We unpack how a federal shutdown freezes cannabis policy progress, why Michigan’s new 24% tax risks shrinking the legal market, and how a Vireo–Schwazze restructuring signals financial maturity. We close with a live “Ode to California” challenging protectionism and calling for true access and scale.
• federal shutdown halting rescheduling, farm bill momentum and appropriations
• behind the scenes lobbying dynamics during a pause
• Michigan’s 24% wholesale tax and illicit market advantage
• punitive taxes vs consumer safety and access
• regulator influence, misaligned incentives and CAMRA limits
• Vireo acquiring Schwazze debt as a restructuring blueprint
• debt service vs operational profitability and MSO viability
• Mana Beverages exit, AB 8 and blocked hemp beverage scale
• interstate scale, GMP quality and real QA vs state silos
• LeafLink pricing backlash, rollback and customer-first lessons
• conference season, planning cadence and community support
• live reading: “Ode to California” and a vision for legalization with access
If you've enjoyed this podcast, please drop a review in Apple Podcast, in Spotify, wherever you listen. Subscribe, share, do all the things like I asked
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High Spirits is brought to you by Vertosa and Wolf Meyer.
Your hosts are Ben Larson and AnnaRae Grabstein.
Follow High Spirits on LinkedIn.
We'd love to hear your thoughts. Who would you like to see on the show? What topics would you like to have us cover?
Visit our website www.highspiritspod.com and listen to all of our past shows.
THANK YOU to our audience. Your engagement encourages us to keep bringing you these thought-provoking conversations.
Remember to always stay curious, stay informed, and most importantly, keep your spirits high.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_02 (00:00):
Hey guys, it's Ben.
I recently read a letter uh liveat the inaugural Ignited Market
Spotlight in Anaheim,California.
An ode to California.
You may have been there towitness it yourself or have seen
the post on LinkedIn.
But in case you haven't, we'veincluded a recording at the very
end of this week's episode forthose that have requested it.
(00:23):
So stick around if you'd like tohear it.
Don't if you don't.
And with that, on with the show.
(00:47):
Recording Tuesday, October 10th,2025.
And we have a cannabis businessnews roundup for you today.
It's just me and Anna Ray.
Me calling in from Durham, NorthCarolina.
And Anna Ray, I presume you'restill at home.
SPEAKER_00 (01:01):
I am at my home studio, but not for long.
I'm uh flying to SouthernCalifornia this afternoon to go
to the Ignite Market Spotlighttomorrow.
SPEAKER_02 (01:11):
That's right.
Rendezvous in Anaheim.
So if you're if you're gonna bethere, come find us.
SPEAKER_00 (01:17):
Absolutely.
We've been so busy lately.
It's it's always hard to dothese news roundups because it's
extra work for us.
When we have a guest on and doan interview, it's can be all
about them.
But for the news roundup, wehave to make sure that we're
paying attention, thinking aboutthings, deciding what we want to
talk about.
SPEAKER_02 (01:34):
News outside our own little bubble of our own worlds.
SPEAKER_00 (01:39):
Yes, not breaching the confidentiality of our
actual work that pays us, asidefrom showing up here for all of
you guys.
But yeah, last night I had theopportunity to try my 2025
backyard harvest.
Um, my my flower was finally dryenough that we cut down a couple
weeks ago.
(01:59):
And uh it was great, veryuplifting.
And uh I just decided to starttexting you, thinking about how
I was unprepared for thisrecording and all the things
that I wanted to think about.
And then it started to feel likeit was an opportunity to write a
poem.
My my head was spinning, I wasthinking about emojis and and
(02:22):
and beautiful formatting.
I I was wondering, did you pickup on it when you were receiving
my late night messages?
SPEAKER_02 (02:28):
I did not, but it was of different, it was of a
different kind of uh voice, andnow it makes a lot more sense.
It's funny, I actually thinkabout this a lot with my
business partner, uh Dr.
Harold Hahn, and he definitelyhas his ideas in the evenings,
and I can always tell.
Uh, so I'm gonna be on thelookout now for you as well.
SPEAKER_00 (02:50):
Nice ideas, I love that.
That's not a term I knew about,and of course Harold has them.
Harold, if you want to messageme your ideas, I also am
curious.
SPEAKER_02 (03:02):
That's that is great.
I am uh I was not doing that.
I I am in North Carolina rightnow, I was visiting my friends
uh open book extracts.
So Dave Noondorfer, Oz Hackett.
Uh, they've been at it for along while now uh in the hemp
space, and hemp space hasevolved a lot, as we often talk
about in on this show.
And so it's interesting to heartheir perspective, uh, how their
(03:25):
business has shifted over theyears, and uh yeah, just hear
how things are going in NorthCarolina.
You know, it brings up a lot ofinteresting thoughts when I
think about just the cannabisbusiness in general, because
they've built this 75,000 squarefoot facility that they have
here in in North Carolina, andit's you know, licensed to the
Hilt, NSF, ISO, you know, GMP,all this kind of stuff.
(03:48):
And it's just like that is theopportunity with larger scale.
You know, we deal so much withthese state-by-state supply
chains in the regulated markets,and it's really hard to build
these big, sophisticatedplatforms.
And I think trying to bring theopportunity of these two
different marketplaces a littlebit closer together, it's like,
how do we get the the best ofboth sides?
SPEAKER_00 (04:10):
Yeah, Dave was uh one of our early guests when we
first talked about.
Oh, that's right.
So I think that he had just doneum a raise and brought in some
pretty big institutionalinvestors that we highlighted
with him.
And it's cool that you're outthere seeing that.
And 75,000 square feet ofmanufacturing, yeah, there's
(04:32):
there's very few businesses inthe regulated cannabis
marketplace that would beappropriately sized at that
footprint.
SPEAKER_02 (04:39):
Yeah, unfortunately, I think anyone that has built
for that sort of size in thespace, probably with the hopes
of seeing interstate commerce uhin their lifetime, have
literally gone out of businessor just struggling, right?
We uh obviously with beveragemanufacturing facilities, you
know, it's a lot of capex to getup to scale to produce the high
quality.
(04:59):
And so that's why we've seen somany beverage companies flood to
the hemp space, is just becauseconsistent quality products at a
reasonable price that itrequires that level of scale.
But you know, we saw similarthings with SkyMint in Michigan,
uh, when they basically werebuilding out an old stadium.
Sounded like a great idea.
You know, it could produce highquality products at scale, but
if you don't have the market toaddress, then it's all for
(05:22):
naught.
SPEAKER_00 (05:22):
Yep.
Forefront did the same thing inCalifornia.
Yep, it's happened a fewdifferent times in the regulated
space.
Well, I hope Open Book is ableto figure out how to utilize all
that manufacturing space.
SPEAKER_02 (05:33):
It's being utilized, yeah.
But yeah, come find out foryourselves.
It's it's uh it's a lovely team.
And in actually this time ofyear, North Carolina is very
nice.
No humidity, perfect weather.
Uh, it's been a nice littlevisit.
SPEAKER_00 (05:45):
Awesome.
I love the fall.
It's such a such a cool season.
So I I do have on a personallevel, I have a question about
what you think about high schoolreunions and if you've gone to
them.
SPEAKER_02 (05:58):
I have not gone to them.
Uh, you know, probably because Iwent to high school in Utah.
I don't know.
I was it was kind of a transienttime in my life.
Like I showed up as a sophomorein high school and I knew I was
leaving the state as soon as Igraduated high school.
I made friends and everything,but I don't know.
I just don't have this desire togo back and talk about my
adventures and weed.
SPEAKER_00 (06:18):
So I and I asked because I just got an invitation
to my 25-year high schoolreunion that is happening in San
Francisco, right?
San Francisco, yeah, in inDecember of this year.
And it's funny because the20-year reunion was during COVID
and they canceled it.
It didn't happen.
And my 15-year reunion, whichwas the one before that, I did
(06:39):
this crazy thing where I went aday late and I showed up to the
reunion, I got all dolled up, Iwas excited to see all these
people that I hadn't seen inyears.
And I got to the event space andI'm like looking around and I'm
like, where is the party?
Where, where is the high schoolreunion?
And I went up to somebody thatworked there.
It was like a restaurant andbar, and I was like, Where's
(07:01):
where's the reunion?
And they're like, Oh, I'm sosorry, ma'am.
That was yesterday.
And I completely messed it upand fully missed the high school
reunion.
So now it's 10 years afterthat's happened.
And I'm like, Do I want to go tothe high school reunion?
Is that is that a thing thatpeople do?
Do you bring your husband?
Do you there's a like like Ijust don't know.
(07:23):
I don't know what the protocolis for this type of thing.
So I'm curious if people outthere have advice or lessons
learned, should you go or shouldyou not to your high school
reunion?
I am I am on the fence at thispoint.
SPEAKER_02 (07:35):
I mean, if you feel a draw for it, do it and just do
whatever you feel.
I I just don't think there's aright answer.
I just have no emotional tie tohigh school.
I mean, it'd be interesting togo back and see if I recognize
anyone, but I'm notoriously badat recognizing people.
And sorry if you've witnessedthat.
I mean, do you hang out withpeople from high school?
Do you know not really?
SPEAKER_00 (07:56):
I do know people from high school.
Shout out to Randall Lee fromBridge Bank.
He went to high school.
Yeah.
SPEAKER_02 (08:03):
Randall's awesome.
Yeah, he didn't go to highschool with him.
SPEAKER_00 (08:08):
And um, there are other notable figures in in
cannabis that have gone to myhigh school or yeah, I don't
know.
I guess I'll I'll report back.
But if listeners out there haveany have any ideas or
suggestions for me, I'm veryopen.
SPEAKER_02 (08:22):
Amazing.
Well, get get Randall to go withyou.
SPEAKER_00 (08:25):
I think he was maybe the class behind me, but I'll
check.
I'm not sure.
Yeah.
SPEAKER_02 (08:29):
All right.
Well, should we jump into somenews?
SPEAKER_00 (08:31):
Sure.
Yeah, we can jump into somenews.
Where do you want to getstarted?
SPEAKER_02 (08:34):
Well, let's just start with the general state of
affairs.
Uh the federal government isshut down.
As we mentioned last week, therewas this video that Trump had
posted about CBD and ScheduleThree and the Farm Bill.
Not much context has been addedsince then, just a lot of
pontificating.
But it's kind of interestingwith everything kind of stalled
out from a discussionstandpoint, from a regulating
(08:56):
standpoint, until we get out ofthis, out of this shutdown.
SPEAKER_00 (08:59):
Yeah, so there's there's just this pause.
Nothing is gonna happen.
Yeah, you're right.
We were excited last week oflike, holy shit, the president's
talking about theendocannabinoid system.
That's a big deal.
Maybe there might be policyprogress.
SPEAKER_02 (09:13):
Uh well, and and even Trump, Trump keeps like
signaling that, oh, interestingnews is gonna come out.
I'm like, can interesting newscome out when there's a
shutdown?
I guess he's the one person thatcould.
And so maybe he startsunilaterally acting.
But I don't know politics wellenough to understand what he can
and can't do.
I don't think he really cares.
I think he just does.
SPEAKER_00 (09:33):
And from the perspective of of cannabis and
and hemp and policy change, Ithink that we're just stuck in
this sort of emulsion of thefederal government.
And so the federal government isall shut down, which means that
all policy, be it the industrythat we're focused on or
(09:54):
anything else, is is stuck andis sitting without change.
So our our main policy concernsare on pause, but so is
everything else.
SPEAKER_02 (10:03):
And those main policy concerns being the
appropriations bill, the farmbill, largely focused on hemp.
And what people are pushing forright now is a clean continuing
resolution, which wouldessentially bring the
legislature back and give themessentially a month, maybe a
month and a week, to get thisall figured out, which we'd be
(10:24):
right back, probably where weare, uh, at threat of the
government shutting down again.
SPEAKER_00 (10:29):
Yeah.
This this has been aninteresting shutdown process
because I think that broadlythere has been a perspective
that the Democrats have beenfairly un-aggressive with the
Republicans and have gottenrolled over in a lot of ways
over the past 18 months, whichis what landed Trump in in the
(10:50):
presidency.
And um, this shutdown, alongwith a lot of very proactive
trolling from Governor Newsome,seem is seemingly ushering in
possibly a new chapter of of theDemocrats pushing back on the
Republicans.
Yeah, possibly not gonna matteras long as the Republicans hold
(11:14):
hold both houses and seeminglycontrol the judiciary, but there
is elections coming midterms,and and this I think is the
Democrats trying to get someenergy behind them, or at least
to show that they have some typeof cojones going into these
elections.
SPEAKER_02 (11:33):
We'll see.
Just one last thing about likekind of the government shutdown.
I I know a lot of people feellike just nothing's happening,
but if you're active on thehill, if you're involved in
organizations, this is the timewhere the the lobbyists actually
really earn their keep becausethe Congress people are not
allowed to take meetings on theHill, um, but they sure as hell
(11:54):
are having conversations withthe people that they know and
trust.
And so interesting to thinkabout you know what
conversations are happeningbehind the scenes as we somewhat
approach uh an end to theshutdown, an ambiguous end, and
and how we will emerge with thatwith folks that are are more
educated on you know the topicsof of choice.
(12:16):
And so it'll be interesting tosee what kind of uh momentum
certain efforts have when thelegislature does eventually come
back.
SPEAKER_00 (12:24):
It's it's a great call out, and I hope I hope that
our lobbyists are representingour voice in a really strong and
proactive way right now.
Some of them.
Um okay, we'll set up the rightones, right?
Uh depending on the side jury.
The best ones.
Um let's let's talk aboutMichigan.
Um, oh Michigan.
(12:44):
You know, Michigan has been aninteresting cannabis market to
follow for quite some time.
There was there was a a race tothe bottom in price in in
Michigan, but also Michigan hasbeen outselling California on a
per capita basis as it relatesto cannabis consumption.
(13:04):
So there has been really like aroller coaster of emotions and
of opportunity and challengeswhen it comes to Michigan.
But Michigan this week passed a24% new tax, wholesale tax,
which they're saying is designedto bridge budget gaps and fund
infrastructure.
It's part of a broader budgetdeal in Michigan because the
(13:28):
state is really facing somepretty significant fiscal
shortfalls and is even lookingat potentially the federal
government having to step in andbail it out because of being so
tight on funds.
The tax is projected to generate$420 million annually.
Is that a joke?
(13:49):
Like what type of economist likedecided that it was going to be
$420 million?
Uh wow.
SPEAKER_02 (13:55):
They just reverse engineered it.
They're like, we need to end upat$420 million.
How much tax do we have to layeron top of the industry to
achieve that?
SPEAKER_00 (14:02):
Yeah, it just seems like a joke.
Uh yeah, thank you.
They probably did reverseengineer that.
SPEAKER_02 (14:07):
It's it is a joke.
It's a joke that this ishappening in every legal quote
unquote market.
It's just this perpetual likeholding down of an industry.
Like you're you're shoving yourhands in people's pockets and
just pulling out wads of cash,like before you even have viable
marketplaces, before they'reeven able to stabilize.
Like, can we not hire economistslike at the state capitals?
(14:31):
And all of them, all of them,Minnesota, California, Michigan,
like New York, it's it just goeson and on, and it's it's just
really tiring.
I I 24%'s an absurd tax.
And why why does the cannabisindustry have to show shoulder
infrastructure uh improvementsin a state?
And I'll acknowledge I I I readthe cannabis headline, so this
(14:54):
is an atrocity to me.
But is someone living inMichigan?
Like, is this happening acrossthe board to other businesses,
or are we just getting picked onbecause it's easy pick-ins?
SPEAKER_00 (15:04):
Yeah, it's it's such a good call out, and especially
like we were just talking aboutthe federal government.
The narrative from the federalgovernment is all about creating
American industry again.
And and cannabis is that.
This is like the new greatAmerican industry, fully
manufactured, cultivated,distributed, and sold all in
(15:25):
America by Americans.
And this feels as as punitive asthe tariffs that we are talking
about putting on countries thatare bringing products into the
US.
When what we're trying to do isincentivize these businesses to
succeed.
And it occurs to me that reallywhat this is is just going to
bolster illegal sellers inMichigan who don't have to pay
(15:48):
taxes and are going to be ableto deliver products to consumers
for a lot cheaper than theregulated market.
The state already is is sayingthat this will likely decrease
the overall unit sales in theregulated market in Michigan,
um, I think by something like 10to 14% or something.
But that that's just that's notacceptable.
(16:11):
That that's not okay.
I I don't know how they canjustify this.
So and not.
SPEAKER_02 (16:16):
I don't know.
I I I I keep wondering, youknow, what is the point of the
Cannabis Regulators Association?
Like these regulators meet andtalk and have a venue, and are
they just not aware of hownegatively like these things
(16:36):
impact the actual marketplace?
And I I I can't help but thinkthat it's it's deliberate.
I feel like they're tradingnotes on how to hold these
markets down and and and how tobasically make them fail.
Like, I I I don't want to be aconspiracy theorist, but it's
just like I've been to thesecamera meetings.
(16:58):
I we've talked to Gillian, we'vehad her on the show, like people
are talking, but they just keepmaking the wrong moves in every
state.
Yeah, and so it's like theentire like I don't know if it's
job security, the moreregulations, the more they have
jobs, but it's like you're notgonna have jobs if they all
fail.
Like in this is happening inCalifornia, like people are
(17:21):
celebrating the wins uh in inSacramento, but it's like
companies are still going intoreceivership every day, like big
companies.
Where does it end?
I I don't think it ends in aviable marketplace.
All right, so Gary Kaminsky, whowas a guest a while back as
well, left this comment earlier.
It says Canra does not make law,they administer and enforce.
(17:43):
We need to educate lawmakers.
And I'm gonna put an asterisknext to that and say that I used
to say that as well, but anyonedoing business in California
knows how much the DCC inparticular pushes their opinion
and agenda on lawmakers.
(18:04):
And I know Canera themselves donot quote unquote lobby the
legislature, uh, but theirconstituents, their their
members certainly are.
And so I have a lot of feelings.
I think I've mentioned this onthe show before about regulators
and their ability to use theirvoice uh with the legislature.
I just think there's a conflictof interest there.
(18:26):
I know they don't technicallywrite the laws, but they
certainly do have a lot ofinfluence over them.
SPEAKER_00 (18:32):
Well, so with taxes on tobacco and cigarettes, they
were always designedtransparently to be punitive to
consumers in hopes to driveconsumers away from consuming
these dangerous products.
SPEAKER_01 (18:45):
Right.
SPEAKER_00 (18:45):
And it's starting to look like the amount of taxes
that is being levied on legalcannabis is punitive also.
But the message is not that thisis an unsafe or harmful product.
And so why are we creatingpunitive taxes onto consumers
and to businesses?
It's just it's not aligned withthe broader understanding that
(19:07):
cannabis does have medicalbenefits, that is a better
alternative than cigarettes oralcohol.
Uh, we want to be encouragingpeople to do healthier things
and also encouraging these greatAmerican businesses to be able
to actually succeed and scalewith some level of stability.
And this isn't it.
SPEAKER_02 (19:25):
It's all broken.
I don't I don't know.
No, thank you.
You know, we're a a rich countryin the grand scheme of things,
but like the the decisions wemake don't serve the citizens,
like the the the quality of ourfood supply, the medicine, and
and how the cannabis industry isbeing treated, it is not in
service of the people.
SPEAKER_00 (19:46):
Well, in service of the shareholders, let's move to
our next story.
SPEAKER_02 (19:51):
All right, come on, let's pick it up.
Let's pick it up.
SPEAKER_00 (19:54):
So um potentially some good news for some people
for shareholders of of Vireo andpotentially shareholders of of
some debt of Schwaz.
Schwazly trading Schwaz Schwazi.
Is it Schwaz or Schwazi?
I'm gonna say Schwaz.
You can say Schwazi.
I don't know.
Uh Vireo is acquiring Schwoaz'sdebt, which is about$82 million
(20:19):
of debt on the face value thatthey're paying$62 million in
stock for.
And they are basically creatinga complex pathway to owning 86%
of the company.
This was reported in depth byMark Hauser and his cannabis
musing Substack.
And Mark calls this out as ahighly sophisticated
(20:40):
restructuring play that signalsincreasing financial mature
maturity in the cannabis sector.
And while it's complicated, it'salso fascinating because
conventional restructuring beingapplied in our space is actually
an example of how we arematuring as an industry and how
distressed assets can becomestabilized in a way that signals
(21:04):
long-term health of the industryfor those that come out on the
other side.
And Vireo has has really taken astrategic approach to this
roll-up strategy.
They've been largely rolling upsingle state operators.
And uh Schwaz, Schwazi is almosta single state operator, but
they're a dual state operatoroperating in Colorado and New
(21:26):
Mexico.
So now Vireo is in more marketsthan they were in before with
strong assets in an acquisitionpath that I think really
benefits the shareholders ofVireo because they're not even
paying cash for this debt.
It's all in stock.
I think that that this is thisis something that we're going to
(21:46):
continue to see, but it alsoshows just the level of kind of
financial engineering that'sgoing on at some of these top
publicly traded companies in ourspace.
SPEAKER_02 (21:56):
Yeah, it's interesting.
I'm I'm curious about yourperspective about, you know,
it's it's creative andsophisticated restructuring, but
does it put them into a strongeradvantage when we're talking
about how they align with otherMSOs in the space?
And then just the eventuality ofthe potential success of this
business.
We just got done talking aboutthe challenges that the
(22:18):
regulated markets are feelinglike all around the US.
Are these MSOs becoming moreviable over time, or is
something still going to have tofundamentally change to make
them viable?
And are they at some point goingto have to be threading a needle
to stay viable in whatever thatthat new ultimate destination
(22:38):
is?
SPEAKER_00 (22:39):
So, so much about what has created a situation
where they might be consideredunviable as debt.
And that's, you know, there wasthere was equity that came into
cannabis early on, but then thenext chapter of capital came in
the form of debt and oftensenior secured debt, with
debtors holding incredible powerover these companies.
(23:01):
And it really became servicingthe debt that created such
stress on the companies, ontheir day-to-day and on their
ability to continually operate.
So deals like this that create apathway for restructuring the
debt into equity and making itso that the company can free up
its cash flow to not have toservice debt in the same way, I
(23:23):
think does actually create apathway for more long-term
viability.
It's the debt, it's notnecessarily the business as a
standalone entity.
And I don't know much about theColorado and New Mexico
operations of Schwaz, but I doknow that the folks at Virio are
really focused on the companiesthat they target being
(23:45):
independently sustainable on anoperational level, and that
those companies can supportthemselves and that are
profitable.
But being profitable does notnecessarily mean that you have
enough cash to service yourdebt.
Right.
Those are different things.
And so when a company has toomuch debt and it becomes
unserviceable, even if they'reprofitable on a standalone
(24:07):
basis, they might be in asituation where they are no
longer a going concern withoutsome major shifts to the way
that their balance sheet isorganized.
So that that's what I do thinkis is the long tail that getting
out of debt and transitioningsome of that debt to equity
could could create a more stablepathway here for sure.
SPEAKER_02 (24:26):
Yeah.
Yeah.
Really interesting.
There's a non-cannabis relatedstory I kind of want to chat
about.
And that is Mana Beveragesclosing its bottling plant in
Sacramento after acquiring thelegacy California business in in
2024.
So Mana Beverages abruptlyshuttered its West Sacramento
(24:46):
bottling plant and ended allCalifornia operations, telling
workers it was exiting the stateentirely.
That's 400 employees.
Um this comes amid broaderweaknesses in the alcohol and
beverage sector as consumersshift toward moderation and
non-alcoholic alternatives.
I said it was not cannabisrelated, but you can probably
already tell where the thread isin my mind.
(25:09):
Yeah, I think there's a numberof different things that we can
talk about here.
We can talk about what it's likedoing business in California.
Uh, I have thoughts about that.
We can also talk about howCalifornia has recently passed
and signed AB 8, uh AssemblyBill 8, which essentially turns
uh hemp anything above 0.3% atany point in the supply chain,
(25:32):
which is different than thedefinition being applied across
the US.
It's now being called cannabisin California.
And so essentially puttingeverything into the regulated
system in California andblocking out the opportunity for
manufacturers like thisparticipating in the national uh
hemp beverage opportunity, uh,like is what's happening in in
(25:53):
many other states.
It's kind of sad.
It's a it's it's sad to see thebeverage industry in general
struggling the way it is andthen being blocked out from
accessing opportunities in inhemp and cannabis.
SPEAKER_00 (26:05):
Yeah, this is an example of an asset that's been
around for a long time with alot of people who both work
there and have jobs, but alsoproduction capacity.
That as alcohol sales aredeclining, that capacity could
have been used for somethingelse, like like how beverage
production.
And and as a result of thepolicy change that recently
(26:27):
happened uh with AB8, thatthat's not an option for this
infrastructure.
And and these factories that dobottling and beverage
manufacturing, it isn't a it isa multi-million dollar
investment to build to buildthis type of equipment.
And and it's part of the reasonwhy I think hemp beverage
(26:48):
companies are so invested in aninterstate commerce model is
that the infrastructure is socomplex, takes up so much space,
and and it already exists inmany places around the country
already with existing beveragesupply chains.
So to be able to utilizeinfrastructure to expand
(27:08):
opportunity where othercategories are declining just
makes sense uh from a basiclevel.
And and this is an example offor whatever reason, uh Mana
Beverages decided thatCalifornia was no longer for
them and what was going on intheir business was untenable and
it wasn't worth expanding, andthey couldn't expand into this
category at least.
SPEAKER_02 (27:28):
Well, yeah, in California we know, especially
even in Sacramento, right?
Like the the cost of just doingbusiness is infinitely more
expensive than than in otherplaces.
So it probably lasted herelonger than than maybe even it
should have.
But to your point, like theseare facilities that could cost
anywhere between 20 to 100million dollars, depending on
(27:49):
their scale.
And that kind of capex justcan't be covered in in the the
regulated cannabis spaceresponsibly, and and and we're
seeing a lot of those struggles.
And you know, obviously, I I'vebeen hyper focused on on the
beverage category for for awhile now.
And we're in this place wherethe the regulated cannabis
market generally ignores thebeverage category.
(28:13):
And and we see this inlegislation, we see this in
rules like AB8, where it's sofocused on the dispensary
marketplace, and theconsideration is taken out about
that we can actually producethese high-quality products like
at scale if we're relegated tothe state-by-state markets.
And and this is the catch 22,right?
We always want higher qual, wetalk about this all the time.
(28:35):
We talk about this as a benefitin the dis in the regulated
channels, is like qualityproduct, consumer safety.
It's like when you go into ainterstate commerce design
facility that has scale, likeyou see what quality really
could look like.
And so we're caught in thisplace where it's like, you know,
we're talking about the nationalmarketplace being not where you
(28:57):
go to find like qualityproducts, but in fact, it's the
only thing that can actuallysupport it.
SPEAKER_00 (29:01):
It's it's a great point because I think about the
evolution of the team structurethat I've seen in the regulated
cannabis markets, and that umearly on, as the markets were
launching, we had a lot ofcompliance and quality people
that worked in-house in inregulated cannabis companies.
And over time, as the marketsmatured, a lot of those roles
(29:23):
just couldn't be financiallysupported anymore.
And as a result of companiesneeding to build infrastructure
in multiple states, you just youcan't have a quality manager in
in every single place and acompliance manager.
And and so your point is welltaken in that scale provides the
opportunity for certain levelsof expertise to have a place in
(29:46):
the broader structure.
And and scaled beverage iscertainly an example of being
able to do scaled manufacturingin one place, means that there
can be investment andconsistency in a different way
than if you're having to set itup.
Over and over and over in 50different markets.
SPEAKER_02 (30:03):
Yeah.
SPEAKER_00 (30:04):
Well, I'm I'm really sorry for these folks um in West
Sacramento that lost their jobs.
And it's just it's no good.
California is a very challengingplace to run a business.
And just it keeps coming back tothat over and over again.
SPEAKER_02 (30:21):
Yeah.
I have a little bit to say aboutthis.
I'll save it for tomorrow whenwe're in Anaheim.
But yeah, doing business inCalifornia, which is, you know,
we love to tout that we're thefourth largest economy in the
world.
Uh, we are the home of a lot ofinnovation.
Uh Silicon Valley, an importantone.
But and and then there's justcannabis, and and we've often be
(30:43):
been identified as the largestcontiguous cannabis market in
the world.
And I just I just don't see howwe're investing in in either of
them right now, uh be itinnovation or or cannabis.
And it's really unfortunate.
SPEAKER_00 (30:55):
All right.
Well, looking at some morebusiness news, cultivated this
morning covered that LeafLink,which is the largest wholesale
marketplace for cannabis,regulated cannabis, just
adjusted its pricing model aftera backlash that moved them from
a monthly flat fee to astructure that took a percentage
(31:20):
of transactions.
And there was a huge uprising oftheir customers.
And uh people said that theirchange in their business model
would result in price hikes ofup to 700% for some of their
customers.
And very quickly, a lot of othertech platforms entered the
conversation who thought thatthey would never be able to
(31:41):
compete with the broad marketpenetration that LeafLink
already had and started offeringcompetitive products.
So really interesting moment tosee how when a company changes a
business model, it actuallycreates this opening for others
to enter.
And instead, what did they do?
They just announced that theyare rolling back their decision
(32:02):
and going back to a flat feemodel.
SPEAKER_02 (32:05):
All right.
SPEAKER_00 (32:05):
Well, what's the lesson here?
SPEAKER_02 (32:08):
A number of lessons.
Uh so we call this FAFO, right?
F-A-F-O.
Um, but no, I mean, the the mainpoint that I pull away from
this, uh, and I'm gonna givecredit to one of our board
members, Menno, um, who has beenan advisor to me over the years.
And she always she's famous foralways saying, like, do things
(32:29):
for your customers, don't do itto them.
And I think this was just one ofthose examples of they made a
business decision, rolled itout, and people probably found
out via like a mass email thatthey're that their payment
structure is changing.
And if there's anything thatwe've learned in the cannabis
industry, is people verysensitive to price.
Uh, it's like top of mind forfor it's this probably true
(32:52):
across all business, butdefinitely in the cannabis
industry where cash is supertight.
It's just don't do things toyour customers, like do things
in service of them and and andjust think it out.
Like, I do wonder about the themove to just roll it back and
and change it back to flat fee.
Like, is that going to besustainable, or they're are they
(33:12):
putting themselves into a toughposition to eventually have to
change it again?
But I don't know the the fullworkings, like maybe, maybe it's
a more sustainable structure.
I'm sure there's a bunch ofthought went into it.
I believe it's a new CEO.
Is that right?
SPEAKER_00 (33:25):
Yeah, it's a new CEO who's been been with the company
about three months, and I thinkhe came in after the the change
in the Yeah, maybe we'll havehim on and see what he has to
say.
It it brings up for me this thisconcept too about market
leadership and how confident wecan be in always being the
market leader, compared toneeding to look at that as a
(33:49):
position that that could be lostand that we need to hold on to
because Leaflink really has beenthe market leader in this space
for for a while.
And I wonder if they just had alittle bit more confidence that
that that was a sticky positionfor them, but that maybe it
wasn't quite as sticky as theythought.
SPEAKER_02 (34:10):
Yeah, I I I feel not I'm trying not to be holier than
thou, but like it's just a sucha foreign concept for me, right?
It's like I've long subscribedto the idea that it's like only
the paranoids survive.
And so just constantly lookingover your shoulder and
constantly believing thatsomeone's gonna be looking for a
better service at for cheaper.
(34:31):
Clearly, it was a misstep.
I think that was very obviouswithin the first week, and
hopefully the the new CEO gothis his arms wrapped around it.
Um, pricing is not easy in thisspace.
SPEAKER_00 (34:43):
That's very, very true.
Yeah.
Well, that is our last newsstory.
Is there anything else you wantto share before we wrap for
today?
SPEAKER_02 (34:50):
No, I'm really excited about uh Anaheim and the
Ignite uh conference.
Uh, this is a market spotlightfor California.
Elliot Lane and and uh PatrickLane, Javier, uh Hesse, they've
teamed up after running theBenzinga events and are now
relaunching it under the Igniteplatform.
(35:10):
And so excited to support that.
I know there's a whole number ofthem rolling out.
I I've also believed that I'llbe attending the DC one in in
just a few weeks.
And I think there was a couplemore that that are scheduled as
well.
SPEAKER_00 (35:22):
So yeah, I think we're doing two more before
Thanksgiving after theCalifornia one, DC and something
in the northeast, maybe like NewJersey, New York.
I'm not sure.
Much love to those guys.
It's it's those have been greatconferences for a lot of people
over the years, and we'll we'llsee if people show up like they
did and follow them on this newpath.
SPEAKER_02 (35:42):
But you and I both are, so yeah, and that's that's
a that's just one group out ofmany that are having events
right now.
October, I don't know.
October just feels insanelybusy.
I don't know if it's coming offof the summer months and it's
just the whiplash, but travelfor for conferences on top of
starting planning for for 2026.
You know, we're we're goingthrough our operating plan
(36:03):
planning and and really tryingto identify who we want to be
next year and what we're goingto achieve.
And and I think doing that whilestill trying to achieve our our
2025 plan, it's just feelsreally intense right now.
So if you're also feeling this,you're not alone.
SPEAKER_00 (36:17):
And if you're not feeling it, then you're doing
something wrong.
SPEAKER_02 (36:20):
Ooh, yeah, tell us more about that.
SPEAKER_00 (36:23):
I mean, I think that it is planning season.
So while it might be conferenceseason for some, it's also
planning season.
And so for those that are doingit and that are feeling the
pressure of trying to close outthe year strong, but also set
intentions for 2026, it's good.
You should you should be doingit.
And if you're not planning for2026 right now, then WTF, what
(36:47):
are you doing?
Uh well, okay.
SPEAKER_02 (36:50):
So so uh I will now that we're pretty far into the
year and it's been a relativelygood year for us, um, I will
admit that we did get started inOctober last year with our
operating plan, but because ofthe intensity and the pressures
of that Q4, we didn't actuallyratify it or launch it until the
end of Q1.
(37:10):
We might have gotten started,but things definitely got
delayed.
And I I felt very very bad aboutthat as we were getting our way
through Q1.
And so the goal this year is toactually deliver it in December
so that we can hit the groundrunning come Jan 1.
And maybe that in of itself isis also what we're feeling.
It's like this this pressurebecause we we didn't deliver
(37:33):
when we wanted to last year, andso now we're doing the extra
effort to make sure that we getit carried through um before the
new year starts.
SPEAKER_00 (37:42):
Self-imposed deadlines are super important,
and so it's great.
It's like it's okay that youdidn't finish it last year, but
you're gonna do better thisyear.
And you've you've dropped a pinon the board.
A little help from my friends,it's yeah, with a little help
from your friends, um, for sure.
So good stuff, everybody.
Do you have a last call for us,Ben?
SPEAKER_02 (38:02):
Oh, I don't think so.
I I think just come find uswherever we are in the world, be
it Anaheim, Anna Ray, and I willboth be there, DC, uh, with the
next Ignitic conference, andthen a bunch of beverage things
coming up for me.
We have NBWA in Vegas, which isthe beer wholesalers.
There's a lot happening there.
Who knows what else?
(38:23):
So come find us, come say hi.
And I think we're getting readyto book new guests on the show.
So if you have anyone you wantto hear from, if you have anyone
that might be an expert on atopic that we'd like to dive
into, please uh shoot us arecommendation, make a
connection, and and we'll getthem on the show.
But besides that, Anna Ray, I'mexcited to see you in just a few
(38:43):
hours as I depart from the EastCoast.
SPEAKER_00 (38:46):
Awesome, for sure.
Yeah, we'll we'll share anightcap in the hotel lobby.
SPEAKER_02 (38:50):
What about you?
Uh any any final calls for you?
SPEAKER_00 (38:53):
Yeah, I think the same thing.
Just just let's let's keep thecommunity vibes rolling.
I've I feel like through thesechallenging news cycles and
struggles in business, therelationships that I have in
this community and the peoplethat reach out to me and tell me
their wins or or bring me intotheir struggles just keep me
moving.
And I'm really appreciative forthat every day.
(39:14):
And uh I've I wake up ready forthe challenges that I just can't
even anticipate.
And uh it's exciting andinvigorating, and I'm I'm not
giving that off.
So sticking with it here foreverybody.
SPEAKER_02 (39:27):
Amazing.
All right, folks.
Thank you, Gary.
Thank you, everyone else, forengaging and leaving comments
during the show, and for likingand subscribing and sharing uh
the recordings everywhere youlisten to the podcast.
Thank you to our friends and ourfamily and our coworkers at
Virtosa and Wolfmeyer, and ofcourse our producer Eric
(39:50):
Rossetti.
If you've enjoyed this podcast,please drop a review in Apple
Podcast, in Spotify, whereveryou listen.
Subscribe, share, do all thethings like I asked.
And as always, folks, staycurious, stay informed, and most
importantly, keep your spiritshigh.
Until next time, that's theshow.
(40:13):
California.
What the hell?
The fourth largest economy inthe world, the birthplace of
Silicon Valley, and avoiders ofthe innovators' dilemma.
Once the largest, most promisingcannabis market in the world, a
state that built its identity oninnovation, risk taking, and
rebellion, is now chasing itsentrepreneurs and innovators out
(40:36):
of state, including this oneright here.
I was gonna read you the letterI recently wrote to Governor
Newsom, but I figured I'd do usall a favor and tailor it to
this audience.
If anyone does want to hear theoriginal, I have it right here.
But this is what I think we allneed to hear.
(40:59):
We've become defenders of thestatus quo, a state, an
industry, more interested inprotecting profits and
bureaucracy than building thefuture.
And I say that as someone wholoves the state dearly.
Born in the Bay, raised inSacramento, schooled in San Luis
Obispo, raising my family inWanna Creek, and now building
(41:21):
and scaling what is my thirdbusiness in Berkeley.
But I've had enough.
I've seen a lot of celebratingonline lately from Kakoa, from
licensed operators about AB 564,AB eight, SB 378.
Look, I know a lot of work wentinto these efforts from good,
(41:43):
well-intentioned people, but I'mleft wondering, what exactly are
we celebrating?
AB 564 was lauded as avoiding anexistential threat.
But hasn't that threat existedall along?
Doesn't it still exist?
If losing four percent of marginwas truly a death knell, then
(42:05):
wasn't the game already lost?
Most operators were already introuble with CDTFA, or
justifying not paying at all.
Fighting just to maintain thestatus quo isn't victory.
It should make you mad as hell.
And AB eight.
Really?
(42:25):
We're demonizing any detectablelevel of THC in hemp derived
products, banning full spectrumCBD from drugstores, tolerating
a three-year DCC onboardingperiod, shoving everything into
a dying, overregulatedmarketplace that doesn't value
low-dose therapeutic products,and pretending it's about saving
(42:46):
the kids?
Nah.
It's about competition.
It's about protectionism.
And it's perpetuating a stigmaof the one plant we all claim to
love and represent.
You're telling me we don'tunderstand this plant well
enough to write nuanced languagethat preserves access where it
(43:07):
should exist?
But if the answer is topermanently shove everything
into a broken system andisolating ourselves from the
outside world, then what exactlyare we protecting?
Certainly not our future.
Because this is notlegalization.
(43:28):
This is not what we fought forwhen we said legalize it.
This is not the will of thevoter like so many like to
claim.
And for the record, access isnot a 30-minute drive to a
dispensary in an industrialzone.
You want to know what legallooks like?
Legal is what we're building inthe TAC beverage category.
(43:51):
Legal is economies of scale,centralized manufacturing,
interstate commerce, realquality assurance, national
distribution, and access tocapital.
High dose products indispensaries with low-dose
products on liquor store shelvesor perhaps behind a drugstore
counter.
And look, I know hemp is farfrom perfect.
(44:12):
There's much work to do.
But it wasn't long ago we feltthe same way about regulating
cannabis.
Perhaps we still do.
Legal is walking into asupermarket and adding THC to
your basket next to your beer,Zen, or cold medicine.
It's ordering one at arestaurant, knowing it's
(44:33):
regulated, tested, and safe.
It's partnering withmanufacturers who hold CGMP,
ISO, and organic certifications.
It's truckloads heading tosupermarkets, not partial
pallets destined for inadequateshelf space.
That's what legal looks like.
That's what's happening acrossthe country.
(44:56):
And California, once a leader,is falling far behind.
So when you celebrate, make sureyou're celebrating a step toward
that vision.
Because California, this isn'tit.
Preserving the status quo yearafter year is just a slow death.
(45:17):
Allowing our representatives tomisrepresent us, letting our
regulators speak louder than ouroperators, that's not progress.
That's surrender.
We've outlawed innovation underthe guise of safety.
We're busy building walls whenwe should be building bridges
and doorways.
(45:38):
And we've mistaken control forleadership.
When those who understand thisplant most intimately still
choose to legislate out of fear,fear of hemp, fear of
competition, we lose sight ofthe bigger picture.
The movement that once stood foraccess and healing, and yes,
(46:00):
leveraging loopholes andinterpreting rules to advance
the cause is now defending aframework that excludes and
suffocates.
We've turned the spirit of yeswe can into the bureaucracy of
no you can't.
If California was once alighthouse, we've now become a
(46:21):
cautionary tale.
And if we keep this up, byprotecting turf instead of
purpose, we won't just loseleadership.
We'll lose relevance.
If there's one thing thecannabis industry has taught us,
it's how to pivot.
I get it.
We're all tired, but we aretruly leaving our roots behind
(46:45):
when we have given up on findingalternative solutions and
pathways forward and killinnovation that could lead to a
better world for our businessesand the consumer.
Just because I'm moving the coreof my business out of state, I'm
still a licensed cannabisoperator after all, doesn't mean
I'm giving up on California.
(47:06):
Quite the opposite.
Once I'm no longer under thethumb of Sacramento, I plan to
be an even bigger pain in theass.
Because this fight isn't over,because I still love California
and this industry, and I stillbelieve California can reclaim
what made it great.
If we choose vision over fear.
(47:54):
One plant for the people.
Thank you.
Hey guys, it's Ben.
I recently read a letter uh liveat the inaugural Ignited Market
Spotlight in Anaheim,California.
An ode to California.
You may have been there towitness it yourself or have seen
the post on LinkedIn.
But in case you haven't, we'veincluded a recording at the very
end of this week's episode forthose that have requested it.
(00:23):
So stick around if you'd like tohear it.
Don't if you don't.
And with that, on with the show.
(00:47):
Recording Tuesday, October 10th,2025.
And we have a cannabis businessnews roundup for you today.
It's just me and Anna Ray.
Me calling in from Durham, NorthCarolina.
And Anna Ray, I presume you'restill at home.
SPEAKER_00 (01:01):
I am at my home studio, but not for long.
I'm uh flying to SouthernCalifornia this afternoon to go
to the Ignite Market Spotlighttomorrow.
SPEAKER_02 (01:11):
That's right.
Rendezvous in Anaheim.
So if you're if you're gonna bethere, come find us.
SPEAKER_00 (01:17):
Absolutely.
We've been so busy lately.
It's it's always hard to dothese news roundups because it's
extra work for us.
When we have a guest on and doan interview, it's can be all
about them.
But for the news roundup, wehave to make sure that we're
paying attention, thinking aboutthings, deciding what we want to
talk about.
SPEAKER_02 (01:34):
News outside our own little bubble of our own worlds.
SPEAKER_00 (01:39):
Yes, not breaching the confidentiality of our
actual work that pays us, asidefrom showing up here for all of
you guys.
But yeah, last night I had theopportunity to try my 2025
backyard harvest.
Um, my my flower was finally dryenough that we cut down a couple
weeks ago.
(01:59):
And uh it was great, veryuplifting.
And uh I just decided to starttexting you, thinking about how
I was unprepared for thisrecording and all the things
that I wanted to think about.
And then it started to feel likeit was an opportunity to write a
poem.
My my head was spinning, I wasthinking about emojis and and
(02:22):
and beautiful formatting.
I I was wondering, did you pickup on it when you were receiving
my late night messages?
SPEAKER_02 (02:28):
I did not, but it was of different, it was of a
different kind of uh voice, andnow it makes a lot more sense.
It's funny, I actually thinkabout this a lot with my
business partner, uh Dr.
Harold Hahn, and he definitelyhas his ideas in the evenings,
and I can always tell.
Uh, so I'm gonna be on thelookout now for you as well.
SPEAKER_00 (02:50):
Nice ideas, I love that.
That's not a term I knew about,and of course Harold has them.
Harold, if you want to messageme your ideas, I also am
curious.
SPEAKER_02 (03:02):
That's that is great.
I am uh I was not doing that.
I I am in North Carolina rightnow, I was visiting my friends
uh open book extracts.
So Dave Noondorfer, Oz Hackett.
Uh, they've been at it for along while now uh in the hemp
space, and hemp space hasevolved a lot, as we often talk
about in on this show.
And so it's interesting to heartheir perspective, uh, how their
(03:25):
business has shifted over theyears, and uh yeah, just hear
how things are going in NorthCarolina.
You know, it brings up a lot ofinteresting thoughts when I
think about just the cannabisbusiness in general, because
they've built this 75,000 squarefoot facility that they have
here in in North Carolina, andit's you know, licensed to the
Hilt, NSF, ISO, you know, GMP,all this kind of stuff.
(03:48):
And it's just like that is theopportunity with larger scale.
You know, we deal so much withthese state-by-state supply
chains in the regulated markets,and it's really hard to build
these big, sophisticatedplatforms.
And I think trying to bring theopportunity of these two
different marketplaces a littlebit closer together, it's like,
how do we get the the best ofboth sides?
SPEAKER_00 (04:10):
Yeah, Dave was uh one of our early guests when we
first talked about.
Oh, that's right.
So I think that he had just doneum a raise and brought in some
pretty big institutionalinvestors that we highlighted
with him.
And it's cool that you're outthere seeing that.
And 75,000 square feet ofmanufacturing, yeah, there's
(04:32):
there's very few businesses inthe regulated cannabis
marketplace that would beappropriately sized at that
footprint.
SPEAKER_02 (04:39):
Yeah, unfortunately, I think anyone that has built
for that sort of size in thespace, probably with the hopes
of seeing interstate commerce uhin their lifetime, have
literally gone out of businessor just struggling, right?
We uh obviously with beveragemanufacturing facilities, you
know, it's a lot of capex to getup to scale to produce the high
quality.
(04:59):
And so that's why we've seen somany beverage companies flood to
the hemp space, is just becauseconsistent quality products at a
reasonable price that itrequires that level of scale.
But you know, we saw similarthings with SkyMint in Michigan,
uh, when they basically werebuilding out an old stadium.
Sounded like a great idea.
You know, it could produce highquality products at scale, but
if you don't have the market toaddress, then it's all for
(05:22):
naught.
SPEAKER_00 (05:22):
Yep.
Forefront did the same thing inCalifornia.
Yep, it's happened a fewdifferent times in the regulated
space.
Well, I hope Open Book is ableto figure out how to utilize all
that manufacturing space.
SPEAKER_02 (05:33):
It's being utilized, yeah.
But yeah, come find out foryourselves.
It's it's uh it's a lovely team.
And in actually this time ofyear, North Carolina is very
nice.
No humidity, perfect weather.
Uh, it's been a nice littlevisit.
SPEAKER_00 (05:45):
Awesome.
I love the fall.
It's such a such a cool season.
So I I do have on a personallevel, I have a question about
what you think about high schoolreunions and if you've gone to
them.
SPEAKER_02 (05:58):
I have not gone to them.
Uh, you know, probably because Iwent to high school in Utah.
I don't know.
I was it was kind of a transienttime in my life.
Like I showed up as a sophomorein high school and I knew I was
leaving the state as soon as Igraduated high school.
I made friends and everything,but I don't know.
I just don't have this desire togo back and talk about my
adventures and weed.
SPEAKER_00 (06:18):
So I and I asked because I just got an invitation
to my 25-year high schoolreunion that is happening in San
Francisco, right?
San Francisco, yeah, in inDecember of this year.
And it's funny because the20-year reunion was during COVID
and they canceled it.
It didn't happen.
And my 15-year reunion, whichwas the one before that, I did
(06:39):
this crazy thing where I went aday late and I showed up to the
reunion, I got all dolled up, Iwas excited to see all these
people that I hadn't seen inyears.
And I got to the event space andI'm like looking around and I'm
like, where is the party?
Where, where is the high schoolreunion?
And I went up to somebody thatworked there.
It was like a restaurant andbar, and I was like, Where's
(07:01):
where's the reunion?
And they're like, Oh, I'm sosorry, ma'am.
That was yesterday.
And I completely messed it upand fully missed the high school
reunion.
So now it's 10 years afterthat's happened.
And I'm like, Do I want to go tothe high school reunion?
Is that is that a thing thatpeople do?
Do you bring your husband?
Do you there's a like like Ijust don't know.
(07:23):
I don't know what the protocolis for this type of thing.
So I'm curious if people outthere have advice or lessons
learned, should you go or shouldyou not to your high school
reunion?
I am I am on the fence at thispoint.
SPEAKER_02 (07:35):
I mean, if you feel a draw for it, do it and just do
whatever you feel.
I I just don't think there's aright answer.
I just have no emotional tie tohigh school.
I mean, it'd be interesting togo back and see if I recognize
anyone, but I'm notoriously badat recognizing people.
And sorry if you've witnessedthat.
I mean, do you hang out withpeople from high school?
Do you know not really?
SPEAKER_00 (07:56):
I do know people from high school.
Shout out to Randall Lee fromBridge Bank.
He went to high school.
Yeah.
SPEAKER_02 (08:03):
Randall's awesome.
Yeah, he didn't go to highschool with him.
SPEAKER_00 (08:08):
And um, there are other notable figures in in
cannabis that have gone to myhigh school or yeah, I don't
know.
I guess I'll I'll report back.
But if listeners out there haveany have any ideas or
suggestions for me, I'm veryopen.
SPEAKER_02 (08:22):
Amazing.
Well, get get Randall to go withyou.
SPEAKER_00 (08:25):
I think he was maybe the class behind me, but I'll
check.
I'm not sure.
Yeah.
SPEAKER_02 (08:29):
All right.
Well, should we jump into somenews?
SPEAKER_00 (08:31):
Sure.
Yeah, we can jump into somenews.
Where do you want to getstarted?
SPEAKER_02 (08:34):
Well, let's just start with the general state of
affairs.
Uh the federal government isshut down.
As we mentioned last week, therewas this video that Trump had
posted about CBD and ScheduleThree and the Farm Bill.
Not much context has been addedsince then, just a lot of
pontificating.
But it's kind of interestingwith everything kind of stalled
out from a discussionstandpoint, from a regulating
(08:56):
standpoint, until we get out ofthis, out of this shutdown.
SPEAKER_00 (08:59):
Yeah, so there's there's just this pause.
Nothing is gonna happen.
Yeah, you're right.
We were excited last week oflike, holy shit, the president's
talking about theendocannabinoid system.
That's a big deal.
Maybe there might be policyprogress.
SPEAKER_02 (09:13):
Uh well, and and even Trump, Trump keeps like
signaling that, oh, interestingnews is gonna come out.
I'm like, can interesting newscome out when there's a
shutdown?
I guess he's the one person thatcould.
And so maybe he startsunilaterally acting.
But I don't know politics wellenough to understand what he can
and can't do.
I don't think he really cares.
I think he just does.
SPEAKER_00 (09:33):
And from the perspective of of cannabis and
and hemp and policy change, Ithink that we're just stuck in
this sort of emulsion of thefederal government.
And so the federal government isall shut down, which means that
all policy, be it the industrythat we're focused on or
(09:54):
anything else, is is stuck andis sitting without change.
So our our main policy concernsare on pause, but so is
everything else.
SPEAKER_02 (10:03):
And those main policy concerns being the
appropriations bill, the farmbill, largely focused on hemp.
And what people are pushing forright now is a clean continuing
resolution, which wouldessentially bring the
legislature back and give themessentially a month, maybe a
month and a week, to get thisall figured out, which we'd be
(10:24):
right back, probably where weare, uh, at threat of the
government shutting down again.
SPEAKER_00 (10:29):
Yeah.
This this has been aninteresting shutdown process
because I think that broadlythere has been a perspective
that the Democrats have beenfairly un-aggressive with the
Republicans and have gottenrolled over in a lot of ways
over the past 18 months, whichis what landed Trump in in the
(10:50):
presidency.
And um, this shutdown, alongwith a lot of very proactive
trolling from Governor Newsome,seem is seemingly ushering in
possibly a new chapter of of theDemocrats pushing back on the
Republicans.
Yeah, possibly not gonna matteras long as the Republicans hold
(11:14):
hold both houses and seeminglycontrol the judiciary, but there
is elections coming midterms,and and this I think is the
Democrats trying to get someenergy behind them, or at least
to show that they have some typeof cojones going into these
elections.
SPEAKER_02 (11:33):
We'll see.
Just one last thing about likekind of the government shutdown.
I I know a lot of people feellike just nothing's happening,
but if you're active on thehill, if you're involved in
organizations, this is the timewhere the the lobbyists actually
really earn their keep becausethe Congress people are not
allowed to take meetings on theHill, um, but they sure as hell
(11:54):
are having conversations withthe people that they know and
trust.
And so interesting to thinkabout you know what
conversations are happeningbehind the scenes as we somewhat
approach uh an end to theshutdown, an ambiguous end, and
and how we will emerge with thatwith folks that are are more
educated on you know the topicsof of choice.
(12:16):
And so it'll be interesting tosee what kind of uh momentum
certain efforts have when thelegislature does eventually come
back.
SPEAKER_00 (12:24):
It's it's a great call out, and I hope I hope that
our lobbyists are representingour voice in a really strong and
proactive way right now.
Some of them.
Um okay, we'll set up the rightones, right?
Uh depending on the side jury.
The best ones.
Um let's let's talk aboutMichigan.
Um, oh Michigan.
(12:44):
You know, Michigan has been aninteresting cannabis market to
follow for quite some time.
There was there was a a race tothe bottom in price in in
Michigan, but also Michigan hasbeen outselling California on a
per capita basis as it relatesto cannabis consumption.
(13:04):
So there has been really like aroller coaster of emotions and
of opportunity and challengeswhen it comes to Michigan.
But Michigan this week passed a24% new tax, wholesale tax,
which they're saying is designedto bridge budget gaps and fund
infrastructure.
It's part of a broader budgetdeal in Michigan because the
(13:28):
state is really facing somepretty significant fiscal
shortfalls and is even lookingat potentially the federal
government having to step in andbail it out because of being so
tight on funds.
The tax is projected to generate$420 million annually.
Is that a joke?
(13:49):
Like what type of economist likedecided that it was going to be
$420 million?
Uh wow.
SPEAKER_02 (13:55):
They just reverse engineered it.
They're like, we need to end upat$420 million.
How much tax do we have to layeron top of the industry to
achieve that?
SPEAKER_00 (14:02):
Yeah, it just seems like a joke.
Uh yeah, thank you.
They probably did reverseengineer that.
SPEAKER_02 (14:07):
It's it is a joke.
It's a joke that this ishappening in every legal quote
unquote market.
It's just this perpetual likeholding down of an industry.
Like you're you're shoving yourhands in people's pockets and
just pulling out wads of cash,like before you even have viable
marketplaces, before they'reeven able to stabilize.
Like, can we not hire economistslike at the state capitals?
(14:31):
And all of them, all of them,Minnesota, California, Michigan,
like New York, it's it just goeson and on, and it's it's just
really tiring.
I I 24%'s an absurd tax.
And why why does the cannabisindustry have to show shoulder
infrastructure uh improvementsin a state?
And I'll acknowledge I I I readthe cannabis headline, so this
(14:54):
is an atrocity to me.
But is someone living inMichigan?
Like, is this happening acrossthe board to other businesses,
or are we just getting picked onbecause it's easy pick-ins?
SPEAKER_00 (15:04):
Yeah, it's it's such a good call out, and especially
like we were just talking aboutthe federal government.
The narrative from the federalgovernment is all about creating
American industry again.
And and cannabis is that.
This is like the new greatAmerican industry, fully
manufactured, cultivated,distributed, and sold all in
(15:25):
America by Americans.
And this feels as as punitive asthe tariffs that we are talking
about putting on countries thatare bringing products into the
US.
When what we're trying to do isincentivize these businesses to
succeed.
And it occurs to me that reallywhat this is is just going to
bolster illegal sellers inMichigan who don't have to pay
(15:48):
taxes and are going to be ableto deliver products to consumers
for a lot cheaper than theregulated market.
The state already is is sayingthat this will likely decrease
the overall unit sales in theregulated market in Michigan,
um, I think by something like 10to 14% or something.
But that that's just that's notacceptable.
(16:11):
That that's not okay.
I I don't know how they canjustify this.
So and not.
SPEAKER_02 (16:16):
I don't know.
I I I I keep wondering, youknow, what is the point of the
Cannabis Regulators Association?
Like these regulators meet andtalk and have a venue, and are
they just not aware of hownegatively like these things
(16:36):
impact the actual marketplace?
And I I I can't help but thinkthat it's it's deliberate.
I feel like they're tradingnotes on how to hold these
markets down and and and how tobasically make them fail.
Like, I I I don't want to be aconspiracy theorist, but it's
just like I've been to thesecamera meetings.
(16:58):
I we've talked to Gillian, we'vehad her on the show, like people
are talking, but they just keepmaking the wrong moves in every
state.
Yeah, and so it's like theentire like I don't know if it's
job security, the moreregulations, the more they have
jobs, but it's like you're notgonna have jobs if they all
fail.
Like in this is happening inCalifornia, like people are
(17:21):
celebrating the wins uh in inSacramento, but it's like
companies are still going intoreceivership every day, like big
companies.
Where does it end?
I I don't think it ends in aviable marketplace.
All right, so Gary Kaminsky, whowas a guest a while back as
well, left this comment earlier.
It says Canra does not make law,they administer and enforce.
(17:43):
We need to educate lawmakers.
And I'm gonna put an asterisknext to that and say that I used
to say that as well, but anyonedoing business in California
knows how much the DCC inparticular pushes their opinion
and agenda on lawmakers.
(18:04):
And I know Canera themselves donot quote unquote lobby the
legislature, uh, but theirconstituents, their their
members certainly are.
And so I have a lot of feelings.
I think I've mentioned this onthe show before about regulators
and their ability to use theirvoice uh with the legislature.
I just think there's a conflictof interest there.
(18:26):
I know they don't technicallywrite the laws, but they
certainly do have a lot ofinfluence over them.
SPEAKER_00 (18:32):
Well, so with taxes on tobacco and cigarettes, they
were always designedtransparently to be punitive to
consumers in hopes to driveconsumers away from consuming
these dangerous products.
SPEAKER_01 (18:45):
Right.
SPEAKER_00 (18:45):
And it's starting to look like the amount of taxes
that is being levied on legalcannabis is punitive also.
But the message is not that thisis an unsafe or harmful product.
And so why are we creatingpunitive taxes onto consumers
and to businesses?
It's just it's not aligned withthe broader understanding that
(19:07):
cannabis does have medicalbenefits, that is a better
alternative than cigarettes oralcohol.
Uh, we want to be encouragingpeople to do healthier things
and also encouraging these greatAmerican businesses to be able
to actually succeed and scalewith some level of stability.
And this isn't it.
SPEAKER_02 (19:25):
It's all broken.
I don't I don't know.
No, thank you.
You know, we're a a rich countryin the grand scheme of things,
but like the the decisions wemake don't serve the citizens,
like the the the quality of ourfood supply, the medicine, and
and how the cannabis industry isbeing treated, it is not in
service of the people.
SPEAKER_00 (19:46):
Well, in service of the shareholders, let's move to
our next story.
SPEAKER_02 (19:51):
All right, come on, let's pick it up.
Let's pick it up.
SPEAKER_00 (19:54):
So um potentially some good news for some people
for shareholders of of Vireo andpotentially shareholders of of
some debt of Schwaz.
Schwazly trading Schwaz Schwazi.
Is it Schwaz or Schwazi?
I'm gonna say Schwaz.
You can say Schwazi.
I don't know.
Uh Vireo is acquiring Schwoaz'sdebt, which is about$82 million
(20:19):
of debt on the face value thatthey're paying$62 million in
stock for.
And they are basically creatinga complex pathway to owning 86%
of the company.
This was reported in depth byMark Hauser and his cannabis
musing Substack.
And Mark calls this out as ahighly sophisticated
(20:40):
restructuring play that signalsincreasing financial mature
maturity in the cannabis sector.
And while it's complicated, it'salso fascinating because
conventional restructuring beingapplied in our space is actually
an example of how we arematuring as an industry and how
distressed assets can becomestabilized in a way that signals
(21:04):
long-term health of the industryfor those that come out on the
other side.
And Vireo has has really taken astrategic approach to this
roll-up strategy.
They've been largely rolling upsingle state operators.
And uh Schwaz, Schwazi is almosta single state operator, but
they're a dual state operatoroperating in Colorado and New
(21:26):
Mexico.
So now Vireo is in more marketsthan they were in before with
strong assets in an acquisitionpath that I think really
benefits the shareholders ofVireo because they're not even
paying cash for this debt.
It's all in stock.
I think that that this is thisis something that we're going to
(21:46):
continue to see, but it alsoshows just the level of kind of
financial engineering that'sgoing on at some of these top
publicly traded companies in ourspace.
SPEAKER_02 (21:56):
Yeah, it's interesting.
I'm I'm curious about yourperspective about, you know,
it's it's creative andsophisticated restructuring, but
does it put them into a strongeradvantage when we're talking
about how they align with otherMSOs in the space?
And then just the eventuality ofthe potential success of this
business.
We just got done talking aboutthe challenges that the
(22:18):
regulated markets are feelinglike all around the US.
Are these MSOs becoming moreviable over time, or is
something still going to have tofundamentally change to make
them viable?
And are they at some point goingto have to be threading a needle
to stay viable in whatever thatthat new ultimate destination
(22:38):
is?
SPEAKER_00 (22:39):
So, so much about what has created a situation
where they might be consideredunviable as debt.
And that's, you know, there wasthere was equity that came into
cannabis early on, but then thenext chapter of capital came in
the form of debt and oftensenior secured debt, with
debtors holding incredible powerover these companies.
(23:01):
And it really became servicingthe debt that created such
stress on the companies, ontheir day-to-day and on their
ability to continually operate.
So deals like this that create apathway for restructuring the
debt into equity and making itso that the company can free up
its cash flow to not have toservice debt in the same way, I
(23:23):
think does actually create apathway for more long-term
viability.
It's the debt, it's notnecessarily the business as a
standalone entity.
And I don't know much about theColorado and New Mexico
operations of Schwaz, but I doknow that the folks at Virio are
really focused on the companiesthat they target being
(23:45):
independently sustainable on anoperational level, and that
those companies can supportthemselves and that are
profitable.
But being profitable does notnecessarily mean that you have
enough cash to service yourdebt.
Right.
Those are different things.
And so when a company has toomuch debt and it becomes
unserviceable, even if they'reprofitable on a standalone
(24:07):
basis, they might be in asituation where they are no
longer a going concern withoutsome major shifts to the way
that their balance sheet isorganized.
So that that's what I do thinkis is the long tail that getting
out of debt and transitioningsome of that debt to equity
could could create a more stablepathway here for sure.
SPEAKER_02 (24:26):
Yeah.
Yeah.
Really interesting.
There's a non-cannabis relatedstory I kind of want to chat
about.
And that is Mana Beveragesclosing its bottling plant in
Sacramento after acquiring thelegacy California business in in
2024.
So Mana Beverages abruptlyshuttered its West Sacramento
(24:46):
bottling plant and ended allCalifornia operations, telling
workers it was exiting the stateentirely.
That's 400 employees.
Um this comes amid broaderweaknesses in the alcohol and
beverage sector as consumersshift toward moderation and
non-alcoholic alternatives.
I said it was not cannabisrelated, but you can probably
already tell where the thread isin my mind.
(25:09):
Yeah, I think there's a numberof different things that we can
talk about here.
We can talk about what it's likedoing business in California.
Uh, I have thoughts about that.
We can also talk about howCalifornia has recently passed
and signed AB 8, uh AssemblyBill 8, which essentially turns
uh hemp anything above 0.3% atany point in the supply chain,
(25:32):
which is different than thedefinition being applied across
the US.
It's now being called cannabisin California.
And so essentially puttingeverything into the regulated
system in California andblocking out the opportunity for
manufacturers like thisparticipating in the national uh
hemp beverage opportunity, uh,like is what's happening in in
(25:53):
many other states.
It's kind of sad.
It's a it's it's sad to see thebeverage industry in general
struggling the way it is andthen being blocked out from
accessing opportunities in inhemp and cannabis.
SPEAKER_00 (26:05):
Yeah, this is an example of an asset that's been
around for a long time with alot of people who both work
there and have jobs, but alsoproduction capacity.
That as alcohol sales aredeclining, that capacity could
have been used for somethingelse, like like how beverage
production.
And and as a result of thepolicy change that recently
(26:27):
happened uh with AB8, thatthat's not an option for this
infrastructure.
And and these factories that dobottling and beverage
manufacturing, it isn't a it isa multi-million dollar
investment to build to buildthis type of equipment.
And and it's part of the reasonwhy I think hemp beverage
(26:48):
companies are so invested in aninterstate commerce model is
that the infrastructure is socomplex, takes up so much space,
and and it already exists inmany places around the country
already with existing beveragesupply chains.
So to be able to utilizeinfrastructure to expand
(27:08):
opportunity where othercategories are declining just
makes sense uh from a basiclevel.
And and this is an example offor whatever reason, uh Mana
Beverages decided thatCalifornia was no longer for
them and what was going on intheir business was untenable and
it wasn't worth expanding, andthey couldn't expand into this
category at least.
SPEAKER_02 (27:28):
Well, yeah, in California we know, especially
even in Sacramento, right?
Like the the cost of just doingbusiness is infinitely more
expensive than than in otherplaces.
So it probably lasted herelonger than than maybe even it
should have.
But to your point, like theseare facilities that could cost
anywhere between 20 to 100million dollars, depending on
(27:49):
their scale.
And that kind of capex justcan't be covered in in the the
regulated cannabis spaceresponsibly, and and and we're
seeing a lot of those struggles.
And you know, obviously, I I'vebeen hyper focused on on the
beverage category for for awhile now.
And we're in this place wherethe the regulated cannabis
market generally ignores thebeverage category.
(28:13):
And and we see this inlegislation, we see this in
rules like AB8, where it's sofocused on the dispensary
marketplace, and theconsideration is taken out about
that we can actually producethese high-quality products like
at scale if we're relegated tothe state-by-state markets.
And and this is the catch 22,right?
We always want higher qual, wetalk about this all the time.
(28:35):
We talk about this as a benefitin the dis in the regulated
channels, is like qualityproduct, consumer safety.
It's like when you go into ainterstate commerce design
facility that has scale, likeyou see what quality really
could look like.
And so we're caught in thisplace where it's like, you know,
we're talking about the nationalmarketplace being not where you
(28:57):
go to find like qualityproducts, but in fact, it's the
only thing that can actuallysupport it.
SPEAKER_00 (29:01):
It's it's a great point because I think about the
evolution of the team structurethat I've seen in the regulated
cannabis markets, and that umearly on, as the markets were
launching, we had a lot ofcompliance and quality people
that worked in-house in inregulated cannabis companies.
And over time, as the marketsmatured, a lot of those roles
(29:23):
just couldn't be financiallysupported anymore.
And as a result of companiesneeding to build infrastructure
in multiple states, you just youcan't have a quality manager in
in every single place and acompliance manager.
And and so your point is welltaken in that scale provides the
opportunity for certain levelsof expertise to have a place in
(29:46):
the broader structure.
And and scaled beverage iscertainly an example of being
able to do scaled manufacturingin one place, means that there
can be investment andconsistency in a different way
than if you're having to set itup.
Over and over and over in 50different markets.
SPEAKER_02 (30:03):
Yeah.
SPEAKER_00 (30:04):
Well, I'm I'm really sorry for these folks um in West
Sacramento that lost their jobs.
And it's just it's no good.
California is a very challengingplace to run a business.
And just it keeps coming back tothat over and over again.
SPEAKER_02 (30:21):
Yeah.
I have a little bit to say aboutthis.
I'll save it for tomorrow whenwe're in Anaheim.
But yeah, doing business inCalifornia, which is, you know,
we love to tout that we're thefourth largest economy in the
world.
Uh, we are the home of a lot ofinnovation.
Uh Silicon Valley, an importantone.
But and and then there's justcannabis, and and we've often be
(30:43):
been identified as the largestcontiguous cannabis market in
the world.
And I just I just don't see howwe're investing in in either of
them right now, uh be itinnovation or or cannabis.
And it's really unfortunate.
SPEAKER_00 (30:55):
All right.
Well, looking at some morebusiness news, cultivated this
morning covered that LeafLink,which is the largest wholesale
marketplace for cannabis,regulated cannabis, just
adjusted its pricing model aftera backlash that moved them from
a monthly flat fee to astructure that took a percentage
(31:20):
of transactions.
And there was a huge uprising oftheir customers.
And uh people said that theirchange in their business model
would result in price hikes ofup to 700% for some of their
customers.
And very quickly, a lot of othertech platforms entered the
conversation who thought thatthey would never be able to
(31:41):
compete with the broad marketpenetration that LeafLink
already had and started offeringcompetitive products.
So really interesting moment tosee how when a company changes a
business model, it actuallycreates this opening for others
to enter.
And instead, what did they do?
They just announced that theyare rolling back their decision
(32:02):
and going back to a flat feemodel.
SPEAKER_02 (32:05):
All right.
SPEAKER_00 (32:05):
Well, what's the lesson here?
SPEAKER_02 (32:08):
A number of lessons.
Uh so we call this FAFO, right?
F-A-F-O.
Um, but no, I mean, the the mainpoint that I pull away from
this, uh, and I'm gonna givecredit to one of our board
members, Menno, um, who has beenan advisor to me over the years.
And she always she's famous foralways saying, like, do things
(32:29):
for your customers, don't do itto them.
And I think this was just one ofthose examples of they made a
business decision, rolled itout, and people probably found
out via like a mass email thatthey're that their payment
structure is changing.
And if there's anything thatwe've learned in the cannabis
industry, is people verysensitive to price.
Uh, it's like top of mind forfor it's this probably true
(32:52):
across all business, butdefinitely in the cannabis
industry where cash is supertight.
It's just don't do things toyour customers, like do things
in service of them and and andjust think it out.
Like, I do wonder about the themove to just roll it back and
and change it back to flat fee.
Like, is that going to besustainable, or they're are they
(33:12):
putting themselves into a toughposition to eventually have to
change it again?
But I don't know the the fullworkings, like maybe, maybe it's
a more sustainable structure.
I'm sure there's a bunch ofthought went into it.
I believe it's a new CEO.
Is that right?
SPEAKER_00 (33:25):
Yeah, it's a new CEO who's been been with the company
about three months, and I thinkhe came in after the the change
in the Yeah, maybe we'll havehim on and see what he has to
say.
It it brings up for me this thisconcept too about market
leadership and how confident wecan be in always being the
market leader, compared toneeding to look at that as a
(33:49):
position that that could be lostand that we need to hold on to
because Leaflink really has beenthe market leader in this space
for for a while.
And I wonder if they just had alittle bit more confidence that
that that was a sticky positionfor them, but that maybe it
wasn't quite as sticky as theythought.
SPEAKER_02 (34:10):
Yeah, I I I feel not I'm trying not to be holier than
thou, but like it's just a sucha foreign concept for me, right?
It's like I've long subscribedto the idea that it's like only
the paranoids survive.
And so just constantly lookingover your shoulder and
constantly believing thatsomeone's gonna be looking for a
better service at for cheaper.
(34:31):
Clearly, it was a misstep.
I think that was very obviouswithin the first week, and
hopefully the the new CEO gothis his arms wrapped around it.
Um, pricing is not easy in thisspace.
SPEAKER_00 (34:43):
That's very, very true.
Yeah.
Well, that is our last newsstory.
Is there anything else you wantto share before we wrap for
today?
SPEAKER_02 (34:50):
No, I'm really excited about uh Anaheim and the
Ignite uh conference.
Uh, this is a market spotlightfor California.
Elliot Lane and and uh PatrickLane, Javier, uh Hesse, they've
teamed up after running theBenzinga events and are now
relaunching it under the Igniteplatform.
(35:10):
And so excited to support that.
I know there's a whole number ofthem rolling out.
I I've also believed that I'llbe attending the DC one in in
just a few weeks.
And I think there was a couplemore that that are scheduled as
well.
SPEAKER_00 (35:22):
So yeah, I think we're doing two more before
Thanksgiving after theCalifornia one, DC and something
in the northeast, maybe like NewJersey, New York.
I'm not sure.
Much love to those guys.
It's it's those have been greatconferences for a lot of people
over the years, and we'll we'llsee if people show up like they
did and follow them on this newpath.
SPEAKER_02 (35:42):
But you and I both are, so yeah, and that's that's
a that's just one group out ofmany that are having events
right now.
October, I don't know.
October just feels insanelybusy.
I don't know if it's coming offof the summer months and it's
just the whiplash, but travelfor for conferences on top of
starting planning for for 2026.
You know, we're we're goingthrough our operating plan
(36:03):
planning and and really tryingto identify who we want to be
next year and what we're goingto achieve.
And and I think doing that whilestill trying to achieve our our
2025 plan, it's just feelsreally intense right now.
So if you're also feeling this,you're not alone.
SPEAKER_00 (36:17):
And if you're not feeling it, then you're doing
something wrong.
SPEAKER_02 (36:20):
Ooh, yeah, tell us more about that.
SPEAKER_00 (36:23):
I mean, I think that it is planning season.
So while it might be conferenceseason for some, it's also
planning season.
And so for those that are doingit and that are feeling the
pressure of trying to close outthe year strong, but also set
intentions for 2026, it's good.
You should you should be doingit.
And if you're not planning for2026 right now, then WTF, what
(36:47):
are you doing?
Uh well, okay.
SPEAKER_02 (36:50):
So so uh I will now that we're pretty far into the
year and it's been a relativelygood year for us, um, I will
admit that we did get started inOctober last year with our
operating plan, but because ofthe intensity and the pressures
of that Q4, we didn't actuallyratify it or launch it until the
end of Q1.
(37:10):
We might have gotten started,but things definitely got
delayed.
And I I felt very very bad aboutthat as we were getting our way
through Q1.
And so the goal this year is toactually deliver it in December
so that we can hit the groundrunning come Jan 1.
And maybe that in of itself isis also what we're feeling.
It's like this this pressurebecause we we didn't deliver
(37:33):
when we wanted to last year, andso now we're doing the extra
effort to make sure that we getit carried through um before the
new year starts.
SPEAKER_00 (37:42):
Self-imposed deadlines are super important,
and so it's great.
It's like it's okay that youdidn't finish it last year, but
you're gonna do better thisyear.
And you've you've dropped a pinon the board.
A little help from my friends,it's yeah, with a little help
from your friends, um, for sure.
So good stuff, everybody.
Do you have a last call for us,Ben?
SPEAKER_02 (38:02):
Oh, I don't think so.
I I think just come find uswherever we are in the world, be
it Anaheim, Anna Ray, and I willboth be there, DC, uh, with the
next Ignitic conference, andthen a bunch of beverage things
coming up for me.
We have NBWA in Vegas, which isthe beer wholesalers.
There's a lot happening there.
Who knows what else?
(38:23):
So come find us, come say hi.
And I think we're getting readyto book new guests on the show.
So if you have anyone you wantto hear from, if you have anyone
that might be an expert on atopic that we'd like to dive
into, please uh shoot us arecommendation, make a
connection, and and we'll getthem on the show.
But besides that, Anna Ray, I'mexcited to see you in just a few
(38:43):
hours as I depart from the EastCoast.
SPEAKER_00 (38:46):
Awesome, for sure.
Yeah, we'll we'll share anightcap in the hotel lobby.
SPEAKER_02 (38:50):
What about you?
Uh any any final calls for you?
SPEAKER_00 (38:53):
Yeah, I think the same thing.
Just just let's let's keep thecommunity vibes rolling.
I've I feel like through thesechallenging news cycles and
struggles in business, therelationships that I have in
this community and the peoplethat reach out to me and tell me
their wins or or bring me intotheir struggles just keep me
moving.
And I'm really appreciative forthat every day.
(39:14):
And uh I've I wake up ready forthe challenges that I just can't
even anticipate.
And uh it's exciting andinvigorating, and I'm I'm not
giving that off.
So sticking with it here foreverybody.
SPEAKER_02 (39:27):
Amazing.
All right, folks.
Thank you, Gary.
Thank you, everyone else, forengaging and leaving comments
during the show, and for likingand subscribing and sharing uh
the recordings everywhere youlisten to the podcast.
Thank you to our friends and ourfamily and our coworkers at
Virtosa and Wolfmeyer, and ofcourse our producer Eric
(39:50):
Rossetti.
If you've enjoyed this podcast,please drop a review in Apple
Podcast, in Spotify, whereveryou listen.
Subscribe, share, do all thethings like I asked.
And as always, folks, staycurious, stay informed, and most
importantly, keep your spiritshigh.
Until next time, that's theshow.
(40:13):
California.
What the hell?
The fourth largest economy inthe world, the birthplace of
Silicon Valley, and avoiders ofthe innovators' dilemma.
Once the largest, most promisingcannabis market in the world, a
state that built its identity oninnovation, risk taking, and
rebellion, is now chasing itsentrepreneurs and innovators out
(40:36):
of state, including this oneright here.
I was gonna read you the letterI recently wrote to Governor
Newsom, but I figured I'd do usall a favor and tailor it to
this audience.
If anyone does want to hear theoriginal, I have it right here.
But this is what I think we allneed to hear.
(40:59):
We've become defenders of thestatus quo, a state, an
industry, more interested inprotecting profits and
bureaucracy than building thefuture.
And I say that as someone wholoves the state dearly.
Born in the Bay, raised inSacramento, schooled in San Luis
Obispo, raising my family inWanna Creek, and now building
(41:21):
and scaling what is my thirdbusiness in Berkeley.
But I've had enough.
I've seen a lot of celebratingonline lately from Kakoa, from
licensed operators about AB 564,AB eight, SB 378.
Look, I know a lot of work wentinto these efforts from good,
(41:43):
well-intentioned people, but I'mleft wondering, what exactly are
we celebrating?
AB 564 was lauded as avoiding anexistential threat.
But hasn't that threat existedall along?
Doesn't it still exist?
If losing four percent of marginwas truly a death knell, then
(42:05):
wasn't the game already lost?
Most operators were already introuble with CDTFA, or
justifying not paying at all.
Fighting just to maintain thestatus quo isn't victory.
It should make you mad as hell.
And AB eight.
Really?
(42:25):
We're demonizing any detectablelevel of THC in hemp derived
products, banning full spectrumCBD from drugstores, tolerating
a three-year DCC onboardingperiod, shoving everything into
a dying, overregulatedmarketplace that doesn't value
low-dose therapeutic products,and pretending it's about saving
(42:46):
the kids?
Nah.
It's about competition.
It's about protectionism.
And it's perpetuating a stigmaof the one plant we all claim to
love and represent.
You're telling me we don'tunderstand this plant well
enough to write nuanced languagethat preserves access where it
(43:07):
should exist?
But if the answer is topermanently shove everything
into a broken system andisolating ourselves from the
outside world, then what exactlyare we protecting?
Certainly not our future.
Because this is notlegalization.
(43:28):
This is not what we fought forwhen we said legalize it.
This is not the will of thevoter like so many like to
claim.
And for the record, access isnot a 30-minute drive to a
dispensary in an industrialzone.
You want to know what legallooks like?
Legal is what we're building inthe TAC beverage category.
(43:51):
Legal is economies of scale,centralized manufacturing,
interstate commerce, realquality assurance, national
distribution, and access tocapital.
High dose products indispensaries with low-dose
products on liquor store shelvesor perhaps behind a drugstore
counter.
And look, I know hemp is farfrom perfect.
(44:12):
There's much work to do.
But it wasn't long ago we feltthe same way about regulating
cannabis.
Perhaps we still do.
Legal is walking into asupermarket and adding THC to
your basket next to your beer,Zen, or cold medicine.
It's ordering one at arestaurant, knowing it's
(44:33):
regulated, tested, and safe.
It's partnering withmanufacturers who hold CGMP,
ISO, and organic certifications.
It's truckloads heading tosupermarkets, not partial
pallets destined for inadequateshelf space.
That's what legal looks like.
That's what's happening acrossthe country.
(44:56):
And California, once a leader,is falling far behind.
So when you celebrate, make sureyou're celebrating a step toward
that vision.
Because California, this isn'tit.
Preserving the status quo yearafter year is just a slow death.
(45:17):
Allowing our representatives tomisrepresent us, letting our
regulators speak louder than ouroperators, that's not progress.
That's surrender.
We've outlawed innovation underthe guise of safety.
We're busy building walls whenwe should be building bridges
and doorways.
(45:38):
And we've mistaken control forleadership.
When those who understand thisplant most intimately still
choose to legislate out of fear,fear of hemp, fear of
competition, we lose sight ofthe bigger picture.
The movement that once stood foraccess and healing, and yes,
(46:00):
leveraging loopholes andinterpreting rules to advance
the cause is now defending aframework that excludes and
suffocates.
We've turned the spirit of yeswe can into the bureaucracy of
no you can't.
If California was once alighthouse, we've now become a
(46:21):
cautionary tale.
And if we keep this up, byprotecting turf instead of
purpose, we won't just loseleadership.
We'll lose relevance.
If there's one thing thecannabis industry has taught us,
it's how to pivot.
I get it.
We're all tired, but we aretruly leaving our roots behind
(46:45):
when we have given up on findingalternative solutions and
pathways forward and killinnovation that could lead to a
better world for our businessesand the consumer.
Just because I'm moving the coreof my business out of state, I'm
still a licensed cannabisoperator after all, doesn't mean
I'm giving up on California.
(47:06):
Quite the opposite.
Once I'm no longer under thethumb of Sacramento, I plan to
be an even bigger pain in theass.
Because this fight isn't over,because I still love California
and this industry, and I stillbelieve California can reclaim
what made it great.
If we choose vision over fear.
(47:54):
One plant for the people.
Thank you.
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