scourge
of a healthy society are gettingpublic recognition as part of
(01:53):
American life, where drugs wereon the ballot.
They won handily, New Jersey,South Dakota, Montana, Arizona
joined 11 other States that hadalready legalized recreational
marijuana, Mississippi and SouthDakota made medical marijuana
legal bringing the total to 35in 1969, two years before the
(02:17):
Dawn of the drug war, 84% ofAmericans thought marijuana
should be illegal.
According to the Pew researchcenter by 2019 91% of Americans
supported the legalization ofmarijuana, either for both
medical and recreational use orsolely for medical use times
(02:37):
have surely changed on thisbackstory, the money and the
medicine of cannabis.
And by the way, the marijuanamarket is by some estimates
expected to be worth about$35billion by 2025.
(02:59):
Let's go to New York.
I want
Speaker 2 (03:00):
To introduce you to Tim Seymour.
Uh, he is the CIO of Seymourasset management.
Hi Tim.
Hey Dan, how are you?
Good to be here.
Thanks for doing this, Tim.
And I know each other fromMoscow because I was a
correspondent there and Tim wasin asset management at a, at
another company there.
And so you have gone from, youknow, very broad asset expertise
(03:22):
and you have really specializedinto cannabis.
Tell me why you made thattransition.
Speaker 3 (03:28):
Well, it's interesting.
Cause you know, I would make anargument that, that a lot of
parallels that I saw of beingrusted in the late nineties and
being an emerging marketsinvestor for the next 15 years,
um, are some of the sameattributes that are akin to
investing in cannabis.
I mean, this is, this is a newasset class.
This is a new, this is a, uh,this is an emerging market.
And yet what would drove a lotof the investor interest in big
(03:52):
emerging markets was this newfrontier, but it was around
demographics consumption trendsand, and I think a rapidly
evolving investment dynamic andthe same thing is happening in
cannabis.
And, and you know, the obvious,uh, macro part of the trade is,
is the, the legislation and thechanges that we're seeing and
we're seeing them around theworld.
(04:13):
And, and obviously, uh, Canada'slegalization North of the border
here was a very big moment forthe industry overall.
Um, but to that extent, toanswer your question, uh, you
know, as an investor findingopportunities where you see, uh,
enormous growth, uh, where thereare, I think, significant risks
and, and some of the depth ofthe markets and some of the
(04:33):
inefficiency of the informationflow to me as an investor is an
incredibly interesting place toinvest
Speaker 2 (04:40):
Enormous growth.
And it's interesting because I'mCanadian.
So I know kind of, you know, thetwo year debate, and then
finally Canada was the tip ofthe spear and the legalization
of cannabis.
And a lot of States in the U Swere saying no way, you're not
going to see it here, except inmaybe California and some of the
(05:00):
other ones that startedexperimenting with it.
And then this election, uh, isseismic in terms of the number
of States who have now signed upand legalized cannabis, uh,
whether it be recreational orwhether it only be for
Speaker 3 (05:15):
The hillside it's, you know, the election was, uh,
as you say, you know, seismicsseismic.
I would, I would characterize itas really Goldilocks for
cannabis and for cannabisinvestors because, um,
perversely, I actually don'tthink a full federal
legalization of cannabis issomething that would be good for
(05:36):
the industry right now.
I don't think it would be goodfor, uh, the development of the
infrastructure.
I don't think it would be, uh,very good for investors because
I still think that there's anenormous amount of regulatory,
uh, you know, bureaucracy matesoverlap of six different federal
agencies that I think would befalling all over themselves.
But what's proven is that on astate by state basis and letting
(06:00):
you know state's rights andletting the States act, and this
goes all the way back to, uh,you know, effectively the Cole
memo under the Obamaadministration, which set the
table for a lot of this, whichis let the States do what they
want to do in cannabis, withoutfear of, of federal
intervention.
And that's largely gone on.
And so if you look at it
Speaker 2 (06:19):
Complicated, right, because a lot of people don't
understand that the S w youknow, the States are legalizing
it, but the federal governmentis still saying no.
Um, and then, you know, I, Italked to somebody who runs a
company in the U S in cannabis,and they said, that's very,
that's, it's very upside down,because for instance, if you
want to nationalize yourcompany, or you wanna, you want
(06:40):
to move cannabis from one stateto another, or you want to move
assets from the sale of proceedsof sale, uh, or health products,
you can find yourselftechnically breaking the law
with the federal government.
Speaker 3 (06:53):
Yeah.
And, and I, I think, you know,some of those legacy laws that
go back in, in, in alcohol, uh,to prohibition of have a lot to
do with some of the things thatcannabis is enduring.
Um, but yes, that's right.
I, I think the capital marketsand the banking dynamics in, in
practical terms, um, also are,are the most onerous and, and,
(07:14):
and punitive in terms of thecost of capital, but also how
difficult it is for thesecompanies to actually, uh, do
traditional banking.
Um, going over state lines is,is I think we're even, you know,
at some point with a federalbackdrop, I think that's still
going to be a ways to go, but Ithink the tax issues, uh, as
(07:34):
they relate to the IRS and, andtreating, uh, any sales and, and
kind of retail orientation fromcannabis as a schedule, one drug
is maybe the most, uh,debilitating, punitive, whatever
you want to say about, uh, aboutoperating in the United States.
But, um, I will say that on a,on a state level, the companies
(07:57):
that are vertically integrated,so that means that they're,
they're, you know, seed to sale,right?
And they're, they're growing theplant, uh, they're packaging the
plant, they're taking it all theway through to a retail channel.
Um, it are very profitable,very, very profitable,
especially those companies thatare operating in the States that
have what we call limitedlicense dynamics to them, which
(08:19):
just simply means that, uh,there's only so many licenses
that they handed out and thosecompanies actually are very
variable.
Speaker 2 (08:26):
Well, there's all this stuff.
I mean, you know, you're talkingabout some companies that are up
24%, another company is up 75%.
So far this month after thelegalization and the vote, I
mean, hundreds of millions ofdollars, billions of dollars,
this is big stuff.
Speaker 3 (08:42):
Well, in terms of market cap, you're right.
And we're getting into theperformance of the cannabis
stocks.
I, I run a cannabis ETF, tickerCNBS, and it's an active
strategy because I think this isexactly what, what, what you
need at this time.
But, but what's interesting isthat the movement in a lot of
the cannabis stocks, uh, goinginto the elections was really on
the back of their ownprofitability.
(09:03):
So what we're talking about, notnecessarily the fact that you
had a very big, uh, uh, state'sfollow-through, uh, remember,
and the elections, again, wewon't go back into that part of
the conversation.
I'll just simply say New JerseyMontana, uh, Mississippi, South
Dakota, uh, Arizona, all turn onthe, the cannabis, you know,
green light.
(09:23):
And so what's, that meant for alot of the companies though,
that either were already set upin New Jersey, for example,
which is, as you can imagine,going to be one of the biggest
markets in the country, this wasa boom, but, but the more
important part of is, uh,despite what appeared to be
growth at all costs, and a lotof companies that really weren't
well-run, and weren't reallymaking any money, especially
(09:45):
those, uh, sorry to say, Northof the border, and it's not,
it's not to indict Canada.
Um, it's truly to say though,that the United States is the
biggest market in the world fora lot of consumer products.
And it is certainly in cannabisand the companies that are set
up and set up with good assetshere are phenomenally
profitable.
And the move in the stocks thisyear, especially off the lows
(10:06):
from kind of the COVID lows, um,is more about profitability and
companies that are actuallywell-run.
And in fact, they're probably intheir third generation of
management teams at this point.
So it's an exciting time in thesector.
Speaker 2 (10:18):
I was going to ask you, I mean, who are these guys
and how sophisticated, butyou're saying a lot of the,
maybe newcomers have beenthinned out, and these are
sophisticated companies that, uh, and some of the bigger fish
are eating the little ones.
Speaker 3 (10:33):
Yeah.
We're seeing a lot ofconsolidation at this point.
Um, but if, if I took the topfive operators in the United
States, um, and, and they wouldbe, uh, curely, which is
actually run by a gentleman, we,we might've run out to and run
into in Moscow, Boris Jordan,who started this company.
Um,
Speaker 2 (10:53):
Truly, yeah,
Speaker 3 (10:55):
Yeah, no, he's, he's built a great business and, uh,
truly, which is a single stateoperator.
And really, uh, I sh I need toactually restate that they're,
they're in multiple States, butthey're known for their
dominance in Florida, andthey're trying to grow outside
of that market, um, GTI, whichis Midwest based, but has very
important assets on the Eastcoast.
And then in Illinois, uh, andsome of the, uh, the Midwest,
(11:18):
um, Cresco labs, also Chicagobase, but, uh, very well
situated in important States anda company called true leaf,
which is mostly Pennsylvania,uh, and now New Jersey.
And because of the profitabilityin those States are two of the
best in the country.
Um, that company has been, uh,that company is up 350% this
year.
So, um, there's your top five.
(11:39):
And, and really in all of thesecases, um, there's new
management teams in place.
And in many cases, uh, CEOs thatwere formerly CPG Titans, you
know, guys that really knew howto build a business that was
focused on a consumer brand, notthe cultivation side of it.
This isn't not a commoditystory, it's not an ag story.
It's ultimately going to be avery sophisticated brand story.
(12:00):
And I think those companies that, that have, uh, elevated
themselves here are not onlyvery well run companies, but
have begun to, to build on thatbranding.
Speaker 2 (12:09):
Okay.
Two quick questions, um, stategovernments, I mean, I don't
want to be melodramatic, but isthis the life ring that they
need, you know, struggling withbudget shortfalls and, and, you
know, a lot of them are, Iwouldn't want to say bankrupt,
but I mean, teetering that waywith, with what's happened in
the COVID-19 economy.
Speaker 3 (12:31):
Yeah.
Look, let's be clear.
This is a very difficult time,uh, on the fiscal side in state
and then the underlyingmunicipalities in many, many
parts of the country.
So what's cannabis mean?
And, and, and what has thismeant for support for cannabis
legislation?
Obviously, cannabis is a sourceof budgetary revenue that is
(12:52):
exciting for a lot of the StatesWashington state, which is one
of the most, um, uh, call it,you know, well, well founded
markets.
It's one of the oldest markets.
It's one of the mostsophisticated markets and that's
today that, uh, they raised,they've raised a billion dollars
in revenues from cannabis taxes,uh, since the inception of the
(13:13):
market.
And again, Washington was one ofthe first, but, you know, half
of that a couple of years too.
Yeah.
That's, that's over probablyabout seven years.
Um, and, and, and, you know,let's be clear, we're talking
about Washington and with alldue respect to our friends in
the Northwest, um, it's not thebiggest market in the world,
right.
So if you think about cannabisrevenues overall in 2019, uh,
(13:34):
the latest numbers are about abillion, nine was collected in
terms of excise and taxes, uh,on the state's levels.
And as you can imagine,California, which is the biggest
cannabis market in the world,much in the way that, you know,
we know it's, it's one of thelargest economies in the world
on its own, um, is, was about athird of those revenues, about
(13:55):
$650 million in, in California,which has been much maligned in
much criticized, probablyaccurately in terms of some of
their regulation.
But leaving that aside, youasked about the impact of
cannabis revenues.
And there's no question thatthis is an exciting thing for
the States and has a lot to dowith the legalizations we're
seeing, and it changed in publicperception.
And this obviously then goesstraight through to Washington,
(14:18):
uh, where you can imagine that,that, especially on the
Republican senatorial side,where we've had the most, you
know, obstinance you're, you'regoing to see a change, and
you're going to see this, this,uh, uh, you know, this vote in
favor of federal.
And, and when that happens, Idon't know, um, last week was a
very important week, uh, both,uh, you know, from a, a, a, a
(14:41):
momentous in terms of theheadline, which is that the
house voted to legalize cannabisright now, that's dead on
arrival in this Senate.
Uh, but it tells you at, uh,where this conversation is going
and, and it's going, not onlybecause I think a lot of people
believe socially, it's the rightthing to do, and it's the right
(15:02):
assessment of, of a drug.
That's not a gateway drug and,and is proven
Speaker 2 (15:07):
I think my second question, which was perception,
thank you for doing that.
It's saves time, but change theperception on the government
side change.
The perception on the publicside is because continue on
please,
Speaker 3 (15:19):
Because, uh, look, I think there's a lot of reasons
why cannabis was made illegaland we call it, we call it
marijuana, uh, which, you know,I'm doing my best to never refer
to the term.
I think it's, you know, I thinkit's a prohibition term.
I think it's a term thatactually was, was actually
targeted to, to, uh, uh, on someof the criminal justice side
against minorities.
(15:40):
And, and I think the, the, thesocial conscience of this
industry is high.
And I, and I no pun intended.
I do think that there's adynamic where there's a better
understanding of where peopleare medicating themselves across
a lot of different products andsome are, are, you know, alcohol
and OTC products.
(16:00):
And some of them are the morecomplex and the more devastating
opioid crisis in the UnitedStates.
And, and, and, and theunderstanding where cannabis
both from, uh, a full spectrumof use cases, but certainly a
lot of the OTC use cases.
And then straight through tosome of the use cases as it
relates to pain management and,and whatnot.
There's, there's, there's noquestion about the efficacy.
(16:22):
Um, like there's betterunderstanding, but, but, you
know, it's clear, more researchneeds to be done.
And this is part of, of wherethe legislation needs to allow
research on the plant.
And it's an incredibly complexplant.
Um, and to be clear, I think thecannabis industry, uh, is out
there saying this isn't aboutaccess of cannabis to minors.
(16:42):
And, and in fact, a lot of, someof the tax money in Washington I
talked about is going justtowards those programs that
keeps cannabis out of the handsof, of minors.
It's, it's, it's an importantissue.
It's important to be regulated.
It's important, like any productto bring the consistency, the
safety that comes withregulation.
And I think that's part of theunderstanding of cannabis.
(17:03):
Then there are the dynamicsaround criminal justice and, and
, uh, awareness of where, uh,clearly, uh, this has been an
unfair, uh, you know, legalenvironment as it relates to
cannabis and incarceration, uh,against
Speaker 2 (17:19):
Certainly there's a lot of trouble with during, when
you take a look at the, thenumbers of people incarcerated
for pretty minor possessioncharges.
And, you know, it's interestingthough, that you talked about
kids, right?
I mean, in, in the Canadianexperience that they talked
about, one of the reasons tolegalize is to move it away from
schools and get rid of the blackmarket, make it safer.
(17:39):
And then a recent statistics at40% of the cannabis market share
in Canada is still held byillegal producers.
So yeah, exactly.
Shake all that out.
Now, it, and I think the black
Speaker 3 (17:50):
Market, the gray market, uh, will continue to,
uh,[inaudible] at least be adynamic.
And look, if you're changingperception, uh, the people that,
at one point we'd had a bigproblem with that, the illegal
head shop down the road was,was, you know, selling cannabis
(18:10):
in through the back door.
Um, when it's generally legal onthe state level and 70% of the
country believes it should belegal.
The, you know, the gray market,the black market actually gets a
benefit here.
Right?
A lot of people just don't carethat it's going on, you know, in
their neighborhood or they,they, they may not seek to, to,
to, to bring in a, you know,enforcement again.
(18:34):
So I, I think there's still alot of work to be done.
And I think it's all about, andI remember when I was 12, you
know, my grandfather used to sayto me, you should legalize
cannabis to get the mob out ofit.
Um, and you've probably seenmarijuana by the way.
Well, I mean, he, his point wassimply that it's there, it's out
(18:55):
there.
People are consuming it, peoplewant it.
And so why not?
Why not tax it?
Why not regulate it?
Why not make it safe?
And, and I think that's, youknow, I think that's, what's
going on
Speaker 2 (19:07):
Anyway, huge growth to come, Tim Seymour of Seymour
asset management, Tim.
Great to talk to you, Dana.
Great to be here.
All right.
I want to take you out toJackson, Florida, and introduce
you to Tom Grinstein, who is thechief revenue officer with
Tikkun Olam.
(19:28):
Hi Tom.
Speaker 4 (19:29):
Thanks for having me.
Thanks
Speaker 2 (19:31):
For doing this.
It says online to Tikkun.
Olam is the most trusted name incannabis.
Speaker 4 (19:38):
We like to think.
So.
Um, you know, we spent, uh,about 20 years now, uh, doing
actual, uh, double blind placebocontrolled research, uh,
pharmaceutical style research onour, uh, strains and our
products.
So we feel that, that gives usthe title of a most trusted
brand in cannabis,
Speaker 2 (19:57):
Tikkun Olam was an Israeli company.
Right.
And, uh, as I understand itfrom, from one of your
colleagues who I know very well,who works in the company, that,
um, the problem is that when youstarted talking about a new
industry in America of cannabis,a new legal industry, nevermind
the illegal one, um, that a lotof people wanted to boast health
benefits, but companies were,you know, six months old or a
(20:20):
year old and suddenly, how couldthey claim any kind of research,
but that's where companies likeyours came in.
And they're not very many ofthem Tikkun Olam that actually
had, had been experimenting fora long time on the health
benefits of cannabis.
Speaker 4 (20:34):
Correct.
Um, so we were actually thefirst company company in the
world licensed to producemedical cannabis.
Now, certainly before we came upto the scene, there were
caregivers systems as inCalifornia and Colorado.
Um, but, uh, as soon as we wereable to achieve our licensure
through a kind of interestingsequence of events in Israel,
(20:56):
um, Dr.
Raphael, Meshulum the gentlemanwho originally discovered THC in
1964, uh, kind of took ourfounder under his wing.
And so we were able to reallystart doing research from are,
are very honest.
Speaker 2 (21:09):
So now you have all of these States on election
night that have come around andlegalized marijuana.
So you have like some 35 Statesnow, right?
The vast majority of them.
Whereas just a few years ago, wewere talking about, you know,
those first few States that werewilling to have legal cannabis.
So is that good news?
Speaker 4 (21:32):
Um, I think it's wonderful news, uh, you know,
from a, uh, from a corporatestandpoint, it may not be, but,
uh, from a compassionatestandpoint and myself as an
active patient as well, youknow, the expanded access to,
uh, effective medicine is, is awonderful thing.
Uh, and, and even for those whodo not have a qualifying
condition, you know, access tocannabis, uh, is, is, is
(21:55):
something that I, I feel is arights that all should have.
Speaker 2 (21:58):
So how much of this is recreational and how much of
it is medicinal?
Speaker 4 (22:03):
Um, obviously that vary, varies from state to
state.
You know, I live in Floridawhere we are technically a
hundred percent, uh, medicalmarket.
Um, but you know, you see Stateslike California, um, Arizona,
certainly having their adult uselegislation coming down New
Jersey.
You know, these are ourburgeoning markets that are
going to convert from strictlymedical to medical and adult
(22:25):
use.
Uh, it's an exciting time.
Speaker 2 (22:29):
What is your, if you don't mind me asking, because
you refer to it, what is yourpersonal story medically?
I mean, how has cannabis beenimportant to you then?
Speaker 4 (22:37):
Sure.
Um, well, I have a few spine,um, which, uh, basically has me
constantly in pain and until Idiscovered medical cannabis, um,
I, uh, had not slept more thanthree consecutive hours in 14
years.
Um, but through horrible.
Yes.
(22:57):
Um, and it's compounded by thefact that I'm also allergic to
opioids, which for most backpain sufferers that you might
actually consider that ablessing because back then
certainly has led people a lotof down the route into, uh,
addiction.
Um, so this has been alife-changing, uh, medicine for
me it's kept me healthy andhappy in my quality of life has
improved a thousand percent.
Speaker 2 (23:18):
So is that where there's the sea change in public
opinion in the U S where, youknow, when the Reagans years you
had this war on drug andcannabis was just another street
drug that they, you know, lockedpeople up for, but really in the
last decade, you know, there'sbeen so much talk about it,
reducing pain about it, helpingpeople.
(23:39):
And so then when it's on theballot, you see, I mean, a huge
percentage of Americanssupporting it.
Whereas if you had done it 20years ago, they wouldn't have
voted that way with that.
Speaker 4 (23:49):
No, very much so.
Um, I think what you're seeingis, uh, you know, the, the
progression or the, thepropagation of information.
So you have so many patientsuccesses in California and
Colorado and, and Israel, uh,you know, as, as medical markets
grew, um, that informationbecomes viral and expands.
And so now you have, um, asopposed to, you know, the Nancy
(24:12):
Reagan era of just say, no,
Speaker 2 (24:15):
I was just trying to find my notes, or because it was
84% of Americans in 1969 thoughtmarijuana, um, should shouldn't
be legal, right?
And then in 2019 pure research,91% of Americans supported
legalization.
Speaker 4 (24:31):
You know, you, you, the, the, the, the success
stories have given birth to whatI think of as the skeptical
boomer.
You know, there are folks outthere who have been told their
entire life, that cannabis isevil, that it's a gateway drug.
Uh, and now the data, uh, isskewing in the other direction.
And it's giving those folks ajustification to say, maybe
(24:53):
there's something there.
Maybe this can help me orsomebody, I know
Speaker 2 (24:56):
What don't you like about this?
When you see all of thesecompanies suddenly opening up in
all of these markets, what arethe pitfalls, do you think, what
I mean, is it standards?
Is it testing?
Is it regulation?
Speaker 4 (25:09):
It's, there's a confluence of a number of
things, and it's all generallypropagated by the folks who, um,
are either a profiteering or donot really understand, um,
cannabis itself, uh, especiallyfrom the regulatory standpoint.
So my fear is, is going too big,too fast, uh, without the, uh,
(25:30):
without the proper sets ofregulations in place, uh,
without those regulations beingset by folks who really do
understand cannabis as medicine
Speaker 2 (25:38):
Like THC levels, because I know in Canada's
experience, there was wildlyvastly different measurements of
THC and the quality of cannabisthat was going to be sold
legally and retail nevermind,illegally.
Speaker 4 (25:54):
Uh, well, I think that there are a number of
things, testing standards, uh,understanding what, uh, can
happen to the plant andunderstanding how legally, uh,
testing should be done aroundthat.
Um, from the consumerstandpoint, yes, I think
there's, there's a hugeemphasis, you know, most
people's experience withintoxication comes from alcohol.
So they associate higherpercentages of potency with, uh,
(26:20):
that level of intoxication.
When that's not necessarily thecase with cannabis, you're
talking about receptor occupancythat can be manipulated by a
number of things aside from justTHC.
So yeah, you can see 30% THCcannabis on a shelf in a
dispensary and think that, wow,that's going to be the most
powerful thing in there whenreally it's a better, uh, there
(26:42):
could be something down thelower teens that's going to
affect somebody's level ofintoxication much differently
because of the combination ofminor cannabinoids and terpenes
affecting receptor occupancy.
Speaker 2 (26:53):
Let me, let me take you to another topic, which I
don't quite understand becausein Canada, it was legalized
nationally with federalstandards in the us.
You have States that have nowpassed it, but federally it's
still, should I use the termillegal
Speaker 4 (27:11):
A hundred percent illegal.
So what
Speaker 2 (27:13):
Does that mean?
How does that translate intowhat happens then in the market?
Speaker 4 (27:17):
Uh, well, uh, in, in a couple of manners, it really,
we're getting into the kind ofobscure, uh, you know, looking
into the crystal ball here.
Um, but currently the federalgovernment, uh, has said that
they will not interfere withstate's rights to regulate
themselves in reference tocannabis.
Of course, that means that thereis no interstate commerce on
(27:38):
cannabis, therefore, um, it doesmake banking a bit of a
challenge because then you'removing, you can be moving money
between States that are theproceeds of, uh, of producing
cannabis, but so far the federalgovernment has, let's just say,
they've been cool with it.
Um, but, uh, you know, as thatchanges, either we go towards a
(28:00):
federal D schedule, which Ithink we're all hoping for, but
should that fail?
I think you'll see statecompacts, uh, where interstate
commerce has permitted, um, orat least not restricted by state
laws.
Of course the da may haveanother opinion on that and
decides to interfere.
But I think you'll see, forexample, you know, uh, if New
(28:24):
York comes to an adult use inPennsylvania and New Jersey, uh,
are all adult use as well.
I think you'll see those threegovernors get together and say,
Hey, we're going to permitinterstate commerce here, um, on
a, on a regulated basis, uh,with a, a nod, a wink and a nod
from the federal government thatthey won't interfere
Speaker 2 (28:41):
Because technically as a, as a producer or, um, a
commercial outlet, then youcould be charged, then could you
buy them?
Absolutely.
So there's risk there and thepeople want it sort it out.
You know, I want to ask youabout something else really
quick, John, before I let yougo.
And that is that in Canada, oneof the biggest arguments by the
prime minister Trudeaugovernment was that, you know,
(29:02):
let's legalize it.
Um, let's, let's take the retailoutlets away from, you know,
kids, schools let's controlquality, let's squeeze out the
illegal market, um, and, andcontrol this on a better level.
So that it's, it's more healthy.
It's, it's, uh, more healthy inall sorts of ways, right.
(29:22):
But 40% of the cannabis marketshare in Canada is still being
held by illegal producers.
So-called illegal producers.
Do you think you're just goingto experience a lot of the same
thing in the U S
Speaker 4 (29:35):
I think you will, uh, for, for a certain period of
time, you know, until, uh, the,the outweighs the reward,
obviously with federal Dschedule as a nation, we'll see
competition rise to a point atwhich, uh, pricing is suppressed
to the black market rate, butthat doesn't happen overnight.
Um, and, and it really is afactor of production.
(29:57):
Um, I think one of the issuesthat has prevented Canada from
getting there is this kind ofconcept of, uh, of
over-investment, uh, which hasled to ghost canopy and
production issues, um, that arepresent.
Um, there are greenhouses thatwere built, um, strictly so that
a company can say, Hey, we'vegot, you know, X, million square
(30:21):
foot of canopy up that weconvergence cannabis on it.
Well, there aren't enough peopleto buy the cannabis that would
be produced by that amounts of,of greenhouses that was just
done as an investment play to,to bolster share price.
Um, as a result of that, you'restill seeing quite high retail
prices, um, which isfacilitating the black market,
(30:41):
um, or even gray market, uh,workings within Canada.
And as I said, the same willhappen here in the U S um, but
eventually prices will be, in myopinion, prices will be
suppressed to the point at which, uh, the gray market is no
longer profitable.
You, the chief revenue officer,last question on revenue.
I mean, everybody thinks that,uh, you know, this is the it's
(31:05):
striking gold.
Now it certainly is for someStates, right.
But in terms of companies andyou guys have been doing this
for years now, I understand, um,there's a lot of challenges in
terms of being able to beingable to make a go of it and do
well in an industry that keepsgetting turned up, turned upside
down every few months.
(31:26):
Right, right.
Um, there certainly arechallenges.
Uh, the main one in the us, uh,would be, you can't operate as a
single entity.
I mean, if you, if you take intoaccount the, uh, you know, DC,
Puerto Rico, uh, et cetera, youknow, if you were to be present
nationwide, you'd need to have52 separate operating entities
(31:47):
all with their owninfrastructure and, and all with
their own legal oversight.
So, um, it's, it's a challengeevery day to, to be able to, or
to have to manipulate thenuances between regulation.
Speaker 1 (31:59):
So in until the federal government gets online
with state governments, that'swhat you're going to face.
Speaker 4 (32:05):
Of course.
And he will continue to see, uh,you know, inflated prices as a
result of that here, because youcan't consolidate operations
from a, not only from a growthstandpoint.
Speaker 1 (32:17):
Well, Tom grievance, Dean of Tikkun, Olam, thanks so
much, Tom.
And that's our backstory forthis Christmas week, 2020 I'm
Dana Lewis, please subscribe tobackstory and share our link
wherever you are, please stayhealthy and safe.
And I'll talk to you again soon.
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