Ben and AnnaRae explore the latest cannabis market developments across multiple states and at the federal level, highlighting both progress and persistent challenges. They dissect New York's comprehensive market report showing local brands outperforming multi-state operators while California cannabis businesses organize against impending tax increases.
• Ben shares insights from Atlantic City's MJ Unpacked conference where New Jersey operators display optimism while cautious veterans observe from experience
• AnnaRae visits Coastal Sun Farm, a certified organic cannabis and blueberry farm embracing traditional agricultural techniques and environmental stewardship
• Federal developments include DEA nominee Terrence Cole stating cannabis rescheduling would be "one of his first priorities" despite previous anti-marijuana stance
• New York's cannabis market shows improvement with 513 brands operating and top five NY-based companies capturing 21% of sales
• California cannabis businesses rally against excise tax increase from 15% to 19%, with Los Angeles dispensaries reportedly considering a tax boycott
• Canadian company Organigram acquires beverage brand Collective Projects, highlighting international opportunities unavailable to US companies
• SBA confirms hemp businesses remain eligible for federal loans while marijuana businesses are excluded regardless of state legality
Join NCIA lobby days in Washington DC on May 13-15 to engage with lawmakers and help shape cannabis policy.
--
High Spirits is brought to you by Vertosa and Wolf Meyer.
Your hosts are Ben Larson and AnnaRae Grabstein.
Follow High Spirits on LinkedIn.
We'd love to hear your thoughts. Who would you like to see on the show? What topics would you like to have us cover?
Visit our website www.highspirits.media and listen to all of our past shows.
THANK YOU to our audience. Your engagement encourages us to keep bringing you these thought-provoking conversations.
Remember to always stay curious, stay informed, and most importantly, keep your spirits high.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ben Larson (00:05):
Hey everybody, welcome to Episode 86 of High
Spirits.
I'm Ben Larson and, as always,I'm joined today by AnnaRae
Grabstein.
We're recording May 1st May 1st2025.
How did that happen so happyMay Day.
Do people celebrate May Day?
Is that a thing?
Oh fast.
Happy May Day.
Do people celebrate May Day?
(00:25):
Is that a thing?
AnnaRae Grabstein (00:26):
Oh, it's May Day, that's right.
Yeah, hopefully there'schildren dancing around Maypole
somewhere.
I love that.
It's so beautiful.
Ben Larson (00:33):
When I think of May Day, I think of the word May Day
Like May Day, and it's likeevery day this year has felt
like May Day.
AnnaRae Grabstein (00:41):
Forest children with pieces of dancing
and ribbons around a maple.
Ben Larson (00:48):
That sounds very North Bay.
Yeah, I could see that.
AnnaRae Grabstein (00:51):
Welcome to my life in Northern California.
Waldorf and Montessori schoolsyeah.
Ben Larson (00:57):
Well, yeah, we're in Northern California.
We're both in NorthernCalifornia.
I was in Atlantic City thismorning, so hello everyone.
You get me in my airportclothes because I just jumped
straight on.
AnnaRae Grabstein (01:07):
Atlantic City seemed like it was a blast.
I was getting texts aftermidnight East Coast time last
night from Angela Chang, CMO atKANA, who was texting me videos
of the two of you raging on somekind of crazy roller coaster.
Ben Larson (01:23):
Yeah, it was the slingshot, you know, the most
extreme ride like in the middleof the Atlantic City Pier and
I'm like I want to do that and Iasked at least 10 people and I
got a lot of no's but Angelasaid yes emphatically and so we
jumped on it and it was rad.
That's awesome.
It was a good way to wrap upthe trip.
You know trip.
I was not super excited abouttraveling all the way across the
(01:46):
country to go to Atlantic City,which is an hour from the
Philly airport without traffic.
I think I did the smart thing.
I didn't really leave the HardRock Hotel slash pier, I just
kind of kept that as my zone ofinfluence but really enjoyed
myself and something just reallymagical last night the weather
was perfect.
Mj Impact had rented out theentire Atlantic City Pier, so
(02:09):
it's like we had it all.
To the cannabis folks.
AnnaRae Grabstein (02:12):
That's amazing.
What did you witness about theNew Jersey market?
That was exciting.
Ben Larson (02:16):
From the vantage point of the Hard Rock Hotel.
Generally the sentiment washigh.
You know people were excited.
You know I talked to a fewbrands and dispensary owners and
it's definitely feels like thehoneymoon phase and it's as a as
an old, haggard operator in thespace I I try not to like rain
on their parade and just be likejust wait so yeah, I'm like, oh
(02:38):
, that's great, that's wonderful.
I hope it stays that way.
AnnaRae Grabstein (02:43):
Yeah, I think that they're okay Old Haggard
operator over here who's feelingnegative for New Jersey but on
the flip side, this is highspirits.
We try to like see the silverlining in all of it, and I think
it is possible for some statemarkets to stay successful and
to not have this crash and burnafter the first 24 months.
And a lot of it has to do withhow the licensing ends up
(03:07):
rolling out, how much I thinkoversupply happens as a result
of licensing at the state level.
And one thing with New Jerseyis that there isn't a ton of
supply in the market still andas a result the prices have
stayed fairly high.
They've come down a little bit,but the prices are high enough
(03:28):
that it seems reasonable that atleast the supply chain side of
the operators will be able tostay profitable for some time.
And there is some saturation ofdispensaries in certain cities
like Jersey.
City has a lot of dispensariesof dispensaries in certain
cities like jersey city has alot of dispensaries, but but by
and large there are pretty soliddispensary opportunities around
(03:49):
the state too.
So I'm I'm staying hopeful fornew jersey that the
entrepreneurs there are going tohave a good run for a while
yeah, and we also don't have theartificial pumping of like
venture capital.
Ben Larson (04:02):
Well, I mean, there's still venture capital
out there, but it just tends tobe a lot slower and smarter
these days.
I don't know if it's smarter,it's just slower.
But yeah, there was a panelabout investment at MJ Unpacked
and I think the major takeawaywas just that there's debt out
there for good operators andthere is some growth capital out
(04:23):
there, but you have to be areally good operator and so, at
the end of the day, if themarket is demanding good
operators just to get startedand survive, then maybe that'll
be the foundation for less pain.
We shall see, but they are.
I did see some pictures of somehemp products at head shops
down the street from some of thedispensaries, and I definitely
(04:44):
saw a picture of like a 10,000milligram gummy pack.
How that's achieved, I don'tknow 10,000 milligrams.
AnnaRae Grabstein (04:51):
that is a problem, it's crazy.
Ben Larson (04:53):
I was thinking like okay, if there's 20 gummies per
package, that's like 750milligrams per gummy.
AnnaRae Grabstein (04:58):
Yeah, I'm not sure who needs that or wants
that.
That's not the kind of progressthat we need.
Needs that or wants that?
That's not the kind of progressthat we need.
It is helping basically no onein our fight towards
normalization, destigmatizationand better regulations.
Like no, thank you.
Yeah.
Ben Larson (05:14):
Yeah Well, not everyone's on the same page
there yet, but that was themoral of our talk.
It was like we were up there ata cannabis conference.
There was, luckily, nopitchforks or torches in the
audience.
We were talking about the hempopportunity, and Chris Lackner
from the Hemp Beverage Alliancewas also up there with me,
christy Palmer from Kiva, sotwo-thirds heavy on beverage and
(05:37):
just talking about, yeah, likehow does this all work together?
How do we create a bifurcatedmarket?
And how do we recognize thatwe're all talking about
cannabinoids here and how do wecreate a system that works?
AnnaRae Grabstein (05:48):
Beverage is interesting in New Jersey
because I don't think that thereare maybe I shouldn't say any,
but I'm not aware of any in theregulated market beverages that
are being manufactured insidethe cannabis supply chain
manufactured inside the cannabissupply chain and so it's a bit
of a bummer for the dispensariesthat have gone through that
process that they don't haveaccess to all of the exciting
(06:11):
beverages that exist rightoutside.
That are the hemp beverages.
Ben Larson (06:15):
I think they will come.
I think there will be.
Whatever the maxing out of thecap is I actually don't know
what it is in Jersey.
Is it 100 milligrams?
We'll see the higher doseproducts in dispensaries for
sure in very short order.
But we are seeing movement inthe low dose hemp beverage space
as well, going into the state.
AnnaRae Grabstein (06:34):
Well, while you were in Atlantic City, I was
basically as far away aspossible and, in an opposite
experience, I was in centralcoast of California at Coastal
Sun Farm.
Yeah, I spent the day thereyesterday and it is beautiful.
It is a certified organic farm.
(06:55):
They grow blueberries andcannabis and I got to visit with
over 100 goats that were therehelping them clear their cover
crop.
They were so cute, so friendly,all these goats, and I was also
there while the High Road salesteam was there, who was also
doing a tour of Coastal Sun withme.
(07:17):
It was really cool to see thepassion and the traditional
agricultural farming techniquesthat have been such an important
part of the Central Coast'skind of breadbasket agricultural
history and legacy inCalifornia playing out at this
particular cannabis farm.
They have a whole philosophyabout sequestering carbon,
(07:41):
building soil and how healthyplants lead to healthy people
and happy people.
It was just really inspiring,helped bring me back to my why
of what I'm doing here.
Ben Larson (07:51):
Yeah, I was going to say we're kind of getting back
into that theme of like yourhippiness this is showing today.
It's because I like organicagriculture, I'll take that if
that makes you and your forestchildren dancing around the pole
and celebrating.
AnnaRae Grabstein (08:10):
Yeah, okay, the forest children, I'll own it
.
I will.
Some interesting stuff, though.
Another reminder andinteresting takeaway Darren's
story, who's the CFO at Coastalwas giving this tour and talking
about the history of the land,and I think it's worth noting,
as we've been talking abouttariffs and things, that the
(08:31):
central coast of California in1995, when NAFTA was passed,
experienced pretty massive shiftin the dynamics related to what
was happening in the economy,and so NAFTA opened up free
trade and, as a result, thefarms in the Central Coast had a
lot of struggles to compete inways that they hadn't before,
(08:54):
and specifically the propertywhere Coastal Sun now grows
cannabis used to be a rose farm,and all of that rose production
was no longer competitive froma price perspective and it was
all started.
All the roses started comingfrom South America and were a
lot cheaper.
And that was part of anti-drugpolicy change, where the Clinton
(09:16):
administration was trying toconvince South American coca
farms to stop growing coca tohelp stop the inflows of cocaine
from South America, and toldthem that as part of this free
trade agreement, they shouldstart growing flowers and that
those flowers could come intothe US, get a really nice
(09:38):
healthy margin.
And what that did is it endedup putting out of business the
flower farms that werefunctioning in the US and opened
up kind of the next moment forthese farms.
And it took a while Obviouslyin 1995, there wasn't legal
cannabis to come in and save theday and take over the property.
(09:58):
But eventually that did happen.
That did happen and it justshows sort of the long tail of
these different trade decisionsand how it causes dynamic shifts
of how we work, where we work,where things are manufactured,
and then it tends to seems likeit comes back to some sort of
equilibrium eventually.
Ben Larson (10:18):
So whatever that says about the tariffs, I'm not
sure that interesting I was, Ispent a little bit of time down
on the Central Coast.
This is like back in 2017, likeGrupo Flordes and I toured one
of their their greenhouses, andone of the greenhouses had a
bunch of roses in it and theyhadn't like switched it over yet
(10:38):
to to cannabis.
What a funny connection.
Yeah right, what a funnyconnection.
AnnaRae Grabstein (10:43):
Yeah, right.
Well, so for all of ourlisteners, this is our once a
month episode where we try tobring you some news.
We're not going to bring you aguest, you just get the two of
us.
That's all for today, folks.
No, just kidding.
Here we go, we're going tobreak into it.
Ben Larson (10:59):
We have one and a half hosts today.
A little brain dead after thelast three days in Atlantic City
.
AnnaRae Grabstein (11:06):
Atlantic City will do that to you for sure.
So give us a hemp legislationupdate, Ben.
Ben Larson (11:13):
Oh dear, it's been a very busy legislative session.
I think the biggest newsrecently that happened this week
is that there is no hemp billmoving forward.
In Florida that was celebratedonline.
You could go online and searchyour favorite influencer and
figure out what happened.
But yeah, I think we're in thissession right now where there's
(11:35):
a lot of efforts to either banintoxicating hemp or there are
some kind of middle-of-the-roadlegislation, often
beverage-focused, which is notvery palatable for a lot of the
hemp community, and so whatwe're seeing is a lot of
attempts to kind of maintain thestatus quo.
(11:55):
In California we did have abeverage bill that showed itself
but never really saw the lightof day.
Showed itself but never reallysaw the light of day, so that
that kind of went by the wayside.
All the focus is on assemblybill 8, which is some sort of
kind of like fusing together thehemp and cannabis supply chains
and trying to make it workable.
(12:17):
But on both the hemp andcannabis side there's a lot of
conflict, and so I think it'sthe we could go state by state,
but it's generally the samestory of we need rules and we're
not aligned.
Hardly anyone's aligned on whatthose rules should look like
and I think a big argument thatI've gotten involved in a number
(12:39):
of times is just, if you don'tlike the bill that you're seeing
, where's the bill that you dolike?
Because we need something.
We need something thatstructures this taxes.
It creates consumer safetymeasures and hopefully isn't an
all-out ban because we arepullinside the hemp space hemp
versus cannabis, as well, therewas some unique news from the
(13:09):
Small Business Administration,who has new leadership under the
Trump administration about SBAloans.
yesterday oh, okay, something wedon't often get to talk about.
AnnaRae Grabstein (13:20):
Yesterday it was announced from the new SBA
administrator, kelly Loeffler,that the SBA has updated its
guidance to confirm, to reaffirmand confirm that marijuana
businesses are not eligible forfederal loan programs like 7A
and 504, even if they'reoperating legally under state
law, and that this includes bothdirect cannabis businesses and
(13:43):
those indirectly involved withcannabis, like consultants or
equipment suppliers.
However, the guidance alsoclarifies that hemp businesses
remain eligible, a keydistinction as the legal hemp
industry continues to navigate aseparate regulatory framework
(14:07):
regulatory framework.
To me, this move reallyunderscores the ongoing tension
between federal policy and statelegal cannabis and kind of
state illegal slash,legislatively complex hemp and
the fact that the federalgovernment is saying SBA loans
yes for hemp, no for cannabis.
It just stirs the pot even moreand reaffirms to me a lot of
(14:31):
what feels so unfair forcannabis businesses to be
hearing this type of feedback asthey're making so many strides
to be compliant.
It's just.
This is like that emoji whereyour head explodes.
It's that, but also like emojiwhere your head explodes.
Yeah, it's that.
Ben Larson (14:46):
But also like maybe I can run to the bank really
quick and apply for an SBA loan.
AnnaRae Grabstein (14:52):
SBA loans have been drivers of
entrepreneurship in this countryfor a really long time.
I mean, for those in cannabiswho have never looked into SBA
loans because you don't, becauseyou know that you're ineligible
for them SBA loans basicallyrepresent the very best possible
terms that you could get on anydebt that exists out there.
Ben Larson (15:11):
It's like a first-time homeowner's loan.
They're going to bring down thebarriers, work with you on your
business plan.
If you're a trustworthy lookingperson with a decent credit
history, you could get up tolike $5 million to get your
business off the ground.
AnnaRae Grabstein (15:23):
Yep.
It has been an opportunity forunconnected people to be able to
use their skills to startbusinesses for decades, and I
think it also is one of thereasons.
The lack of access to SBA loansthat have driven such high debt
rates in cannabis is becausethere's just no other
(15:45):
alternative for folks to turn to, and to see the type of rates
that cannabis businesses paycompared to non-cannabis
businesses is just reallyextreme.
So it's another way that hempbusinesses are positioned to
have a easier path forward thanthese state legal businesses
that are trying so hard to becompliant.
Ben Larson (16:06):
I'd be really curious to find out like what
kind of devils are hiding in thedetails.
Is this any hemp business?
Yeah, what is hemp?
It's hotly debated right now,but that I mean, it's wild.
Like you know, hemp has becomea pretty significant part of our
business and you know, like allgood businesses in the space,
we properly structure everythingto kind of put them in the
(16:27):
right buckets.
I guess there's nothingstopping me from going and
trying to get an SBA loan.
AnnaRae Grabstein (16:32):
No, you should.
Let's keep talking about it asyou do.
Ben Larson (16:36):
Should I live tweet it?
AnnaRae Grabstein (16:39):
Yeah, it would be really interesting to
share what the process is, butdoing that might mean that they
reject you for the loanaltogether, but at least you'd
be highlighting it for the restof us what the experience is and
how many hemp businesses areactually getting SBA loans.
I have no idea.
So if you are a hemp businessthat has gotten an SBA loan,
(17:00):
reach out.
I think it would be reallyinteresting to hear about how or
if it created opportunities foryou that you wouldn't have been
able to have otherwise.
I think it would be abeneficial narrative for us to
be able to use as we talk aboutpolicy and inclusivity at the
federal level the importance ofpolicy change.
Ben Larson (17:20):
There's so much in flux at the federal level,
whether it's the new nominees orthe farm bill, the
appropriations bill coming inthe fall.
What happens if you take an SBAloan and then they change the
rules on you?
AnnaRae Grabstein (17:33):
I have that exact thought.
I think it's wild that the SBAis willing to give loans based
on the farm bill when the farmbill has to get renewed so often
, and so it could change what isallowed.
But yeah, we actually do havesome more federal news, and
we've been avoiding talkingabout federal news for a while
because it's felt just like somuch nothingness.
(17:56):
This is sort of still.
Ben Larson (17:59):
This is no guarantee that it's still about
nothingness.
I just want to point out.
AnnaRae Grabstein (18:03):
Still might be nothing.
Yeah, apologies if it's stillabout nothingness.
I just want to point out Stillmight be nothing, yeah,
apologies if it's nothing.
But yesterday was theconfirmation hearing for the
nominee to be the new head ofthe DEA for Terrence Terry Cole,
and he has been nominated byDonald Trump.
And he has been nominated byDonald Trump and this is a guy
(18:25):
who has spent 30 plus years inlaw enforcement kind of split
between the state of Virginiaand Homeland Security and he has
notoriously been anti marijuana.
He posted a year ago onLinkedIn quote everybody knows
my stance on marijuana after 30plus years in law enforcement,
(18:46):
so don't even ask.
Ben Larson (18:47):
Hashtag just say no.
Hashtag not legal fordistribution.
Hashtag health issues yeah, notgreat.
AnnaRae Grabstein (18:55):
Oh yeah, those are some heavy hashtags.
So yeah, terrence Cole did notseem like a friend and when he
was nominated, the industrygulped and thought oh, the
schedule three reschedulingadministrative process is really
going to go nowhere now.
But the silver lining is thatyesterday, during his
(19:17):
confirmation hearing, colestated that reviewing the
cannabis rescheduling processwould be quote one of his first
priorities.
If confirmed, when I arrive atthe DEA to see where we are in
the administrative process, hesays so that doesn't mean that
he is going to push it forward,but it did.
(19:37):
He is clearly saying that whenhe arrives at the DEA he is
going to pay attention to it andthat feels like a win.
I'll take it.
Ben Larson (19:50):
Yeah, well, with the exception that there is the
legislation that has beenoffered that would maintain 280E
penalties even afterrescheduling.
AnnaRae Grabstein (20:01):
Oh yes, but that legislation hasn't appeared
to be moving.
But it's possible it could ifthe rescheduling continued to
move forward.
But you're right, there is anevil representative that is
trying to make Schedule 3 evenless important and impactful to
the industry if it was to moveforward.
(20:21):
You're right, good point.
Ben Larson (20:23):
It was Arrington, republican from Texas, but I was
.
I was talking to some folksactually this week and Arrington
sits on an important committeethat could actually potentially
see it through.
So oh, wow, yeah it's.
We'll just go back topretending like it's nothing,
just a lot.
AnnaRae Grabstein (20:42):
Yeah, you're pouring water on my fire here,
sorry.
Ben Larson (20:45):
Yeah, sorry, sorry.
High spirits.
Let's just not talk aboutfederal.
That's how we keep our spiritshigh.
AnnaRae Grabstein (20:53):
Well, I do think it's worth talking about a
few comments that came up inthe hearing that weren't just
from Terrence Cole, senator AlexPadilla from California he
really waded into it, in myopinion, alex Padilla from
California.
He really waded into it, in myopinion.
He started making comments andadvocating for full
de-scheduling and saying thatmoving cannabis to schedule
three doesn't really resolve anyof the damage done by
(21:15):
criminalization of cannabis andthat full de-scheduling is the
only solution.
All right, dude, great.
But come on, can we just focuson what's right in front of us
and not open a huge other can ofworms of saying that this isn't
good enough?
It's the kind of thing of whenyou say something isn't good
enough, then the response is OK,well then, maybe we shouldn't
(21:36):
do it at all.
And no, thank you, senatorPadilla, let's let's keep our
eye on the ball and try to movetowards more incremental
progress, and that we are veryopen to Schedule 3 being that
next step of incrementalprogress.
Ben Larson (21:52):
I appreciate the virtue signaling from him, but
it's all right, it doesn'tmatter.
No one listens to Democratsfrom California anymore in DC.
AnnaRae Grabstein (22:02):
Oh, so they're just fully irrelevant
anyway.
Ben Larson (22:04):
We're just completely irrelevant.
Yeah oh, so they're just fullyirrelevant.
Anyway, we're just completelyirrelevant.
AnnaRae Grabstein (22:07):
Yeah, all right.
Well, someone that potentiallymight be considered more
relevant these days is SenatorTom Tillis, republican from
North Carolina.
He also spoke at the hearing.
He says that the conflictsbetween federal prohibition and
state legal marijuana marketsneed to be addressed.
He talked about the patchworkof different rules, state by
(22:29):
state, and he advocated for aworking group at the federal
level that would help figure outfederal boundaries and
guidelines.
It wasn't exactly alegalization path.
He wasn't saying de-scheduling,but he very clearly
acknowledged that the lack ofreconciliation between state and
(22:52):
federal laws is creating somebig problems.
Don Murphy, the well-known law.
Ben Larson (23:00):
I'm pretty sure this is why the cannabis caucus
existed.
I don't know if it still existsbecause there's a lot of people
that have retired, but maybethis is a new picking up the
mantle from the other side andpretending like they're doing it
for the first time.
AnnaRae Grabstein (23:14):
Yeah, for sure.
But you know Don Murphy, who'sa well-known lobbyist.
He says, he says we are makingincremental steps that will lead
to an end to prohibition soonerrather than later.
So I'm going to take it, I'mgoing to say yes, Don Murphy, I
hope so.
I hope that this new DEAadministrator is able to keep
(23:40):
this ball rolling, that the workthat was started in the last
administration continues to moveforward.
I think the industry couldreally benefit from a win.
Ben Larson (23:50):
So yes, please, absolutely.
And look, I think the reasonwhy it is hard for me to get
bogged down by day-to-day newsis because I do see everything
generally heading into a verypositive direction, right, the
more people talking aboutcannabis, the more bills being
entered the general publicknowing about it a lot more and
having exposure to it.
It's all on the whole, movingup and to the right Doesn't mean
(24:14):
we're not gonna have setbacks.
But there's this quote of I'mgonna mess it up, but following
the climate, not the weather, orsomething like that.
You know what I'm talking about.
AnnaRae Grabstein (24:26):
I hear you following the climate, not the
weather, or something like thatyou know what I'm talking about,
but I hear you Following theclimate, not the weather.
I get that, and I think part ofthat is this idea that, even
though the business landscapehas been really challenging and
we've seen a lot of failures andwe have a lot of folks that are
still on the brink through allof that, we're also seeing
successful turnarounds.
Still on the brink Through allof that, we're also seeing
(24:47):
successful turnarounds.
We're seeing businesses thatare figuring it out, figuring
out how to run lean, figuringout how to create a niche for
themselves and it has nothing todo with the policy being in
their favor or not.
It's like policy be damned, weare still going to keep focused
and win at this thing that westarted at.
And that's really the energy ofa real cannabis entrepreneur.
(25:11):
It's like, okay, we accept thatthere's all of this messy shit
in these laws and in theseregulations and could they be
better?
Hell yes, and we figured outhow to carve ourself a path
through it all and we're goingto win.
No, that's going to keep peoplerelevant and keep businesses
(25:33):
open.
Yeah.
Ben Larson (25:34):
Okay, I totally butchered the quote.
It's supposed to be climate iswhat you expect, weather is what
you get.
And that's by Robert Heinlein.
I got climate and weather right.
AnnaRae Grabstein (25:43):
I kind of liked the way that you said it.
It was just simpler.
Ben Larson (25:45):
It was just simpler Less words.
AnnaRae Grabstein (25:46):
Yeah, yeah.
Ben Larson (25:54):
We have this thing in our company that we say to
each other and we just say wordsto wisdom ratio.
So it's like stop talking somuch, Just get it out in fewer
words.
AnnaRae Grabstein (25:59):
How is that working for you?
Ben Larson (26:01):
Great, yeah, wait, the practicing it or the saying
it to people.
AnnaRae Grabstein (26:06):
Like are people offended when someone
says that to them?
Ben Larson (26:09):
No, because they generally know what it means.
It's like you know we allpractice it.
It's like, all right, you'retalking too much, you know.
It's like it's a nice way ofsaying that.
AnnaRae Grabstein (26:18):
Yeah, I like it.
Ben Larson (26:19):
What's next?
AnnaRae Grabstein (26:20):
So next we're going to talk about the New
York market a little bit.
Ben Larson (26:23):
All right, yeah, so New York's one of those
interesting markets where itdidn't start out great, but also
like kind of progressivelygotten better.
Kind of progressively gottenbetter, is that fair to?
AnnaRae Grabstein (26:33):
say oh, 100%.
It was looking really grimthere for a minute.
Ben Larson (26:37):
For the first, like 18 months.
AnnaRae Grabstein (26:46):
It was taking forever for the dispensaries to
open.
Meanwhile the illicit marketexploded to something like
nobody had ever seen before.
There was a lot of hubris goingon with the unlicensed
dispensaries in New York.
So, yeah, you're right, it waspretty bad at the beginning, but
I'm thinking that it's movingin the right direction.
It's good.
It's looking pretty good rightnow.
Ben Larson (27:06):
Yeah, I mean I've heard it's generally very
positive.
They really did step in andintervene with some of the
competing factors right.
I know they went prettyhardcore on shutting down the
illicit shops.
We know what happened with thehemp bill, that they came back
and really hyper-restricted that, so giving it a fighting chance
(27:26):
much better than what'shappening in LA, I guess.
AnnaRae Grabstein (27:29):
Yeah Well, so the state published this market
report looking back on thewhole year of 2024.
And we'll link the report inthe show notes so people can go
and check it out themselves.
It's 64 pages of data and it'sreally interesting.
The first, probably 58 pages,is just straight up data, and
(27:54):
then at the very end, is thestate actually making some
recommendations and insightsinto all of it.
And so there's some points thatI think are worth talking about,
and I think we all have somethings to learn from, but so
I'll just jump in with some datafrom the report Indoor versus
outdoor flower.
This came out in the report inthat they talked about 19% of
(28:18):
the flower that's going into themarket is being grown by one of
the nine registeredorganizations, which are the
original operators from themedical market, which, by and
large, are public MSOs Not allof them, but most of them and
the reason that we can jump toindoor versus outdoor is that
(28:43):
these companies were the onlyones that were allowed to grow
indoor flower at the launch ofthe market, and all of the new
cultivators of which they'velicensed 191 that are
operational and then 300additional conditional ones all
were forced to be outdoor orgreenhouse growers, and so to
(29:04):
have nine companies out of over400 that are licensed,
accounting for 19% of the floweris definitely a unique market
dynamic that is creating somewinners and losers in the market
, and, as a result, the state,in their insights, said at the
end of the report that they arerecommending that the state
(29:27):
consider allowing all of thetypes of cultivators to grow
however they want if they choose.
So basically, they're sayingthat we should open the doors to
any type of cultivator beingable to grow inside if they
choose, because the marketclearly is interested in indoor
(29:47):
flower.
That being said, the reasonthat the state put so much
emphasis on outdoor was becausethey really created their entire
cannabis law and program basedon a lot of environmental and
social justice themes, and sothey wanted to have a less
carbon intensive cultivationmethod Interesting.
Ben Larson (30:09):
It's almost like the inverse of what happened here
in California, where they werewere going to start small, with
22 000 square foot canopies andand all of a sudden boom, you
get to stack licenses and thebig guys came in and crushed it
all yeah, now people havehundreds of acres of outdoor
cultivation um, but you know,california is also a better
place to grow outdoor weed andnew york has a lot more water.
AnnaRae Grabstein (30:30):
It has a lot of fungal issues with their
outdoor plants.
So I mean, really what we needis interstate commerce to be
able to take all of thatwonderful cannabis from the
central coast of california andbring it to new york legally oh,
don't worry.
I saw another article aboutinterstate commerce being alive
(30:51):
and well yeah, yeah, there is awhole situation with inversion
which we weren't even planningon covering today, but you can
all read about it.
Ben Larson (30:59):
Well, I was talking to Josh Swider from Infinite
Chemical and he said he went toI think it was a head shop.
It was like all Michiganproduct.
They had like Michigan stickersand labels and all this kind of
stuff on it.
AnnaRae Grabstein (31:11):
In New York City.
Ben Larson (31:12):
I can't remember if it was new york city or new
jersey, but it was definitely.
Yeah, definitely over there allright.
AnnaRae Grabstein (31:17):
Well, a couple more things.
On new york, there arecurrently 513 brands sold into
the state and I thought thatsounded like a lot of brands for
such a young market and thatwithin all of these different
brands similar to how we haveseen it unfold in other markets
flour and pre-rolls are the mostcompetitive category, with 300
(31:40):
brands competing in flour andover 200 brands competing in the
pre-roll category, with a lotless staticky numbers of brands
competing in the like tablets,tinctures and topicals, but
still lots of different ediblecompanies.
And that within that, the topfive selling brands account for
(32:00):
21% of the sales.
So this is wild because ifthere's 500 brands, five brands,
which is just 1%, account for20% of sales of the whole state.
Ben Larson (32:13):
Pretty intense power ranking right there.
AnnaRae Grabstein (32:15):
Yeah.
Ben Larson (32:15):
But I like to see Heirloom on there.
Big fan of Heirloom.
AnnaRae Grabstein (32:18):
Yeah, and so the top five brands that are,
those that top 20% are all NewYork brands.
They are Dank, heirloom, jauntyOff Hours and MFNY.
But when you look at that listthat they publish of the top 200
brands, once you start goingdown the line like the first 20,
you'll start to see at leastthree to five multi-state brands
(32:42):
that are showing up in manydifferent markets.
You'll see Stizzy on thereEnfused, a few others that are
multi-state brands.
So it's not like New Yorkdoesn't have multi-state brands
in their most popular categories, but the top five are holding
strong as New York companies andthat the top 200 brands account
(33:03):
for 96% of the sales.
So even though there are 500brands out there, 300 of them
basically have zero sales.
Ben Larson (33:11):
We have to give some kudos to the OCM, and Felicia
Reed was actually at MJNPAC.
She's the executive directorand it seems like very in tune
and thoughtful about what'shappening, and that must be
really nice to have not onlythat level of thought and
putting out a report with dataand then making recommendations
(33:34):
about what could be better andthen potentially even acting on
it, but maybe even having aframework that allows them to do
that.
Compared to some other marketsthat we're very familiar with,
it's worth recognizing as, Ithink, a step in the right
direction.
AnnaRae Grabstein (33:48):
Yeah, I'll give them some credit.
There's been enormous turnoverand change with the OCM, and the
initial staff and team, whoseemed very mission driven and
social justice focused, havebasically been exited, and
there's there's new sheriffs intown, quote unquote and they're
really action oriented.
(34:09):
I thought this report did areally great job of shedding
some light of what's happeningin the market and setting the
stage for what 2025 and even2026 might look like, and so I
think probably the final pointon New York is just an update on
where they are with theirdispensaries as well.
As of the end of the year, theyhad licensed just a little over
(34:31):
700 dispensaries and close to300 of them had opened their
doors by the time that the yearclosed, and so there is a bunch
more stores that will be opening, and New York, in their law,
kind of gives some flexibilityto the regulators to figure out
(34:52):
when the right time is to stopissuing licenses or how many is
the right amount of licenses.
There currently is not licensedcaps in New York, but they
might decide at some point thatthey have issued enough, and I
think this goes back to what wewere talking about at the
beginning with New Jersey andwhat could make a long-term
(35:13):
healthy market, and I think whatit has to do with is not
oversaturating the market withany particular license type, so
that the licensees that are inthe market have enough
opportunity to capture enoughmarket that they can be
profitable and successful.
Ben Larson (35:29):
Well, I think they're running at a pretty good
clip right now, so I didn'trealize this.
But new york has like 8.3million people, so third to a
quarter the size of california,and so for them to be kind of
approaching 700 licenses, it'sactually pretty solid oh yeah,
I'm not.
I'm not sure what local controllooks like in in new york.
(35:50):
Do most new yorkers have accessto legal cannabis?
AnnaRae Grabstein (35:53):
The local communities did have an option
to opt out instead of an opt in,and which is what it was.
In California, you had to optin as opposed to opt out, and
there were definitely areas thatopted out in New York, but by
and large, I think that there'sgoing to be pretty solid retail
access within, you know, a 20minute drive of most people, and
(36:15):
that should be really good forthe market great well, go new
york.
Ben Larson (36:22):
Should we talk about our own, our own home state of
california, and how awesome itis?
AnnaRae Grabstein (36:26):
yeah, well, so there is a lot of stuff going
on in california, but I thinkwhat is worth talking about is
taxes.
There has been a tremendousamount of coalition building new
types of coalitions in theindustry to rally around
stopping a scheduled taxincrease of the excise tax in
(36:47):
California From 15 to 19%.
Yeah, which currently is 15%,scheduled to go to 19% over the
summer, and there've been awhole bunch of new.
I want to just call themcoalitions.
I don't necessarily want tocall them trade associations,
because I don't know at whatpoint you become a group or a
trade association from a group,but it's a whole bunch of new
groups that are coming togetherwith new messaging trying to
(37:09):
stop these taxes.
Normal, california Normal hasbeen one of the louder voices in
all of this, which I reallylove to see normal at the table,
because they really are aboutrepresenting consumers as
opposed to just businesses, andI think that that's a really
powerful part of theconversation is remembering that
it's not just about businessesthat are trying to stack dollars
(37:31):
, but it's about creating anenvironment where access is
simple for consumers andaffordable, and affordable is
kind of the key here is that weknow that when taxes are too
high, consumers choose to buycannabis outside of the legal
market, and normal is being areally strong advocate to make
(37:52):
sure that well, not only that.
Ben Larson (37:53):
Operationally, if you're pinched as a business and
you're cutting corners like thequality of the products is
going to be lower.
AnnaRae Grabstein (37:59):
Yeah, the whole thing.
And so not only is thererallying going on at the state
level, but in California, as asis the case in many cities
around the US that have legalcannabis programs, there isn't
just a state tax, but somecities or municipalities or
counties or towns have passedtheir own additional cannabis
(38:23):
taxes.
Sometimes it's a gross receiptstax, sometimes it's an excise
tax, it can look like alldifferent things, and the city
of Los Angeles has just thistype of tax, and they have a
gross receipts tax, which isenormous it's 8% and a gross
receipts tax is particularlypainful because even when a
(38:44):
company is not profitable, youhave to pay gross receipts tax
and it can just really reallyhurt a business.
And so, on top of this advocacygoing on at the state level in
Sacramento to stop the taxincrease, there is also talk of
this is the first I've everheard of anything like this of a
dispensary tax boycott for thecity of Los Angeles taxes.
(39:08):
It's pretty wild.
Ben Larson (39:09):
Can we just do that as a population?
Can we just like boycott taxes?
AnnaRae Grabstein (39:13):
that would be great I've always thought like
wouldn't it be nice if, when youpay your taxes, there was a
checkbox of like what you'd likeyour taxes to go to, so that
you choose to like not fund themilitary but to fund the roads,
or fund fund schools, but not Idon't even know what?
Ben Larson (39:31):
I'm not, I'm not gonna, I'm not gonna pick apart
idea.
AnnaRae Grabstein (39:36):
Or just keep it all together.
I'm not against that, but Iknow that we do need taxes to
keep our civilization civil.
Ben Larson (39:44):
Do we have the power ?
I'm so deathly afraid of theIRS and CDTFA.
I just really don't want themknocking on my door for anything
personal or business orotherwise.
It seems wild to me and ascannabis companies, we've always
been conditioned to be likefollow the rules, don't get in
trouble, Don't ask questions,you know.
I know man that's like, uh,that's begging for a conflict.
AnnaRae Grabstein (40:06):
Well, this idea of the tax boycott in LA,
you're right.
It feels like, on the one hand,if you're just one single
company and you say, screw thecity of LA, they aren't showing
up for me, they're not doing allthe things that they said they
were going to do, like shuttingdown legal dispensary which they
aren't right I mean theygenerally aren't you say I'm not
going to pay my taxes.
It's kind of a drop in thebucket and they're probably
(40:26):
going to come for you.
But if every dispensary in thecity of LA together at once
collectively comes together anddoes something like that, I can
see the power in it and I thinkthat's the whole idea of the
power of people coming together.
Ben Larson (40:44):
So do you know how far along?
AnnaRae Grabstein (40:45):
this is Do they have like near 100%
coverage of all these dispensaryowners?
I mean, there's not a ton ofgood information.
This is mostly coming fromLinkedIn stories and Instagram
stories of folks that areoperating in that market sharing
what's going on, so we needmore information.
If you're out there and youknow about this Los Angeles tax
boycott, send us moreinformation and we will talk
about it on future episodes,because I think that there's
(41:05):
something.
There's something interestingbrewing here.
Ben Larson (41:08):
Man, imagine if they pull this off, like the
coordinated efforts that wouldspin up out of being motivated
by that.
So true, so true.
But yeah, I mean, the one thingwe complain about all the time
in the cannabis industry istaxation without representation.
Right, we pay through the nose,but what services do we get?
Like when we had our businessin Oakland, it was hard to get
(41:28):
the police to show up foranything.
AnnaRae Grabstein (41:32):
Yeah, and yet you had a big gross receipts
tax in Oakland.
Ben Larson (41:35):
Yep.
Thank you, Berkeley, for thetax shelter that you provided
everyone.
I think, Berkeley pulled backtheir taxes for like three years
or something like that.
AnnaRae Grabstein (41:47):
And you know this local tax issue is big.
I was speaking with a clientthat was thinking about moving a
cultivation company to a newcity.
Thinking about moving acultivation company to a new
city and that city has atemporary tax pullback and in 16
to 18 months or something thetax is supposed to go back to
what it was initially when theyallowed cannabis use in that
(42:09):
area.
And we had to think really hardabout well, that's too big of a
risk to move a whole businessbecause we don't know if, in 18
months, if they turn that taxback on, this is no longer an
area that it makes sense to dobusiness in when there's other
cities that aren't charging youthat tax.
So, cities should heed this call.
Ben Larson (42:28):
Yeah, so with gross receipts tax that's just like 8%
straight off your margin.
AnnaRae Grabstein (42:31):
Yeah, it's just it's very challenging Cool.
Ben Larson (42:38):
Well, it's just, it's very challenging, cool.
Well, take us to our next story, ben.
Yeah, so, um, deals being done,I get to take it back to the
beverage space.
So organigram, a large canadianoperator, picked up collective
projects, which is a lesserknown beverage brand down here
in the states.
They have kind of dipped theirtoe and into into the hemp
marketplace but they've beenvery popular in the canadian
beverage space.
So they I, their blood orangeyuzu was like the top skew being
(43:03):
sold in canada for felt like atleast a year rockstar team,
their craft brewery in thegreater toronto area, incredible
beers and and they were like apretty big exporter into the uS
and so I think it's a nicepickup for Organigram and you
know Organigram is a reallystrong company.
It's been really solid.
AnnaRae Grabstein (43:22):
So this is again just another validation
that people are seeing the hempbeverage opportunity as public
companies being able to list inthe US, being able to accept
capital from strong capitalpartners interested in creating
(44:01):
a future outside of tobacco andhas supported Organigram in a
lot of unique and interestinggrowth opportunities and has
given them capital to be able todo acquisitions and to invest
in growth like this.
And this isn't the first timethat we've talked about
Organigram investing ininnovative companies.
It was probably a year and ahalf ago that we talked about
them investing in open bookextracts.
They've made some other reallyinteresting investments in
(44:25):
genetics and other things, soit's just it's another example
of how the US is being leftbehind because of the way that
policymakers have not moved toopen up access to institutional
and highly mature capitalpartners for American companies.
Ben Larson (44:46):
Yeah, and ICBC was this week as well out in Berlin,
and so just another place wherethe US doesn't have a big
presence.
I think Curaleaf has a littlething going on out there, but
it's largely Canadian companiesand then European companies.
AnnaRae Grabstein (45:00):
Yeah, I mean just think so.
Canada is doing tons ofexporting of cannabis and it's
basically been the savior to theCanadian cannabis market who,
similar to some of the US states, created a massive oversupply
initially when they werebuilding out their market, but
they have found a relief valvein the international markets.
(45:21):
And why are American companiesnot able to participate in that
relief valve?
Because there is not federallegalization.
This is just endlesshandicapping.
Come on America, let's cleanthis up.
Ben Larson (45:35):
Okay, so really quick, before we wrap up, I want
to kind of pull on this threada little bit because BAT being
involved and now throughOrganigram being involved in the
hemp beverage space, is therepotential for big tobaccos all
of a sudden to enter the chatand start trying to influence
things?
Because right now the fear fora lot of like camp operators is
(45:58):
big, out taking over doing force, like three-tier system, all
this kind of stuff.
But you know there's also likeconvenience stores and the
convenience store lobby isreally big and they want a piece
of it and so like they're kindof in the conversation as well.
Would be really interesting tosee like big tobacco team up
with the convenience store lobbyand all of a sudden they're
(46:18):
going head to head with thealcohol lobby and you know we're
just here in the middle well, Ithink what's most interesting
tobacco is at the table, uh, buthas is at the table much more
quietly.
AnnaRae Grabstein (46:30):
And what has happened in the past 12 months,
and even more just in the pastsix months, is the alcohol has
really come out of the closetand hasn't isn't at the table
quietly anymore, like there'sactually policy positions and
and direct asks to policymakers,and that is what isn't as clear
for tobacco.
Tobacco is not grabbing armswith cannabis companies or hemp
(46:55):
companies and advocating forcertain positions in a public
way, but I think it's stillhappening.
I think that there is such abad perception of tobacco
companies different than alcoholcompanies that cannabis
companies don't generally wantto be associated with tobacco
companies publicly.
(47:15):
Whereas the beverage space hasseemingly welcomed the alcohol
partners in with open arms-ish.
Ben Larson (47:21):
Yes and no.
Yeah, there's a lot of politics.
I mean in general, yes,especially from the brand side.
But, as you know, in theregulated California market, if
you're talking about retailers,the narrative and perspective is
very different than if you'retalking about brands.
Right, and as we kind of reachthese decision points of access
and regulation, I think we'regoing to see a lot of like
(47:44):
divergence when it comes to whatwe quote, unquote, want, right,
yeah, such as the world we live.
AnnaRae Grabstein (47:54):
Well, I think that you should do the last
call today, ben.
Last month I did the last call.
So I'm going to put you on thespot here, Ben.
What is your final messagetoday for our listeners?
It's time for the last call.
Ben Larson (48:10):
Just in the vein of everything that we're talking
about.
I'm thinking about because Ijust booked my flight today
mid-May, I think.
It's like the 13th, 14th and15th NCIA is doing lobby days.
If you're anywhere in or aroundDC or you can be there, come
join us.
It's important that we havethese conversations, that we get
a pulse of what's going on onthe hill and what people are
(48:31):
talking about, what they know,and on average, every 18 months
you're dealing with a new teamanyway, so the work is never
done.
Every conversation is importantand come join me.
That's my last call.
AnnaRae Grabstein (48:45):
Awesome, well , I guess I could read us out,
since you did the last call.
That would be wonderful,awesome, well, thanks everyone
for listening today.
Keep engaging with us.
Thank you to our teams atVertosa and Wolfmeyer and to our
amazing producer, eric Rossetti.
We hope that if you enjoyedthis episode, that you'll drop
(49:05):
us a review on Apple Podcasts orSpotify or YouTube.
Really, wherever you listen, itreally helps people to find our
content and spread the wordfurther.
So just thank you, like,subscribe, share it and, as
always, stay curious, stayinformed and, most importantly,
keep your spirits high.
That's the show.
Ben Larson (49:28):
Bye-bye.
Hey everybody, welcome to Episode 86 of High
Spirits.
I'm Ben Larson and, as always,I'm joined today by AnnaRae
Grabstein.
We're recording May 1st May 1st2025.
How did that happen so happyMay Day.
Do people celebrate May Day?
Is that a thing?
Oh fast.
Happy May Day.
Do people celebrate May Day?
(00:25):
Is that a thing?
AnnaRae Grabstein (00:26):
Oh, it's May Day, that's right.
Yeah, hopefully there'schildren dancing around Maypole
somewhere.
I love that.
It's so beautiful.
Ben Larson (00:33):
When I think of May Day, I think of the word May Day
Like May Day, and it's likeevery day this year has felt
like May Day.
AnnaRae Grabstein (00:41):
Forest children with pieces of dancing
and ribbons around a maple.
Ben Larson (00:48):
That sounds very North Bay.
Yeah, I could see that.
AnnaRae Grabstein (00:51):
Welcome to my life in Northern California.
Waldorf and Montessori schoolsyeah.
Ben Larson (00:57):
Well, yeah, we're in Northern California.
We're both in NorthernCalifornia.
I was in Atlantic City thismorning, so hello everyone.
You get me in my airportclothes because I just jumped
straight on.
AnnaRae Grabstein (01:07):
Atlantic City seemed like it was a blast.
I was getting texts aftermidnight East Coast time last
night from Angela Chang, CMO atKANA, who was texting me videos
of the two of you raging on somekind of crazy roller coaster.
Ben Larson (01:23):
Yeah, it was the slingshot, you know, the most
extreme ride like in the middleof the Atlantic City Pier and
I'm like I want to do that and Iasked at least 10 people and I
got a lot of no's but Angelasaid yes emphatically and so we
jumped on it and it was rad.
That's awesome.
It was a good way to wrap upthe trip.
You know trip.
I was not super excited abouttraveling all the way across the
(01:46):
country to go to Atlantic City,which is an hour from the
Philly airport without traffic.
I think I did the smart thing.
I didn't really leave the HardRock Hotel slash pier, I just
kind of kept that as my zone ofinfluence but really enjoyed
myself and something just reallymagical last night the weather
was perfect.
Mj Impact had rented out theentire Atlantic City Pier, so
(02:09):
it's like we had it all.
To the cannabis folks.
AnnaRae Grabstein (02:12):
That's amazing.
What did you witness about theNew Jersey market?
That was exciting.
Ben Larson (02:16):
From the vantage point of the Hard Rock Hotel.
Generally the sentiment washigh.
You know people were excited.
You know I talked to a fewbrands and dispensary owners and
it's definitely feels like thehoneymoon phase and it's as a as
an old, haggard operator in thespace I I try not to like rain
on their parade and just be likejust wait so yeah, I'm like, oh
(02:38):
, that's great, that's wonderful.
I hope it stays that way.
AnnaRae Grabstein (02:43):
Yeah, I think that they're okay Old Haggard
operator over here who's feelingnegative for New Jersey but on
the flip side, this is highspirits.
We try to like see the silverlining in all of it, and I think
it is possible for some statemarkets to stay successful and
to not have this crash and burnafter the first 24 months.
And a lot of it has to do withhow the licensing ends up
(03:07):
rolling out, how much I thinkoversupply happens as a result
of licensing at the state level.
And one thing with New Jerseyis that there isn't a ton of
supply in the market still andas a result the prices have
stayed fairly high.
They've come down a little bit,but the prices are high enough
(03:28):
that it seems reasonable that atleast the supply chain side of
the operators will be able tostay profitable for some time.
And there is some saturation ofdispensaries in certain cities
like Jersey.
City has a lot of dispensariesof dispensaries in certain
cities like jersey city has alot of dispensaries, but but by
and large there are pretty soliddispensary opportunities around
(03:49):
the state too.
So I'm I'm staying hopeful fornew jersey that the
entrepreneurs there are going tohave a good run for a while
yeah, and we also don't have theartificial pumping of like
venture capital.
Ben Larson (04:02):
Well, I mean, there's still venture capital
out there, but it just tends tobe a lot slower and smarter
these days.
I don't know if it's smarter,it's just slower.
But yeah, there was a panelabout investment at MJ Unpacked
and I think the major takeawaywas just that there's debt out
there for good operators andthere is some growth capital out
(04:23):
there, but you have to be areally good operator and so, at
the end of the day, if themarket is demanding good
operators just to get startedand survive, then maybe that'll
be the foundation for less pain.
We shall see, but they are.
I did see some pictures of somehemp products at head shops
down the street from some of thedispensaries, and I definitely
(04:44):
saw a picture of like a 10,000milligram gummy pack.
How that's achieved, I don'tknow 10,000 milligrams.
AnnaRae Grabstein (04:51):
that is a problem, it's crazy.
Ben Larson (04:53):
I was thinking like okay, if there's 20 gummies per
package, that's like 750milligrams per gummy.
AnnaRae Grabstein (04:58):
Yeah, I'm not sure who needs that or wants
that.
That's not the kind of progressthat we need.
Needs that or wants that?
That's not the kind of progressthat we need.
It is helping basically no onein our fight towards
normalization, destigmatizationand better regulations.
Like no, thank you.
Yeah.
Ben Larson (05:14):
Yeah Well, not everyone's on the same page
there yet, but that was themoral of our talk.
It was like we were up there ata cannabis conference.
There was, luckily, nopitchforks or torches in the
audience.
We were talking about the hempopportunity, and Chris Lackner
from the Hemp Beverage Alliancewas also up there with me,
christy Palmer from Kiva, sotwo-thirds heavy on beverage and
(05:37):
just talking about, yeah, likehow does this all work together?
How do we create a bifurcatedmarket?
And how do we recognize thatwe're all talking about
cannabinoids here and how do wecreate a system that works?
AnnaRae Grabstein (05:48):
Beverage is interesting in New Jersey
because I don't think that thereare maybe I shouldn't say any,
but I'm not aware of any in theregulated market beverages that
are being manufactured insidethe cannabis supply chain
manufactured inside the cannabissupply chain and so it's a bit
of a bummer for the dispensariesthat have gone through that
process that they don't haveaccess to all of the exciting
(06:11):
beverages that exist rightoutside.
That are the hemp beverages.
Ben Larson (06:15):
I think they will come.
I think there will be.
Whatever the maxing out of thecap is I actually don't know
what it is in Jersey.
Is it 100 milligrams?
We'll see the higher doseproducts in dispensaries for
sure in very short order.
But we are seeing movement inthe low dose hemp beverage space
as well, going into the state.
AnnaRae Grabstein (06:34):
Well, while you were in Atlantic City, I was
basically as far away aspossible and, in an opposite
experience, I was in centralcoast of California at Coastal
Sun Farm.
Yeah, I spent the day thereyesterday and it is beautiful.
It is a certified organic farm.
(06:55):
They grow blueberries andcannabis and I got to visit with
over 100 goats that were therehelping them clear their cover
crop.
They were so cute, so friendly,all these goats, and I was also
there while the High Road salesteam was there, who was also
doing a tour of Coastal Sun withme.
(07:17):
It was really cool to see thepassion and the traditional
agricultural farming techniquesthat have been such an important
part of the Central Coast'skind of breadbasket agricultural
history and legacy inCalifornia playing out at this
particular cannabis farm.
They have a whole philosophyabout sequestering carbon,
(07:41):
building soil and how healthyplants lead to healthy people
and happy people.
It was just really inspiring,helped bring me back to my why
of what I'm doing here.
Ben Larson (07:51):
Yeah, I was going to say we're kind of getting back
into that theme of like yourhippiness this is showing today.
It's because I like organicagriculture, I'll take that if
that makes you and your forestchildren dancing around the pole
and celebrating.
AnnaRae Grabstein (08:10):
Yeah, okay, the forest children, I'll own it
.
I will.
Some interesting stuff, though.
Another reminder andinteresting takeaway Darren's
story, who's the CFO at Coastalwas giving this tour and talking
about the history of the land,and I think it's worth noting,
as we've been talking abouttariffs and things, that the
(08:31):
central coast of California in1995, when NAFTA was passed,
experienced pretty massive shiftin the dynamics related to what
was happening in the economy,and so NAFTA opened up free
trade and, as a result, thefarms in the Central Coast had a
lot of struggles to compete inways that they hadn't before,
(08:54):
and specifically the propertywhere Coastal Sun now grows
cannabis used to be a rose farm,and all of that rose production
was no longer competitive froma price perspective and it was
all started.
All the roses started comingfrom South America and were a
lot cheaper.
And that was part of anti-drugpolicy change, where the Clinton
(09:16):
administration was trying toconvince South American coca
farms to stop growing coca tohelp stop the inflows of cocaine
from South America, and toldthem that as part of this free
trade agreement, they shouldstart growing flowers and that
those flowers could come intothe US, get a really nice
(09:38):
healthy margin.
And what that did is it endedup putting out of business the
flower farms that werefunctioning in the US and opened
up kind of the next moment forthese farms.
And it took a while Obviouslyin 1995, there wasn't legal
cannabis to come in and save theday and take over the property.
(09:58):
But eventually that did happen.
That did happen and it justshows sort of the long tail of
these different trade decisionsand how it causes dynamic shifts
of how we work, where we work,where things are manufactured,
and then it tends to seems likeit comes back to some sort of
equilibrium eventually.
Ben Larson (10:18):
So whatever that says about the tariffs, I'm not
sure that interesting I was, Ispent a little bit of time down
on the Central Coast.
This is like back in 2017, likeGrupo Flordes and I toured one
of their their greenhouses, andone of the greenhouses had a
bunch of roses in it and theyhadn't like switched it over yet
(10:38):
to to cannabis.
What a funny connection.
Yeah right, what a funnyconnection.
AnnaRae Grabstein (10:43):
Yeah, right.
Well, so for all of ourlisteners, this is our once a
month episode where we try tobring you some news.
We're not going to bring you aguest, you just get the two of
us.
That's all for today, folks.
No, just kidding.
Here we go, we're going tobreak into it.
Ben Larson (10:59):
We have one and a half hosts today.
A little brain dead after thelast three days in Atlantic City
.
AnnaRae Grabstein (11:06):
Atlantic City will do that to you for sure.
So give us a hemp legislationupdate, Ben.
Ben Larson (11:13):
Oh dear, it's been a very busy legislative session.
I think the biggest newsrecently that happened this week
is that there is no hemp billmoving forward.
In Florida that was celebratedonline.
You could go online and searchyour favorite influencer and
figure out what happened.
But yeah, I think we're in thissession right now where there's
(11:35):
a lot of efforts to either banintoxicating hemp or there are
some kind of middle-of-the-roadlegislation, often
beverage-focused, which is notvery palatable for a lot of the
hemp community, and so whatwe're seeing is a lot of
attempts to kind of maintain thestatus quo.
(11:55):
In California we did have abeverage bill that showed itself
but never really saw the lightof day.
Showed itself but never reallysaw the light of day, so that
that kind of went by the wayside.
All the focus is on assemblybill 8, which is some sort of
kind of like fusing together thehemp and cannabis supply chains
and trying to make it workable.
(12:17):
But on both the hemp andcannabis side there's a lot of
conflict, and so I think it'sthe we could go state by state,
but it's generally the samestory of we need rules and we're
not aligned.
Hardly anyone's aligned on whatthose rules should look like
and I think a big argument thatI've gotten involved in a number
(12:39):
of times is just, if you don'tlike the bill that you're seeing
, where's the bill that you dolike?
Because we need something.
We need something thatstructures this taxes.
It creates consumer safetymeasures and hopefully isn't an
all-out ban because we arepullinside the hemp space hemp
versus cannabis, as well, therewas some unique news from the
(13:09):
Small Business Administration,who has new leadership under the
Trump administration about SBAloans.
yesterday oh, okay, something wedon't often get to talk about.
AnnaRae Grabstein (13:20):
Yesterday it was announced from the new SBA
administrator, kelly Loeffler,that the SBA has updated its
guidance to confirm, to reaffirmand confirm that marijuana
businesses are not eligible forfederal loan programs like 7A
and 504, even if they'reoperating legally under state
law, and that this includes bothdirect cannabis businesses and
(13:43):
those indirectly involved withcannabis, like consultants or
equipment suppliers.
However, the guidance alsoclarifies that hemp businesses
remain eligible, a keydistinction as the legal hemp
industry continues to navigate aseparate regulatory framework
(14:07):
regulatory framework.
To me, this move reallyunderscores the ongoing tension
between federal policy and statelegal cannabis and kind of
state illegal slash,legislatively complex hemp and
the fact that the federalgovernment is saying SBA loans
yes for hemp, no for cannabis.
It just stirs the pot even moreand reaffirms to me a lot of
(14:31):
what feels so unfair forcannabis businesses to be
hearing this type of feedback asthey're making so many strides
to be compliant.
It's just.
This is like that emoji whereyour head explodes.
It's that, but also like emojiwhere your head explodes.
Yeah, it's that.
Ben Larson (14:46):
But also like maybe I can run to the bank really
quick and apply for an SBA loan.
AnnaRae Grabstein (14:52):
SBA loans have been drivers of
entrepreneurship in this countryfor a really long time.
I mean, for those in cannabiswho have never looked into SBA
loans because you don't, becauseyou know that you're ineligible
for them SBA loans basicallyrepresent the very best possible
terms that you could get on anydebt that exists out there.
Ben Larson (15:11):
It's like a first-time homeowner's loan.
They're going to bring down thebarriers, work with you on your
business plan.
If you're a trustworthy lookingperson with a decent credit
history, you could get up tolike $5 million to get your
business off the ground.
AnnaRae Grabstein (15:23):
Yep.
It has been an opportunity forunconnected people to be able to
use their skills to startbusinesses for decades, and I
think it also is one of thereasons.
The lack of access to SBA loansthat have driven such high debt
rates in cannabis is becausethere's just no other
(15:45):
alternative for folks to turn to, and to see the type of rates
that cannabis businesses paycompared to non-cannabis
businesses is just reallyextreme.
So it's another way that hempbusinesses are positioned to
have a easier path forward thanthese state legal businesses
that are trying so hard to becompliant.
Ben Larson (16:06):
I'd be really curious to find out like what
kind of devils are hiding in thedetails.
Is this any hemp business?
Yeah, what is hemp?
It's hotly debated right now,but that I mean, it's wild.
Like you know, hemp has becomea pretty significant part of our
business and you know, like allgood businesses in the space,
we properly structure everythingto kind of put them in the
(16:27):
right buckets.
I guess there's nothingstopping me from going and
trying to get an SBA loan.
AnnaRae Grabstein (16:32):
No, you should.
Let's keep talking about it asyou do.
Ben Larson (16:36):
Should I live tweet it?
AnnaRae Grabstein (16:39):
Yeah, it would be really interesting to
share what the process is, butdoing that might mean that they
reject you for the loanaltogether, but at least you'd
be highlighting it for the restof us what the experience is and
how many hemp businesses areactually getting SBA loans.
I have no idea.
So if you are a hemp businessthat has gotten an SBA loan,
(17:00):
reach out.
I think it would be reallyinteresting to hear about how or
if it created opportunities foryou that you wouldn't have been
able to have otherwise.
I think it would be abeneficial narrative for us to
be able to use as we talk aboutpolicy and inclusivity at the
federal level the importance ofpolicy change.
Ben Larson (17:20):
There's so much in flux at the federal level,
whether it's the new nominees orthe farm bill, the
appropriations bill coming inthe fall.
What happens if you take an SBAloan and then they change the
rules on you?
AnnaRae Grabstein (17:33):
I have that exact thought.
I think it's wild that the SBAis willing to give loans based
on the farm bill when the farmbill has to get renewed so often
, and so it could change what isallowed.
But yeah, we actually do havesome more federal news, and
we've been avoiding talkingabout federal news for a while
because it's felt just like somuch nothingness.
(17:56):
This is sort of still.
Ben Larson (17:59):
This is no guarantee that it's still about
nothingness.
I just want to point out.
AnnaRae Grabstein (18:03):
Still might be nothing.
Yeah, apologies if it's stillabout nothingness.
I just want to point out Stillmight be nothing, yeah,
apologies if it's nothing.
But yesterday was theconfirmation hearing for the
nominee to be the new head ofthe DEA for Terrence Terry Cole,
and he has been nominated byDonald Trump.
And he has been nominated byDonald Trump and this is a guy
(18:25):
who has spent 30 plus years inlaw enforcement kind of split
between the state of Virginiaand Homeland Security and he has
notoriously been anti marijuana.
He posted a year ago onLinkedIn quote everybody knows
my stance on marijuana after 30plus years in law enforcement,
(18:46):
so don't even ask.
Ben Larson (18:47):
Hashtag just say no.
Hashtag not legal fordistribution.
Hashtag health issues yeah, notgreat.
AnnaRae Grabstein (18:55):
Oh yeah, those are some heavy hashtags.
So yeah, terrence Cole did notseem like a friend and when he
was nominated, the industrygulped and thought oh, the
schedule three reschedulingadministrative process is really
going to go nowhere now.
But the silver lining is thatyesterday, during his
(19:17):
confirmation hearing, colestated that reviewing the
cannabis rescheduling processwould be quote one of his first
priorities.
If confirmed, when I arrive atthe DEA to see where we are in
the administrative process, hesays so that doesn't mean that
he is going to push it forward,but it did.
(19:37):
He is clearly saying that whenhe arrives at the DEA he is
going to pay attention to it andthat feels like a win.
I'll take it.
Ben Larson (19:50):
Yeah, well, with the exception that there is the
legislation that has beenoffered that would maintain 280E
penalties even afterrescheduling.
AnnaRae Grabstein (20:01):
Oh yes, but that legislation hasn't appeared
to be moving.
But it's possible it could ifthe rescheduling continued to
move forward.
But you're right, there is anevil representative that is
trying to make Schedule 3 evenless important and impactful to
the industry if it was to moveforward.
(20:21):
You're right, good point.
Ben Larson (20:23):
It was Arrington, republican from Texas, but I was
.
I was talking to some folksactually this week and Arrington
sits on an important committeethat could actually potentially
see it through.
So oh, wow, yeah it's.
We'll just go back topretending like it's nothing,
just a lot.
AnnaRae Grabstein (20:42):
Yeah, you're pouring water on my fire here,
sorry.
Ben Larson (20:45):
Yeah, sorry, sorry.
High spirits.
Let's just not talk aboutfederal.
That's how we keep our spiritshigh.
AnnaRae Grabstein (20:53):
Well, I do think it's worth talking about a
few comments that came up inthe hearing that weren't just
from Terrence Cole, senator AlexPadilla from California he
really waded into it, in myopinion, alex Padilla from
California.
He really waded into it, in myopinion.
He started making comments andadvocating for full
de-scheduling and saying thatmoving cannabis to schedule
three doesn't really resolve anyof the damage done by
(21:15):
criminalization of cannabis andthat full de-scheduling is the
only solution.
All right, dude, great.
But come on, can we just focuson what's right in front of us
and not open a huge other can ofworms of saying that this isn't
good enough?
It's the kind of thing of whenyou say something isn't good
enough, then the response is OK,well then, maybe we shouldn't
(21:36):
do it at all.
And no, thank you, senatorPadilla, let's let's keep our
eye on the ball and try to movetowards more incremental
progress, and that we are veryopen to Schedule 3 being that
next step of incrementalprogress.
Ben Larson (21:52):
I appreciate the virtue signaling from him, but
it's all right, it doesn'tmatter.
No one listens to Democratsfrom California anymore in DC.
AnnaRae Grabstein (22:02):
Oh, so they're just fully irrelevant
anyway.
Ben Larson (22:04):
We're just completely irrelevant.
Yeah oh, so they're just fullyirrelevant.
Anyway, we're just completelyirrelevant.
AnnaRae Grabstein (22:07):
Yeah, all right.
Well, someone that potentiallymight be considered more
relevant these days is SenatorTom Tillis, republican from
North Carolina.
He also spoke at the hearing.
He says that the conflictsbetween federal prohibition and
state legal marijuana marketsneed to be addressed.
He talked about the patchworkof different rules, state by
(22:29):
state, and he advocated for aworking group at the federal
level that would help figure outfederal boundaries and
guidelines.
It wasn't exactly alegalization path.
He wasn't saying de-scheduling,but he very clearly
acknowledged that the lack ofreconciliation between state and
(22:52):
federal laws is creating somebig problems.
Don Murphy, the well-known law.
Ben Larson (23:00):
I'm pretty sure this is why the cannabis caucus
existed.
I don't know if it still existsbecause there's a lot of people
that have retired, but maybethis is a new picking up the
mantle from the other side andpretending like they're doing it
for the first time.
AnnaRae Grabstein (23:14):
Yeah, for sure.
But you know Don Murphy, who'sa well-known lobbyist.
He says, he says we are makingincremental steps that will lead
to an end to prohibition soonerrather than later.
So I'm going to take it, I'mgoing to say yes, Don Murphy, I
hope so.
I hope that this new DEAadministrator is able to keep
(23:40):
this ball rolling, that the workthat was started in the last
administration continues to moveforward.
I think the industry couldreally benefit from a win.
Ben Larson (23:50):
So yes, please, absolutely.
And look, I think the reasonwhy it is hard for me to get
bogged down by day-to-day newsis because I do see everything
generally heading into a verypositive direction, right, the
more people talking aboutcannabis, the more bills being
entered the general publicknowing about it a lot more and
having exposure to it.
It's all on the whole, movingup and to the right Doesn't mean
(24:14):
we're not gonna have setbacks.
But there's this quote of I'mgonna mess it up, but following
the climate, not the weather, orsomething like that.
You know what I'm talking about.
AnnaRae Grabstein (24:26):
I hear you following the climate, not the
weather, or something like thatyou know what I'm talking about,
but I hear you Following theclimate, not the weather.
I get that, and I think part ofthat is this idea that, even
though the business landscapehas been really challenging and
we've seen a lot of failures andwe have a lot of folks that are
still on the brink through allof that, we're also seeing
successful turnarounds.
Still on the brink Through allof that, we're also seeing
(24:47):
successful turnarounds.
We're seeing businesses thatare figuring it out, figuring
out how to run lean, figuringout how to create a niche for
themselves and it has nothing todo with the policy being in
their favor or not.
It's like policy be damned, weare still going to keep focused
and win at this thing that westarted at.
And that's really the energy ofa real cannabis entrepreneur.
(25:11):
It's like, okay, we accept thatthere's all of this messy shit
in these laws and in theseregulations and could they be
better?
Hell yes, and we figured outhow to carve ourself a path
through it all and we're goingto win.
No, that's going to keep peoplerelevant and keep businesses
(25:33):
open.
Yeah.
Ben Larson (25:34):
Okay, I totally butchered the quote.
It's supposed to be climate iswhat you expect, weather is what
you get.
And that's by Robert Heinlein.
I got climate and weather right.
AnnaRae Grabstein (25:43):
I kind of liked the way that you said it.
It was just simpler.
Ben Larson (25:45):
It was just simpler Less words.
AnnaRae Grabstein (25:46):
Yeah, yeah.
Ben Larson (25:54):
We have this thing in our company that we say to
each other and we just say wordsto wisdom ratio.
So it's like stop talking somuch, Just get it out in fewer
words.
AnnaRae Grabstein (25:59):
How is that working for you?
Ben Larson (26:01):
Great, yeah, wait, the practicing it or the saying
it to people.
AnnaRae Grabstein (26:06):
Like are people offended when someone
says that to them?
Ben Larson (26:09):
No, because they generally know what it means.
It's like you know we allpractice it.
It's like, all right, you'retalking too much, you know.
It's like it's a nice way ofsaying that.
AnnaRae Grabstein (26:18):
Yeah, I like it.
Ben Larson (26:19):
What's next?
AnnaRae Grabstein (26:20):
So next we're going to talk about the New
York market a little bit.
Ben Larson (26:23):
All right, yeah, so New York's one of those
interesting markets where itdidn't start out great, but also
like kind of progressivelygotten better.
Kind of progressively gottenbetter, is that fair to?
AnnaRae Grabstein (26:33):
say oh, 100%.
It was looking really grimthere for a minute.
Ben Larson (26:37):
For the first, like 18 months.
AnnaRae Grabstein (26:46):
It was taking forever for the dispensaries to
open.
Meanwhile the illicit marketexploded to something like
nobody had ever seen before.
There was a lot of hubris goingon with the unlicensed
dispensaries in New York.
So, yeah, you're right, it waspretty bad at the beginning, but
I'm thinking that it's movingin the right direction.
It's good.
It's looking pretty good rightnow.
Ben Larson (27:06):
Yeah, I mean I've heard it's generally very
positive.
They really did step in andintervene with some of the
competing factors right.
I know they went prettyhardcore on shutting down the
illicit shops.
We know what happened with thehemp bill, that they came back
and really hyper-restricted that, so giving it a fighting chance
(27:26):
much better than what'shappening in LA, I guess.
AnnaRae Grabstein (27:29):
Yeah Well, so the state published this market
report looking back on thewhole year of 2024.
And we'll link the report inthe show notes so people can go
and check it out themselves.
It's 64 pages of data and it'sreally interesting.
The first, probably 58 pages,is just straight up data, and
(27:54):
then at the very end, is thestate actually making some
recommendations and insightsinto all of it.
And so there's some points thatI think are worth talking about,
and I think we all have somethings to learn from, but so
I'll just jump in with some datafrom the report Indoor versus
outdoor flower.
This came out in the report inthat they talked about 19% of
(28:18):
the flower that's going into themarket is being grown by one of
the nine registeredorganizations, which are the
original operators from themedical market, which, by and
large, are public MSOs Not allof them, but most of them and
the reason that we can jump toindoor versus outdoor is that
(28:43):
these companies were the onlyones that were allowed to grow
indoor flower at the launch ofthe market, and all of the new
cultivators of which they'velicensed 191 that are
operational and then 300additional conditional ones all
were forced to be outdoor orgreenhouse growers, and so to
(29:04):
have nine companies out of over400 that are licensed,
accounting for 19% of the floweris definitely a unique market
dynamic that is creating somewinners and losers in the market
, and, as a result, the state,in their insights, said at the
end of the report that they arerecommending that the state
(29:27):
consider allowing all of thetypes of cultivators to grow
however they want if they choose.
So basically, they're sayingthat we should open the doors to
any type of cultivator beingable to grow inside if they
choose, because the marketclearly is interested in indoor
(29:47):
flower.
That being said, the reasonthat the state put so much
emphasis on outdoor was becausethey really created their entire
cannabis law and program basedon a lot of environmental and
social justice themes, and sothey wanted to have a less
carbon intensive cultivationmethod Interesting.
Ben Larson (30:09):
It's almost like the inverse of what happened here
in California, where they werewere going to start small, with
22 000 square foot canopies andand all of a sudden boom, you
get to stack licenses and thebig guys came in and crushed it
all yeah, now people havehundreds of acres of outdoor
cultivation um, but you know,california is also a better
place to grow outdoor weed andnew york has a lot more water.
AnnaRae Grabstein (30:30):
It has a lot of fungal issues with their
outdoor plants.
So I mean, really what we needis interstate commerce to be
able to take all of thatwonderful cannabis from the
central coast of california andbring it to new york legally oh,
don't worry.
I saw another article aboutinterstate commerce being alive
(30:51):
and well yeah, yeah, there is awhole situation with inversion
which we weren't even planningon covering today, but you can
all read about it.
Ben Larson (30:59):
Well, I was talking to Josh Swider from Infinite
Chemical and he said he went toI think it was a head shop.
It was like all Michiganproduct.
They had like Michigan stickersand labels and all this kind of
stuff on it.
AnnaRae Grabstein (31:11):
In New York City.
Ben Larson (31:12):
I can't remember if it was new york city or new
jersey, but it was definitely.
Yeah, definitely over there allright.
AnnaRae Grabstein (31:17):
Well, a couple more things.
On new york, there arecurrently 513 brands sold into
the state and I thought thatsounded like a lot of brands for
such a young market and thatwithin all of these different
brands similar to how we haveseen it unfold in other markets
flour and pre-rolls are the mostcompetitive category, with 300
(31:40):
brands competing in flour andover 200 brands competing in the
pre-roll category, with a lotless staticky numbers of brands
competing in the like tablets,tinctures and topicals, but
still lots of different ediblecompanies.
And that within that, the topfive selling brands account for
(32:00):
21% of the sales.
So this is wild because ifthere's 500 brands, five brands,
which is just 1%, account for20% of sales of the whole state.
Ben Larson (32:13):
Pretty intense power ranking right there.
AnnaRae Grabstein (32:15):
Yeah.
Ben Larson (32:15):
But I like to see Heirloom on there.
Big fan of Heirloom.
AnnaRae Grabstein (32:18):
Yeah, and so the top five brands that are,
those that top 20% are all NewYork brands.
They are Dank, heirloom, jauntyOff Hours and MFNY.
But when you look at that listthat they publish of the top 200
brands, once you start goingdown the line like the first 20,
you'll start to see at leastthree to five multi-state brands
(32:42):
that are showing up in manydifferent markets.
You'll see Stizzy on thereEnfused, a few others that are
multi-state brands.
So it's not like New Yorkdoesn't have multi-state brands
in their most popular categories, but the top five are holding
strong as New York companies andthat the top 200 brands account
(33:03):
for 96% of the sales.
So even though there are 500brands out there, 300 of them
basically have zero sales.
Ben Larson (33:11):
We have to give some kudos to the OCM, and Felicia
Reed was actually at MJNPAC.
She's the executive directorand it seems like very in tune
and thoughtful about what'shappening, and that must be
really nice to have not onlythat level of thought and
putting out a report with dataand then making recommendations
(33:34):
about what could be better andthen potentially even acting on
it, but maybe even having aframework that allows them to do
that.
Compared to some other marketsthat we're very familiar with,
it's worth recognizing as, Ithink, a step in the right
direction.
AnnaRae Grabstein (33:48):
Yeah, I'll give them some credit.
There's been enormous turnoverand change with the OCM, and the
initial staff and team, whoseemed very mission driven and
social justice focused, havebasically been exited, and
there's there's new sheriffs intown, quote unquote and they're
really action oriented.
(34:09):
I thought this report did areally great job of shedding
some light of what's happeningin the market and setting the
stage for what 2025 and even2026 might look like, and so I
think probably the final pointon New York is just an update on
where they are with theirdispensaries as well.
As of the end of the year, theyhad licensed just a little over
(34:31):
700 dispensaries and close to300 of them had opened their
doors by the time that the yearclosed, and so there is a bunch
more stores that will be opening, and New York, in their law,
kind of gives some flexibilityto the regulators to figure out
(34:52):
when the right time is to stopissuing licenses or how many is
the right amount of licenses.
There currently is not licensedcaps in New York, but they
might decide at some point thatthey have issued enough, and I
think this goes back to what wewere talking about at the
beginning with New Jersey andwhat could make a long-term
(35:13):
healthy market, and I think whatit has to do with is not
oversaturating the market withany particular license type, so
that the licensees that are inthe market have enough
opportunity to capture enoughmarket that they can be
profitable and successful.
Ben Larson (35:29):
Well, I think they're running at a pretty good
clip right now, so I didn'trealize this.
But new york has like 8.3million people, so third to a
quarter the size of california,and so for them to be kind of
approaching 700 licenses, it'sactually pretty solid oh yeah,
I'm not.
I'm not sure what local controllooks like in in new york.
(35:50):
Do most new yorkers have accessto legal cannabis?
AnnaRae Grabstein (35:53):
The local communities did have an option
to opt out instead of an opt in,and which is what it was.
In California, you had to optin as opposed to opt out, and
there were definitely areas thatopted out in New York, but by
and large, I think that there'sgoing to be pretty solid retail
access within, you know, a 20minute drive of most people, and
(36:15):
that should be really good forthe market great well, go new
york.
Ben Larson (36:22):
Should we talk about our own, our own home state of
california, and how awesome itis?
AnnaRae Grabstein (36:26):
yeah, well, so there is a lot of stuff going
on in california, but I thinkwhat is worth talking about is
taxes.
There has been a tremendousamount of coalition building new
types of coalitions in theindustry to rally around
stopping a scheduled taxincrease of the excise tax in
(36:47):
California From 15 to 19%.
Yeah, which currently is 15%,scheduled to go to 19% over the
summer, and there've been awhole bunch of new.
I want to just call themcoalitions.
I don't necessarily want tocall them trade associations,
because I don't know at whatpoint you become a group or a
trade association from a group,but it's a whole bunch of new
groups that are coming togetherwith new messaging trying to
(37:09):
stop these taxes.
Normal, california Normal hasbeen one of the louder voices in
all of this, which I reallylove to see normal at the table,
because they really are aboutrepresenting consumers as
opposed to just businesses, andI think that that's a really
powerful part of theconversation is remembering that
it's not just about businessesthat are trying to stack dollars
(37:31):
, but it's about creating anenvironment where access is
simple for consumers andaffordable, and affordable is
kind of the key here is that weknow that when taxes are too
high, consumers choose to buycannabis outside of the legal
market, and normal is being areally strong advocate to make
(37:52):
sure that well, not only that.
Ben Larson (37:53):
Operationally, if you're pinched as a business and
you're cutting corners like thequality of the products is
going to be lower.
AnnaRae Grabstein (37:59):
Yeah, the whole thing.
And so not only is thererallying going on at the state
level, but in California, as asis the case in many cities
around the US that have legalcannabis programs, there isn't
just a state tax, but somecities or municipalities or
counties or towns have passedtheir own additional cannabis
(38:23):
taxes.
Sometimes it's a gross receiptstax, sometimes it's an excise
tax, it can look like alldifferent things, and the city
of Los Angeles has just thistype of tax, and they have a
gross receipts tax, which isenormous it's 8% and a gross
receipts tax is particularlypainful because even when a
(38:44):
company is not profitable, youhave to pay gross receipts tax
and it can just really reallyhurt a business.
And so, on top of this advocacygoing on at the state level in
Sacramento to stop the taxincrease, there is also talk of
this is the first I've everheard of anything like this of a
dispensary tax boycott for thecity of Los Angeles taxes.
(39:08):
It's pretty wild.
Ben Larson (39:09):
Can we just do that as a population?
Can we just like boycott taxes?
AnnaRae Grabstein (39:13):
that would be great I've always thought like
wouldn't it be nice if, when youpay your taxes, there was a
checkbox of like what you'd likeyour taxes to go to, so that
you choose to like not fund themilitary but to fund the roads,
or fund fund schools, but not Idon't even know what?
Ben Larson (39:31):
I'm not, I'm not gonna, I'm not gonna pick apart
idea.
AnnaRae Grabstein (39:36):
Or just keep it all together.
I'm not against that, but Iknow that we do need taxes to
keep our civilization civil.
Ben Larson (39:44):
Do we have the power ?
I'm so deathly afraid of theIRS and CDTFA.
I just really don't want themknocking on my door for anything
personal or business orotherwise.
It seems wild to me and ascannabis companies, we've always
been conditioned to be likefollow the rules, don't get in
trouble, Don't ask questions,you know.
I know man that's like, uh,that's begging for a conflict.
AnnaRae Grabstein (40:06):
Well, this idea of the tax boycott in LA,
you're right.
It feels like, on the one hand,if you're just one single
company and you say, screw thecity of LA, they aren't showing
up for me, they're not doing allthe things that they said they
were going to do, like shuttingdown legal dispensary which they
aren't right I mean theygenerally aren't you say I'm not
going to pay my taxes.
It's kind of a drop in thebucket and they're probably
(40:26):
going to come for you.
But if every dispensary in thecity of LA together at once
collectively comes together anddoes something like that, I can
see the power in it and I thinkthat's the whole idea of the
power of people coming together.
Ben Larson (40:44):
So do you know how far along?
AnnaRae Grabstein (40:45):
this is Do they have like near 100%
coverage of all these dispensaryowners?
I mean, there's not a ton ofgood information.
This is mostly coming fromLinkedIn stories and Instagram
stories of folks that areoperating in that market sharing
what's going on, so we needmore information.
If you're out there and youknow about this Los Angeles tax
boycott, send us moreinformation and we will talk
about it on future episodes,because I think that there's
(41:05):
something.
There's something interestingbrewing here.
Ben Larson (41:08):
Man, imagine if they pull this off, like the
coordinated efforts that wouldspin up out of being motivated
by that.
So true, so true.
But yeah, I mean, the one thingwe complain about all the time
in the cannabis industry istaxation without representation.
Right, we pay through the nose,but what services do we get?
Like when we had our businessin Oakland, it was hard to get
(41:28):
the police to show up foranything.
AnnaRae Grabstein (41:32):
Yeah, and yet you had a big gross receipts
tax in Oakland.
Ben Larson (41:35):
Yep.
Thank you, Berkeley, for thetax shelter that you provided
everyone.
I think, Berkeley pulled backtheir taxes for like three years
or something like that.
AnnaRae Grabstein (41:47):
And you know this local tax issue is big.
I was speaking with a clientthat was thinking about moving a
cultivation company to a newcity.
Thinking about moving acultivation company to a new
city and that city has atemporary tax pullback and in 16
to 18 months or something thetax is supposed to go back to
what it was initially when theyallowed cannabis use in that
(42:09):
area.
And we had to think really hardabout well, that's too big of a
risk to move a whole businessbecause we don't know if, in 18
months, if they turn that taxback on, this is no longer an
area that it makes sense to dobusiness in when there's other
cities that aren't charging youthat tax.
So, cities should heed this call.
Ben Larson (42:28):
Yeah, so with gross receipts tax that's just like 8%
straight off your margin.
AnnaRae Grabstein (42:31):
Yeah, it's just it's very challenging Cool.
Ben Larson (42:38):
Well, it's just, it's very challenging, cool.
Well, take us to our next story, ben.
Yeah, so, um, deals being done,I get to take it back to the
beverage space.
So organigram, a large canadianoperator, picked up collective
projects, which is a lesserknown beverage brand down here
in the states.
They have kind of dipped theirtoe and into into the hemp
marketplace but they've beenvery popular in the canadian
beverage space.
So they I, their blood orangeyuzu was like the top skew being
(43:03):
sold in canada for felt like atleast a year rockstar team,
their craft brewery in thegreater toronto area, incredible
beers and and they were like apretty big exporter into the uS
and so I think it's a nicepickup for Organigram and you
know Organigram is a reallystrong company.
It's been really solid.
AnnaRae Grabstein (43:22):
So this is again just another validation
that people are seeing the hempbeverage opportunity as public
companies being able to list inthe US, being able to accept
capital from strong capitalpartners interested in creating
(44:01):
a future outside of tobacco andhas supported Organigram in a
lot of unique and interestinggrowth opportunities and has
given them capital to be able todo acquisitions and to invest
in growth like this.
And this isn't the first timethat we've talked about
Organigram investing ininnovative companies.
It was probably a year and ahalf ago that we talked about
them investing in open bookextracts.
They've made some other reallyinteresting investments in
(44:25):
genetics and other things, soit's just it's another example
of how the US is being leftbehind because of the way that
policymakers have not moved toopen up access to institutional
and highly mature capitalpartners for American companies.
Ben Larson (44:46):
Yeah, and ICBC was this week as well out in Berlin,
and so just another place wherethe US doesn't have a big
presence.
I think Curaleaf has a littlething going on out there, but
it's largely Canadian companiesand then European companies.
AnnaRae Grabstein (45:00):
Yeah, I mean just think so.
Canada is doing tons ofexporting of cannabis and it's
basically been the savior to theCanadian cannabis market who,
similar to some of the US states, created a massive oversupply
initially when they werebuilding out their market, but
they have found a relief valvein the international markets.
(45:21):
And why are American companiesnot able to participate in that
relief valve?
Because there is not federallegalization.
This is just endlesshandicapping.
Come on America, let's cleanthis up.
Ben Larson (45:35):
Okay, so really quick, before we wrap up, I want
to kind of pull on this threada little bit because BAT being
involved and now throughOrganigram being involved in the
hemp beverage space, is therepotential for big tobaccos all
of a sudden to enter the chatand start trying to influence
things?
Because right now the fear fora lot of like camp operators is
(45:58):
big, out taking over doing force, like three-tier system, all
this kind of stuff.
But you know there's also likeconvenience stores and the
convenience store lobby isreally big and they want a piece
of it and so like they're kindof in the conversation as well.
Would be really interesting tosee like big tobacco team up
with the convenience store lobbyand all of a sudden they're
(46:18):
going head to head with thealcohol lobby and you know we're
just here in the middle well, Ithink what's most interesting
tobacco is at the table, uh, buthas is at the table much more
quietly.
AnnaRae Grabstein (46:30):
And what has happened in the past 12 months,
and even more just in the pastsix months, is the alcohol has
really come out of the closetand hasn't isn't at the table
quietly anymore, like there'sactually policy positions and
and direct asks to policymakers,and that is what isn't as clear
for tobacco.
Tobacco is not grabbing armswith cannabis companies or hemp
(46:55):
companies and advocating forcertain positions in a public
way, but I think it's stillhappening.
I think that there is such abad perception of tobacco
companies different than alcoholcompanies that cannabis
companies don't generally wantto be associated with tobacco
companies publicly.
(47:15):
Whereas the beverage space hasseemingly welcomed the alcohol
partners in with open arms-ish.
Ben Larson (47:21):
Yes and no.
Yeah, there's a lot of politics.
I mean in general, yes,especially from the brand side.
But, as you know, in theregulated California market, if
you're talking about retailers,the narrative and perspective is
very different than if you'retalking about brands.
Right, and as we kind of reachthese decision points of access
and regulation, I think we'regoing to see a lot of like
(47:44):
divergence when it comes to whatwe quote, unquote, want, right,
yeah, such as the world we live.
AnnaRae Grabstein (47:54):
Well, I think that you should do the last
call today, ben.
Last month I did the last call.
So I'm going to put you on thespot here, Ben.
What is your final messagetoday for our listeners?
It's time for the last call.
Ben Larson (48:10):
Just in the vein of everything that we're talking
about.
I'm thinking about because Ijust booked my flight today
mid-May, I think.
It's like the 13th, 14th and15th NCIA is doing lobby days.
If you're anywhere in or aroundDC or you can be there, come
join us.
It's important that we havethese conversations, that we get
a pulse of what's going on onthe hill and what people are
(48:31):
talking about, what they know,and on average, every 18 months
you're dealing with a new teamanyway, so the work is never
done.
Every conversation is importantand come join me.
That's my last call.
AnnaRae Grabstein (48:45):
Awesome, well , I guess I could read us out,
since you did the last call.
That would be wonderful,awesome, well, thanks everyone
for listening today.
Keep engaging with us.
Thank you to our teams atVertosa and Wolfmeyer and to our
amazing producer, eric Rossetti.
We hope that if you enjoyedthis episode, that you'll drop
(49:05):
us a review on Apple Podcasts orSpotify or YouTube.
Really, wherever you listen, itreally helps people to find our
content and spread the wordfurther.
So just thank you, like,subscribe, share it and, as
always, stay curious, stayinformed and, most importantly,
keep your spirits high.
That's the show.
Ben Larson (49:28):
Bye-bye.
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