April 18, 2025 • 46 mins
Mitchell Osak, veteran cannabis consultant and founder of Cannabis Management Review, joins us to share insights on navigating the complex cannabis business landscape and finding success through fundamental business principles.
• Hemp and cannabis policy debates highlight the challenges of finding middle ground in an increasingly polarized environment
• Cannabis business dynamics parallel historical precedents from Renaissance trading states to modern boom-bust cycles
• Companies that focus on core fundamentals like capital efficiency and operational excellence are weathering industry challenges best
• Successful cannabis leaders like Mike DiGiulio (Village Farms) and Zach George (SNDL) demonstrate the value of understanding your business and strong governance
• Execution matters more than strategy in today's competitive cannabis market
• Pricing strategy remains a critical challenge with many companies trapped in a race-to-the-bottom dynamic
• Corporate culture suffers when profitability remains elusive
• The global cannabis market offers promising alternative models to North American approaches
Be brave. This industry is getting harder before it gets better, but when it improves, it will be amazing. Look at cannabis through clear eyes without rose-colored glasses as it becomes a real industry requiring real business fundamentals.
--
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ben Larson (00:05):
Hey, everybody, welcome to.
Episode 84 of High Spirits.
I'm Ben Larson and with me, asalways, is Anna Rae Grabstein.
It is Thursday, April 17, 2025.
We got a great conversation foryou today.
We have Mitchell Osok on theshow.
We're going to be diving intoall things cannabis and digging
(00:26):
into his mind and how he seesthe industry.
But before we get there, AnnaRae, I'm so happy to see you.
I really look forward to today.
AnnaRae Grabstein (00:36):
I'm happy to see you too, Thursday.
It means that we're getting tothe end of the week and I know
that we both have been nonstop.
We've been trying to find timeto check in, and it's like it's
only the weekends and the nightsthat there seems to be time
these days.
Ben Larson (00:53):
Even those have been limited as of late.
I literally feel.
it just feels so recent that Iwas like okay, I got to run to
Sacramento, I'll see you nextweek.
AnnaRae Grabstein (01:04):
Well, I know you're deep in a lot of policy
debates.
What's really hot for you rightnow?
Ben Larson (01:09):
The boiling pot that I'm sitting in, I don't know.
Yeah, so it's like after I leftthe show last Thursday I went
up to Sacramento andparticipated in NCIA's
Stakeholder Summit, which wasabout 150 operators,
policymakers, legislators youknow you name.
It advocates largely from thecannabis lens, and so I found
(01:31):
myself in this room where I wasprobably on the polar end of
operators that you know workingin hemp advocating for kind of
more of this in between of hempand cannabis, and this is often
where I find myself kind of afoot in both boats.
But I was the one pushing theenvelope on the conversation in
(01:54):
that room and I think it wasappreciated.
I had a lot of people come upto me and say, you know,
thanking me for deepening theconversation and opening it up.
And we were talking about, youknow, synthesized ingredients,
be it chemically orbiosynthesized or converted, and
kind of the nuances there.
We were talking about theconvergence of hemp and cannabis
(02:14):
.
There's a assembly bill AB8, inSacramento right now that is
finding ways to get the supplychains to work a little bit
closer together.
There's new amendments that I'mactually reviewing right now
and we're going to see a hearing, I think very soon.
The 22nd, I believe is thehearing Anyways after that.
(02:37):
Then I find myself kind of inthese online conversations
regarding the hemp side of thebusiness and we have the US Hemp
Roundtable at the polaropposite end really not
appreciating kind of the effortsthat we've been doing in the
THC beverage space.
And I say THC beverage becausebeverage exists in both cannabis
(02:59):
and hemp and they're kind ofthe same products and so it's
very confusing for a lot ofpeople.
AnnaRae Grabstein (03:05):
So it's funny you're sort of calling out that
, like on this show.
We often have talked about thecannabis industry and the hemp
industry, but it's almoststarting to be that there's like
a third party in town, which isthat there's like a division
within hemp there's the THCbeverage, there is the hemp
industry and there's theregulated cannabis industry.
Ben Larson (03:25):
Yeah, I mean, yeah, look I.
There is the hemp industry andthere's the regulated cannabis
industry.
Yeah, I mean, yeah, look I, I Idon't, um, I don't envy the us
hemp roundtables position,because they started in this
realm of like, fighting for therights of hemp um, largely
growers and materials and andall that kind of stuff, so a
rope, not dope, um, and that hasevolved over time and so their
constituency is very diverse,but the ones with the money are
(03:48):
generally going to guide thedirection of that organization.
But they're coming from thisplace where hemp is legal
everywhere and it's distinctlydifferent than quote unquote
marijuana, right, but, to yourpoint, in certain circles, and
especially with policymakers andlegislators, all this kind of
stuff, it is becoming muchcloser together and I think
(04:11):
we're just reaching this verytense kind of situation where we
need to have really honest andopen conversations and we need
to kind of consider tactics thataren't scorched earth.
AnnaRae Grabstein (04:24):
We need to kind of consider tactics that
aren't scorched earth yeah,scorched earth.
I think that what you're reallysaying is just sort of get what
you want or don't take anythingat all.
You're talking aboutincrementalism.
Ben Larson (04:35):
Yeah, well, yeah, yeah, so in the cannabis
industry we are.
I mean, incrementalism is whatwe used to call it.
It is very slow and arduous,and I acknowledge that, and
sometimes you need to take theseleaps forward.
And and hemp actually hasprovided for the plant.
These opportunities like thatdidn't previously exist, and and
(04:57):
the beverage movement is anexample of that, and I
acknowledge that.
But in the the increasing rateof which we are seeing bans
being proposed in differentstates, like we experienced here
in california, I think we haveto realize that the conversation
is changing, that the cat's outof the bag, so to speak, and I
(05:18):
think we need to realize thatit's like we don't want to head
towards a catastrophic end wherea ban does get passed and you
gave up on a perfectly goodcompromise right, and so I think
there needs to be more of aneffort of creating the
conversations and not justfighting for the status quo I
hear that I think, um, it's.
AnnaRae Grabstein (05:39):
It's a challenging thing for businesses
that um, the ending of thestatus quo as an end to their
business.
And I have been looking at thehemp space over the past few
years as an opportunity to lookat how is the addressable market
(06:00):
larger of cannabinoid consumersthan it maybe was before with
just the adult use or regulatedmedical spaces?
And hemp was really interestingand is interesting for that
reason because there's more waysto reach the consumer.
But it became pretty clear tome pretty fast that there was
also a tremendous risk ofoperating in hemp in many of the
(06:25):
product categories,specifically, in my opinion, in
the inhalable categories.
And so while they're presentedan opportunity and remains an
opportunity for some groups toparticipate in some places and
things like inhalable hempproducts, I think that I'm just
going to say it that it's a bitdelusional to think that that's
going to stick around for longand it's just about accepting
(06:48):
that reality is that you're notgoing to be able to hold on to
those things long-term from apolicy and legal perspective.
It's just come on now and theresome, some cash stacked and
some profits made for somepeople, and no judgment there I,
(07:09):
but I I just don't think thatthat's something that we can
continue to depend on, and it'sgoing to create some policy
conflicts, um amongststakeholders, because people
aren't going to want to give upwhat they got.
Ben Larson (07:21):
Yeah, look, I mean, I could probably talk about this
for days.
AnnaRae Grabstein (07:25):
Yeah, we'll have some great contributions to
the conversation.
Ben Larson (07:29):
Yeah, I'm sure he's probably chomping at the bit to
just jump into this one, butyeah, let's get him on, let's,
let's, let's do it.
AnnaRae Grabstein (07:36):
Yeah, so I'll queue him up.
Today we have Mitchell Osak,who, if if you are a person that
is on LinkedIn and cannabis,you have probably seen his hot
takes on what's going on in theindustry.
He is a longtime consultant inthe space.
Prior to consulting in cannabis, he started his career in brand
(07:58):
management at Procter Gambleand has worked across a variety
of sectors, including pharmatech, financial services.
And has worked across a varietyof sectors, including pharma
tech, financial services.
He's a frequent contributor inmedia and at events and he
publishes what he calls theCannabis Management Review, the
Harvard Business Review for Weed.
So welcome, mitchell Osak.
(08:19):
Super stoked to have you here.
Mitchell Osak (08:21):
It's a pleasure.
Thank you for including me tohave you here.
AnnaRae Grabstein (08:26):
It's a pleasure.
Thank you for including meAbsolutely Well, so let's just
dive in.
What we're talking about isthis debate between
incrementalism and big sweepingpolicy change.
Obviously, sweeping policychange is more of a utopian
vision, but incrementalism seemsto be more of what we've
experienced in the US.
Yet you are in Canada, which Ididn't mention in the intro, and
(08:51):
there was a little bit more ofa sweeping policy shift.
That happened in Canada withfederal legalization.
What do you think about thisdebate between getting
everything that you want versustaking small steps towards a
larger goal?
Mitchell Osak (09:06):
You know, it's always hard to follow really
talented, smart people like youguys, because you end up making
a lot of my very points when itcomes to cannabis or anything
political.
These days we've settled into asociety where we have and I
mean we, because I sometimes dothis as well we tend to look at
(09:27):
things in a very reductive,binary fashion Win, lose, good,
evil, and so on and so forth.
And that kind of Greek drama isplaying out in the cannabis
versus hemp debate and evenwithin hemp and that was an
excellent point you made there,ben and even within hemp and
that was an excellent point youmade there, ben.
(09:48):
Obviously, as a more as anolder, maybe more seasoned,
battle-hardened person, I tendto believe that perfect is the
enemy of good, or even very good.
Clearly, along theincrementalism strategy, we will
never get anything unless wetake at least some baby steps.
(10:09):
And as much as it's nice tosort of swing for the fences and
hit that titanic home run attimes, we're not going to get it
.
And we're not going to get itwith the stigma, with the
misinformation, with thepolitical deadlock that's in
many legislative bodies, fromthe US Congress right down to
(10:30):
different states.
So I'm firmly in the beliefthat we have to come together
everybody and understand thatwhat you talked about, anna Rae,
almost this sort of Manicheannuclear option is going to set
us all back and you know, withall the other things going on in
the world right now and in ourrespective countries, we can ill
(10:53):
afford to hit that nuclearoption.
So clearly we have to findcommon ground.
People like Ben are perfectlysuited to do that Influencing
policy, bringing sober andsensible and mature and
professional thinking to thedialogue.
I just hope we get there, butI'm not always so optimistic.
Ben Larson (11:14):
I'm going to.
I'm going to play devil'sadvocate, I guess, against
myself and and and.
Just put a question out thereLike this is kind of just
mirroring what politics is today.
You know, I found myself in alot of conversations today.
God, we could just replace allthese players with, just, you
know, trump versus Biden andDemocrats versus Republicans.
(11:35):
And is this just the new normalin political discourse?
I've never claimed to be apolitician and I'm relatively
new to policy and politics, andI find myself in this world that
it feels gross.
Right, I am used to havingintellectual conversations and
(12:00):
honest conversations, and Idon't know if this is new or if
I'm just like in a new arena,and so I guess not to turn you
guys into my therapist, but Idid have my therapy session this
morning, so I'm already in themode.
So sorry, not sorry, but yeah,I'm interested in your guys'
(12:21):
thoughts.
Is this just the game?
Do we have to bat the ball backand forth to land somewhere in
the middle?
AnnaRae Grabstein (12:28):
anyway, if it was politics, we wouldn't land
anywhere, because that's whattends to happen, is that we just
bat the ball back and forth,and back and forth, and back and
forth forever until, like, thenext midterm and and um, I mean,
look at what's happening withtariff.
It's like tariffs are on,tariffs are off, tariffs are on
tariffs are off tariffs are on.
Oh, maybe we're going to holdfor 90 days, so I would like to
(12:52):
hope that it isn't just the same.
But I think that what'shappening politically is
affecting a lot of things, inparticular, the way that leaders
are showing up in theircommunication and the way that
they're seeing the world.
I think that there has been anew cultural dynamic about
winning and about things likethe art of the deal, like how
(13:15):
are we going to get things done.
There's a lot of what Iconsider like false idolatry to
some of the leaders that we'reseeing right now of the styles
that they come forward with, andspecifically like the Elon Musk
and Donald Trump style.
I think that it's not that theyare ineffective leaders.
I just think that they are sortof the exception to the rule
(13:39):
and that the high hubrisleadership style that we are
seeing them exhibit is not apath that is usually the winning
path for most leaders, andwe're seeing people kind of try
that on and see if awinner-take-all approach is
going to work, and it might, but, like I said, I think it's the
(14:03):
exception.
That's my thought, mitchell.
What do you think about this?
Mitchell Osak (14:09):
I would agree with both of you wholeheartedly
and just add another dimension,and that is unlike other sectors
.
Cannabis is permeated bycannabis culture, ideology, a
whole bunch of other things thatyou don't see, for example, in
financial services, and thoseother nuances or X factors make
(14:35):
it and I'll include hemp theremake it a much more difficult
form to reach the consensus andeven to talk to each other and
understand each other.
I find online very often and Iknow it's not representative of
the entire industry, but whetherit's in Canada or among my
(14:57):
American brothers or sistersseemingly normal, sensible
debate about what's the best wayto build a brand or how do you
cut cost will degenerate veryquickly into a roots versus
suits kind of paradigm.
I don't know how that happens,because you know ultimately, you
(15:19):
know, creating a sustainablebusiness and building brands,
you know, is based on dictumsand axioms that have been proven
out over decades, if nothundreds of years.
But we become prisoners of thisideology, this lexicon that
divides us and prevents thatsort of compromise from emerging
today.
However, you know, at a certainpoint, I believe, and sadly,
(15:44):
you have to get to this pointwhere you know when the ship is
sinking, everybody's got tostart bailing water or diving
over the edge.
There comes a moment where wehave to reach some sort of
solutions or companies andindividuals are just going to
fall by the wayside.
I hope we don't get to thatpoint, but sadly I think we
(16:05):
might have to, particularly inthis hemp versus cannabis debate
.
AnnaRae Grabstein (16:09):
Well, so you're starting to kind of
allude to this thing that a lotof us have been dancing around,
which is just this massiveshakeout that's happening in
cannabis.
Some people have been talkingabout consolidation, but the
reality is it's not even justconsolidation, it's companies
literally going out of business.
And you write a lot about usingmore traditional business
(16:31):
framework structures and lessonsfrom other industries and
applying them to cannabis, butthere's a lot of things about
cannabis that don't really seemto add up because it isn't a
traditional environment.
We aren't in a free, openmarket where if you have too
much inventory, you can sell itto the grocery outlet at a
reduced rate in the next stateover.
(16:52):
It's just not an option.
We're in a very closed, uniquemarket on the regulated cannabis
side, and then hemp, while lessregulated, in some ways
presents a lot of complicationsand uncertainty because we have
all of these laws, like the farmbill has to get renewed every
five years.
So there's just so muchuncertainty and unique market
(17:12):
dynamics.
I'm curious like why you thinkthat these old school frameworks
apply, or and that we're notcreating something new that
we've never done before.
Or maybe I'm wrong and thatisn't what you think.
Mitchell Osak (17:30):
No, no, as usual, you're right.
When I and I'll use your termold school, because it's a very
good phrase when I talk aboutold school, I talk about really
old school.
So there are less as background.
My undergraduate degree was inmilitary history, so I tend to
(17:50):
look at things through ahistorical lens and often a
military lens.
If you go back to real oldschool, like the 17th, 18th
century, even the 13th, 14thcentury, you had trading states.
You had states that hadagricultural-based or
craft-based economies thatcouldn't trade, so they
individually had their own boomand bust cycles and so on and so
(18:15):
forth.
So the peculiarities and thenuances of cannabis can be found
in other markets, in othercountries, in other eras.
I look at those for inspiration.
So why am I telling you that?
I'm telling you that because toa great extent, cannabis is
(18:37):
unique.
I will not deny that when I doconsulting work, I don't just
pull frameworks and templatesfrom other industries and apply
them.
That's crude, blunt and stupid.
Never do that.
But if you look at how doislands, using states as an
example, how do states managesupply and demand when you can't
(19:01):
ship between them?
I mean, go to the papal statesof the Renaissance in Italy and
you can see a great example ofhow they managed production of
olive oil and leather goods andso on and so forth.
And what you had, for example,in those particular markets, was
that boom and bust cycle.
And to your point, anna Rae,about consolidation, what ended
(19:25):
up happening is you hadevaporation of businesses.
So to your excellent point,that's exactly what happened.
So the lessons that I try andimpart and learn from and apply
to my clients and apply tobroader conversations with
policymakers about markets haveantecedents and precedents in
(19:48):
other places.
I'll give you a perfect exampleHemp beverages.
I'm not sure how many SKUs areout there.
Every time I put out a number,somebody corrects me.
Let's say, there's 700 SKUs ofhemp beverages right now.
That's not that different frommany of the bubbles we saw,
beginning in Holland with TulipMania, to US railroads, to, you
(20:13):
know, internet stocks in thelate, you know, 1990s.
We've been there.
We've seen this kind of thingmany, many times and it doesn't
necessarily give any hope tocertain companies and how
they're going to manage about it.
But it also will tell you thatat a certain point there's going
to be fewer companies, they'regoing to consolidate together.
(20:34):
They're going to exert marketpower, they're going to control
capacity and we're going to getto a more sustainable, albeit
concentrated industry.
Ben Larson (20:42):
So let's dig into that.
So, let's dig into that.
So we're in this highlycompetitive era, whether it's
the compressing, filtering outof the cannabis industry or this
exuberant hemp beveragecategory that you just mentioned
.
What are the qualities thatyou're seeing or encouraging the
(21:03):
operators in the industry towin in this kind?
Mitchell Osak (21:05):
of era of cannabis, to win in this kind of
era of cannabis.
So I'm going to tell you a sortof a tagline that my first
hockey coach.
I am Canadian and I did playhockey, so too bad.
Ben Larson (21:15):
Skate where the puck is going.
Mitchell Osak (21:18):
But you know his saying.
His catchphrase was back, check, forecheck, paycheck, and what
that basically means is do thefundamentals, work hard and
you'll be a successful hockeyplayer.
So for these hemp-basedcompanies, or cannabis companies
that have gone into hemp, youknow, to me it comes down to
(21:40):
basic business fundamentals.
You know cash flow management,differentiating your products
where it matters to consumers,getting the product shipped on
time and complete, providinggreat customer service and
building for scalability andmanaging risk as you go along.
There's no rocket scienceinvolved with that.
(22:02):
The unfortunate thing is, incannabis and hemp, that seems to
be a very difficult and tallorder for a lot of companies for
various reasons.
Ben Larson (22:11):
What's your advice as far as how capital plays into
this?
The venture capital markets arevery tight, with the exception
of a couple of categories, buteven those are becoming tight.
How are these businessesgetting off the ground and then
growing so?
Mitchell Osak (22:30):
whenever I write a lot about you know capital.
I write a lot about you knowhow do you deploy it and so on.
I'm very reticent to havesimplistic answers to very
complicated questions, and youdidn't ask me for a simple
answer.
But there is capital out there.
(22:51):
The capital isn't always wherepeople think it is and it's not
always available, and theavailable dry powder is what
they call.
It is also driven off a lot ofmacroeconomic factors like
interest rates and tariffs andthings like that that are beyond
the control of the cannabis andhemp industry.
So, long story short, companiesright now that I am seeing who
(23:16):
are very successful in highlycompetitive markets and I'll
point to Canada as an example,because it's an old market, it's
already gone through the boomand bust cycle or it's in the
midst of bust right now thecompanies that have done
exceptionally well are the onesthat have gotten the
fundamentals right.
We just spoke about that haveonly raised the amount of
(23:39):
capital they need, have scouredvarious sources of capital to be
able to get the money in place,and have prudently managed
their balance sheets such that,even as they're growing, they're
not creating, you know, theseeds of their own destruction
by reducing their ability toraise more growth capital when
(24:00):
they need it.
So really, at the end of theday, one of those force
multipliers in cannabis, andlikely in hemp, will be the
ability for companies andleaders to be highly capital
efficient Not only raise capitalat the right time in the right
amount, but use it very adroitlyand drive a lot of profit and
(24:21):
revenue out of that capital.
AnnaRae Grabstein (24:23):
Mitchell, I see you as someone that has a
lot of insight of the market asa whole and sometimes I will
find that the things that youare saying might even come
across as a little judgy ornegative of like is all that he
sees problems out there.
What are the solutions?
(24:44):
And I know that, within thecontext of looking at history,
we want to not repeat themistakes that we made in the
past, and you know it's Passoverright now for those that are
celebrating.
It's a time that we're lookingback, talking about historic
injustice, and I wonder who inyour mind is doing it right?
(25:07):
Who are some of the companiesor leaders or products that
you're out there watching withyour pointed eye and saying,
okay, they actually are movingin the direction that I think is
the right one?
Mitchell Osak (25:24):
Okay.
So if you think I'm judgy, Iwonder what you think about some
of the other people online.
I think I'm pretty modest andbalanced, so let me answer your
question by saying upfront acouple of things.
One is that, believe it or not,I own no shares in none of my
(25:45):
clients, in almost any cannabiscompany outside of an ETF.
Okay, so what I'm about to tellyou is not pumping up a stock
that I own or a client that I'mworking with right now.
So that's important becausethere is a lot of conflicted
advice, particularly when peopleare asked who do you like?
And I'm going to answer who Ilike, because that's a lot more
(26:09):
positive than who I don't like,and the financial results of the
company, of 90% of thecompanies out there, speak for
themselves.
So there are a lot of greatcompanies that I like.
In Canada, there's a companycalled Rubicon Organics.
They are a premium grower oforganic cannabis.
(26:30):
They're a mid-tier that havedone exceptionally well, not
only you know growing reallygood cannabis at a low price,
(26:51):
but also through innovation.
Decibel Cannabis is another oneof those that pioneered infused
pre-rolls, for example, inCanada, in the United States,
there's a whole host ofcompanies I like.
I like Binsky as an example,host of companies I like.
I like Binsky as an example.
That's one of your classicasset-light cannabis companies
(27:11):
that chose a lane and minimizedthe use of and the acquisition
of capital and that are focusedon producing IP and other forms
of technology and brands thatwill win in the marketplace.
I like them a lot.
I like a small dispensary.
I think they're a grower aswell C21.
They regularly put up quarterafter quarter of real profit.
(27:34):
So there are terrific companiesout there, without a doubt, and
the industry can absolutelylearn from them.
But I think if you stood backand now I'm being being
judgmental and you looked atwhat the winners or the leaders
are doing, it's not rocketscience.
Ben Larson (27:50):
So in my opinion to that point you've you've
mentioned, you know, businessfundamentals, profitability,
cash management.
You know those are like kind ofthe mechanics of it.
But going a step beyond andfocusing on the leaders
themselves, the CEOs, what aresome of the qualities that that
you might find maybe resonatedacross all these companies?
(28:11):
Or just from your experienceand working with so many
companies in the space, you know, what is it that you believe
are some of the keycharacteristics of a of a
successful CEO?
Mitchell Osak (28:22):
Okay, so I'll.
I'll single out a couple onlybecause I think they got it
right in the first place andalthough they're not where they
would probably like to be andthey would be a little bashful
if they knew I was mentioningtheir name I'm going to throw
out some names only because Ithink they've got that alchemy
(28:44):
down right.
One CEO is a gentleman namedMike DiGiulio.
He's the CEO of Village Farms.
Village Farms owns Pure SunFarms in Canada, Rose Life
Sciences and, I think, CBDBotanicals.
They also own a few millionsquare feet of greenhouse in
(29:05):
Texas, so Village will be aplayer.
What separated Mike, in myopinion, from a lot of his peers
was that he always saw cannabisas an agricultural product.
He didn't come in like a lot ofpeople who said you know,
cannabis is beverage, alcohol,or cannabis is CPG or cannabis
(29:28):
is medicine.
He saw cannabis as anagricultural product, so he
focused on growing the bestcannabis at the lowest possible
price.
That has held his company invery good stead.
They're fantastic growers.
They've got a beachhead now inHolland with one of the 10
licenses there for the adult usemarket.
(29:49):
I like Mike because he's agrower and I think people who
can grow and who focus ongrowing and whose values and
corporate DNA are aroundcultivation industrial scale
cultivation are going to win.
That's one example.
Another example is anotherCanadian company, but, I think,
(30:11):
a dual citizen.
His name is Zach George.
He's the CEO of SNDL.
Zach is a consummate gentleman.
One of the many reasons I likehim is that from the early days
when I spoke to him, he was allabout corporate governance, the
adroit use of capital, buyinglow and rebuilding.
(30:34):
And he, according to some I'mnot sure I would say this
because I'm not privy to a lotof their strategy conversations
but his strategy of buyingdistressed assets in the United
States at a low price, turningthem around, plus the affinities
he's developing through retailand cultivation, as well as
(30:55):
alcohol retail and cannabisretail, I think is going to
generate some very interestingsynergies in this industry in
terms of running highperformance retail operations,
in terms of understandingcannabis consumers, particularly
alcohol consumers that aretransitioning over to cannabis.
Zak and what they're doing atS&DL is a very interesting model
(31:20):
of how some of our winnersmight evolve.
So those are two.
There's a host of many othersthat are doing great work, but
those are two companies thatmost people might know if
they're investors or operators Ilove that companies that most
people might know if they'reinvestors or operators.
Ben Larson (31:38):
I love that.
So understanding your businessfor what it is and obviously the
consumer kind of makes me thinkabout my own company.
I told Harold in the early daysI'm like, no offense, we're
building the company around thescience, but the science isn't
rocket science and so we have tobuild more than just an
emulsion right isn't rocketscience, and so we have to build
more than just an emulsion,right?
Mitchell Osak (32:00):
So can I jump in for one second, just to your
point, ben?
And I just wrote about this twoweeks ago and I'm unplugging
myself, but you know there's one.
There's one thing having agreat strategy.
I know your firm does, I knowAnna Anna Reid, there's a lot of
that kind of stuff, but youknow execution matters more much
, if not more, in cannabis rightnow than I think strategy does.
There's a lot of greatcompanies that have similar
(32:22):
strategies and doing similarthings.
You see that in the UnitedStates, especially in certain
markets.
But what I think is separatingthe winners or the high
performers from the pack istheir ability to execute, and
that means getting stuff done ontime on budget, hitting those
market windows, making fewererrors and sort of doing the
(32:48):
right things right, as the lateStephen Covey would say.
So to me, execution is socritical right now, and the good
ones are doing it great and thealso-rans not as well.
AnnaRae Grabstein (33:01):
Diving into execution a little more.
I think it's interestingbecause there's a lot of
companies that have had badperformance up to now and there
are sometimes outsiders orsometimes it's the existing team
that are trying to turn itaround and steer the ship the
right way.
And if you are a leader who istasked with trying to improve
(33:24):
execution, what advice would yougive people or how would you
think about getting started?
Where do you start?
Mitchell Osak (33:34):
Oh boy, that's a big question.
You know, like a lot of thingsin business and a lot of things
in life, which the right answeris multifactorial and dependent
on the organization, theirculture, their strategy and the
people there.
In terms of general truisms,what I like to say to clients
when I'm talking to them is youknow a couple of things.
(33:57):
One strategically focus.
Don't try and be all things toall people in every market.
That seems obvious, but incannabis that's not so obvious,
particularly for an industry andwe talked about hemp earlier
that likes to chase growth orchase the next sexy category
that's being launched.
So one thing Anna Rae is forthese firms is you know, pick a
(34:20):
few lanes, probably no more thanthree, and really double down
on them, number one.
Number two is you know whatwe've been seeing in cannabis
for the last couple of years andwhat was an Achilles heel from
the very beginning and I won'tsay it for the United States of
years?
And what was an Achilles heelfrom the very beginning and I
won't say it for the UnitedStates, because I wasn't
necessarily there at the time,but I was in Canada we didn't
(34:42):
bring in all the best talent.
That's a euphemism, it means alot of things to a lot of people
, but I would say there was alot of people who actually
didn't know how to in marketing,who didn't know how to build
brands yet they were givenmillion dollar budgets sales
people who didn't know how tosell according to professional
competencies, that kind of stuff.
So we brought in a lot ofpeople, we trained them up, they
(35:05):
became battle-hardened, many ofthem were laid off or they left
the industry.
And now we're faced with asituation where we tend to
underpay people, weunderappreciate them, we
overload them with work, so it'shard to execute through a
demoralized, underpaid, verycynical workforce now.
(35:28):
So we're just, you know, as anindustry, and now I'm judging
okay, we just treat our people,our teammates, like shit, pardon
my language and that's not trueof every company, but it's true
of a lot of companies.
And if anyone wants to disagreewith me, show me a very healthy
corporate culture in amid-sized to large-sized
(35:50):
cannabis company.
AnnaRae Grabstein (35:51):
I've yet to see one, so obviously I will
disagree, but I want to jump inand push on it a little deeper,
in that I think that one of thereasons that corporate culture
has degraded so much is thatcompanies haven't actualized the
promise of profit and that hasresulted in companies not being
(36:15):
able to to execute on some oftheir more lofty internal
culture focused aspirations thatwere in place years ago.
Um, there were people that wereleaders of corporate social
responsibility in cannabis.
Like, those roles don't existanymore and um and and.
Part of that is based in thefact that there hasn't been
(36:37):
great execution, which is whatyou were just alluding to.
But I think that part of greatexecution has a lot to do with
pricing in the market has beenso challenging for cannabis
companies is pricing becausethere has been oversupply in
lots of markets and companieshave responded with just cheaper
(37:00):
and cheaper products, whichultimately has driven down
margins.
It's driven down dollars pertransaction to be adding to the
bottom line.
I mean, it's just had thismassive ripple effect and it
seems like it is almost a gameof like who can hold on longest
(37:20):
with the cheapest prices, and Ithink that there's going to have
to be a reconciliation at somepoint.
Most operators are reallynervous to raise their prices
because it doesn't seem like theconsumers have the appetite to
spend more money, especially inthese economic times.
(37:40):
And if your competitor down theroad is also selling something
for cheaper than you are, itmakes it very difficult to raise
your prices.
And you talk about pricing alot.
I would love to hear yourthoughts of how we might get out
from under these bad pricingstrategies.
Mitchell Osak (37:59):
Oh my gosh what a huge question that we can speak
hours on.
I completely agree with you.
I mean, cannabis is aprisoner's dilemma situation in
many, many markets.
I mean the obvious answers, the10,000 foot answers is going to
be you know you don't want tocompete on price unless you have
(38:21):
some unique advantage like costor something along those lines,
or infinite amounts of capital.
Companies have to figure outhow to compete in other
dimensions around price and thatcan be convenience, brand,
whatever you want to call itsuch that they can sustain price
(38:41):
premiums or higher pricesrelative to the competition
pricing in our industry.
I do some pricing work.
I should be doing three timesmore than I do right now and it
bothers me because there's onlyso many levers to drive up
margin and drive profitability.
(39:01):
And following the market downto even lower and lower, like
$79 in Canada, ounces, which iswhat you can get an ounce in
Canada for a flower, isridiculous.
No one is going to make anymoney and it's just going to
ruin the entire industry.
One of the things that we don'tdo a lot in cannabis that we
(39:22):
need to do are more pricingtests, and what do I mean by
that is raising pricing ofcertain categories or at certain
times and what have you, andtry and find those moments or
those customers where you faceinelastic price demand.
So if you raise your priceyou're not going to lose
(39:42):
customers.
And if we can find those bitsand pieces, even within local
markets, where we can takepricing up, I think a lot of
companies will be much betteroff.
By the way, nothing I'madvocating here is nothing
that's not done in financialservices and CPG and other
retail.
So this is not a rock star kindof recommendation, but it does
(40:06):
take work and a lot of analysisand a little bit of courage and
a little bit of persistence totry this out and to hold the
line for a week or two weeks ora month and see what happens.
I think if a lot of companiesdo that, they'll find that
they'll be able to generate alot of nickels and dimes and
quarters and enough of thosewill be able to buttress their
(40:27):
margins and their profits at theend of each quarter.
Ben Larson (40:31):
I think the biggest challenge here is what you're
saying makes a lot of sense.
And even if we had 99%penetration into the market with
this message and got through topeople and convinced them, like
, don't do somethingunsustainable, there's going to
be some idiot that comes in witha pile of cash that thinks it's
infinite and what we've allbeen terrible at in the cannabis
(40:53):
industry is judging timelinesand so they think that cash will
last and that they'll starvepeople out of the market.
But there's always someone newcoming into space with a smaller
pile of cash but can also comein with that approach, and so
it's just this perpetual drivingdown of costs and it'll level
out at some point.
But I don't know if I'm notconvinced that suddenly, you
(41:16):
know, convincing 90% of themarket to be responsible with
their pricing is going to fixthe problem.
Unfortunately, because we'rejust in this kind of emerging
space that's been emerging fordecades.
But, not to end on a cynicalnote, we are approaching the top
of the hour.
Mitchell, I have one lastquestion that's kind of
tangential for you.
(41:36):
You know you spend a lot oftime on LinkedIn.
You've chosen to go kind of inthis long form newsletter.
I'm curious are you happy withyour approach?
You know I spend a lot of timeon LinkedIn doing various forms
hosting a podcast, various formshosting a podcast.
Mitchell Osak (41:59):
What's been one of your biggest learnings or
surprises in putting out thisnewsletter.
Okay, so, one of my biggestlearnings?
Well, there's two big ones.
I would say One of them ispurely selfish.
I publish a lot because it's amanifestation of a lot of my
learning and my synthesis oflessons and data and connecting
the dots from other industriesand other eras to cannabis.
(42:20):
So I do this selfishly becauseit keeps me on the cutting edge
of the focus areas that I wantto prioritize strategy,
development operations, capitalmarkets, that kind of stuff.
So I do it for me, I don't doit for anybody else.
That's one thing.
The second thing is that I wantto be different.
(42:43):
Getting back to my point 20minutes ago, my difference in
the market isn't to rail againstthe lack of legalization or the
delays in rescheduling.
There are way smarter people,closer to the actual decision
makers, that can talk about that.
I wanted to go to white spacewithin the cannabis industry and
(43:03):
the conversation where therearen't a lot of people
discussing the media issues andthe complexity of this, much
like you guys do on this podcast, and the complexity of this,
much like you guys do on thispodcast.
So one of my major learningsI've discovered is how many
(43:24):
senior connections I've made andsenior conversations I have
with CEOs, cfos, brand managers,policymakers around the world.
They want to talk to me quietly, off the record.
They don't want it public, butthey want an talk to me quietly
off the record.
They don't want it public, butthey want an exchange of views
and and that kind of quiet umexchange is what makes me
hopeful for this industry,because there are people that
(43:44):
listen to the three of us.
We don't always see it online,we don't always see it through
likes and comments, but thereare kindred souls that want to
do the right things and build ahealthy, sustainable industry
and an industry that paysattention to social justice
issues, by the way, and safetyand education.
(44:07):
They are happening.
It's just very often below thewater surface.
So that big learning for me wasthat if you do enough of this
and you're mature trying to bemature and professional, not
judgmental, balanced I try andbe very, very balanced you one
will create a discourse with alot of the right people in this
(44:28):
industry, and that's at leastthe beginning of when Anna Rae
was and you were talking aboutat the beginning in terms of
influencing policy, at least Ihope.
AnnaRae Grabstein (44:38):
Mitchell, thank you so much.
I know that we are a littleshorter than we usually are
because we started late, but itis time for our last call.
So, mitchell, this is yourchance to give a final message
to our listeners.
Advice, call to action, closingthought Mike is yours.
Mitchell Osak (44:55):
You know, be brave, you know, hang in there.
You know this is hard work.
It's not going to get anyeasier.
There are, there are a lot ofpeople myself included, but but
others who will help.
But but look at this industrythrough clear, clear eyes.
No more rose-colored lenses.
This is becoming a realindustry and we all have to act
(45:18):
as such.
It's going to get a lot harderbefore it gets better, but when
it gets better, it's going to beamazing.
I know this because I see thisin other parts of the world and
how cannabis is evolving there.
Canada and the US are a bit ofan exception.
The world is doing it right andthey're offering a good model
for how we can improve thingshere.
So good luck to everybody.
(45:38):
Amazing.
AnnaRae Grabstein (45:40):
Thank you so much.
Ben Larson (45:42):
Mitchell Osok.
Thank you so much for your timeand knowledge and everything
that you're doing in theindustry, Looking forward to the
next time we get to catch up.
Mitchell Osak (45:51):
Thank you, and right back to you guys as well,
and your contributions as well.
I appreciate it All right.
AnnaRae Grabstein (45:57):
It means a lot.
Ben Larson (45:58):
And thank you to our live studio audience for
engaging during our recording.
Love seeing the commentsflowing in.
We'll drop into the commentsand interact with you there.
If you're listening via ourpodcast on Apple or Spotify or
YouTube, please like, subscribe,share, review all the things.
(46:19):
That really helps us get seen.
Thank you to our teams atVertosa and Wolfmeyer and, of
course, our producer, ericRossetti.
As always, folks stay curious,stay informed and, most
importantly, keep your spiritshigh Until next time.
That's the show.
Hey, everybody, welcome to.
Episode 84 of High Spirits.
I'm Ben Larson and with me, asalways, is Anna Rae Grabstein.
It is Thursday, April 17, 2025.
We got a great conversation foryou today.
We have Mitchell Osok on theshow.
We're going to be diving intoall things cannabis and digging
(00:26):
into his mind and how he seesthe industry.
But before we get there, AnnaRae, I'm so happy to see you.
I really look forward to today.
AnnaRae Grabstein (00:36):
I'm happy to see you too, Thursday.
It means that we're getting tothe end of the week and I know
that we both have been nonstop.
We've been trying to find timeto check in, and it's like it's
only the weekends and the nightsthat there seems to be time
these days.
Ben Larson (00:53):
Even those have been limited as of late.
I literally feel.
it just feels so recent that Iwas like okay, I got to run to
Sacramento, I'll see you nextweek.
AnnaRae Grabstein (01:04):
Well, I know you're deep in a lot of policy
debates.
What's really hot for you rightnow?
Ben Larson (01:09):
The boiling pot that I'm sitting in, I don't know.
Yeah, so it's like after I leftthe show last Thursday I went
up to Sacramento andparticipated in NCIA's
Stakeholder Summit, which wasabout 150 operators,
policymakers, legislators youknow you name.
It advocates largely from thecannabis lens, and so I found
(01:31):
myself in this room where I wasprobably on the polar end of
operators that you know workingin hemp advocating for kind of
more of this in between of hempand cannabis, and this is often
where I find myself kind of afoot in both boats.
But I was the one pushing theenvelope on the conversation in
(01:54):
that room and I think it wasappreciated.
I had a lot of people come upto me and say, you know,
thanking me for deepening theconversation and opening it up.
And we were talking about, youknow, synthesized ingredients,
be it chemically orbiosynthesized or converted, and
kind of the nuances there.
We were talking about theconvergence of hemp and cannabis
(02:14):
.
There's a assembly bill AB8, inSacramento right now that is
finding ways to get the supplychains to work a little bit
closer together.
There's new amendments that I'mactually reviewing right now
and we're going to see a hearing, I think very soon.
The 22nd, I believe is thehearing Anyways after that.
(02:37):
Then I find myself kind of inthese online conversations
regarding the hemp side of thebusiness and we have the US Hemp
Roundtable at the polaropposite end really not
appreciating kind of the effortsthat we've been doing in the
THC beverage space.
And I say THC beverage becausebeverage exists in both cannabis
(02:59):
and hemp and they're kind ofthe same products and so it's
very confusing for a lot ofpeople.
AnnaRae Grabstein (03:05):
So it's funny you're sort of calling out that
, like on this show.
We often have talked about thecannabis industry and the hemp
industry, but it's almoststarting to be that there's like
a third party in town, which isthat there's like a division
within hemp there's the THCbeverage, there is the hemp
industry and there's theregulated cannabis industry.
Ben Larson (03:25):
Yeah, I mean, yeah, look I.
There is the hemp industry andthere's the regulated cannabis
industry.
Yeah, I mean, yeah, look I, I Idon't, um, I don't envy the us
hemp roundtables position,because they started in this
realm of like, fighting for therights of hemp um, largely
growers and materials and andall that kind of stuff, so a
rope, not dope, um, and that hasevolved over time and so their
constituency is very diverse,but the ones with the money are
(03:48):
generally going to guide thedirection of that organization.
But they're coming from thisplace where hemp is legal
everywhere and it's distinctlydifferent than quote unquote
marijuana, right, but, to yourpoint, in certain circles, and
especially with policymakers andlegislators, all this kind of
stuff, it is becoming muchcloser together and I think
(04:11):
we're just reaching this verytense kind of situation where we
need to have really honest andopen conversations and we need
to kind of consider tactics thataren't scorched earth.
AnnaRae Grabstein (04:24):
We need to kind of consider tactics that
aren't scorched earth yeah,scorched earth.
I think that what you're reallysaying is just sort of get what
you want or don't take anythingat all.
You're talking aboutincrementalism.
Ben Larson (04:35):
Yeah, well, yeah, yeah, so in the cannabis
industry we are.
I mean, incrementalism is whatwe used to call it.
It is very slow and arduous,and I acknowledge that, and
sometimes you need to take theseleaps forward.
And and hemp actually hasprovided for the plant.
These opportunities like thatdidn't previously exist, and and
(04:57):
the beverage movement is anexample of that, and I
acknowledge that.
But in the the increasing rateof which we are seeing bans
being proposed in differentstates, like we experienced here
in california, I think we haveto realize that the conversation
is changing, that the cat's outof the bag, so to speak, and I
(05:18):
think we need to realize thatit's like we don't want to head
towards a catastrophic end wherea ban does get passed and you
gave up on a perfectly goodcompromise right, and so I think
there needs to be more of aneffort of creating the
conversations and not justfighting for the status quo I
hear that I think, um, it's.
AnnaRae Grabstein (05:39):
It's a challenging thing for businesses
that um, the ending of thestatus quo as an end to their
business.
And I have been looking at thehemp space over the past few
years as an opportunity to lookat how is the addressable market
(06:00):
larger of cannabinoid consumersthan it maybe was before with
just the adult use or regulatedmedical spaces?
And hemp was really interestingand is interesting for that
reason because there's more waysto reach the consumer.
But it became pretty clear tome pretty fast that there was
also a tremendous risk ofoperating in hemp in many of the
(06:25):
product categories,specifically, in my opinion, in
the inhalable categories.
And so while they're presentedan opportunity and remains an
opportunity for some groups toparticipate in some places and
things like inhalable hempproducts, I think that I'm just
going to say it that it's a bitdelusional to think that that's
going to stick around for longand it's just about accepting
(06:48):
that reality is that you're notgoing to be able to hold on to
those things long-term from apolicy and legal perspective.
It's just come on now and theresome, some cash stacked and
some profits made for somepeople, and no judgment there I,
(07:09):
but I I just don't think thatthat's something that we can
continue to depend on, and it'sgoing to create some policy
conflicts, um amongststakeholders, because people
aren't going to want to give upwhat they got.
Ben Larson (07:21):
Yeah, look, I mean, I could probably talk about this
for days.
AnnaRae Grabstein (07:25):
Yeah, we'll have some great contributions to
the conversation.
Ben Larson (07:29):
Yeah, I'm sure he's probably chomping at the bit to
just jump into this one, butyeah, let's get him on, let's,
let's, let's do it.
AnnaRae Grabstein (07:36):
Yeah, so I'll queue him up.
Today we have Mitchell Osak,who, if if you are a person that
is on LinkedIn and cannabis,you have probably seen his hot
takes on what's going on in theindustry.
He is a longtime consultant inthe space.
Prior to consulting in cannabis, he started his career in brand
(07:58):
management at Procter Gambleand has worked across a variety
of sectors, including pharmatech, financial services.
And has worked across a varietyof sectors, including pharma
tech, financial services.
He's a frequent contributor inmedia and at events and he
publishes what he calls theCannabis Management Review, the
Harvard Business Review for Weed.
So welcome, mitchell Osak.
(08:19):
Super stoked to have you here.
Mitchell Osak (08:21):
It's a pleasure.
Thank you for including me tohave you here.
AnnaRae Grabstein (08:26):
It's a pleasure.
Thank you for including meAbsolutely Well, so let's just
dive in.
What we're talking about isthis debate between
incrementalism and big sweepingpolicy change.
Obviously, sweeping policychange is more of a utopian
vision, but incrementalism seemsto be more of what we've
experienced in the US.
Yet you are in Canada, which Ididn't mention in the intro, and
(08:51):
there was a little bit more ofa sweeping policy shift.
That happened in Canada withfederal legalization.
What do you think about thisdebate between getting
everything that you want versustaking small steps towards a
larger goal?
Mitchell Osak (09:06):
You know, it's always hard to follow really
talented, smart people like youguys, because you end up making
a lot of my very points when itcomes to cannabis or anything
political.
These days we've settled into asociety where we have and I
mean we, because I sometimes dothis as well we tend to look at
(09:27):
things in a very reductive,binary fashion Win, lose, good,
evil, and so on and so forth.
And that kind of Greek drama isplaying out in the cannabis
versus hemp debate and evenwithin hemp and that was an
excellent point you made there,ben and even within hemp and
that was an excellent point youmade there, ben.
(09:48):
Obviously, as a more as anolder, maybe more seasoned,
battle-hardened person, I tendto believe that perfect is the
enemy of good, or even very good.
Clearly, along theincrementalism strategy, we will
never get anything unless wetake at least some baby steps.
(10:09):
And as much as it's nice tosort of swing for the fences and
hit that titanic home run attimes, we're not going to get it
.
And we're not going to get itwith the stigma, with the
misinformation, with thepolitical deadlock that's in
many legislative bodies, fromthe US Congress right down to
(10:30):
different states.
So I'm firmly in the beliefthat we have to come together
everybody and understand thatwhat you talked about, anna Rae,
almost this sort of Manicheannuclear option is going to set
us all back and you know, withall the other things going on in
the world right now and in ourrespective countries, we can ill
(10:53):
afford to hit that nuclearoption.
So clearly we have to findcommon ground.
People like Ben are perfectlysuited to do that Influencing
policy, bringing sober andsensible and mature and
professional thinking to thedialogue.
I just hope we get there, butI'm not always so optimistic.
Ben Larson (11:14):
I'm going to.
I'm going to play devil'sadvocate, I guess, against
myself and and and.
Just put a question out thereLike this is kind of just
mirroring what politics is today.
You know, I found myself in alot of conversations today.
God, we could just replace allthese players with, just, you
know, trump versus Biden andDemocrats versus Republicans.
(11:35):
And is this just the new normalin political discourse?
I've never claimed to be apolitician and I'm relatively
new to policy and politics, andI find myself in this world that
it feels gross.
Right, I am used to havingintellectual conversations and
(12:00):
honest conversations, and Idon't know if this is new or if
I'm just like in a new arena,and so I guess not to turn you
guys into my therapist, but Idid have my therapy session this
morning, so I'm already in themode.
So sorry, not sorry, but yeah,I'm interested in your guys'
(12:21):
thoughts.
Is this just the game?
Do we have to bat the ball backand forth to land somewhere in
the middle?
AnnaRae Grabstein (12:28):
anyway, if it was politics, we wouldn't land
anywhere, because that's whattends to happen, is that we just
bat the ball back and forth,and back and forth, and back and
forth forever until, like, thenext midterm and and um, I mean,
look at what's happening withtariff.
It's like tariffs are on,tariffs are off, tariffs are on
tariffs are off tariffs are on.
Oh, maybe we're going to holdfor 90 days, so I would like to
(12:52):
hope that it isn't just the same.
But I think that what'shappening politically is
affecting a lot of things, inparticular, the way that leaders
are showing up in theircommunication and the way that
they're seeing the world.
I think that there has been anew cultural dynamic about
winning and about things likethe art of the deal, like how
(13:15):
are we going to get things done.
There's a lot of what Iconsider like false idolatry to
some of the leaders that we'reseeing right now of the styles
that they come forward with, andspecifically like the Elon Musk
and Donald Trump style.
I think that it's not that theyare ineffective leaders.
I just think that they are sortof the exception to the rule
(13:39):
and that the high hubrisleadership style that we are
seeing them exhibit is not apath that is usually the winning
path for most leaders, andwe're seeing people kind of try
that on and see if awinner-take-all approach is
going to work, and it might, but, like I said, I think it's the
(14:03):
exception.
That's my thought, mitchell.
What do you think about this?
Mitchell Osak (14:09):
I would agree with both of you wholeheartedly
and just add another dimension,and that is unlike other sectors
.
Cannabis is permeated bycannabis culture, ideology, a
whole bunch of other things thatyou don't see, for example, in
financial services, and thoseother nuances or X factors make
(14:35):
it and I'll include hemp theremake it a much more difficult
form to reach the consensus andeven to talk to each other and
understand each other.
I find online very often and Iknow it's not representative of
the entire industry, but whetherit's in Canada or among my
(14:57):
American brothers or sistersseemingly normal, sensible
debate about what's the best wayto build a brand or how do you
cut cost will degenerate veryquickly into a roots versus
suits kind of paradigm.
I don't know how that happens,because you know ultimately, you
(15:19):
know, creating a sustainablebusiness and building brands,
you know, is based on dictumsand axioms that have been proven
out over decades, if nothundreds of years.
But we become prisoners of thisideology, this lexicon that
divides us and prevents thatsort of compromise from emerging
today.
However, you know, at a certainpoint, I believe, and sadly,
(15:44):
you have to get to this pointwhere you know when the ship is
sinking, everybody's got tostart bailing water or diving
over the edge.
There comes a moment where wehave to reach some sort of
solutions or companies andindividuals are just going to
fall by the wayside.
I hope we don't get to thatpoint, but sadly I think we
(16:05):
might have to, particularly inthis hemp versus cannabis debate
.
AnnaRae Grabstein (16:09):
Well, so you're starting to kind of
allude to this thing that a lotof us have been dancing around,
which is just this massiveshakeout that's happening in
cannabis.
Some people have been talkingabout consolidation, but the
reality is it's not even justconsolidation, it's companies
literally going out of business.
And you write a lot about usingmore traditional business
(16:31):
framework structures and lessonsfrom other industries and
applying them to cannabis, butthere's a lot of things about
cannabis that don't really seemto add up because it isn't a
traditional environment.
We aren't in a free, openmarket where if you have too
much inventory, you can sell itto the grocery outlet at a
reduced rate in the next stateover.
(16:52):
It's just not an option.
We're in a very closed, uniquemarket on the regulated cannabis
side, and then hemp, while lessregulated, in some ways
presents a lot of complicationsand uncertainty because we have
all of these laws, like the farmbill has to get renewed every
five years.
So there's just so muchuncertainty and unique market
(17:12):
dynamics.
I'm curious like why you thinkthat these old school frameworks
apply, or and that we're notcreating something new that
we've never done before.
Or maybe I'm wrong and thatisn't what you think.
Mitchell Osak (17:30):
No, no, as usual, you're right.
When I and I'll use your termold school, because it's a very
good phrase when I talk aboutold school, I talk about really
old school.
So there are less as background.
My undergraduate degree was inmilitary history, so I tend to
(17:50):
look at things through ahistorical lens and often a
military lens.
If you go back to real oldschool, like the 17th, 18th
century, even the 13th, 14thcentury, you had trading states.
You had states that hadagricultural-based or
craft-based economies thatcouldn't trade, so they
individually had their own boomand bust cycles and so on and so
(18:15):
forth.
So the peculiarities and thenuances of cannabis can be found
in other markets, in othercountries, in other eras.
I look at those for inspiration.
So why am I telling you that?
I'm telling you that because toa great extent, cannabis is
(18:37):
unique.
I will not deny that when I doconsulting work, I don't just
pull frameworks and templatesfrom other industries and apply
them.
That's crude, blunt and stupid.
Never do that.
But if you look at how doislands, using states as an
example, how do states managesupply and demand when you can't
(19:01):
ship between them?
I mean, go to the papal statesof the Renaissance in Italy and
you can see a great example ofhow they managed production of
olive oil and leather goods andso on and so forth.
And what you had, for example,in those particular markets, was
that boom and bust cycle.
And to your point, anna Rae,about consolidation, what ended
(19:25):
up happening is you hadevaporation of businesses.
So to your excellent point,that's exactly what happened.
So the lessons that I try andimpart and learn from and apply
to my clients and apply tobroader conversations with
policymakers about markets haveantecedents and precedents in
(19:48):
other places.
I'll give you a perfect exampleHemp beverages.
I'm not sure how many SKUs areout there.
Every time I put out a number,somebody corrects me.
Let's say, there's 700 SKUs ofhemp beverages right now.
That's not that different frommany of the bubbles we saw,
beginning in Holland with TulipMania, to US railroads, to, you
(20:13):
know, internet stocks in thelate, you know, 1990s.
We've been there.
We've seen this kind of thingmany, many times and it doesn't
necessarily give any hope tocertain companies and how
they're going to manage about it.
But it also will tell you thatat a certain point there's going
to be fewer companies, they'regoing to consolidate together.
(20:34):
They're going to exert marketpower, they're going to control
capacity and we're going to getto a more sustainable, albeit
concentrated industry.
Ben Larson (20:42):
So let's dig into that.
So, let's dig into that.
So we're in this highlycompetitive era, whether it's
the compressing, filtering outof the cannabis industry or this
exuberant hemp beveragecategory that you just mentioned
.
What are the qualities thatyou're seeing or encouraging the
(21:03):
operators in the industry towin in this kind?
Mitchell Osak (21:05):
of era of cannabis, to win in this kind of
era of cannabis.
So I'm going to tell you a sortof a tagline that my first
hockey coach.
I am Canadian and I did playhockey, so too bad.
Ben Larson (21:15):
Skate where the puck is going.
Mitchell Osak (21:18):
But you know his saying.
His catchphrase was back, check, forecheck, paycheck, and what
that basically means is do thefundamentals, work hard and
you'll be a successful hockeyplayer.
So for these hemp-basedcompanies, or cannabis companies
that have gone into hemp, youknow, to me it comes down to
(21:40):
basic business fundamentals.
You know cash flow management,differentiating your products
where it matters to consumers,getting the product shipped on
time and complete, providinggreat customer service and
building for scalability andmanaging risk as you go along.
There's no rocket scienceinvolved with that.
(22:02):
The unfortunate thing is, incannabis and hemp, that seems to
be a very difficult and tallorder for a lot of companies for
various reasons.
Ben Larson (22:11):
What's your advice as far as how capital plays into
this?
The venture capital markets arevery tight, with the exception
of a couple of categories, buteven those are becoming tight.
How are these businessesgetting off the ground and then
growing so?
Mitchell Osak (22:30):
whenever I write a lot about you know capital.
I write a lot about you knowhow do you deploy it and so on.
I'm very reticent to havesimplistic answers to very
complicated questions, and youdidn't ask me for a simple
answer.
But there is capital out there.
(22:51):
The capital isn't always wherepeople think it is and it's not
always available, and theavailable dry powder is what
they call.
It is also driven off a lot ofmacroeconomic factors like
interest rates and tariffs andthings like that that are beyond
the control of the cannabis andhemp industry.
So, long story short, companiesright now that I am seeing who
(23:16):
are very successful in highlycompetitive markets and I'll
point to Canada as an example,because it's an old market, it's
already gone through the boomand bust cycle or it's in the
midst of bust right now thecompanies that have done
exceptionally well are the onesthat have gotten the
fundamentals right.
We just spoke about that haveonly raised the amount of
(23:39):
capital they need, have scouredvarious sources of capital to be
able to get the money in place,and have prudently managed
their balance sheets such that,even as they're growing, they're
not creating, you know, theseeds of their own destruction
by reducing their ability toraise more growth capital when
(24:00):
they need it.
So really, at the end of theday, one of those force
multipliers in cannabis, andlikely in hemp, will be the
ability for companies andleaders to be highly capital
efficient Not only raise capitalat the right time in the right
amount, but use it very adroitlyand drive a lot of profit and
(24:21):
revenue out of that capital.
AnnaRae Grabstein (24:23):
Mitchell, I see you as someone that has a
lot of insight of the market asa whole and sometimes I will
find that the things that youare saying might even come
across as a little judgy ornegative of like is all that he
sees problems out there.
What are the solutions?
(24:44):
And I know that, within thecontext of looking at history,
we want to not repeat themistakes that we made in the
past, and you know it's Passoverright now for those that are
celebrating.
It's a time that we're lookingback, talking about historic
injustice, and I wonder who inyour mind is doing it right?
(25:07):
Who are some of the companiesor leaders or products that
you're out there watching withyour pointed eye and saying,
okay, they actually are movingin the direction that I think is
the right one?
Mitchell Osak (25:24):
Okay.
So if you think I'm judgy, Iwonder what you think about some
of the other people online.
I think I'm pretty modest andbalanced, so let me answer your
question by saying upfront acouple of things.
One is that, believe it or not,I own no shares in none of my
(25:45):
clients, in almost any cannabiscompany outside of an ETF.
Okay, so what I'm about to tellyou is not pumping up a stock
that I own or a client that I'mworking with right now.
So that's important becausethere is a lot of conflicted
advice, particularly when peopleare asked who do you like?
And I'm going to answer who Ilike, because that's a lot more
(26:09):
positive than who I don't like,and the financial results of the
company, of 90% of thecompanies out there, speak for
themselves.
So there are a lot of greatcompanies that I like.
In Canada, there's a companycalled Rubicon Organics.
They are a premium grower oforganic cannabis.
(26:30):
They're a mid-tier that havedone exceptionally well, not
only you know growing reallygood cannabis at a low price,
(26:51):
but also through innovation.
Decibel Cannabis is another oneof those that pioneered infused
pre-rolls, for example, inCanada, in the United States,
there's a whole host ofcompanies I like.
I like Binsky as an example,host of companies I like.
I like Binsky as an example.
That's one of your classicasset-light cannabis companies
(27:11):
that chose a lane and minimizedthe use of and the acquisition
of capital and that are focusedon producing IP and other forms
of technology and brands thatwill win in the marketplace.
I like them a lot.
I like a small dispensary.
I think they're a grower aswell C21.
They regularly put up quarterafter quarter of real profit.
(27:34):
So there are terrific companiesout there, without a doubt, and
the industry can absolutelylearn from them.
But I think if you stood backand now I'm being being
judgmental and you looked atwhat the winners or the leaders
are doing, it's not rocketscience.
Ben Larson (27:50):
So in my opinion to that point you've you've
mentioned, you know, businessfundamentals, profitability,
cash management.
You know those are like kind ofthe mechanics of it.
But going a step beyond andfocusing on the leaders
themselves, the CEOs, what aresome of the qualities that that
you might find maybe resonatedacross all these companies?
(28:11):
Or just from your experienceand working with so many
companies in the space, you know, what is it that you believe
are some of the keycharacteristics of a of a
successful CEO?
Mitchell Osak (28:22):
Okay, so I'll.
I'll single out a couple onlybecause I think they got it
right in the first place andalthough they're not where they
would probably like to be andthey would be a little bashful
if they knew I was mentioningtheir name I'm going to throw
out some names only because Ithink they've got that alchemy
(28:44):
down right.
One CEO is a gentleman namedMike DiGiulio.
He's the CEO of Village Farms.
Village Farms owns Pure SunFarms in Canada, Rose Life
Sciences and, I think, CBDBotanicals.
They also own a few millionsquare feet of greenhouse in
(29:05):
Texas, so Village will be aplayer.
What separated Mike, in myopinion, from a lot of his peers
was that he always saw cannabisas an agricultural product.
He didn't come in like a lot ofpeople who said you know,
cannabis is beverage, alcohol,or cannabis is CPG or cannabis
(29:28):
is medicine.
He saw cannabis as anagricultural product, so he
focused on growing the bestcannabis at the lowest possible
price.
That has held his company invery good stead.
They're fantastic growers.
They've got a beachhead now inHolland with one of the 10
licenses there for the adult usemarket.
(29:49):
I like Mike because he's agrower and I think people who
can grow and who focus ongrowing and whose values and
corporate DNA are aroundcultivation industrial scale
cultivation are going to win.
That's one example.
Another example is anotherCanadian company, but, I think,
(30:11):
a dual citizen.
His name is Zach George.
He's the CEO of SNDL.
Zach is a consummate gentleman.
One of the many reasons I likehim is that from the early days
when I spoke to him, he was allabout corporate governance, the
adroit use of capital, buyinglow and rebuilding.
(30:34):
And he, according to some I'mnot sure I would say this
because I'm not privy to a lotof their strategy conversations
but his strategy of buyingdistressed assets in the United
States at a low price, turningthem around, plus the affinities
he's developing through retailand cultivation, as well as
(30:55):
alcohol retail and cannabisretail, I think is going to
generate some very interestingsynergies in this industry in
terms of running highperformance retail operations,
in terms of understandingcannabis consumers, particularly
alcohol consumers that aretransitioning over to cannabis.
Zak and what they're doing atS&DL is a very interesting model
(31:20):
of how some of our winnersmight evolve.
So those are two.
There's a host of many othersthat are doing great work, but
those are two companies thatmost people might know if
they're investors or operators Ilove that companies that most
people might know if they'reinvestors or operators.
Ben Larson (31:38):
I love that.
So understanding your businessfor what it is and obviously the
consumer kind of makes me thinkabout my own company.
I told Harold in the early daysI'm like, no offense, we're
building the company around thescience, but the science isn't
rocket science and so we have tobuild more than just an
emulsion right isn't rocketscience, and so we have to build
more than just an emulsion,right?
Mitchell Osak (32:00):
So can I jump in for one second, just to your
point, ben?
And I just wrote about this twoweeks ago and I'm unplugging
myself, but you know there's one.
There's one thing having agreat strategy.
I know your firm does, I knowAnna Anna Reid, there's a lot of
that kind of stuff, but youknow execution matters more much
, if not more, in cannabis rightnow than I think strategy does.
There's a lot of greatcompanies that have similar
(32:22):
strategies and doing similarthings.
You see that in the UnitedStates, especially in certain
markets.
But what I think is separatingthe winners or the high
performers from the pack istheir ability to execute, and
that means getting stuff done ontime on budget, hitting those
market windows, making fewererrors and sort of doing the
(32:48):
right things right, as the lateStephen Covey would say.
So to me, execution is socritical right now, and the good
ones are doing it great and thealso-rans not as well.
AnnaRae Grabstein (33:01):
Diving into execution a little more.
I think it's interestingbecause there's a lot of
companies that have had badperformance up to now and there
are sometimes outsiders orsometimes it's the existing team
that are trying to turn itaround and steer the ship the
right way.
And if you are a leader who istasked with trying to improve
(33:24):
execution, what advice would yougive people or how would you
think about getting started?
Where do you start?
Mitchell Osak (33:34):
Oh boy, that's a big question.
You know, like a lot of thingsin business and a lot of things
in life, which the right answeris multifactorial and dependent
on the organization, theirculture, their strategy and the
people there.
In terms of general truisms,what I like to say to clients
when I'm talking to them is youknow a couple of things.
(33:57):
One strategically focus.
Don't try and be all things toall people in every market.
That seems obvious, but incannabis that's not so obvious,
particularly for an industry andwe talked about hemp earlier
that likes to chase growth orchase the next sexy category
that's being launched.
So one thing Anna Rae is forthese firms is you know, pick a
(34:20):
few lanes, probably no more thanthree, and really double down
on them, number one.
Number two is you know whatwe've been seeing in cannabis
for the last couple of years andwhat was an Achilles heel from
the very beginning and I won'tsay it for the United States of
years?
And what was an Achilles heelfrom the very beginning and I
won't say it for the UnitedStates, because I wasn't
necessarily there at the time,but I was in Canada we didn't
(34:42):
bring in all the best talent.
That's a euphemism, it means alot of things to a lot of people
, but I would say there was alot of people who actually
didn't know how to in marketing,who didn't know how to build
brands yet they were givenmillion dollar budgets sales
people who didn't know how tosell according to professional
competencies, that kind of stuff.
So we brought in a lot ofpeople, we trained them up, they
(35:05):
became battle-hardened, many ofthem were laid off or they left
the industry.
And now we're faced with asituation where we tend to
underpay people, weunderappreciate them, we
overload them with work, so it'shard to execute through a
demoralized, underpaid, verycynical workforce now.
(35:28):
So we're just, you know, as anindustry, and now I'm judging
okay, we just treat our people,our teammates, like shit, pardon
my language and that's not trueof every company, but it's true
of a lot of companies.
And if anyone wants to disagreewith me, show me a very healthy
corporate culture in amid-sized to large-sized
(35:50):
cannabis company.
AnnaRae Grabstein (35:51):
I've yet to see one, so obviously I will
disagree, but I want to jump inand push on it a little deeper,
in that I think that one of thereasons that corporate culture
has degraded so much is thatcompanies haven't actualized the
promise of profit and that hasresulted in companies not being
(36:15):
able to to execute on some oftheir more lofty internal
culture focused aspirations thatwere in place years ago.
Um, there were people that wereleaders of corporate social
responsibility in cannabis.
Like, those roles don't existanymore and um and and.
Part of that is based in thefact that there hasn't been
(36:37):
great execution, which is whatyou were just alluding to.
But I think that part of greatexecution has a lot to do with
pricing in the market has beenso challenging for cannabis
companies is pricing becausethere has been oversupply in
lots of markets and companieshave responded with just cheaper
(37:00):
and cheaper products, whichultimately has driven down
margins.
It's driven down dollars pertransaction to be adding to the
bottom line.
I mean, it's just had thismassive ripple effect and it
seems like it is almost a gameof like who can hold on longest
(37:20):
with the cheapest prices, and Ithink that there's going to have
to be a reconciliation at somepoint.
Most operators are reallynervous to raise their prices
because it doesn't seem like theconsumers have the appetite to
spend more money, especially inthese economic times.
(37:40):
And if your competitor down theroad is also selling something
for cheaper than you are, itmakes it very difficult to raise
your prices.
And you talk about pricing alot.
I would love to hear yourthoughts of how we might get out
from under these bad pricingstrategies.
Mitchell Osak (37:59):
Oh my gosh what a huge question that we can speak
hours on.
I completely agree with you.
I mean, cannabis is aprisoner's dilemma situation in
many, many markets.
I mean the obvious answers, the10,000 foot answers is going to
be you know you don't want tocompete on price unless you have
(38:21):
some unique advantage like costor something along those lines,
or infinite amounts of capital.
Companies have to figure outhow to compete in other
dimensions around price and thatcan be convenience, brand,
whatever you want to call itsuch that they can sustain price
(38:41):
premiums or higher pricesrelative to the competition
pricing in our industry.
I do some pricing work.
I should be doing three timesmore than I do right now and it
bothers me because there's onlyso many levers to drive up
margin and drive profitability.
(39:01):
And following the market downto even lower and lower, like
$79 in Canada, ounces, which iswhat you can get an ounce in
Canada for a flower, isridiculous.
No one is going to make anymoney and it's just going to
ruin the entire industry.
One of the things that we don'tdo a lot in cannabis that we
(39:22):
need to do are more pricingtests, and what do I mean by
that is raising pricing ofcertain categories or at certain
times and what have you, andtry and find those moments or
those customers where you faceinelastic price demand.
So if you raise your priceyou're not going to lose
(39:42):
customers.
And if we can find those bitsand pieces, even within local
markets, where we can takepricing up, I think a lot of
companies will be much betteroff.
By the way, nothing I'madvocating here is nothing
that's not done in financialservices and CPG and other
retail.
So this is not a rock star kindof recommendation, but it does
(40:06):
take work and a lot of analysisand a little bit of courage and
a little bit of persistence totry this out and to hold the
line for a week or two weeks ora month and see what happens.
I think if a lot of companiesdo that, they'll find that
they'll be able to generate alot of nickels and dimes and
quarters and enough of thosewill be able to buttress their
(40:27):
margins and their profits at theend of each quarter.
Ben Larson (40:31):
I think the biggest challenge here is what you're
saying makes a lot of sense.
And even if we had 99%penetration into the market with
this message and got through topeople and convinced them, like
, don't do somethingunsustainable, there's going to
be some idiot that comes in witha pile of cash that thinks it's
infinite and what we've allbeen terrible at in the cannabis
(40:53):
industry is judging timelinesand so they think that cash will
last and that they'll starvepeople out of the market.
But there's always someone newcoming into space with a smaller
pile of cash but can also comein with that approach, and so
it's just this perpetual drivingdown of costs and it'll level
out at some point.
But I don't know if I'm notconvinced that suddenly, you
(41:16):
know, convincing 90% of themarket to be responsible with
their pricing is going to fixthe problem.
Unfortunately, because we'rejust in this kind of emerging
space that's been emerging fordecades.
But, not to end on a cynicalnote, we are approaching the top
of the hour.
Mitchell, I have one lastquestion that's kind of
tangential for you.
(41:36):
You know you spend a lot oftime on LinkedIn.
You've chosen to go kind of inthis long form newsletter.
I'm curious are you happy withyour approach?
You know I spend a lot of timeon LinkedIn doing various forms
hosting a podcast, various formshosting a podcast.
Mitchell Osak (41:59):
What's been one of your biggest learnings or
surprises in putting out thisnewsletter.
Okay, so, one of my biggestlearnings?
Well, there's two big ones.
I would say One of them ispurely selfish.
I publish a lot because it's amanifestation of a lot of my
learning and my synthesis oflessons and data and connecting
the dots from other industriesand other eras to cannabis.
(42:20):
So I do this selfishly becauseit keeps me on the cutting edge
of the focus areas that I wantto prioritize strategy,
development operations, capitalmarkets, that kind of stuff.
So I do it for me, I don't doit for anybody else.
That's one thing.
The second thing is that I wantto be different.
(42:43):
Getting back to my point 20minutes ago, my difference in
the market isn't to rail againstthe lack of legalization or the
delays in rescheduling.
There are way smarter people,closer to the actual decision
makers, that can talk about that.
I wanted to go to white spacewithin the cannabis industry and
(43:03):
the conversation where therearen't a lot of people
discussing the media issues andthe complexity of this, much
like you guys do on this podcast, and the complexity of this,
much like you guys do on thispodcast.
So one of my major learningsI've discovered is how many
(43:24):
senior connections I've made andsenior conversations I have
with CEOs, cfos, brand managers,policymakers around the world.
They want to talk to me quietly, off the record.
They don't want it public, butthey want an talk to me quietly
off the record.
They don't want it public, butthey want an exchange of views
and and that kind of quiet umexchange is what makes me
hopeful for this industry,because there are people that
(43:44):
listen to the three of us.
We don't always see it online,we don't always see it through
likes and comments, but thereare kindred souls that want to
do the right things and build ahealthy, sustainable industry
and an industry that paysattention to social justice
issues, by the way, and safetyand education.
(44:07):
They are happening.
It's just very often below thewater surface.
So that big learning for me wasthat if you do enough of this
and you're mature trying to bemature and professional, not
judgmental, balanced I try andbe very, very balanced you one
will create a discourse with alot of the right people in this
(44:28):
industry, and that's at leastthe beginning of when Anna Rae
was and you were talking aboutat the beginning in terms of
influencing policy, at least Ihope.
AnnaRae Grabstein (44:38):
Mitchell, thank you so much.
I know that we are a littleshorter than we usually are
because we started late, but itis time for our last call.
So, mitchell, this is yourchance to give a final message
to our listeners.
Advice, call to action, closingthought Mike is yours.
Mitchell Osak (44:55):
You know, be brave, you know, hang in there.
You know this is hard work.
It's not going to get anyeasier.
There are, there are a lot ofpeople myself included, but but
others who will help.
But but look at this industrythrough clear, clear eyes.
No more rose-colored lenses.
This is becoming a realindustry and we all have to act
(45:18):
as such.
It's going to get a lot harderbefore it gets better, but when
it gets better, it's going to beamazing.
I know this because I see thisin other parts of the world and
how cannabis is evolving there.
Canada and the US are a bit ofan exception.
The world is doing it right andthey're offering a good model
for how we can improve thingshere.
So good luck to everybody.
(45:38):
Amazing.
AnnaRae Grabstein (45:40):
Thank you so much.
Ben Larson (45:42):
Mitchell Osok.
Thank you so much for your timeand knowledge and everything
that you're doing in theindustry, Looking forward to the
next time we get to catch up.
Mitchell Osak (45:51):
Thank you, and right back to you guys as well,
and your contributions as well.
I appreciate it All right.
AnnaRae Grabstein (45:57):
It means a lot.
Ben Larson (45:58):
And thank you to our live studio audience for
engaging during our recording.
Love seeing the commentsflowing in.
We'll drop into the commentsand interact with you there.
If you're listening via ourpodcast on Apple or Spotify or
YouTube, please like, subscribe,share, review all the things.
(46:19):
That really helps us get seen.
Thank you to our teams atVertosa and Wolfmeyer and, of
course, our producer, ericRossetti.
As always, folks stay curious,stay informed and, most
importantly, keep your spiritshigh Until next time.
That's the show.
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