May 23, 2025 • 55 mins
Cannabis industry experts discuss the stark contrast between Texas's recent ban on hemp-derived THC products and New York's efforts to strengthen its regulatory framework through a new track and trace program. Mark Hauser shares insights on market maturity, regulatory challenges, and the uncertain future facing both hemp and cannabis businesses.
• Texas just passed SB3, banning hemp THC products despite an estimated $8 billion marketplace
• Lieutenant Governor leveraged teacher wages and school funding to push prohibition against public opinion
• Texas Compassionate Use Program remains woefully inadequate with only about 8,000 patients served statewide
• New York implementing track and trace starting in August to address product diversion concerns
• Industry faces fundamental challenge of parallel regulatory structures for "hemp" and "non-hemp" cannabis
• Successful operators focus on tight margins, compliance excellence, and clear market positioning
• Mark predicts more debt restructuring for cannabis companies and a potential Farm Bill passage
• The cannabis industry may evolve into an "hourglass shape" with large players at top, craft producers at bottom
• Regulatory chaos at state level may be necessary to eventually drive rational federal policy
• Yiddish wisdom: "Trying to understand the cannabis industry logically is like trying to pick up a dead body with cups"
--
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Your hosts are Ben Larson and AnnaRae Grabstein.
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Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
AnnaRae Grabstein (00:00):
This is like a perfect example, I think, of a
few powerful politicians thathave certain positions on what
is right or wrong for theirconstituency getting to choose
when really the people have avery different position.
Ben Larson (00:24):
Hey everybody, welcome to episode 89 of High
Spirits.
I'm Ben Larson and with me, asalways, is Anna Rae Grabstein.
We're recording Thursday, may22nd 2025, and there's been
absolutely no news this week.
Just kidding, we'll get therein just a bit.
We have a great show for youtoday.
Just kidding, I'll get there injust a bit.
(00:46):
We have a great show for youtoday.
We have mark hauser coming on,the purveyor of cannabis musings
, lots of opinions and topicsand we'll cover a bunch.
But before we get there and ray, how you doing I am so good.
AnnaRae Grabstein (00:57):
this recording today is my last stop
before I head out on a cruise tome, mexico, with my dad and my
son and my brother, all of us.
Ben Larson (01:09):
Yeah, I'm really where we're in Mexico, are we
going?
AnnaRae Grabstein (01:14):
We are just going to Ensenada.
It's really so.
My son is calling it a partyboat and my dad is calling it a
booze cruise.
I have not figured out what I'mcalling it yet, probably
neither of those for mesomewhere in the middle.
But we're leaving from SanFrancisco.
It's just a local weekendgetaway.
We'll cruise out under theGolden Gate Bridge during sunset
(01:37):
and just I don't know partakewhatever fun adventures happen
on this floating hotel that willbe careening south through the
Pacific Ocean.
Ben Larson (01:49):
That sounds lovely, and they're right, it is a booze
cruise.
I think I might have been onthat voyage before.
AnnaRae Grabstein (02:00):
I definitely have a cannabis strategy that I
won't be talking about on airbecause I don't want to be
breaking any rules, but my planis to exercise every day, eat
edibles every day, laugh andsmile, and maybe have one or two
deep conversations along theway and read.
(02:22):
I hope no cruise line executivesare watching this show, for
your sake, yeah exactly, andother fun things that happened
outside of cannabis is, um, butcannabis adjacent.
I think everything grateful toadd a sort of cannabis adjacent.
And you know we've got a newmayor in San Francisco, daniel
Lurie, and he's been reallyactive um on social media,
(02:43):
sharing kind of everything thathe's been up to.
And one of the things that he'sannounced over the past few
weeks is that Dead Company,which is sort of the what's
still hanging on in the GratefulDead these days, is doing a
three-day run for their 60thanniversary in Golden Gate Park
in San Francisco in August.
So I signed up for pre-salesfor that as well.
(03:03):
So if anyone wants to comeparty with me in Golden Gate
Park in August, you let me know,because I will be there.
Ben Larson (03:10):
They might have to retitle the name of the brand to
the Grateful, not Dead.
Oh, is that sacrilege?
AnnaRae Grabstein (03:17):
I don't know, but you just have to keep an
open mind about these things.
What's going on in your world,ben?
Just keep an open mind aboutthese things.
Ben Larson (03:24):
What's going on in your world, ben?
Nothing.
It's been a week.
Texas voted on SB3, which we'llget to in a little bit, but
yeah, just business as usual,just active and really doing all
the things.
Funny story though, again,cannabis adjacent, I was
juggling a lot.
Yesterday I had my Vistagemeeting, I had dad duty shortly
(03:45):
thereafter, but I wastryinguggling a lot.
Yesterday I had my Vistagemeeting, I had dad duty shortly
thereafter, but I was trying tosqueeze in some meetings.
And so I was picking upAlistair from school and I was
going to take him to Kung Fu andI hopped on with a new contact
We'll call him Mr Jackson and wewere jamming on the industry
and all the things that layahead and it was a really lovely
conversation.
I was able to transitionalistair to kung fu while having
(04:08):
this call, and then I'm likeall right, I'm just gonna walk
around this neighborhood.
And so I had myself walkingaround you know some nice homes
and in alamo, and talking to mrjackson, and all of a sudden I
look up at the street sign and Iwas at the intersection of
South Jackson Way, north JacksonWay and Jackson Way.
It was a three-way intersectionwhich we'll talk to the civil
(04:32):
engineer about their creativityof street naming.
But I was just like one of thoseserendipitous moments.
I was like broke out inlaughter, had goosebumps.
I'm like, whoa, the universeworks in really strange ways,
and by universe maybe I meansimulation, who knows.
But yeah, that was.
That was my moment of Zenyesterday, while the hearing for
the the Senate Bill three votewas, was it?
AnnaRae Grabstein (04:54):
Yeah, we'll talk all about that and I know
that, with your business beingin both hemp and cannabis, it's
going on in.
Hemp has a big impact on onyour team and clients and things
, so I'm sure you're watching itreally closely, quite closely,
yeah.
Yeah, on on the work front withme.
I'm just plugging along.
It's been busy, but feelinggrateful for all of that and
(05:14):
getting ready for someconferences that are coming up.
Benzinga is is on the is on theticket.
There is a lawyer's event thatI'll be speaking at in Denver,
so, yeah, all those things.
Ben Larson (05:28):
But I think Nothing like surrounding yourself with a
bunch of lawyers.
That sounds like fun.
AnnaRae Grabstein (05:32):
Oh well, we're bringing one on right now.
So we're going to introduceMark and bring him on to talk
through news with us, because heoften remarks on news through
his newsletter Substack CannabisMusings.
Mark Hauser is a widelyrespected voice in cannabis and
he's a local friend also livesin Petaluma.
(05:53):
Like me, he is formerly chairof the cannabis practice at Reed
Smith and he was longtimepersonal deal counsel to
investor Sam Zell at the EquityGroup.
He has overseen billions incapital markets and M&A deals
and currently serves as chief ofstaff at Hardeen, a leading
cannabis dispensary in Vegas,and he teaches law at both
(06:15):
Northwestern and UNLV.
So let's bring Mark on toinclude him in our conversation
today.
Thanks for joining, mark.
Good morning.
Marc Hauser (06:27):
Though you know I'm already thinking of walking
because of Ben's haunt about theGrateful Dead.
I think Jerry Garcia is turningover in his grave from that one
.
AnnaRae Grabstein (06:36):
Well, you've got a Grateful Dead poster in
your background.
Oh yeah, you must be a fan also.
Marc Hauser (06:40):
Oh yeah, there it is.
Oh okay, yeah, he's going tocome back and haunt you for that
.
So yeah, I should have checkedthe wall before I made that joke
.
AnnaRae Grabstein (06:57):
I'm thrilled to be here.
I'm a big fan of the podcastand I'm a big fan of the two of
you.
Oh, thanks, mark.
We like fans Well, so I thinkwe should just jump right into
the news and then we're going tohave a conversation with you
about the industry.
But, ben, will you give us anupdate on what's going on in
Texas and start us off there?
Ben Larson (07:12):
Yeah.
So you know it's been a verybusy legislative session.
Texas was oscillating betweenthis booming hemp industry I
think the Lieutenant Governoridentified it as an $8 billion
marketplace, which would peg itslightly larger than how much
alcohol they sell in the state.
That same Lieutenant Governordecided it was a good idea to
(07:34):
just completely outright baneverything.
He'll argue, it's noteverything.
Cbd isolates and CBG isolatesare still okay, but pretty much
everything else.
And so there was a lot ofefforts over the last several
months to find a middle groundor kill the bill, all of which,
(07:54):
in short, basically failed lastnight.
And what really happened wasthat the lieutenant governor
single-handedly took it uponhimself to leverage teachers and
their wages and a funding billfor the schools in exchange for
a complete ban on THC, againstthe desires of many businesses,
(08:16):
many consumers, many veterans,many patients, did something
that we all generally knowdoesn't work and enforced
prohibition.
And now their pressure releasevow, their moral high ground is
that, oh well, they have teacup,but teacup is woefully
inaccessible.
And say what teacup is?
Sorry, teacup is the TexasCompassionate Use Program.
(08:38):
It's a very limited cannabisprogram.
There's three licensees, Ithink two that are active and
they basically very limited.
I think there's like 8 000patients or something like that
for the entire state of texas.
And now there's a bill on thedocket that hasn't been passed
but would increase this and theysaid this in the hearing last
(09:01):
night by 10x.
Well, what's 10x of theexisting thing?
So it's like, okay, maybe thatopens it up to 80,000 patients
of the state of texas and maybethat creates 10 licensees or 30
licensees like, is that enoughto serve the state of texas?
Probably not, and so are peoplegoing to be able to have access
(09:22):
to to THC?
Yes, they will.
We'll be through teacup, whoknows?
We'll be through the illicitmarket, most likely.
And where's Texas?
Next to Mexico?
So, yeah, bring back theconversations, the border walls
and the cartels and all that.
So yeah, it was a.
It was a busy week.
Last night was was fun.
(09:42):
Last night did start theprevious morning, so there was
an entire day of session wheresb3 being brought to the floor
kept getting postponed, keptgetting postponed.
It was supposed to be 10 then,then 10 am yesterday morning and
then it got postponed all theway till 6 pm.
AnnaRae Grabstein (09:59):
So, as you can imagine, there was a lot of
politicking happening behind thescenes, a lot of adult use, and
we're so so far from that inTexas and there is a tremendous
(10:35):
opportunity to serve consumersin Texas, but it doesn't really
seem like there's anything onthe docket that is going to open
it up in a way that wouldreally do anything other than
create a massive illicitopportunity.
And I think about this, and Ithink about all of the
businesses that started in Texasthat were trying to do the
(10:56):
right thing and that were opento regulations through some type
of legislative fix, and I'm sadfor those entrepreneurs because
it doesn't seem like there'sreally options for them with
this bill.
It does seem like what there isis new options for illicit
cannabis to come into Texas andto serve all these people that
have been participating in thehemp market there.
(11:17):
So I don't know.
I'm sorry for everyone that iswaking up today and wondering
what comes next, because I knowthat there's a lot of that going
on.
What do you think, mark?
Marc Hauser (11:28):
I also before we go .
I should have mentioned this atthe beginning.
This is all my own personalsort of statements.
None of it reflects the opinionof Hardeen and it's not legal
or investment advice.
Look, I mean I agree with youthat it is sad, that you know
people are going to be losingtheir jobs, and you know it's
(11:49):
not the result that peoplewanted.
I think, though, it's a goodexample of how expectations in
this industry are.
Just, you know, continue to beoff base and people not
understanding that what isrational never applies in
cannabis.
(12:10):
And Texas is a funny state in.
It's got kind of a uniquepolitical situation, both with
the way it's lawmaking isstructured, with the power that
the governor, and particularlythe lieutenant governor, have in
that state.
So you know, so it's uniquelysort of structured the way
(12:30):
things play out there, but youknow, at the same time you know
I would counter a lot of thiswith this is all built on a
loophole, and you know you mayget and I'll probably get some
nasty email for calling it aloophole, but it's a loophole
and it's there.
(12:50):
There is risk in building anindustry, an industry based upon
a loophole, particularly onewhere you're asking politicians
to justify allowing psychoactive, psychotropic drugs to be or
sorry, products I should say tobe sold to the public without
(13:14):
regulation or with a certainlevel of regulation.
That doesn't quite sort of meetwhat other products are at.
And it's possible in some statesare continuing to allow it.
But it really shouldn'tsurprise a lot of people that a
lot of states don't want that.
The reason why we're here todayis because Congress hasn't
(13:36):
moved on it, even though it'syou know, it's known about this
problem for a while, becauseCongress can't do anything and
we kind of all agree on that.
And it's only been untilrecently that states are, you
know that states are reallybeing coming aware of this.
I don't want to call it aproblem because that's motive.
Anyway.
AnnaRae Grabstein (13:55):
Let's double click on this.
Yeah, I'm going to interrupt youfor a second and just say that
what you're talking about is thepower of politicians versus the
will of the people, and thisseems to be the sort of theme
across cannabis policyconstantly and this sort of
recovery that the industry istrying to create in the hearts
(14:17):
and minds of politicians who areholding on to reefer madness
ideology from the past, becausethe American people support
adult use legalization, theysupport medical cannabis, they
support access to cannabinoidsbroadly, and I think that the
American consumer doesn't evenreally have an opinion on hemp
(14:41):
versus cannabis, and they don'tneed to.
That is not the calling of theAmerican consumer to understand
the complexity of the lawsrelated to hemp and cannabis.
My own husband can't wrap hishead around it and I work with
this space.
This is a perfect example, Ithink, of a few powerful
(15:02):
politicians that have certainpositions on what is right or
wrong for their constituency.
Getting to choose when reallythe people have a very different
position, and I think thatthat's what Texans want is
access.
There's a lot of people andbusinesses that are enjoying
access to cannabis and nowthey're not going to have it
(15:24):
anymore.
Marc Hauser (15:26):
Yeah, but for better or for worse.
I mean, that's the way Americaworks.
I mean, most people hatedaylight savings time but we
still seem to have it becausethe farmer lobby wants it.
You know, I mean and I'm nottrying to be flippant, but I
mean, you know you can make thatcomplaint about a lot of things
.
It's unfortunate because it isindicative of where cannabis is
(15:48):
at and how.
For years we've been expecting,you know, change.
We've been expecting Congressto do the right thing, you know
the DEA to sort of come to itssenses about the sensibility of
all of this, the presidents tomake you know change, but that
hasn't happened because there'sno political.
You know there's, the politicalwill isn't there and it's such
(16:11):
a it's such a hot button issue,but it's also a low priority hot
button issue.
I'm sorry, ben, I cut you offto make my little rant there.
Ben Larson (16:20):
well, no, it's.
It's kind of funny, you know,reminds me of this chris rock
quote where he was talking aboutwhen, like sigfried and roy got
attacked by their tiger and hewas like that tiger didn't go
crazy, that tiger went tigertexas just went texas, like.
I remember when, like, hemp thcstarted selling in texas and I
was just so dumbfounded I waslike this is happening in texas,
(16:43):
te Texas hates cannabis and itjust kind of proliferated and I
never quite wrapped my headaround why it was proliferating
beyond this like two-year cycle.
But they never like took itinto session and I believe it
was Dan Patrick that actuallykilled it last time around.
So maybe it was just like notas important as this time, and
(17:07):
yeah, but I think it's alsoimportant.
It's.
It's it's not done, done right,like I.
I know greg abbott hasn't provento have like a huge against the
lieutenant governor, but likemaybe if he receives thousands
of letters from veterans andconsumers and business owners in
the state that maybe he'llconsider vetoing this bill or
(17:27):
you know, lawsuits, lawsuitswill certainly drop on the
government's desk and that couldtie things up in potential like
restraining orders and whatnot,and so what this all kind of
like generally leads to is whatdo we want to see and like?
How do we get there?
Because what we lack in thisindustry is a singular voice and
(17:49):
we can't even decide what thatvoice is or where it needs to be
or where it needs to align andlike how do we make it big
enough and strong enough tocompete with these other lobbies
that are that are in themarketplace?
Like you know, we do have aneffort where we've been aligning
with some, some of the alcoholvoices, and that has been like
(18:11):
oil and water with a lot of thehemp operators.
They don't want to see productsgo to to alcohol.
You know, so to speak, theydon't want to see, see the
industry sold out to alcohol.
But like, how are we going toget this done if we're just
constantly fragmented on allfronts?
This isn't just texas, this isat the federal level.
This, this is in every statelevel.
Like people are constantlybeing surprised by the laws that
(18:32):
are being passed in Alabama andTennessee and you name it.
I'm kind of at a loss and Idon't know if there's a question
coming here, and so maybe I'lljust kick it back over to Mark
and see if he can muse on it.
Marc Hauser (18:43):
No, I think you're right and I think you know it's
not just with respect to hemp.
I mean the Right and I thinkyou know it's not just with
respect to hemp, I mean thenon-hemp side of things.
You know what I mean we weretalking about this earlier is
there's no good, there's no goodwords.
Yet we got to come up withbetter vocabulary to distinguish
hemp and non-hemp cannabis.
You know, talking aboutconfusion, you know, but the
(19:06):
non-hemp lobbies, I mean, havebeen, have had that same problem
for years.
You know we have a lot ofdifferent.
A number has been focused on alot of random things instead of
(19:32):
focusing all of its firepower onchanging the narrative and
getting legalization done.
It's the only thing that'sgoing to fix the non-hemp
industry is legalization period.
All these other changes, safebanking, safer banking, all this
other stuff it's all marginal.
And, ben, you're saying this onthe hemp side.
(19:53):
I mean, I think it's the samething.
You've got differentconstituencies trying to push
for different things instead ofall aligning on one message.
Ben Larson (20:04):
But to Anna Rae's point, are we still definitively
have sides?
After all, this Hemp is verydivided within hemp right, there
is material hemp, industrialhemp, and I think they deserve
their own definition andcategory and I think that's
coming from what I've beenhearing at the federal level.
But then there's all thecannabinoids coming from hemp
(20:25):
and that is becoming veryclosely associated with cannabis
, to the point where I watched alot of the rhetoric being
delivered last night and it was.
There's this one story wherethis woman God bless her is like
crying about her daughter whowent through like cannabis
hyperemesis or was it CHS?
But she was describing heradult daughter that was in a
(20:48):
legal state of nevada consumingcannabis.
I'm like the lines are becomingvery blurred well, it's.
AnnaRae Grabstein (20:54):
It's because it's because it's like, what are
we talking about?
Are we centering on consumer?
Are we centering on regulatorynavigation from a business
perspective and what you'reallowed to do from a
go-to-market market by market,like legal allowance?
So people, yes, they don't seethe difference.
They're going to ingest a5-milligram edible, thc edible,
(21:17):
and whether it comes from hempor it comes from cannabis,
likely their experience is goingto be fairly similar and how it
gets to them and what the legalpathway is through the
regulatory and legal kind ofmesses that exist for businesses
and manufacturers are uniquedepending on where that consumer
is standing and living.
(21:39):
Interestingly, I think, likepivoting to two of the larger
legal cannabis markets.
There are, I think, twodifferent, pretty important
conversations going on in bothCalifornia and New York that are
worth talking about.
New York has finally announcedthat it's going to be launching
its track and trace program andit's interesting most states,
(22:01):
when they launch either theirmedical program or their adult
use program, the track and traceprogram launches at the same
time.
And New York took a differentapproach and launched the market
without launching its track andtrace program, with a stated
intent that it would do so at alater date and they signed a
contract with Biotrack, whichalso was a divergence from the
(22:25):
norm, which is most of thestates have gone the way of
metric, from the norm, which ismost of the states have gone the
way of metric, and they finally, after a couple years of having
this program in place, haveannounced that in August is when
the first track and tracerequirements will begin for
cultivators, and then they'regoing to, month after month,
roll it out for different partsof the supply chain.
(22:46):
September is when themanufacturers and, I think,
distributors will need to comeonline and then, right after
that, retailers will follow.
This is on the back of massivequestions about product coming
into New York from other marketsand potentially it not being
caught because there hasn't beentrack and trace in place.
(23:09):
So it's been easy for folks toimport and invert product from
other markets.
So I think that this is newsbecause it could have a domino
effect on other markets.
Apparently, oklahoma andCalifornia are the places that
most people are saying that theextra product has been showing
(23:31):
up in New York.
I don't have any insideinformation to say who's doing
this, but it's possible thattrack and trace could make a big
difference.
Ben Larson (23:39):
I think diversion is happening in many places.
I've heard of Michigan productsshowing up outside of Michigan.
I just don't think it's goingto stop.
It's one marketplace, whetherit's the illicit market,
cannabis or hemp, people aregoing to get the product and
they're going to get, hopefully,quality product, but cheaper
product when they can.
And great that New York's doingthis Biotrack, sure, whatever.
(24:03):
I also heard that theyembargoed a bunch of Stizzy
product, but yeah, I don't know.
I'm curious, mark what are yourthoughts on how the markets are
evolving, and are any of themreaching a more viable state
than the other?
Marc Hauser (24:20):
You mean California versus New York?
Sure, let's start there, we'reall sitting in California, which
is not helping, which is aboutas non-viable as it gets.
California is about, you know,it's about as mature a market as
it can get, both you know bothfrom a consumer perspective as
(24:41):
well as a, you know, thelicensed perspective.
It's been.
What since 2016 is when wepassed adult use.
It's when we passed the law andthen it launched 2018.
Launched 2018.
It's about as mature as it getsand I think it's really showing
its cracks.
There are so few companies thatare actually thriving here.
(25:05):
That happens in a lot of stateswhere that sort of reach
maturity, where you see thiscurve in most states, where you
get incredible demands to startand then you have too much
cultivation and then there's toomuch product.
Then eventually it flattens outbecause the consumers that are
(25:26):
in that state who are going tobe buying product from licensed
dispensaries are fully beingsatisfied, and so you kind of
reach this stasis and basicallya flattening to slight downturn
of the curve, and that seems tokeep happening in every state.
New York is definitely on theupswing.
I mean, you know I don't needto repeat what everybody knows
(25:48):
about the failures of the launchthere, which you know it seems
like they are it's gettingbetter, you know, with respect
to crackdowns of illicit,unlicensed dispensaries,
certainly in Manhattan, but youknow, from what I understand,
(26:08):
it's still a problem.
Going back to what Anna Rae wastalking about is about sort of
products showing up in thatstate.
I think that you're probablygoing to see less of it because
of track and trace, because it'sharder then to get those
products into licenseddispensaries and as the state
becomes more successful atshutting down unlicensed
(26:31):
dispensaries, there's going tobe fewer places for those
products to go.
AnnaRae Grabstein (26:35):
They can all go to Texas.
Now, just as a side note, theproducts can go to Texas.
So New York will turn on trackand trace.
It will close off the importand now there's a new
opportunity for everybody.
Yeah, that is sarcastic.
Marc Hauser (26:48):
It blows off the import and now there's a new
opportunity for everybody.
AnnaRae Grabstein (26:50):
Yeah, Well right, that is sarcastic.
I don't know if you can alltell in my voice but, also maybe
realistic and truth telling.
Marc Hauser (26:56):
Well, yeah, that stuff's going to end up
somewhere.
You know it's going to stillend up within the unlicensed
market.
What New York is doing willlikely have the effect of
reducing acts.
You know it won't be.
It'll reduce its prevalence inlicensed dispensaries and with
hopefully fewer unlicenseddispensaries in New York.
(27:18):
But yeah, it'll just getdiverted or I shudder to say,
inverted I don't like that terminto the unlicensed market, sure
, into, you know, into theunlicensed market, sure.
So yeah, I mean it's, but yeah,I mean, if you walked into a
(27:38):
dispensary two years ago in NewYork City which were everywhere
you could see, you know, brandedproducts.
I don't want to name names, butyou could see branded products
from all across the country andyou know, it wasn't totally
clear if those were actually.
You know, were those authenticproducts from another state or
were they?
You know, were they just sortof scammed with that, you know,
with that brand's name?
It wasn't totally clear.
But uh, you know, anecdotally,from what you heard, it was real
(28:02):
stuff just being brought infrom the other states.
Um, it was a huge problem sowe're.
Ben Larson (28:08):
we're in an interesting place in the
industry, right, the thecannabis industry is is not
super stoked with the realitythat they're getting to live in
most cases.
There's some states that arestill in their first 18 months,
and so they're enjoying it hellonew jersey.
But then there's there's whatthe hemp industry is
(28:28):
experiencing and and they'rethey're feeling like things are
being taken away from them.
And you know, I know, a lot ofcannabis operators are looking
at what's happening in hemp andthey would just love a little
bit of taste of that.
And you know, many of some ofthe brands are actually trying
that.
Some of the MSOs are trying it,and so I guess let me take this
more to a to in a personaldirection.
(28:49):
Mark, You've been doing thissince 2018.
So you've been through a lot ofthe ups and downs 17, 17.
2017.
Sorry, I didn't mean thatthat's seven years.
Yeah, what keeps you enthused,like what are some of the bright
spots for you?
What has you excited looking atthe remainder of the year?
Marc Hauser (29:10):
Oh, I mean there, what gets me excited?
There's nothing that has meexcited right now.
Ben Larson (29:19):
And there are no bright spots.
Uh, this is called high spirits.
Marc Hauser (29:22):
There you go Um, I'm being slightly flippant, but
not totally, I mean it's.
I'm being slightly flippant,but not totally, I mean it's.
You know, I, I look, I lovethis industry.
It's.
It's rare that you get to work,you know, you get to focus your
career on building somethingfrom scratch, uh, and you know,
and helping people and workingwith and being one of the people
(29:45):
to to help sort of create abrand new industry, especially
an industry that you know thatultimately is helping people.
You know, I used to poo-poo theidea that that cannabis is
medicine, but I, you know, I, II've come to really understand
that, that you can see that you,you really are helping people
with we are, you know, and whatwe're doing, and that's, that's
(30:07):
great, and's great.
And this industry is sofascinating from an intellectual
perspective because it's justso hard and so much of it
doesn't make any sense.
Trying to navigate an industrythat's both illegal and highly
regulated at the same time isreally hard and it creates a lot
(30:28):
of weird problems, both, youknow, academic and sort of
existential, as well as thepractical problems of operating
your business.
And how do you navigate that?
I mean, that's it's, it's funand it's interesting that way.
But you know, but at the sametime I remain fairly pessimistic
about it, and you know.
So I go back to, like I, youknow, there aren't many bright
(30:50):
spots on the horizon,unfortunately.
You know, particularly for, youknow, non-hemp cannabis.
You know it's not lookingbright and you know the few sort
of lights we saw on the horizonwith rescheduling which would
have, you know, eased thefinancial burden on the industry
to a certain extent.
It would have, you know, giventhe a bit more of a vibe, sort
(31:13):
of positive vibe to the industry.
Is is kind of, you know, fading, and you know, and, and the
chances for any sort of realpolitical action at the federal
level these days are, you know,I think, zero plus the, the, the
competition from its, you know,its its sibling hemp, remains a
(31:35):
problem for non-hem cannabis.
And then I, you know it's, it's, they're kind of like
stepbrothers in a way, uh, wheretheir family, but they, they,
they, they, uh, you know theybicker a lot, let's just put it
that way.
You know, and the, and youstill, you know what other
industry has has an illicitmarket that's bigger than it,
(31:56):
that continues to thrive.
I am serious when I don'thonestly see any bright spots.
You keep working in it everyday.
AnnaRae Grabstein (32:05):
I feel like what what you're really talking
about is the difference betweenlike transparency, honesty, like
not being in denial aboutreality, and spin, and so you're
talking about like balancingrealism with actual, like, I
guess, adaptability in the faceof challenge.
(32:26):
It's a good way to put itBecause I know you.
I know that you are prettyresolutely focused on your work
in the industry.
You get up every morning andyou think about what's happening
.
You are working on compromisein all kinds of ways and you're
someone that has a unique way ofthinking about creating
consensus and compromise.
So I want to hear the honesttruth of what you think
(32:51):
separates those that will fallvictim to the crap that cannabis
is facing versus the people andthe businesses that you think
are going to make it throughthis.
Because we know cannabisconsumers aren't going anywhere.
It's just, yes, it's a toughbusiness environment, but what?
What separates the goodcompanies and the good leaders
(33:14):
from the ones that are not goingto make it through this climate
?
Marc Hauser (33:17):
No, it's a.
It's a, it's a good point and I, you know, I I am, I'm
optimistic about the industry inthe long run and there are good
operators out there and thereare people who are succeeding in
this.
There are well-run businessesand there's a lot of great
people trying to make it work inthe industry.
(33:40):
You know, in the face of, youknow of just rampant, you know
pessimism and terrible overall.
You know business environmentfor the industry.
You know, and I think whatdistinguishes those people you
know from a business perspectiveare just our tightness in the
(34:01):
way they run their business, anincredible attention to margin,
treating their people right.
In making this business work,compliance is 98% of the game
and I think, understanding whatyou want to be when you grow up,
I've always felt thateventually this industry will be
(34:22):
hourglass shaped, similar alittle bit to the craft beer
industry, or sorry, the beerindustry, where you've got, you
know, a handful of players atthe top who have a lot of the
volume.
You've got a lot of smallplayers at the bottom who are
local or hyper-local, who aremore focused on the connoisseur
(34:45):
or, for lack of a word, snob,and you've got and I say that
lovingly and you know, and notmuch in the middle.
To me that shows that there'sroom in cannabis for both.
There's room for big players ofa national presence and a lot
of you know who have a lot and alot of resources to you know to
cater to a broad consumer base.
(35:06):
But without you know a ton oftypicity within their product,
you've got a lot of small.
You know local craft producerswho are you know, who are out
there for the weed snob, who youknow, who are producing very
sort of highly crafted products,and you know, and so to me
(35:28):
success is you know, know, ifyou're not going to be the big
one and not everybody can be inthe top how do you find your
place within, within that smallniche?
What makes you different?
And it's really hard, you knowit's a lot, it's easy to say
that, but it's really hard.
In an industry where you've gota lot of brands a a lot of
(35:49):
product, it's not that easy todistinguish yourself and
everybody's competing for shelfspace and it's hard to build a
brand because advertising isreally tough, if not almost
non-existent, and so you knowit's not that different from
other CPG.
But to me that is wherecompanies succeed and don't
(36:13):
succeed is what really makesthem different in an industry
where it's hard to differentiateyourself.
Ben Larson (36:21):
Yeah, I want to bring it back a little bit to
the regulatory convergence,because you say hemp and
non-hempemp and it feels alittle bit like kind of stuck
right.
We're stuck with these twodifferent paradigms that are
running in parallel.
And in my world, you know, Ithink a lot about the consumer,
(36:42):
who we've already identified,really starting to see this as
just, you know, where can I getthe cannabinoids that I want?
And we work with a lot ofbeverage brands who, as a
product category, have been themost fluid across the two
different regulatory structures.
You know, you see a lot ofbrands operating in both.
And then we have the MSOs, youknow, kind of jumping in, like I
(37:04):
said, doing their thing.
And so, as we think about thefuture, is it even a potential
that we see regulatoryconvergence like?
I have my thoughts and I'mqueuing this up for you, mark,
and, and I think something thatcame up recently really makes it
poignant for us here incalifornia is there's this uh,
what's it called?
(37:24):
The like the rethink cannabisum movement, where it's like
redefined a new voter initiativefor the state of california to
replace prop 64.
Now, if we can't get it.
That's what it's called cannabisaligned, sorry yeah and so if
we could get past the whole,like how do we can we, you know,
(37:44):
raise 40 million dollars orwhatever it takes to kind of
push something like this across?
Like how would we actually doit?
Would we get hemp and cannabisoperators in the same room?
And like, would we startlooking at it as regulatory
convergence?
Could we set aside all thedifferent capitalistic
components to really think about, like, what is the the vision
(38:07):
of the future?
Like how do we get cannabis orcannabis in all its forms to
people?
And, and like I and I wassaying this to nina parks like
on linkedin, it's like I reallywant to ensure that we have all
these voices equally represented.
When we have this conversationit always comes down to is like,
how do we make decisions withall those like diverse
(38:30):
perspectives?
Marc Hauser (38:30):
because, as we've seen in california, you can have
some very powerful voicesrepresenting just a few
operators yeah, it's a greatquestion, which I think the
answer is a lot harder thanpeople make it out to be.
You know, I mean one of mybeefs with the rhetoric from the
(38:52):
hemp side of things is when youknow the argument that let's
just all work.
You know let's just all worktogether to figure this out.
You know that's easy to say butI don't.
You know it's rarely explainedor articulated what that means,
because a lot of the you know alot of the results is only
(39:15):
really going to favor the hempside of things and because you
know how do you reconcile and Idon't mean this in an
antagonistic way, I mean this inlike a, in an academic and sort
of like trying to think thisthrough what does that really
look like?
Because if you've got, you knowif the point of hemp that might
(39:38):
be the wrong way to put it.
But the point of hemp is thatit's a federally legal product
and you know, with everythingthat's sort of wrapped up in
that and putting aside, you know, fda regulations and the food,
drug and cosmetic, that, puttingall that aside it's it's a
let's just for the argument.
It's a legal product, federallylegal product, and so that
(40:00):
means that you know so does.
But then you've got non-hempthat has, you know, by state law
, has to go through the fulltrack and trace system and is
subject to 280E and it can onlybe sold in dispensaries,
licensed dispensaries.
You know, I don't know how youcan feasibly reconcile those two
(40:21):
.
Ben Larson (40:22):
So I mean we have examples right, or at least
examples trying, and Minnesota'skind of the hallmark of the
kind of bifurcated market.
But one way to consider it isyou have the cannabis
marketplace where people areshopping for cannabis and
cannabis alternatives, and thenyou have the low-d dose hemp
(40:42):
products that are in themainstream marketplace where
they might be perceived asalternatives to other products.
And I'm going to always speakfrom the beverage perspective,
right, like you go into a baryou don't want an alcoholic
drink, but you'll take a hempbeverage drink and it's low dose
.
It's not a hundred milligramdrink that you'll find in
dispensary beverage drink andit's low dose.
(41:03):
It's not 100 milligram drinkthat you'll find in dispensary.
But it creates an opportunityfor general access and
normalization of cannabinoids toconsumers and, like that, could
theoretically increase thewhole, the whole pie for
everyone and that's a fair point, and before mark, before you,
before you respond, ben, whatyou're talking about is how we
(41:24):
get there.
AnnaRae Grabstein (41:25):
I think Mark is talking about the challenges.
But, mark, when you answer, youhave a lot of perspectives
about how to build consensus,because you have been getting
deals across the finish line fora long time, for a long time
and let's say this is the deal.
This is like the biggest dealthat there is, for cannabis is
(41:46):
like how we reconcile this.
You know that not everyone'sgoing to win, right, there will
be winners and losers in thisdeal, right?
Like, oh, how do you geteverybody together and get a
deal across the table?
Marc Hauser (41:58):
Yeah, I mean, I don't get paid enough for that.
I, no, look, I, you know, Imean, ben, I take your point, I,
it is fair, and I think thatthat's where you know you.
You have to distinguish formfactors, um, and I think what
I'm getting at maybe more has todo with you know, as you're
(42:21):
distinguishing it betweenbeverage and everything else.
Beverage through dispensarieshas always been a very small
part of the market because it'shard to distribute.
It's hard for cannabisdistributors to distribute and
dispensaries don't have a ton ofshelf space or space to store
(42:42):
it.
Distributors to distribute anddispensaries don't have a ton of
shelf space and so or you knowspace to store it, whereas it is
.
It is much more natural for youknow the, the alcohol
distribution system and you know, and all the mishegas that's,
that's wrapped up in that.
But you know, so I, you know,to me maybe that's where the
resolution comes out Now.
I mean, minnesota is a funnyplace too, because you know they
(43:10):
, they also, their law is inplace because of of a you know a
reported mistake by thelegislature, though I've also
heard that maybe it reallywasn't a mistake, you know.
So that that's, you know,that's got.
That's funny in and of itself.
Ben Larson (43:21):
I think it was.
I think it was very deliberate.
It just happened to be anoversight by certain yes voters
yeah, yeah, yeah, it was.
Marc Hauser (43:28):
It was a mistake, but not really a mistake.
You know it's which is nuts, butit's um, yeah, I mean me, you
know I, and to iterate I meanfigure, to your point, I mean to
you know, maybe that's wherethe middle ground is found,
where you know you, you, youhave, you are allowing certain,
you know certain beverages,beverages with you know that are
(43:50):
that meet certain standards youknow and are properly licensed
through.
You know, through a statesystem, that are sold through
you know a certain licensesystem.
I mean maybe it's the alcoholsystem, I don't know that you
know a certain license system.
I mean maybe it's the alcoholsystem, I don't know that you
know.
Maybe that's the middle ground.
Whereas, and then you knowreforming and figuring out, you
(44:11):
know a flower and all of thatneeds to remain within the you
know the license system.
You know there, because thereisn't as much to me the the
threat, because there isn't asmuch to me the threat, if that's
the right word for it, tolicensed non-hem cannabis is
more from the hemp flower andhemp pre-rolls and all of that
(44:37):
it's less so from beverage.
AnnaRae Grabstein (44:56):
And so maybe that's where it comes out.
You know, and as we talk aboutbeverage, we're talking about,
you know, thc, hemp, derived THCbeverage.
You know, the whole sort of CBDis that I came away from that
with.
Is that remembrance of how faststaff turns over in DC and how
fast the staff needs toconstantly be reeducated about
what these issues are.
(45:17):
And kind of all the meat thatmakes the sausage, kind of all
the meat that makes the sausage.
And it occurs to me that thisis just so nuanced that it's
just so complicated forlawmakers who don't spend their
days like we do in this sausagemaking to understand.
And how we explain it and howwe get them to understand is so
(45:41):
important.
Ben Larson (45:42):
Well, my perspective is that how we explain it and
how we get them to understand isso important.
Well, my perspective is thatit's kind of like organized
chaos, right, like everythingthat's happening across the
states between cannabis and hempis it's a big experimental
testing ground for what needs tohappen at the federal level and
Congress is designed to moveslowly, like this has been said
(46:02):
to me every time I've been onthe hill.
Like 15 years is like thegeneral cycle that takes to like
really get something normalizedand passed, and you might argue
we've been at this for morethan 15 years, uh, but I mean,
it's changed.
It's changed so rapidly, right.
But what I do recognizehappening is the regulators have
(46:24):
been everything that's going onin all these different markets
and they're talking, and they'retalking to the legislators, and
what we start seeing at thefederal level is this
understanding that's like, okay,you have hemp and you have
cannabis, and you have hempthat's for industrial, and then
you have hemp that's destinedfor cannabinoid extraction, and
then we have the FDCNA, likeMark Mark identified right, and
(46:45):
so like the FDCNA doesn't reallyhave a definition for
cannabinoids, and so what weneed to make sure happens in the
FDCNA is that we get acannabinoid section, not a hemp
section, not a cannabis section,a cannabinoid section and like
this is how we start to driveregulatory convergence and in
the meantime it's going to justbe pure fucking chaos, like at
(47:07):
the state level, uh, until weget clarity.
But yeah, like all this chaos iswhat's necessary to have a
rational discussion at thefederal level.
So you know, really high level,I'm talking probably a hundred
thousand feet instead of 30,000feet.
Like this is all like necessaryfor us to rewrite like the
(47:28):
century of of bad legislationthat's been written.
But it's going to be painfulfor a lot of operators, you know
, mainly dispensary owners, Ithink.
Marc Hauser (47:38):
I, I think that's spot on, you know, I think that
the industry has been overlyoptimistic.
That would just happen that theregulators and the state
governments and the federalgovernment were going to see the
light, naturally, becausethat's what's rational and
that's what's logical.
And we kind of expected I mean,how many times as have did we
(48:06):
hear oh, safe is going to saferis going to pass tomorrow,
that's not a problem.
And I think that you know thereis a.
I think most of the industrynow realizes the reality that
state, you know, the state andfederal governments are not just
going to hand this to us on asilver platter.
And we, you know, we need to bemuch more proactive in
rewriting our own narrative asan industry.
(48:28):
And I mean that both in industry, both non-hemp and hemp.
You know how do we?
You know it's it's changing theminds of that sliver of
politicians at the federal levelwho are, you know, who aren't
yet willing to risk thepolitical capital to make change
.
And at the state level, it's,you know, within each state,
(48:51):
it's getting the regulators well, not the regulators, the
legislators to recognize that.
You know, the way that theselaws have been drafted have been
basically to isolate cannabisand not really to you know to
give it the real tools it needsto be a viable, you know
(49:12):
industry, a legitimate industrythat it is and you know how you
know.
So it's refocusing our effortsand changing those narratives
about getting politicians mindschanged oh, a lot here.
AnnaRae Grabstein (49:30):
A lot here.
Mark, do you have anypredictions over what you think
is going to be happening overthe next six to 12 months in
cannabis?
There's so much discussionaround consolidation and
restructuring and debt cliffsthat are coming with large
companies.
What do you think is happeningin the next six to 12?
Marc Hauser (49:56):
Well, I think we will finally see a farm bill,
because I have no basis for this, you know, I have no inside
information.
I just think that it's beenlong enough and with you know,
with Republicans controllingboth both houses and the White
House, there will probably bemore of an effort to finally get
(50:17):
that done.
So you know where that'll panout.
I have no idea when it comes tohemp, but I do think that we
will finally see some sort ofresolution on that.
I don't think we're going tosee safer pasts still.
I think that we are going tosee more restructurings of debt
at these big companies andsmaller companies, with dealing
(50:41):
with this upcoming debt cliffthat's coming, you know, in the
next 12 to 18 months.
I think it's going to be reallyhard.
I don't see a lot of change, alot of substantial change within
the industry.
I think it's just going to be alot of the same.
And I do see, though I do see alot of your listeners who
aren't yet subscribed going tocannabismusings, subsub stackcom
(51:03):
and subscribing for free to mynewsletter, so that I do see
well, mark, I really appreciateyou kind of uh jumping on with
us and allowing us to navigatethese different uh, sticky
conversations I love talkingabout this stuff and I
appreciate the opportunity andto talk to smart people about
(51:25):
this stuff.
Ben Larson (51:25):
So yeah, well, as we head out, I want to give you an
opportunity to take the mic andand give us one last shout.
So we call this our last call.
It's your opportunity to give acall to action, a plug, shout
out to someone, anythingcannabis related or otherwise.
So, mark hauser, what's yourlast call?
Marc Hauser (51:45):
um, you know, there is a, there's a yiddish saying
um I'm gonna probablymispronounce it because, as much
as I know, yiddish by mypronunciation is terrible, but
it's hyphen b as a, a point, andbonkus, which means trying to
pick up a dead body with, withcups, which is which was cupping
, which was they, you know,years ago.
(52:07):
They, as a medical procedure,they take, you know, hot, like
like glasses or like a glass,and put it on your, on your skin
, to try to suck out the badvapors and humors and stuff like
that.
And so it's, there's something,is this?
The saying is it's, it'spointless trying to pick up a
(52:31):
dead body with, with, with, withcups.
And I, you know it's, it's oneof my favorite Yiddish sayings
because it's just kind ofnonsensical and weird.
But the you know, to me itencapsulates this industry is
that trying to really understandit is is almost pointless and
instead you just need, you justneed to do it, you just need to
(52:52):
embrace it, you need to justnavigate it as best you can, but
, but really trying to sort ofunderstand it from a logical and
perspective, it's just notworth it.
And I say that lovingly.
I say, and it's what I loveabout it is it's.
You know Yiddish is such aloving you know, at the same
time loving and bitter language,and so you know, so it
(53:16):
encapsulates my feelings aboutthis space.
AnnaRae Grabstein (53:19):
This concept of organized chaos that we've
been kind of dancing around.
This episode is hilarious, andespecially in light of you guys
kind of making fun of me forbeing excited about going to the
60,000 person dead in companyshow in San Francisco in August.
It sounds kind of the samething Like we just need to
embrace the chaos and the crazy.
(53:39):
It sounds kind of the samething Like we just need to
embrace the chaos and the crazy.
Go for it, Let loose man.
Marc Hauser (53:45):
A little bit, a little bit, and use the porta
potties.
Yeah, oh God.
Ben Larson (53:50):
Yeah, well, this is like you were just asking me at
the beginning of the show.
It's like, how's the week been?
I'm like it could I could sayit was devastating, uh, but
really it's expected in in somesort of way.
It's just like it's just thechaos that we get to live in.
Yeah, in general, like we canall look back and say it's like
still kind of up and to theright, it's just a lot more
(54:11):
volatile and and crazy than thanwe ever expected.
But yeah mark really appreciateyour time.
Thank you, so so much.
Thank you.
We'll talk to you soon.
Alright, what do you thinkeverybody?
Big news week.
A little bit of a deep divethere with Mark.
(54:33):
Hope you liked it.
Please like, subscribe, share,do all the things.
Thank you to our teams atVirtosa and Wolfmeyer For
keeping things going and, ofcourse, our incredible producer,
eric Rossetti.
If you enjoyed this episode,please drop us a review, comment
on our LinkedIn.
Wherever you you find us, asalways, folks stay curious, stay
(54:57):
informed and keep your spiritshigh until next time.
That's the show.
This is like a perfect example, I think, of a
few powerful politicians thathave certain positions on what
is right or wrong for theirconstituency getting to choose
when really the people have avery different position.
Ben Larson (00:24):
Hey everybody, welcome to episode 89 of High
Spirits.
I'm Ben Larson and with me, asalways, is Anna Rae Grabstein.
We're recording Thursday, may22nd 2025, and there's been
absolutely no news this week.
Just kidding, we'll get therein just a bit.
We have a great show for youtoday.
Just kidding, I'll get there injust a bit.
(00:46):
We have a great show for youtoday.
We have mark hauser coming on,the purveyor of cannabis musings
, lots of opinions and topicsand we'll cover a bunch.
But before we get there and ray, how you doing I am so good.
AnnaRae Grabstein (00:57):
this recording today is my last stop
before I head out on a cruise tome, mexico, with my dad and my
son and my brother, all of us.
Ben Larson (01:09):
Yeah, I'm really where we're in Mexico, are we
going?
AnnaRae Grabstein (01:14):
We are just going to Ensenada.
It's really so.
My son is calling it a partyboat and my dad is calling it a
booze cruise.
I have not figured out what I'mcalling it yet, probably
neither of those for mesomewhere in the middle.
But we're leaving from SanFrancisco.
It's just a local weekendgetaway.
We'll cruise out under theGolden Gate Bridge during sunset
(01:37):
and just I don't know partakewhatever fun adventures happen
on this floating hotel that willbe careening south through the
Pacific Ocean.
Ben Larson (01:49):
That sounds lovely, and they're right, it is a booze
cruise.
I think I might have been onthat voyage before.
AnnaRae Grabstein (02:00):
I definitely have a cannabis strategy that I
won't be talking about on airbecause I don't want to be
breaking any rules, but my planis to exercise every day, eat
edibles every day, laugh andsmile, and maybe have one or two
deep conversations along theway and read.
(02:22):
I hope no cruise line executivesare watching this show, for
your sake, yeah exactly, andother fun things that happened
outside of cannabis is, um, butcannabis adjacent.
I think everything grateful toadd a sort of cannabis adjacent.
And you know we've got a newmayor in San Francisco, daniel
Lurie, and he's been reallyactive um on social media,
(02:43):
sharing kind of everything thathe's been up to.
And one of the things that he'sannounced over the past few
weeks is that Dead Company,which is sort of the what's
still hanging on in the GratefulDead these days, is doing a
three-day run for their 60thanniversary in Golden Gate Park
in San Francisco in August.
So I signed up for pre-salesfor that as well.
(03:03):
So if anyone wants to comeparty with me in Golden Gate
Park in August, you let me know,because I will be there.
Ben Larson (03:10):
They might have to retitle the name of the brand to
the Grateful, not Dead.
Oh, is that sacrilege?
AnnaRae Grabstein (03:17):
I don't know, but you just have to keep an
open mind about these things.
What's going on in your world,ben?
Just keep an open mind aboutthese things.
Ben Larson (03:24):
What's going on in your world, ben?
Nothing.
It's been a week.
Texas voted on SB3, which we'llget to in a little bit, but
yeah, just business as usual,just active and really doing all
the things.
Funny story though, again,cannabis adjacent, I was
juggling a lot.
Yesterday I had my Vistagemeeting, I had dad duty shortly
(03:45):
thereafter, but I wastryinguggling a lot.
Yesterday I had my Vistagemeeting, I had dad duty shortly
thereafter, but I was trying tosqueeze in some meetings.
And so I was picking upAlistair from school and I was
going to take him to Kung Fu andI hopped on with a new contact
We'll call him Mr Jackson and wewere jamming on the industry
and all the things that layahead and it was a really lovely
conversation.
I was able to transitionalistair to kung fu while having
(04:08):
this call, and then I'm likeall right, I'm just gonna walk
around this neighborhood.
And so I had myself walkingaround you know some nice homes
and in alamo, and talking to mrjackson, and all of a sudden I
look up at the street sign and Iwas at the intersection of
South Jackson Way, north JacksonWay and Jackson Way.
It was a three-way intersectionwhich we'll talk to the civil
(04:32):
engineer about their creativityof street naming.
But I was just like one of thoseserendipitous moments.
I was like broke out inlaughter, had goosebumps.
I'm like, whoa, the universeworks in really strange ways,
and by universe maybe I meansimulation, who knows.
But yeah, that was.
That was my moment of Zenyesterday, while the hearing for
the the Senate Bill three votewas, was it?
AnnaRae Grabstein (04:54):
Yeah, we'll talk all about that and I know
that, with your business beingin both hemp and cannabis, it's
going on in.
Hemp has a big impact on onyour team and clients and things
, so I'm sure you're watching itreally closely, quite closely,
yeah.
Yeah, on on the work front withme.
I'm just plugging along.
It's been busy, but feelinggrateful for all of that and
(05:14):
getting ready for someconferences that are coming up.
Benzinga is is on the is on theticket.
There is a lawyer's event thatI'll be speaking at in Denver,
so, yeah, all those things.
Ben Larson (05:28):
But I think Nothing like surrounding yourself with a
bunch of lawyers.
That sounds like fun.
AnnaRae Grabstein (05:32):
Oh well, we're bringing one on right now.
So we're going to introduceMark and bring him on to talk
through news with us, because heoften remarks on news through
his newsletter Substack CannabisMusings.
Mark Hauser is a widelyrespected voice in cannabis and
he's a local friend also livesin Petaluma.
(05:53):
Like me, he is formerly chairof the cannabis practice at Reed
Smith and he was longtimepersonal deal counsel to
investor Sam Zell at the EquityGroup.
He has overseen billions incapital markets and M&A deals
and currently serves as chief ofstaff at Hardeen, a leading
cannabis dispensary in Vegas,and he teaches law at both
(06:15):
Northwestern and UNLV.
So let's bring Mark on toinclude him in our conversation
today.
Thanks for joining, mark.
Good morning.
Marc Hauser (06:27):
Though you know I'm already thinking of walking
because of Ben's haunt about theGrateful Dead.
I think Jerry Garcia is turningover in his grave from that one
.
AnnaRae Grabstein (06:36):
Well, you've got a Grateful Dead poster in
your background.
Oh yeah, you must be a fan also.
Marc Hauser (06:40):
Oh yeah, there it is.
Oh okay, yeah, he's going tocome back and haunt you for that
.
So yeah, I should have checkedthe wall before I made that joke
.
AnnaRae Grabstein (06:57):
I'm thrilled to be here.
I'm a big fan of the podcastand I'm a big fan of the two of
you.
Oh, thanks, mark.
We like fans Well, so I thinkwe should just jump right into
the news and then we're going tohave a conversation with you
about the industry.
But, ben, will you give us anupdate on what's going on in
Texas and start us off there?
Ben Larson (07:12):
Yeah.
So you know it's been a verybusy legislative session.
Texas was oscillating betweenthis booming hemp industry I
think the Lieutenant Governoridentified it as an $8 billion
marketplace, which would peg itslightly larger than how much
alcohol they sell in the state.
That same Lieutenant Governordecided it was a good idea to
(07:34):
just completely outright baneverything.
He'll argue, it's noteverything.
Cbd isolates and CBG isolatesare still okay, but pretty much
everything else.
And so there was a lot ofefforts over the last several
months to find a middle groundor kill the bill, all of which,
(07:54):
in short, basically failed lastnight.
And what really happened wasthat the lieutenant governor
single-handedly took it uponhimself to leverage teachers and
their wages and a funding billfor the schools in exchange for
a complete ban on THC, againstthe desires of many businesses,
(08:16):
many consumers, many veterans,many patients, did something
that we all generally knowdoesn't work and enforced
prohibition.
And now their pressure releasevow, their moral high ground is
that, oh well, they have teacup,but teacup is woefully
inaccessible.
And say what teacup is?
Sorry, teacup is the TexasCompassionate Use Program.
(08:38):
It's a very limited cannabisprogram.
There's three licensees, Ithink two that are active and
they basically very limited.
I think there's like 8 000patients or something like that
for the entire state of texas.
And now there's a bill on thedocket that hasn't been passed
but would increase this and theysaid this in the hearing last
(09:01):
night by 10x.
Well, what's 10x of theexisting thing?
So it's like, okay, maybe thatopens it up to 80,000 patients
of the state of texas and maybethat creates 10 licensees or 30
licensees like, is that enoughto serve the state of texas?
Probably not, and so are peoplegoing to be able to have access
(09:22):
to to THC?
Yes, they will.
We'll be through teacup, whoknows?
We'll be through the illicitmarket, most likely.
And where's Texas?
Next to Mexico?
So, yeah, bring back theconversations, the border walls
and the cartels and all that.
So yeah, it was a.
It was a busy week.
Last night was was fun.
(09:42):
Last night did start theprevious morning, so there was
an entire day of session wheresb3 being brought to the floor
kept getting postponed, keptgetting postponed.
It was supposed to be 10 then,then 10 am yesterday morning and
then it got postponed all theway till 6 pm.
AnnaRae Grabstein (09:59):
So, as you can imagine, there was a lot of
politicking happening behind thescenes, a lot of adult use, and
we're so so far from that inTexas and there is a tremendous
(10:35):
opportunity to serve consumersin Texas, but it doesn't really
seem like there's anything onthe docket that is going to open
it up in a way that wouldreally do anything other than
create a massive illicitopportunity.
And I think about this, and Ithink about all of the
businesses that started in Texasthat were trying to do the
(10:56):
right thing and that were opento regulations through some type
of legislative fix, and I'm sadfor those entrepreneurs because
it doesn't seem like there'sreally options for them with
this bill.
It does seem like what there isis new options for illicit
cannabis to come into Texas andto serve all these people that
have been participating in thehemp market there.
(11:17):
So I don't know.
I'm sorry for everyone that iswaking up today and wondering
what comes next, because I knowthat there's a lot of that going
on.
What do you think, mark?
Marc Hauser (11:28):
I also before we go .
I should have mentioned this atthe beginning.
This is all my own personalsort of statements.
None of it reflects the opinionof Hardeen and it's not legal
or investment advice.
Look, I mean I agree with youthat it is sad, that you know
people are going to be losingtheir jobs, and you know it's
(11:49):
not the result that peoplewanted.
I think, though, it's a goodexample of how expectations in
this industry are.
Just, you know, continue to beoff base and people not
understanding that what isrational never applies in
cannabis.
(12:10):
And Texas is a funny state in.
It's got kind of a uniquepolitical situation, both with
the way it's lawmaking isstructured, with the power that
the governor, and particularlythe lieutenant governor, have in
that state.
So you know, so it's uniquelysort of structured the way
(12:30):
things play out there, but youknow, at the same time you know
I would counter a lot of thiswith this is all built on a
loophole, and you know you mayget and I'll probably get some
nasty email for calling it aloophole, but it's a loophole
and it's there.
(12:50):
There is risk in building anindustry, an industry based upon
a loophole, particularly onewhere you're asking politicians
to justify allowing psychoactive, psychotropic drugs to be or
sorry, products I should say tobe sold to the public without
(13:14):
regulation or with a certainlevel of regulation.
That doesn't quite sort of meetwhat other products are at.
And it's possible in some statesare continuing to allow it.
But it really shouldn'tsurprise a lot of people that a
lot of states don't want that.
The reason why we're here todayis because Congress hasn't
(13:36):
moved on it, even though it'syou know, it's known about this
problem for a while, becauseCongress can't do anything and
we kind of all agree on that.
And it's only been untilrecently that states are, you
know that states are reallybeing coming aware of this.
I don't want to call it aproblem because that's motive.
Anyway.
AnnaRae Grabstein (13:55):
Let's double click on this.
Yeah, I'm going to interrupt youfor a second and just say that
what you're talking about is thepower of politicians versus the
will of the people, and thisseems to be the sort of theme
across cannabis policyconstantly and this sort of
recovery that the industry istrying to create in the hearts
(14:17):
and minds of politicians who areholding on to reefer madness
ideology from the past, becausethe American people support
adult use legalization, theysupport medical cannabis, they
support access to cannabinoidsbroadly, and I think that the
American consumer doesn't evenreally have an opinion on hemp
(14:41):
versus cannabis, and they don'tneed to.
That is not the calling of theAmerican consumer to understand
the complexity of the lawsrelated to hemp and cannabis.
My own husband can't wrap hishead around it and I work with
this space.
This is a perfect example, Ithink, of a few powerful
(15:02):
politicians that have certainpositions on what is right or
wrong for their constituency.
Getting to choose when reallythe people have a very different
position, and I think thatthat's what Texans want is
access.
There's a lot of people andbusinesses that are enjoying
access to cannabis and nowthey're not going to have it
(15:24):
anymore.
Marc Hauser (15:26):
Yeah, but for better or for worse.
I mean, that's the way Americaworks.
I mean, most people hatedaylight savings time but we
still seem to have it becausethe farmer lobby wants it.
You know, I mean and I'm nottrying to be flippant, but I
mean, you know you can make thatcomplaint about a lot of things
.
It's unfortunate because it isindicative of where cannabis is
(15:48):
at and how.
For years we've been expecting,you know, change.
We've been expecting Congressto do the right thing, you know
the DEA to sort of come to itssenses about the sensibility of
all of this, the presidents tomake you know change, but that
hasn't happened because there'sno political.
You know there's, the politicalwill isn't there and it's such
(16:11):
a it's such a hot button issue,but it's also a low priority hot
button issue.
I'm sorry, ben, I cut you offto make my little rant there.
Ben Larson (16:20):
well, no, it's.
It's kind of funny, you know,reminds me of this chris rock
quote where he was talking aboutwhen, like sigfried and roy got
attacked by their tiger and hewas like that tiger didn't go
crazy, that tiger went tigertexas just went texas, like.
I remember when, like, hemp thcstarted selling in texas and I
was just so dumbfounded I waslike this is happening in texas,
(16:43):
te Texas hates cannabis and itjust kind of proliferated and I
never quite wrapped my headaround why it was proliferating
beyond this like two-year cycle.
But they never like took itinto session and I believe it
was Dan Patrick that actuallykilled it last time around.
So maybe it was just like notas important as this time, and
(17:07):
yeah, but I think it's alsoimportant.
It's.
It's it's not done, done right,like I.
I know greg abbott hasn't provento have like a huge against the
lieutenant governor, but likemaybe if he receives thousands
of letters from veterans andconsumers and business owners in
the state that maybe he'llconsider vetoing this bill or
(17:27):
you know, lawsuits, lawsuitswill certainly drop on the
government's desk and that couldtie things up in potential like
restraining orders and whatnot,and so what this all kind of
like generally leads to is whatdo we want to see and like?
How do we get there?
Because what we lack in thisindustry is a singular voice and
(17:49):
we can't even decide what thatvoice is or where it needs to be
or where it needs to align andlike how do we make it big
enough and strong enough tocompete with these other lobbies
that are that are in themarketplace?
Like you know, we do have aneffort where we've been aligning
with some, some of the alcoholvoices, and that has been like
(18:11):
oil and water with a lot of thehemp operators.
They don't want to see productsgo to to alcohol.
You know, so to speak, theydon't want to see, see the
industry sold out to alcohol.
But like, how are we going toget this done if we're just
constantly fragmented on allfronts?
This isn't just texas, this isat the federal level.
This, this is in every statelevel.
Like people are constantlybeing surprised by the laws that
(18:32):
are being passed in Alabama andTennessee and you name it.
I'm kind of at a loss and Idon't know if there's a question
coming here, and so maybe I'lljust kick it back over to Mark
and see if he can muse on it.
Marc Hauser (18:43):
No, I think you're right and I think you know it's
not just with respect to hemp.
I mean the Right and I thinkyou know it's not just with
respect to hemp, I mean thenon-hemp side of things.
You know what I mean we weretalking about this earlier is
there's no good, there's no goodwords.
Yet we got to come up withbetter vocabulary to distinguish
hemp and non-hemp cannabis.
You know, talking aboutconfusion, you know, but the
(19:06):
non-hemp lobbies, I mean, havebeen, have had that same problem
for years.
You know we have a lot ofdifferent.
A number has been focused on alot of random things instead of
(19:32):
focusing all of its firepower onchanging the narrative and
getting legalization done.
It's the only thing that'sgoing to fix the non-hemp
industry is legalization period.
All these other changes, safebanking, safer banking, all this
other stuff it's all marginal.
And, ben, you're saying this onthe hemp side.
(19:53):
I mean, I think it's the samething.
You've got differentconstituencies trying to push
for different things instead ofall aligning on one message.
Ben Larson (20:04):
But to Anna Rae's point, are we still definitively
have sides?
After all, this Hemp is verydivided within hemp right, there
is material hemp, industrialhemp, and I think they deserve
their own definition andcategory and I think that's
coming from what I've beenhearing at the federal level.
But then there's all thecannabinoids coming from hemp
(20:25):
and that is becoming veryclosely associated with cannabis
, to the point where I watched alot of the rhetoric being
delivered last night and it was.
There's this one story wherethis woman God bless her is like
crying about her daughter whowent through like cannabis
hyperemesis or was it CHS?
But she was describing heradult daughter that was in a
(20:48):
legal state of nevada consumingcannabis.
I'm like the lines are becomingvery blurred well, it's.
AnnaRae Grabstein (20:54):
It's because it's because it's like, what are
we talking about?
Are we centering on consumer?
Are we centering on regulatorynavigation from a business
perspective and what you'reallowed to do from a
go-to-market market by market,like legal allowance?
So people, yes, they don't seethe difference.
They're going to ingest a5-milligram edible, thc edible,
(21:17):
and whether it comes from hempor it comes from cannabis,
likely their experience is goingto be fairly similar and how it
gets to them and what the legalpathway is through the
regulatory and legal kind ofmesses that exist for businesses
and manufacturers are uniquedepending on where that consumer
is standing and living.
(21:39):
Interestingly, I think, likepivoting to two of the larger
legal cannabis markets.
There are, I think, twodifferent, pretty important
conversations going on in bothCalifornia and New York that are
worth talking about.
New York has finally announcedthat it's going to be launching
its track and trace program andit's interesting most states,
(22:01):
when they launch either theirmedical program or their adult
use program, the track and traceprogram launches at the same
time.
And New York took a differentapproach and launched the market
without launching its track andtrace program, with a stated
intent that it would do so at alater date and they signed a
contract with Biotrack, whichalso was a divergence from the
(22:25):
norm, which is most of thestates have gone the way of
metric, from the norm, which ismost of the states have gone the
way of metric, and they finally, after a couple years of having
this program in place, haveannounced that in August is when
the first track and tracerequirements will begin for
cultivators, and then they'regoing to, month after month,
roll it out for different partsof the supply chain.
(22:46):
September is when themanufacturers and, I think,
distributors will need to comeonline and then, right after
that, retailers will follow.
This is on the back of massivequestions about product coming
into New York from other marketsand potentially it not being
caught because there hasn't beentrack and trace in place.
(23:09):
So it's been easy for folks toimport and invert product from
other markets.
So I think that this is newsbecause it could have a domino
effect on other markets.
Apparently, oklahoma andCalifornia are the places that
most people are saying that theextra product has been showing
(23:31):
up in New York.
I don't have any insideinformation to say who's doing
this, but it's possible thattrack and trace could make a big
difference.
Ben Larson (23:39):
I think diversion is happening in many places.
I've heard of Michigan productsshowing up outside of Michigan.
I just don't think it's goingto stop.
It's one marketplace, whetherit's the illicit market,
cannabis or hemp, people aregoing to get the product and
they're going to get, hopefully,quality product, but cheaper
product when they can.
And great that New York's doingthis Biotrack, sure, whatever.
(24:03):
I also heard that theyembargoed a bunch of Stizzy
product, but yeah, I don't know.
I'm curious, mark what are yourthoughts on how the markets are
evolving, and are any of themreaching a more viable state
than the other?
Marc Hauser (24:20):
You mean California versus New York?
Sure, let's start there, we'reall sitting in California, which
is not helping, which is aboutas non-viable as it gets.
California is about, you know,it's about as mature a market as
it can get, both you know bothfrom a consumer perspective as
(24:41):
well as a, you know, thelicensed perspective.
It's been.
What since 2016 is when wepassed adult use.
It's when we passed the law andthen it launched 2018.
Launched 2018.
It's about as mature as it getsand I think it's really showing
its cracks.
There are so few companies thatare actually thriving here.
(25:05):
That happens in a lot of stateswhere that sort of reach
maturity, where you see thiscurve in most states, where you
get incredible demands to startand then you have too much
cultivation and then there's toomuch product.
Then eventually it flattens outbecause the consumers that are
(25:26):
in that state who are going tobe buying product from licensed
dispensaries are fully beingsatisfied, and so you kind of
reach this stasis and basicallya flattening to slight downturn
of the curve, and that seems tokeep happening in every state.
New York is definitely on theupswing.
I mean, you know I don't needto repeat what everybody knows
(25:48):
about the failures of the launchthere, which you know it seems
like they are it's gettingbetter, you know, with respect
to crackdowns of illicit,unlicensed dispensaries,
certainly in Manhattan, but youknow, from what I understand,
(26:08):
it's still a problem.
Going back to what Anna Rae wastalking about is about sort of
products showing up in thatstate.
I think that you're probablygoing to see less of it because
of track and trace, because it'sharder then to get those
products into licenseddispensaries and as the state
becomes more successful atshutting down unlicensed
(26:31):
dispensaries, there's going tobe fewer places for those
products to go.
AnnaRae Grabstein (26:35):
They can all go to Texas.
Now, just as a side note, theproducts can go to Texas.
So New York will turn on trackand trace.
It will close off the importand now there's a new
opportunity for everybody.
Yeah, that is sarcastic.
Marc Hauser (26:48):
It blows off the import and now there's a new
opportunity for everybody.
AnnaRae Grabstein (26:50):
Yeah, Well right, that is sarcastic.
I don't know if you can alltell in my voice but, also maybe
realistic and truth telling.
Marc Hauser (26:56):
Well, yeah, that stuff's going to end up
somewhere.
You know it's going to stillend up within the unlicensed
market.
What New York is doing willlikely have the effect of
reducing acts.
You know it won't be.
It'll reduce its prevalence inlicensed dispensaries and with
hopefully fewer unlicenseddispensaries in New York.
(27:18):
But yeah, it'll just getdiverted or I shudder to say,
inverted I don't like that terminto the unlicensed market, sure
, into, you know, into theunlicensed market, sure.
So yeah, I mean it's, but yeah,I mean, if you walked into a
(27:38):
dispensary two years ago in NewYork City which were everywhere
you could see, you know, brandedproducts.
I don't want to name names, butyou could see branded products
from all across the country andyou know, it wasn't totally
clear if those were actually.
You know, were those authenticproducts from another state or
were they?
You know, were they just sortof scammed with that, you know,
with that brand's name?
It wasn't totally clear.
But uh, you know, anecdotally,from what you heard, it was real
(28:02):
stuff just being brought infrom the other states.
Um, it was a huge problem sowe're.
Ben Larson (28:08):
we're in an interesting place in the
industry, right, the thecannabis industry is is not
super stoked with the realitythat they're getting to live in
most cases.
There's some states that arestill in their first 18 months,
and so they're enjoying it hellonew jersey.
But then there's there's whatthe hemp industry is
(28:28):
experiencing and and they'rethey're feeling like things are
being taken away from them.
And you know, I know, a lot ofcannabis operators are looking
at what's happening in hemp andthey would just love a little
bit of taste of that.
And you know, many of some ofthe brands are actually trying
that.
Some of the MSOs are trying it,and so I guess let me take this
more to a to in a personaldirection.
(28:49):
Mark, You've been doing thissince 2018.
So you've been through a lot ofthe ups and downs 17, 17.
2017.
Sorry, I didn't mean thatthat's seven years.
Yeah, what keeps you enthused,like what are some of the bright
spots for you?
What has you excited looking atthe remainder of the year?
Marc Hauser (29:10):
Oh, I mean there, what gets me excited?
There's nothing that has meexcited right now.
Ben Larson (29:19):
And there are no bright spots.
Uh, this is called high spirits.
Marc Hauser (29:22):
There you go Um, I'm being slightly flippant, but
not totally, I mean it's.
I'm being slightly flippant,but not totally, I mean it's.
You know, I, I look, I lovethis industry.
It's.
It's rare that you get to work,you know, you get to focus your
career on building somethingfrom scratch, uh, and you know,
and helping people and workingwith and being one of the people
(29:45):
to to help sort of create abrand new industry, especially
an industry that you know thatultimately is helping people.
You know, I used to poo-poo theidea that that cannabis is
medicine, but I, you know, I, II've come to really understand
that, that you can see that you,you really are helping people
with we are, you know, and whatwe're doing, and that's, that's
(30:07):
great, and's great.
And this industry is sofascinating from an intellectual
perspective because it's justso hard and so much of it
doesn't make any sense.
Trying to navigate an industrythat's both illegal and highly
regulated at the same time isreally hard and it creates a lot
(30:28):
of weird problems, both, youknow, academic and sort of
existential, as well as thepractical problems of operating
your business.
And how do you navigate that?
I mean, that's it's, it's funand it's interesting that way.
But you know, but at the sametime I remain fairly pessimistic
about it, and you know.
So I go back to, like I, youknow, there aren't many bright
(30:50):
spots on the horizon,unfortunately.
You know, particularly for, youknow, non-hemp cannabis.
You know it's not lookingbright and you know the few sort
of lights we saw on the horizonwith rescheduling which would
have, you know, eased thefinancial burden on the industry
to a certain extent.
It would have, you know, giventhe a bit more of a vibe, sort
(31:13):
of positive vibe to the industry.
Is is kind of, you know, fading, and you know, and, and the
chances for any sort of realpolitical action at the federal
level these days are, you know,I think, zero plus the, the, the
competition from its, you know,its its sibling hemp, remains a
(31:35):
problem for non-hem cannabis.
And then I, you know it's, it's, they're kind of like
stepbrothers in a way, uh, wheretheir family, but they, they,
they, they, uh, you know theybicker a lot, let's just put it
that way.
You know, and the, and youstill, you know what other
industry has has an illicitmarket that's bigger than it,
(31:56):
that continues to thrive.
I am serious when I don'thonestly see any bright spots.
You keep working in it everyday.
AnnaRae Grabstein (32:05):
I feel like what what you're really talking
about is the difference betweenlike transparency, honesty, like
not being in denial aboutreality, and spin, and so you're
talking about like balancingrealism with actual, like, I
guess, adaptability in the faceof challenge.
(32:26):
It's a good way to put itBecause I know you.
I know that you are prettyresolutely focused on your work
in the industry.
You get up every morning andyou think about what's happening
.
You are working on compromisein all kinds of ways and you're
someone that has a unique way ofthinking about creating
consensus and compromise.
So I want to hear the honesttruth of what you think
(32:51):
separates those that will fallvictim to the crap that cannabis
is facing versus the people andthe businesses that you think
are going to make it throughthis.
Because we know cannabisconsumers aren't going anywhere.
It's just, yes, it's a toughbusiness environment, but what?
What separates the goodcompanies and the good leaders
(33:14):
from the ones that are not goingto make it through this climate
?
Marc Hauser (33:17):
No, it's a.
It's a, it's a good point and I, you know, I I am, I'm
optimistic about the industry inthe long run and there are good
operators out there and thereare people who are succeeding in
this.
There are well-run businessesand there's a lot of great
people trying to make it work inthe industry.
(33:40):
You know, in the face of, youknow of just rampant, you know
pessimism and terrible overall.
You know business environmentfor the industry.
You know, and I think whatdistinguishes those people you
know from a business perspectiveare just our tightness in the
(34:01):
way they run their business, anincredible attention to margin,
treating their people right.
In making this business work,compliance is 98% of the game
and I think, understanding whatyou want to be when you grow up,
I've always felt thateventually this industry will be
(34:22):
hourglass shaped, similar alittle bit to the craft beer
industry, or sorry, the beerindustry, where you've got, you
know, a handful of players atthe top who have a lot of the
volume.
You've got a lot of smallplayers at the bottom who are
local or hyper-local, who aremore focused on the connoisseur
(34:45):
or, for lack of a word, snob,and you've got and I say that
lovingly and you know, and notmuch in the middle.
To me that shows that there'sroom in cannabis for both.
There's room for big players ofa national presence and a lot
of you know who have a lot and alot of resources to you know to
cater to a broad consumer base.
(35:06):
But without you know a ton oftypicity within their product,
you've got a lot of small.
You know local craft producerswho are you know, who are out
there for the weed snob, who youknow, who are producing very
sort of highly crafted products,and you know, and so to me
(35:28):
success is you know, know, ifyou're not going to be the big
one and not everybody can be inthe top how do you find your
place within, within that smallniche?
What makes you different?
And it's really hard, you knowit's a lot, it's easy to say
that, but it's really hard.
In an industry where you've gota lot of brands a a lot of
(35:49):
product, it's not that easy todistinguish yourself and
everybody's competing for shelfspace and it's hard to build a
brand because advertising isreally tough, if not almost
non-existent, and so you knowit's not that different from
other CPG.
But to me that is wherecompanies succeed and don't
(36:13):
succeed is what really makesthem different in an industry
where it's hard to differentiateyourself.
Ben Larson (36:21):
Yeah, I want to bring it back a little bit to
the regulatory convergence,because you say hemp and
non-hempemp and it feels alittle bit like kind of stuck
right.
We're stuck with these twodifferent paradigms that are
running in parallel.
And in my world, you know, Ithink a lot about the consumer,
(36:42):
who we've already identified,really starting to see this as
just, you know, where can I getthe cannabinoids that I want?
And we work with a lot ofbeverage brands who, as a
product category, have been themost fluid across the two
different regulatory structures.
You know, you see a lot ofbrands operating in both.
And then we have the MSOs, youknow, kind of jumping in, like I
(37:04):
said, doing their thing.
And so, as we think about thefuture, is it even a potential
that we see regulatoryconvergence like?
I have my thoughts and I'mqueuing this up for you, mark,
and, and I think something thatcame up recently really makes it
poignant for us here incalifornia is there's this uh,
what's it called?
(37:24):
The like the rethink cannabisum movement, where it's like
redefined a new voter initiativefor the state of california to
replace prop 64.
Now, if we can't get it.
That's what it's called cannabisaligned, sorry yeah and so if
we could get past the whole,like how do we can we, you know,
(37:44):
raise 40 million dollars orwhatever it takes to kind of
push something like this across?
Like how would we actually doit?
Would we get hemp and cannabisoperators in the same room?
And like, would we startlooking at it as regulatory
convergence?
Could we set aside all thedifferent capitalistic
components to really think about, like, what is the the vision
(38:07):
of the future?
Like how do we get cannabis orcannabis in all its forms to
people?
And, and like I and I wassaying this to nina parks like
on linkedin, it's like I reallywant to ensure that we have all
these voices equally represented.
When we have this conversationit always comes down to is like,
how do we make decisions withall those like diverse
(38:30):
perspectives?
Marc Hauser (38:30):
because, as we've seen in california, you can have
some very powerful voicesrepresenting just a few
operators yeah, it's a greatquestion, which I think the
answer is a lot harder thanpeople make it out to be.
You know, I mean one of mybeefs with the rhetoric from the
(38:52):
hemp side of things is when youknow the argument that let's
just all work.
You know let's just all worktogether to figure this out.
You know that's easy to say butI don't.
You know it's rarely explainedor articulated what that means,
because a lot of the you know alot of the results is only
(39:15):
really going to favor the hempside of things and because you
know how do you reconcile and Idon't mean this in an
antagonistic way, I mean this inlike a, in an academic and sort
of like trying to think thisthrough what does that really
look like?
Because if you've got, you knowif the point of hemp that might
(39:38):
be the wrong way to put it.
But the point of hemp is thatit's a federally legal product
and you know, with everythingthat's sort of wrapped up in
that and putting aside, you know, fda regulations and the food,
drug and cosmetic, that, puttingall that aside it's it's a
let's just for the argument.
It's a legal product, federallylegal product, and so that
(40:00):
means that you know so does.
But then you've got non-hempthat has, you know, by state law
, has to go through the fulltrack and trace system and is
subject to 280E and it can onlybe sold in dispensaries,
licensed dispensaries.
You know, I don't know how youcan feasibly reconcile those two
(40:21):
.
Ben Larson (40:22):
So I mean we have examples right, or at least
examples trying, and Minnesota'skind of the hallmark of the
kind of bifurcated market.
But one way to consider it isyou have the cannabis
marketplace where people areshopping for cannabis and
cannabis alternatives, and thenyou have the low-d dose hemp
(40:42):
products that are in themainstream marketplace where
they might be perceived asalternatives to other products.
And I'm going to always speakfrom the beverage perspective,
right, like you go into a baryou don't want an alcoholic
drink, but you'll take a hempbeverage drink and it's low dose
.
It's not a hundred milligramdrink that you'll find in
dispensary beverage drink andit's low dose.
(41:03):
It's not 100 milligram drinkthat you'll find in dispensary.
But it creates an opportunityfor general access and
normalization of cannabinoids toconsumers and, like that, could
theoretically increase thewhole, the whole pie for
everyone and that's a fair point, and before mark, before you,
before you respond, ben, whatyou're talking about is how we
(41:24):
get there.
AnnaRae Grabstein (41:25):
I think Mark is talking about the challenges.
But, mark, when you answer, youhave a lot of perspectives
about how to build consensus,because you have been getting
deals across the finish line fora long time, for a long time
and let's say this is the deal.
This is like the biggest dealthat there is, for cannabis is
(41:46):
like how we reconcile this.
You know that not everyone'sgoing to win, right, there will
be winners and losers in thisdeal, right?
Like, oh, how do you geteverybody together and get a
deal across the table?
Marc Hauser (41:58):
Yeah, I mean, I don't get paid enough for that.
I, no, look, I, you know, Imean, ben, I take your point, I,
it is fair, and I think thatthat's where you know you.
You have to distinguish formfactors, um, and I think what
I'm getting at maybe more has todo with you know, as you're
(42:21):
distinguishing it betweenbeverage and everything else.
Beverage through dispensarieshas always been a very small
part of the market because it'shard to distribute.
It's hard for cannabisdistributors to distribute and
dispensaries don't have a ton ofshelf space or space to store
(42:42):
it.
Distributors to distribute anddispensaries don't have a ton of
shelf space and so or you knowspace to store it, whereas it is
.
It is much more natural for youknow the, the alcohol
distribution system and you know, and all the mishegas that's,
that's wrapped up in that.
But you know, so I, you know,to me maybe that's where the
resolution comes out Now.
I mean, minnesota is a funnyplace too, because you know they
(43:10):
, they also, their law is inplace because of of a you know a
reported mistake by thelegislature, though I've also
heard that maybe it reallywasn't a mistake, you know.
So that that's, you know,that's got.
That's funny in and of itself.
Ben Larson (43:21):
I think it was.
I think it was very deliberate.
It just happened to be anoversight by certain yes voters
yeah, yeah, yeah, it was.
Marc Hauser (43:28):
It was a mistake, but not really a mistake.
You know it's which is nuts, butit's um, yeah, I mean me, you
know I, and to iterate I meanfigure, to your point, I mean to
you know, maybe that's wherethe middle ground is found,
where you know you, you, youhave, you are allowing certain,
you know certain beverages,beverages with you know that are
(43:50):
that meet certain standards youknow and are properly licensed
through.
You know, through a statesystem, that are sold through
you know a certain licensesystem.
I mean maybe it's the alcoholsystem, I don't know that you
know a certain license system.
I mean maybe it's the alcoholsystem, I don't know that you
know.
Maybe that's the middle ground.
Whereas, and then you knowreforming and figuring out, you
(44:11):
know a flower and all of thatneeds to remain within the you
know the license system.
You know there, because thereisn't as much to me the the
threat, because there isn't asmuch to me the threat, if that's
the right word for it, tolicensed non-hem cannabis is
more from the hemp flower andhemp pre-rolls and all of that
(44:37):
it's less so from beverage.
AnnaRae Grabstein (44:56):
And so maybe that's where it comes out.
You know, and as we talk aboutbeverage, we're talking about,
you know, thc, hemp, derived THCbeverage.
You know, the whole sort of CBDis that I came away from that
with.
Is that remembrance of how faststaff turns over in DC and how
fast the staff needs toconstantly be reeducated about
what these issues are.
(45:17):
And kind of all the meat thatmakes the sausage, kind of all
the meat that makes the sausage.
And it occurs to me that thisis just so nuanced that it's
just so complicated forlawmakers who don't spend their
days like we do in this sausagemaking to understand.
And how we explain it and howwe get them to understand is so
(45:41):
important.
Ben Larson (45:42):
Well, my perspective is that how we explain it and
how we get them to understand isso important.
Well, my perspective is thatit's kind of like organized
chaos, right, like everythingthat's happening across the
states between cannabis and hempis it's a big experimental
testing ground for what needs tohappen at the federal level and
Congress is designed to moveslowly, like this has been said
(46:02):
to me every time I've been onthe hill.
Like 15 years is like thegeneral cycle that takes to like
really get something normalizedand passed, and you might argue
we've been at this for morethan 15 years, uh, but I mean,
it's changed.
It's changed so rapidly, right.
But what I do recognizehappening is the regulators have
(46:24):
been everything that's going onin all these different markets
and they're talking, and they'retalking to the legislators, and
what we start seeing at thefederal level is this
understanding that's like, okay,you have hemp and you have
cannabis, and you have hempthat's for industrial, and then
you have hemp that's destinedfor cannabinoid extraction, and
then we have the FDCNA, likeMark Mark identified right, and
(46:45):
so like the FDCNA doesn't reallyhave a definition for
cannabinoids, and so what weneed to make sure happens in the
FDCNA is that we get acannabinoid section, not a hemp
section, not a cannabis section,a cannabinoid section and like
this is how we start to driveregulatory convergence and in
the meantime it's going to justbe pure fucking chaos, like at
(47:07):
the state level, uh, until weget clarity.
But yeah, like all this chaos iswhat's necessary to have a
rational discussion at thefederal level.
So you know, really high level,I'm talking probably a hundred
thousand feet instead of 30,000feet.
Like this is all like necessaryfor us to rewrite like the
(47:28):
century of of bad legislationthat's been written.
But it's going to be painfulfor a lot of operators, you know
, mainly dispensary owners, Ithink.
Marc Hauser (47:38):
I, I think that's spot on, you know, I think that
the industry has been overlyoptimistic.
That would just happen that theregulators and the state
governments and the federalgovernment were going to see the
light, naturally, becausethat's what's rational and
that's what's logical.
And we kind of expected I mean,how many times as have did we
(48:06):
hear oh, safe is going to saferis going to pass tomorrow,
that's not a problem.
And I think that you know thereis a.
I think most of the industrynow realizes the reality that
state, you know, the state andfederal governments are not just
going to hand this to us on asilver platter.
And we, you know, we need to bemuch more proactive in
rewriting our own narrative asan industry.
(48:28):
And I mean that both in industry, both non-hemp and hemp.
You know how do we?
You know it's it's changing theminds of that sliver of
politicians at the federal levelwho are, you know, who aren't
yet willing to risk thepolitical capital to make change
.
And at the state level, it's,you know, within each state,
(48:51):
it's getting the regulators well, not the regulators, the
legislators to recognize that.
You know, the way that theselaws have been drafted have been
basically to isolate cannabisand not really to you know to
give it the real tools it needsto be a viable, you know
(49:12):
industry, a legitimate industrythat it is and you know how you
know.
So it's refocusing our effortsand changing those narratives
about getting politicians mindschanged oh, a lot here.
AnnaRae Grabstein (49:30):
A lot here.
Mark, do you have anypredictions over what you think
is going to be happening overthe next six to 12 months in
cannabis?
There's so much discussionaround consolidation and
restructuring and debt cliffsthat are coming with large
companies.
What do you think is happeningin the next six to 12?
Marc Hauser (49:56):
Well, I think we will finally see a farm bill,
because I have no basis for this, you know, I have no inside
information.
I just think that it's beenlong enough and with you know,
with Republicans controllingboth both houses and the White
House, there will probably bemore of an effort to finally get
(50:17):
that done.
So you know where that'll panout.
I have no idea when it comes tohemp, but I do think that we
will finally see some sort ofresolution on that.
I don't think we're going tosee safer pasts still.
I think that we are going tosee more restructurings of debt
at these big companies andsmaller companies, with dealing
(50:41):
with this upcoming debt cliffthat's coming, you know, in the
next 12 to 18 months.
I think it's going to be reallyhard.
I don't see a lot of change, alot of substantial change within
the industry.
I think it's just going to be alot of the same.
And I do see, though I do see alot of your listeners who
aren't yet subscribed going tocannabismusings, subsub stackcom
(51:03):
and subscribing for free to mynewsletter, so that I do see
well, mark, I really appreciateyou kind of uh jumping on with
us and allowing us to navigatethese different uh, sticky
conversations I love talkingabout this stuff and I
appreciate the opportunity andto talk to smart people about
(51:25):
this stuff.
Ben Larson (51:25):
So yeah, well, as we head out, I want to give you an
opportunity to take the mic andand give us one last shout.
So we call this our last call.
It's your opportunity to give acall to action, a plug, shout
out to someone, anythingcannabis related or otherwise.
So, mark hauser, what's yourlast call?
Marc Hauser (51:45):
um, you know, there is a, there's a yiddish saying
um I'm gonna probablymispronounce it because, as much
as I know, yiddish by mypronunciation is terrible, but
it's hyphen b as a, a point, andbonkus, which means trying to
pick up a dead body with, withcups, which is which was cupping
, which was they, you know,years ago.
(52:07):
They, as a medical procedure,they take, you know, hot, like
like glasses or like a glass,and put it on your, on your skin
, to try to suck out the badvapors and humors and stuff like
that.
And so it's, there's something,is this?
The saying is it's, it'spointless trying to pick up a
(52:31):
dead body with, with, with, withcups.
And I, you know it's, it's oneof my favorite Yiddish sayings
because it's just kind ofnonsensical and weird.
But the you know, to me itencapsulates this industry is
that trying to really understandit is is almost pointless and
instead you just need, you justneed to do it, you just need to
(52:52):
embrace it, you need to justnavigate it as best you can, but
, but really trying to sort ofunderstand it from a logical and
perspective, it's just notworth it.
And I say that lovingly.
I say, and it's what I loveabout it is it's.
You know Yiddish is such aloving you know, at the same
time loving and bitter language,and so you know, so it
(53:16):
encapsulates my feelings aboutthis space.
AnnaRae Grabstein (53:19):
This concept of organized chaos that we've
been kind of dancing around.
This episode is hilarious, andespecially in light of you guys
kind of making fun of me forbeing excited about going to the
60,000 person dead in companyshow in San Francisco in August.
It sounds kind of the samething Like we just need to
embrace the chaos and the crazy.
(53:39):
It sounds kind of the samething Like we just need to
embrace the chaos and the crazy.
Go for it, Let loose man.
Marc Hauser (53:45):
A little bit, a little bit, and use the porta
potties.
Yeah, oh God.
Ben Larson (53:50):
Yeah, well, this is like you were just asking me at
the beginning of the show.
It's like, how's the week been?
I'm like it could I could sayit was devastating, uh, but
really it's expected in in somesort of way.
It's just like it's just thechaos that we get to live in.
Yeah, in general, like we canall look back and say it's like
still kind of up and to theright, it's just a lot more
(54:11):
volatile and and crazy than thanwe ever expected.
But yeah mark really appreciateyour time.
Thank you, so so much.
Thank you.
We'll talk to you soon.
Alright, what do you thinkeverybody?
Big news week.
A little bit of a deep divethere with Mark.
(54:33):
Hope you liked it.
Please like, subscribe, share,do all the things.
Thank you to our teams atVirtosa and Wolfmeyer For
keeping things going and, ofcourse, our incredible producer,
eric Rossetti.
If you enjoyed this episode,please drop us a review, comment
on our LinkedIn.
Wherever you you find us, asalways, folks stay curious, stay
(54:57):
informed and keep your spiritshigh until next time.
That's the show.
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