0:00

Hey everybody , welcome to High Spirits

0:02

. It is our new look

0:04

. Look at us , Anna Rae

0:06

. You're looking great today . Everybody

0:09

so are you . It

0:11

is episode 41 and we're recording

0:13

May 2nd 2024

0:16

. And yeah , a lot of

0:18

big news this week . We

0:20

have rescheduling , caoa

0:22

, farm Bill news and

0:24

we mentioned some other things earlier in the week , but I

0:27

don't even know if we'll get to that . But

0:29

first , anna Rae , what's top of mind

0:31

for you today ?

0:32

Obviously , all the news that we're going to be talking about

0:34

today is huge . There's just so much excitement

0:37

federal action . In

0:39

terms of the way I've been spending my week , probably

0:42

one of the highlights for me this week has

0:44

been that I've been learning a lot and

0:46

digging into the way Canadian

0:48

companies are exporting

0:51

cannabis around the world and this

0:53

really exciting supply chain opportunity

0:56

out of Canada that is

0:58

alive and well and , with

1:00

all of the different global policy

1:02

changes happening in places like Australia

1:05

and Germany and Portugal , it's

1:07

just opening up incredible

1:10

opportunities for producers in Canada

1:12

who are used to EUGMP . So

1:14

I've been learning about EUGMP

1:16

, talking with producers and

1:20

really enjoying

1:23

learning about how different countries

1:26

are approaching cannabis .

1:28

Yeah , your buddy Mike Elkin , his

1:31

ears are burning . I love it

1:33

. We're going to have to sit down and talk about

1:35

that .

1:36

Well , shout out to Mike Elkin for

1:38

really actually being a person that

1:40

got me curious about the whole topic , so

1:42

I'll be calling you later , mike .

1:44

Yeah , we have a big operation

1:47

with our partner up in Toronto

1:49

, tyma , and we've

1:51

actually been talking about setting up those

1:53

pipelines . But I need to

1:55

hear the update from you . I've been traveling

1:58

again this week . Luckily I'm back at home , but I

2:00

was down in LA for the beverage

2:02

forum . It was not

2:05

cannabis related , in

2:07

fact . I found it very interesting , sat

2:09

through a day and a half of

2:12

talks all about beverage a lot

2:14

of alcohol , non-alcohol , functional beverages

2:16

, mood enhancement is the new big

2:18

category and not

2:20

a mention of THC . So I thought that was

2:22

just really interesting . It

2:25

tells me how early we are still , but

2:27

also exciting in the fact that we

2:30

have that much more room for growth . Like

2:32

we always talk about total

2:34

wine and DoorDash and what's

2:36

happening across hemp and cannabis

2:38

and still just the beginning

2:41

. You know we always say in cannabis

2:43

like it's the first inning . In

2:45

some ways it really still is , which

2:48

is kind of wild .

2:49

Yeah , first inning , man , I don't know when

2:51

do we get to the second inning . How do we know when we

2:53

win ?

2:54

It's the longest effing innings

2:56

ever .

2:57

I mean , I think that , within

3:00

the context of the work that I do with leaders

3:03

, I often ask people like how do

3:05

you know when you're winning , and what does winning

3:07

look like ? And I

3:10

don't know if I have really thought through the answer

3:12

. When it comes

3:14

to this incremental reform , some

3:17

of this stuff feels like wins , but is it winning

3:19

? No , we're not there

3:21

. There are wins along the road

3:24

, though , for sure .

3:25

Yeah , incrementalism right , like

3:32

one step in front of another , as long as you're making progress which progress takes

3:34

weird shape sometimes , but we're getting there . It

3:37

does feel like , if you look at the big picture

3:39

, that things are progressing , and

3:41

the big news that we're going to be embarking

3:44

on today is a sign of that , I

3:46

think .

3:47

Absolutely Well , should we jump in

3:49

? I think today's

3:51

going to be a little different for listeners . It's one

3:53

of the days that it's just going to be me and Ben , and

3:55

we are going to be

3:58

diving into a bunch of news

4:00

stories that happened this

4:02

week and just

4:04

bantering back and forth . We

4:07

love doing these episodes and we've

4:09

got great feedback about them . We

4:11

don't always need a guest . We've got plenty to

4:14

say on our own . And since

4:16

today also marks the first day

4:18

with our new brand which probably

4:20

doesn't mean that much to most of you , but you

4:23

know , when we started this journey over a year

4:25

ago , Ben , you were a real

4:27

advocate for just building in public . I

4:29

was concerned about making

4:31

everything perfect before we started

4:34

and I wanted to have a logo and the right

4:36

music at the beginning and figure out

4:38

if we needed an editor . And

4:40

, ben , you told me , let's , let's just

4:42

, let's just put our conversations

4:44

on the internet and see if anyone cares

4:46

. And we

4:49

did .

4:49

Yeah .

4:50

And a lot of you have come along for

4:52

the ride and supported us as

4:54

we built in public . And so , as

4:57

we were getting towards the end of last year

4:59

, we thought , okay , we're going to just keep

5:01

cleaning up a little bit and try to

5:03

take this to the next level . So , that's

5:05

what we've done . We launched an

5:07

Instagram account this week you guys

5:09

should go follow us and

5:12

we're going to keep trying to incrementally

5:14

have little wins to broaden the platform

5:17

and make sure that the conversation stays fresh .

5:19

I mean , it is a hallmark of the cannabis industry

5:21

, right , it's a we're . We're building

5:23

this industry in public , so to speak

5:26

, and yeah

5:28

, I love it and all the positive

5:30

feedback that we've received . No

5:32

one has at least said it to my face that they're

5:35

tired of hearing us on the internet , so I'm

5:37

just going to take that as a positive signal

5:39

to keep going .

5:42

Yeah , we don't have that many trolls . I don't know , maybe

5:44

that means we haven't actually made it .

5:46

That's exactly what that means .

5:52

So we're going to be talking about three

5:54

main big stories today . The

5:56

first is the rescheduling announcement

5:59

that the DEA is pushing forward with Schedule 3 . That the DEA is pushing

6:01

forward with schedule three . The

6:03

second is that the Senate

6:06

Democrats uh , reintroduced

6:08

the CAO , a legalization

6:11

bill , in the Senate . And

6:13

then we're also going to be touching on

6:15

the announcement

6:17

about the new farm bill language , uh

6:20

, that came out yesterday and

6:22

specifically how it relates to intoxicating

6:25

hemp . So jumping

6:27

right in rescheduling . So

6:30

April 30th , just

6:33

a couple of days ago , we heard

6:35

that the DEA is going

6:37

to be moving forward with the process

6:40

to move cannabis

6:43

from schedule one to schedule three . There

6:46

was a lot of excitement

6:48

about the news

6:50

. The market definitely

6:53

responded . We saw cannabis stocks

6:55

shoot up , some as high as 60%

6:57

gains within the

6:59

day . Most of the

7:01

massive gains were temporary

7:04

and

7:06

now , a couple of days later , we've seen that the majority of cannabis stocks have seen a gain

7:08

of somewhere in the 15 to

7:11

25% , which is still a lot

7:13

. So huge

7:15

, huge news on that side

7:17

. In terms of what this

7:19

actually means for a pathway for implementation

7:22

, there's a couple of ways to look

7:24

at it , but at the low

7:26

end and at the fastest implementation

7:29

of moving to Schedule 3

7:31

, there are two key steps

7:33

. The White House Office

7:35

of Management and Budget has 90 days

7:37

to review the rule , and then the

7:40

next step is a public comment period that

7:42

lasts 60 days , and then the

7:44

DEA has to respond to comments

7:47

, and that could take a couple months

7:49

, but it could also take a year , and

7:53

we're seeing two really prominent

7:55

voices in this discussion have very

7:57

different opinions about how long it will take

7:59

. Howard Sklomberg

8:01

, from a former FDA

8:03

official , predicted that it would

8:05

happen before November , which is about

8:07

as optimistic as it could get based on those

8:10

numbers . But

8:15

then we've also heard from Shane Pennington , who's a cannabis policy lawyer and administrative expert

8:17

, and he thinks it could take three years . So a little

8:19

uncertain of when the rules and

8:21

regulations that the DEA will

8:23

create will launch , but

8:25

still huge news .

8:28

Absolutely .

8:28

How'd this make you feel Ben when you heard it ?

8:30

Yeah , I'll just read

8:33

a note that I sent to my

8:35

team . Okay Sounds great

8:37

. I had

8:39

thoughts Full

8:42

stop . This is a

8:44

momentous point for the industry and the history

8:46

and its history right Like nothing

8:50

like this has yet occurred . And

8:52

actually Wes uh

8:55

from mammoth said it really good yesterday

8:57

on on the cannabis beverage association board call

8:59

. He said if for some

9:01

reason we were in schedule

9:03

three and someone tried

9:05

to move us to schedule one , how

9:08

negative would that be . And

9:10

so the way we should be feeling about that

9:12

is the inverse of that feeling right . And

9:15

so it is really a momentous occasion

9:17

and it's a great signal and it's an incremental

9:20

step forward . The potential

9:22

tax benefits that cannabis businesses

9:25

will see is huge . And sorry

9:27

I'm not reading , but now I'm just thinking . But

9:30

it is just that right and

9:33

it is not legalization , it does not

9:35

right the wrongs of the war on drugs that

9:37

we absolutely have to keep fighting

9:39

for justice for the people and the

9:41

plant and the industry

9:44

should feel this as

9:46

wind in the sails to double down

9:48

on efforts and continue to do

9:50

the policy work on the Hill

9:53

. Yeah , if you have

9:55

public stocks , I hope you sold them on Wednesday

9:57

because there will be a chilling effect

9:59

, as there always is after news like this when

10:02

we realize it's not a

10:04

panacea for solving

10:06

everyone's problems in cannabis

10:08

.

10:09

I hear you . I agree that it is

10:11

a momentous occasion and I also

10:13

see how it's not enough . I was receiving

10:16

so many texts as it was happening

10:18

and one of them , from

10:20

Leah Heiss just said I'm sobbing

10:22

and you know she's someone

10:25

who entered this industry as a medical

10:27

patient and has had like an incredible

10:29

career as an executive after that , but

10:31

cannabis truly has changed her life and I think

10:33

that for people who have

10:36

a really strong commitment to

10:38

the power and

10:40

the validity of medical cannabis , this

10:42

is very reinforcing and the validity

10:44

of medical cannabis . This is very reinforcing . This is saying

10:47

that , like we

10:51

see you , we believe that there is not just an abuse potential for cannabis . Cannabis might

10:53

be able to help people to be determined , but now we can study

10:55

it and that

10:57

that's just . I think it's really important

10:59

on the psyche of a lot of people that have

11:01

been in this movement for a long time and

11:04

it has been .

11:05

It has been a long time 87

11:07

years since the marijuana tax

11:10

act uh was put in place , 54

11:13

years since the controlled substances act

11:15

like damn near

11:17

a century of of

11:19

work just

11:21

to just to see some

11:23

progress in the right direction . It's

11:26

massive .

11:27

It is massive , and the fact that

11:29

the schedule even exists for

11:31

drugs in general

11:33

is a part of

11:35

the drug war creation that

11:38

happened over the past century

11:40

, but really over the past 50 years , and

11:43

so the work of dismantling

11:45

the drug war , this

11:47

is a part of it . This is one of those bricks

11:50

on the wall . So I'm

11:52

celebrating and and let's

11:54

talk about the the opportunity

11:57

presented by getting rid of 280E

11:59

. I mean , holy shit , I'm

12:02

just going to say it because this

12:04

is a big effing deal

12:06

. Every

12:08

single cannabis operator has

12:11

such a challenge

12:14

when it comes to structuring their

12:16

business from an accounting perspective

12:18

that other businesses do

12:20

not face and it's been unfair

12:22

since the beginning . And not only is it

12:24

a tax structuring issue , it's

12:27

it's a massive extra tax

12:29

liability huge and

12:31

it's been one of the things that I have been

12:33

skeptical about kind

12:36

of create . I've been skeptical that the feds would

12:38

move on this rescheduling

12:40

because of this , because I think that the federal

12:42

government loves the revenue

12:44

that they're getting from the industry and

12:47

maybe it will be replaced

12:49

by some other type of federal

12:51

excise tax and we'll talk about that

12:53

in a little while . But but this , this

12:56

could really free up a lot of capital for businesses

12:58

in a way that just is fair . You know

13:00

, if other businesses get to write off

13:02

marketing expenses , cannabis companies companies

13:04

should too .

13:06

Well , the most important thing as a business like

13:08

that you rely on in a typical business right

13:10

is like in the first few years , especially

13:12

if you're operating at a loss , that

13:15

you're not going to have to shell out even more cash

13:17

and send it to the federal government . But that

13:19

is actually happening right now , like people

13:21

are sending all their profits

13:24

to the federal government and

13:27

still having a remaining

13:29

tax bill , and so to

13:31

have that go away and be able to make

13:33

the standard deductions and you

13:36

know if you are , you know

13:38

running at a razor thin , you know margin

13:40

or something like that , like not having

13:43

to go into debt because you

13:45

don't yet have a viable business yeah , I

13:47

wonder when 280e

13:50

really is is recognized

13:52

as going away , if

13:54

if the the prices

13:56

are going to shift across the supply chain

13:58

and the costs will just go down for

14:01

wholesale product and at retail

14:03

, or if the money will

14:05

stay into the pockets of operators

14:07

.

14:08

We've just seen so much price compression across

14:10

the industry and so often

14:12

, even when there is tax reform , it's

14:16

just been metabolized so quickly

14:18

because there's just been so much oversupply

14:20

. So I mean to be determined

14:22

how much people are able to hold on to these

14:24

tax wins .

14:27

So I remember postulating on that in

14:29

California when we removed the

14:31

cultivation tax , but

14:33

I don't know if we actually witnessed

14:35

it and tell me if I'm wrong

14:37

. I'm not that close to the

14:39

flower market , but I do think

14:41

it was around the same time where the

14:43

market was rebounding from such severe

14:45

compression that we actually were

14:48

kind of getting back to this point of sustainability

14:51

, right , which is what you hope for in

14:53

a freer market . Is like things figure themselves

14:55

out . You can't operate an unsustainable

14:58

business forever . I

15:00

don't know , I'm just I'm trying to think from a positive

15:02

angle on this one . Like especially the

15:04

MSOs , where they have this massive federal

15:06

tax bill that's largely going unpaid

15:09

, right , like I think the last count

15:11

was like well over a billion

15:13

dollars in total with

15:24

your tax bill , hopefully and I don't think it's sustainable in the long run to absorb that

15:26

and reduce costs only to

15:28

once again find yourself operating at a loss

15:30

. So maybe there's an opportunity

15:32

to see an equilibrium here

15:36

and maybe it just gets absorbed into people

15:38

trying to be somewhat profitable .

15:41

I sure hope so . I mean , you brought up when California

15:43

eliminated the cultivation tax and

15:45

I wish I was more optimistic

15:47

about that money staying in the pockets of cultivators

15:49

. I think what happened is just the price

15:52

of weed mostly became reduced

15:55

by the cost of the tax that was

15:57

removed and that's

16:01

mostly what went down . It's hard to say

16:03

exactly because , you're right , it was at a time of

16:05

major price fluctuation across the market

16:07

and maybe folks were able to hold on

16:09

to it for a little while . But everyone

16:11

in the supply chain knew what was going on and

16:13

knew that all of a sudden the cultivators had

16:16

around $200 a pound more

16:18

in their pocket that they didn't

16:20

have to pay to the state and

16:23

it just worked itself out . So

16:27

we will see . I

16:31

think on the con side of

16:33

rescheduling or just on the what's

16:36

left to be done , I think it is important

16:38

to platform a lot of the

16:40

voices that are talking about

16:42

what's next and

16:45

what we're not going to see with rescheduling

16:48

, with the 280E going away

16:50

and medical being recognized

16:52

and I think you said some of it . But

16:55

let's go a little deeper . I think that

16:57

what this doesn't do is it

17:00

really does nothing on the social justice front

17:02

in terms of people that are

17:04

currently in jail for cannabis or

17:07

any type of criminal penalties that

17:09

are on the books are

17:11

still there , are left unchanged . We

17:15

are not seeing anything that's

17:18

related to interstate commerce

17:20

. There isn't any

17:23

new clarity around what regulations

17:25

will be , and there

17:28

are some fears that people

17:30

think that this will now invite pharmaceutical

17:32

companies into

17:35

the space . Do

17:37

you have those fears ?

17:38

Yeah , uh , starting at the

17:40

end , no , um , so

17:42

as far as pharmaceutical companies

17:44

coming into space , I'm they've

17:46

been allowed to come into the space ever

17:48

since it was on schedule one . Um , nothing

17:51

was stopping them , and building

17:53

pharmaceutical products out of cannabis is is

17:56

just very challenging . It's , it's , it's not

17:58

, it's not going to be in the form of flower

18:00

, because flower is not highly repeatable , like

18:03

, if you understand , like , what it takes to get

18:05

, like a drug you know approved

18:07

, you have to go through an immense

18:09

amount of proof that you have a very

18:11

highly stringent , you know repeatable

18:14

process for the resulting product . And

18:17

so it's just like the plant and

18:19

the pharmaceutical industry , kind of like oil

18:21

and water . Pharmaceutical

18:24

industry kind of like oil and water , uh , not to mention the pharmaceutical industry

18:27

makes a lot of money off of making sure that they aren't carrying people's uh issues

18:29

with low-cost items . I don't

18:31

think the intention of any of this is is

18:33

to affect what the states have

18:35

have enacted . Um

18:38

, again , you know , going back to wesley heinz

18:40

comment , if

18:42

we were moving from schedule three to schedule

18:44

one , like we would

18:46

expect whatever the states had

18:49

done in the past to

18:51

to withstand that , that shift in

18:53

the very least , right , and

18:55

so why would that not be the same

18:57

, like going in a more positive

18:59

direction as far as everything

19:02

else goes ? You know , I

19:04

, yeah , I

19:06

don't see a ton of benefit to it

19:08

. So we have so much more work to do on

19:11

on the that's what I was saying Like

19:13

we have so much more work to do on on

19:15

the lobbying front . Um , because

19:17

we need legalization

19:19

or decriminalization , we need to get people

19:22

out of jail , we need to make sure that more people

19:24

don't go into jail , we need to make sure that , yeah

19:26

, eventually we do get interstate commerce

19:28

. And none of that is going to happen with

19:31

any sort of rescheduling . So

19:33

, uh , it's deschedule

19:36

or bust , but I'll take the incremental

19:38

step . That's the difference , you know . I think there

19:40

was a big deschedule or bust movement

19:42

that kind of meant that like we

19:44

don't want rescheduling , I'll

19:47

take the rescheduling , but

19:50

that just means like we wake up in

19:52

the morning and we get back to fucking work .

19:54

Yeah , absolutely , and we'll

19:56

talk about what was just introduced in the Senate

19:59

. But do you think that

20:01

the reason that the Senate and

20:03

the Senate Democrats just reintroduced a

20:05

legalization bill is because

20:08

it's the timing of ? Okay ? Now we're on

20:10

schedule three . Now is the time to have

20:12

this conversation . This is the next step .

20:15

Exactly , exactly , I think it's . I

20:18

was surprised . Actually , I wasn't even thinking

20:20

that that was going to be coming in such lockstep

20:23

with the announcement of the rescheduling . It's

20:30

almost as if they had it planned um . But it is important because it's that critical realization

20:32

for the general public , because I

20:35

too was receiving a lot of text messages like

20:37

congratulations , man , this is huge . I'm like

20:39

kind of uh

20:41

, but like I'm not gonna give you my diatribe

20:44

over text and I can't call you know like 30

20:46

people when I'm already trying to lobby in california

20:49

and in dc . And

20:52

so it's like it's actually helpful for

20:54

the cannabis community , for

20:56

our , our , our policymakers

20:58

, to actually start this conversation right

21:00

on the heels of a big , big announcement , so

21:03

that we can explain to everyone broadly

21:05

that this doesn't solve all those problems

21:07

that we're trying to get across

21:10

with the CAOA .

21:11

It also seems like from a public perception timing

21:15

moment , this announcement

21:17

was widely celebrated . I

21:19

was surprised to even get a

21:21

notification from the New York Times

21:24

news app on my phone about rescheduling

21:26

. Holy crap , that's wild . Okay

21:29

, we're hitting the New York

21:31

Times with this announcement , and so

21:33

I'm sure that the Senate Democrats

21:35

are paying attention to that excitement and

21:38

looking to utilize that

21:40

wave of momentum .

21:42

Yeah , yeah , utilize

21:45

that wave of momentum . Yeah , yeah , hopefully we can get some

21:47

notifications from the new york times being like and here is why chuck schumer

21:50

has reintroduced the caoa right after this announcement , like , yeah

21:53

, you know that's hopeful , as we're looking

21:55

towards november .

21:56

It's interesting . I would think that that

21:58

they would be introducing this if they thought

22:00

that they could actually get movement on it , but

22:03

maybe it is just a

22:05

pr and a messaging game

22:07

. It's so hard to know with the way

22:09

that things really generally

22:12

don't get done in washington . Uh

22:14

, yeah , why . Why now

22:16

, like , do they think they're going to be able to pull this off ?

22:18

no , I mean I . I don't like who

22:20

knows where biden stands on all of this and I don't like who knows where Biden

22:22

stands on all of this and I don't know what

22:25

the prospects are like . Is

22:27

it maybe ? I'm in denial ? I'm

22:29

still having a very hard time imagining

22:32

that I show up to the ballots in November

22:34

and I'm really picking between Biden and Trump

22:37

. It's very depressing . So

22:40

I'm hoping there's this off chance that there's

22:42

another candidate waiting out there in the shadows

22:44

because one of them kicks the bucket . Not

22:46

that I'm hoping in a proverbial sense

22:48

, like you know .

22:49

Well , so RFK did just qualify for

22:51

the ballot in California , so you'll also

22:53

be able to to vote for Robert

22:56

Kennedy Jr .

22:57

And I could see him picking up the CAO as

22:59

a potential like platform Right

23:04

, but I don't think he's , unfortunately , with the other two

23:06

in the race . Still , I don't think he's a viable candidate . But this is this

23:09

is not a political pundit podcast . So well

23:13

.

23:13

So okay , caoa has

23:15

been talked about in the past

23:17

, but I will refresh folks memories

23:19

about what it's all about . It is

23:21

a pretty broad , sweeping legalization

23:24

and decriminalization bill . It

23:26

stands for the Cannabis Administration

23:28

and Opportunity Act . It

23:31

deschedules

23:33

and taxes cannabis

23:35

. So marijuana

23:38

would be removed from the Controlled Substances

23:40

Act and a federal excise

23:42

tax would be implemented

23:44

that escalates

23:47

. So it would start at 5%

23:49

for smaller businesses and escalate

23:52

over time and with business scale

23:54

up to a maximum of 25%

23:56

for larger businesses . Then

23:59

there is social justice

24:02

aspect to it , where

24:04

it mandates expunging

24:06

low level federal cannabis convictions

24:09

and sets up a regulatory

24:11

framework for

24:13

regulation under agencies

24:15

like the FDA , the ATF and

24:17

the TTP . On the interstate commerce

24:19

front , it allows States to keep production

24:22

and sales illegal if they choose

24:24

, but does not allow states

24:27

to block the transport of cannabis through

24:30

their state . So you

24:32

know , if Idaho said absolutely

24:34

not , we still don't want cannabis here , but

24:36

someone wants to drive cannabis from Washington

24:39

to South Dakota , you

24:41

would still be able to . And then

24:43

it does establish grants for job

24:46

training , reentry services , promotes

24:48

industry participation by disadvantaged

24:50

groups through various funding programs

24:52

and definitely makes an effort to

24:55

address some of

24:57

the harms caused by the war on drugs . So

24:59

pretty broad , sweeping measure . You

25:03

know , the skeptic in me thinks that

25:05

this is all just about money and that

25:08

the way that I mentioned earlier

25:10

that all of on the federal budget that

25:12

are going to be pushing this

25:27

to make sure that the feds are not

25:29

missing an opportunity for

25:31

a money grab yeah , if

25:34

we did see some traction with

25:36

this , like to your point , it helps

25:38

fill a hole .

25:39

that removing 280 reinserts

25:43

some tax revenue . It would pale

25:45

in comparison to what they're owed

25:47

by 280 . I won't say what they're collecting

25:50

by 280 , but what they're owed . It

25:52

replenishes some of that . But what

25:55

I think it also opens the door for

25:57

is the

25:59

proliferating hemp market

26:01

, and so if you suddenly

26:03

have a federally legal cannabis

26:07

market that has interstate commerce , does

26:10

it help solve a lot of this ambiguity and

26:12

problems that the hemp

26:14

industry is is facing ?

26:17

Wait , you're saying it helps the hemp industry or harms

26:19

it ?

26:20

Hemp is cannabis .

26:22

Okay , yeah , okay

26:24

.

26:24

I hear what you're saying , I think that I

26:26

mean it brings the conversation to

26:29

a , to a head right , where it's like hemp

26:31

is cannabis we're talking about cannabinoids cannabis

26:34

is is suddenly

26:36

federally legal , and then there's

26:38

straight frameworks to kind of like help frame

26:40

it up and support it . It removes

26:42

the need , I guess , for

26:44

hemp to be anything but rope

26:47

, not dope sure ?

26:49

yes , I hear what you're saying , so what it ? I

26:51

could see that it could lead to existing

26:54

hemp companies that have leaned

26:56

into thc and intoxicated

26:59

hemp cannabinoids . Those companies

27:01

maybe would choose to have

27:03

a different supply chain to get

27:05

their thc inputs . Um

27:07

, they wouldn't necessarily need I would

27:10

.

27:10

I think they'd much rather use plants that produce

27:13

30 thc versus

27:15

0.3 percent .

27:16

Yeah right , but it doesn't necessarily

27:19

mean those companies go away or that industry

27:21

suffers . It means that there's a

27:23

reshuffling of the supply chain dynamics

27:26

to support those brands

27:28

and almost a consolidation

27:30

of customer acquisition

27:32

channels .

27:33

Yeah , I mean I always have

27:35

a little bit of a unique lens on this because the beverage industry

27:38

is a little bit more fluid across

27:40

the lines . We've seen brands

27:43

like Cannes and Mary Jones and

27:45

a number of others make those

27:47

transitions pretty fluidly between

27:50

supply chains . I do think

27:52

there would be a time of

27:54

pain as the market all figured

27:56

itself out , but I do think it

27:58

is a pathway to potentially an

28:02

equilibrium that makes a little

28:04

bit more sense and is like contiguous

28:06

right , Like from federal statute to

28:08

state statute .

28:09

I love where this conversation is going when

28:12

we're thinking about a legalization

28:14

measure and what it could do and the

28:16

impacts that it could have . I've

28:18

been looking at the way

28:21

that e-commerce is moving around in the hemp

28:23

space , and one of the things that has

28:25

been really clear

28:29

is just how many more technology

28:31

tools are are available to hemp operators

28:34

. Like you see , a lot of the brands using

28:36

Shopify and WooCommerce and

28:38

and more traditional payment gateways

28:41

, and it's a huge

28:43

barrier for cannabis

28:45

companies who are not able to use

28:47

those same platforms , and

28:49

that just makes business a lot harder

28:51

. And so that's just one example

28:54

of the way that something like a federal legalization

28:56

bill could have just widespread opportunity

29:00

opening effects to create

29:03

opportunities for cannabis companies

29:05

to maybe have access to the same types of tools

29:08

that hemp companies have . And

29:10

, at the same time , the double-edged sword there

29:12

is that we've had a lot of technology

29:15

companies that have formed in cannabis

29:17

to serve cannabis specifically , because

29:19

there are so much larger behemoths that

29:22

have excluded cannabis from their

29:24

terms of services and said we

29:26

won't , we won't serve you . And so then

29:28

what happens to all of those e-commerce

29:31

menu platforms if

29:33

, um , if now companies

29:35

don't need to go to the cannabis specific

29:38

tool and they can use a more widely

29:40

commercialized mature

29:43

solution .

29:44

It's an interesting question that

29:47

we've brought it up in the past

29:50

in certain conversations

29:52

, where at the end of the day , it still

29:54

might be perceived as a vice industry

29:56

. In other ways it might

29:58

not . Maybe there's more opportunities for it to be

30:00

recognized as wellness and

30:02

all that as well . There's more opportunities for it to be recognized as wellness and

30:04

all that as well . But gambling , alcohol and

30:07

sex work . These

30:10

different economies

30:12

do have significant

30:15

barriers in compared to soda

30:17

. Right , there's

30:31

a lot of constraints that would probably still remain or take a significant

30:34

amount of time to transition , which would give these other

30:36

companies time to adapt or adjust . But , like with all things , there would probably

30:38

be a time of pain if there was something very substantive like that to change

30:40

Any last points on

30:42

this before we move on to the Farm Bill . Yeah

30:53

, I think that's the natural transition , right

30:55

? Sure , any last points on this before

30:58

we move on to the farm bill . I'm stuttering

31:00

over my next word because I've had a lot of conversations

31:03

lately about how to position

31:05

psychoactive compounds from

31:07

the hemp plant . It

31:10

feels like every word I try to use

31:12

is like trying to be relabeled

31:15

or something Psychoactive , intoxicating , inebriating

31:18

, whatever you want to call it . Thc-like

31:21

ingredients from the hemp plant .

31:23

I like psychoactive . I have actually started

31:25

using intoxicating against my will

31:28

, because that's what people understand and

31:30

that does seem to be the word that makes

31:32

sense to the most people .

31:33

But uh , I I'm

31:36

gonna say I gotta say one thing about intoxicating

31:38

, just because I , I , I feel obliged

31:40

to say it , I , I fucking

31:42

like being intoxicated . I

31:45

mean , sometimes that's my goal . Sure , love

31:47

, love can

31:49

be intoxicating . Thank you , diana , for that one

31:51

.

31:54

But you weren't always intoxicated . This is true .

31:57

But you're not always intoxicated when you drink alcohol , exactly

32:00

, but it's the compound

32:02

. The alcohol itself is intoxicating . We

32:05

don't have , we don't have to debate this on there . I

32:07

just I , I

32:09

think I use it because it's like

32:11

just common terminology , like it doesn't even

32:13

have a negative connotation in my head . But

32:16

I know I understand what people are saying when

32:18

, when they don't like couching

32:20

cannabis in general as

32:22

as an intoxicant , especially

32:24

if they're using it as a wellness product or or

32:27

what have you .

32:27

But well , either way , let's

32:30

um , let's just go through the main points

32:32

. Uh , I I like making

32:34

sure that we have a good baseline for knowledge

32:36

here and good yeah and

32:39

so we're not going to review the whole farm bill . As

32:41

folks know , the farm bill covers a wide

32:43

range of topics , from corn

32:45

and dairy and meat production and all kinds

32:48

of things that affect agriculture in the U S

32:50

, uh , but specifically around hemp

32:52

, um a

32:54

. So a draft was released of

32:56

language and people were able to

32:58

review yesterday or the day before

33:00

what some of the new hemp language

33:03

is , and really I

33:05

mean I'll use the term nothing , burger

33:07

. There's no new clarity

33:10

around psychoactive

33:12

or intoxicating cannabinoids . There

33:14

is some new definitions

33:17

around industrial hemp

33:19

and designing industrial hemp more clearly

33:22

, and

33:24

it does appear to be aiming

33:27

for simplification of regulations

33:29

for hemp farmers , especially the ones that are

33:31

working on industrial hemp production , and

33:34

it proposes removing the ban

33:37

on hemp production for individuals

33:39

with felony convictions . So that's

33:41

positive and

33:43

and overall I don't I don't know if this is positive

33:46

or negative I think that this is all

33:48

just something to manage . I

33:50

see it . I

33:53

think for probably a lot of folks

33:55

that are creating products

33:58

with hemp , this is a huge

34:00

, enormous win , and for folks

34:03

on the regulated cannabis

34:05

side of the aisle , who have been lobbying

34:07

hard in Washington to

34:10

close the quote unquote

34:12

loophole , this is

34:14

a fail that

34:24

, if you've been following this podcast and hearing Ben and

34:26

I talk about it , we have been predicting all along that there

34:28

would not be substantive changes to the availability

34:30

of hemp to produce products and

34:33

to come to market the way that we've seen

34:35

them over the past couple years . So

34:40

it's a win for our predictions .

34:42

Yeah , well

34:45

, as far as the draft goes

34:47

right . There's probably a lot of conversations

34:49

to be had over the draft and I'm sure everyone's going to try

34:51

to be getting their comments in to

34:54

see what direction they can influence it . Corners

35:09

of the market that people are still submitting , sourcing various languages . To go as

35:11

far as putting some of these compounds back into the csa , which I just

35:13

I fundamentally

35:15

have have an issue with it . Just because

35:17

I understand the desire

35:20

to close certain loopholes and I understand

35:22

, like I've talked to michael bronstein , that attach and

35:24

that there's a order of

35:27

uh operations

35:29

that we should be seeking to

35:31

, in an organized fashion , get the plant

35:33

, you know , into a legalized state . I

35:36

just like cannabinoids

35:39

not being on the csa and trying to put them back

35:41

on there . It it's just like I don't know

35:43

, it doesn't feel

35:45

like the right direction . I

35:48

would like to see everyone's energy go into

35:50

backing the CAOA so we can

35:52

because I'm now convinced that

35:54

this is the way to like just get

35:56

hemp and cannabis all resolved . It's like legalized

35:59

cannabis .

36:00

Yes , amazing , I'm there with you

36:02

. On the efforts

36:05

, though , to restrict hemp

36:07

derived cannabinoids

36:09

more heavily at the federal level , I

36:12

just want to remind listeners that that isn't the

36:14

only path to more

36:16

regulations of hemp . We

36:18

are seeing plenty of states choose

36:21

to put in place their own regulations

36:24

, and a

36:26

more open

36:29

or permissive federal

36:32

policy does not restrict states

36:34

from moving to create

36:37

state-level restrictions

36:39

, and that's broadly

36:41

been the way cannabis has worked , even

36:44

though within the context

36:46

of federal prohibition . And

36:49

I don't think that states are going to

36:51

stop further

36:54

regulating hemp , because

36:56

there is lots of internal conflict

36:59

at the state level between , you

37:02

know , startup cannabis regulated

37:05

businesses and hemp businesses , and

37:07

we're seeing that play out in

37:09

California just this week and

37:11

last week and other places . So

37:14

the game isn't over

37:16

, and I think , ben , you're

37:18

really cluing into something interesting that

37:20

probably

37:23

the states would be able to back off hemp regulation

37:25

as well if the federal government decided

37:27

to legalize cannabis

37:29

at the federal level , because it would

37:31

just take away all this complication

37:33

.

37:34

We wouldn't need to be having a debate about

37:36

did this product source

37:38

their ingredient from hemp or

37:40

cannabis , because it has to be hemp

37:42

in order for it to be allowed in this

37:44

non-legal market , or whatever

37:47

the challenge that we're facing now

37:49

is that , because we are back

37:52

to kind of states uh , evoking their

37:54

rights , uh , to frame up their own programs

37:56

, um , that

37:58

we're seeing massive fragmentation in

38:00

in the the rules around hemp , and

38:03

it's feeling like a third

38:05

dimension of the cannabis industry now where

38:07

connecticut just

38:10

passed , I think , a three milligram

38:12

cap on , we'll

38:14

just say , hemp beverages , because that's what my lens is

38:16

right now which is

38:19

challenging because all of a sudden you have

38:21

a very specific rule for one

38:23

state which starts to remove

38:25

the benefits of interstate

38:27

commerce and centralized manufacturing

38:29

, economies of scale , all that kind of stuff that

38:32

people are very excited about with

38:34

the hemp category , especially when it comes

38:36

to the beverage category , because there's a lot of infrastructure

38:38

required to create these products

38:40

. So , yeah , it's

38:43

wild to see kind of where this trajectory

38:45

goes . As we , you

38:47

know , maintain a kind of what we'll just

38:50

call the status quo with the farm bill , you

38:52

know what happens a year , two

38:54

years from now when you let all

38:56

the states kind of decide what they want to

38:58

do with hemp . I heard Georgia

39:00

is considering

39:03

doing a fully vertically integrated

39:05

hemp program in their state

39:07

where it's grown , manufactured

39:09

and sold and

39:11

how that isn't regulated

39:13

cannabis .

39:15

I don't know the difference at this point

39:17

it's solid point

39:19

and one of the things you got

39:21

to remember the farm bill is not something that comes

39:24

up for for renegotiation

39:26

every year . Uh , it's

39:28

generally four years , and this time it's

39:30

been five years , and the

39:32

2018 Farm Bill that

39:34

opened up the door for all of these

39:36

products . It took

39:38

industry players really a couple

39:41

years to understand

39:43

and realize the opportunity presented

39:46

in the language , and , ben , you pointed

39:48

out that it really wasn't until Minnesota legalized

39:51

that the whole

39:53

hemp-derived cannabinoid industry really

39:56

started to grow and grow fast

39:58

, and so that's been less

40:00

than two years and we've

40:03

seen extraordinary growth . We've

40:05

talked about it in the past . Bo Whitney estimates

40:07

that this space could be worth $28

40:10

billion a year already . Space could be

40:12

worth $28 billion a year already . So if

40:14

we've got four more years with

40:17

similar Farm Bill language , how

40:25

much more growth and acceleration and innovation

40:28

are we going to see ? Hard to predict the future , but I

40:30

know a lot of you out there are creating it . Yeah , it is

40:32

wild .

40:32

There's a lot of you out there are creating it . Yeah , it is wild . There's a

40:35

lot of innovation in the space . Every

40:37

time you insert a constraint right

40:40

, it's a breeding ground for creativity

40:42

and I've

40:44

heard people

40:46

even working and

40:49

I won't pass judgment on whether

40:52

this is a good idea or not . I'll

40:54

save that for another show Amplifying

40:56

the effects of one milligram

40:58

of THC so that it feels

41:01

like more because of

41:03

the constraints that were put into place

41:05

in some of these markets . So

41:07

just one concept

41:09

like that , how

41:11

that extrapolates across

41:13

what we're going to see over the next several years

41:16

, how different markets

41:18

are going to react , and

41:21

I don't know , I don't . I

41:23

think there will be a lot of growth . I

41:25

think there will be also a lot of ups

41:27

and downs and a lot of reactions

41:30

. And I'll tell you right now and I've

41:32

been trying to explain this to a number of people it's like

41:35

the hemp industry has been on a terror , like a

41:37

great

41:39

growth trajectory

41:42

, but it is starting to . That

41:44

growth trajectory is starting to really

41:47

find its way into the mainstream

41:49

channels , like we're seeing with Total Wine

41:51

and DoorDash and a number of others , and

41:54

that is catching the attention of a lot of regulators

41:57

and the broader community and people are starting to react

41:59

, and so the

42:01

pendulum has largely been swinging in

42:03

one direction , and it's a threat

42:06

of like starting to swing wildly

42:08

in different directions because

42:10

of people reacting , and we're seeing it

42:12

in California right now 22 , 23,

42:15

. The assembly bill that is hotly

42:17

debated right now , I think , is an example

42:19

of that .

42:20

Why don't you give us a quick down low on what's

42:22

going on with assembly bill , with that assembly

42:24

bill in California ?

42:25

Yeah , essentially , when

42:28

AB45 was

42:30

released , the intention of it and

42:32

this was a couple years ago was to

42:34

find kind of some common ground between

42:37

the hemp market and the cannabis market . Right

42:39

, so , to allow hemp

42:41

broadly into

42:44

foods in the California supply chain , because

42:46

CBD beverages and CBD

42:49

products were actually not even

42:51

legal in California until about two

42:53

years ago , which , for

42:56

being a progressive state , really is not a good

42:58

look in my eyes and

43:00

there's a number of things that I could go off on that . So

43:03

AB 45 was put into place and

43:05

because of ambiguities

43:07

in the bill , there was a lot of holes and

43:10

the policymakers have identified

43:12

that this indeed is a problem , that

43:14

there were so many holes that AB45

43:17

created that it's created a lot of confusion

43:19

and that's why you do see

43:21

THC beverage

43:24

end caps in total wine all across

43:26

the state and why you can go on to DoorDash

43:28

right now and order Snoop

43:30

Dogg's , do it Fluid right to your door

43:32

right

43:35

now and ordered , you know , snoop Dogg's , do it fluid right to your door . And

43:37

so AB 2223 is trying to right the wrongs

43:39

of AB 45 . And this has been like a four year process

43:41

. How do we responsibly

43:44

allow integration or crossover

43:46

between the hemp and cannabis supply chains . How

43:48

do we allow manufacturers who manufacture

43:51

cannabinoids the ability

43:53

to either incorporate some

43:56

of the cannabinoids from the hemp plant into

43:58

the cannabis supply chain where it makes sense ? But

44:01

even in the drafting of 2223 , there was even

44:03

more holes . Like , as an operator in the

44:05

space , I'm like OK , I'm a manufacturer

44:08

, mid supply chain , can I take in hemp

44:10

cannabinoids and then ship it back out

44:12

to the hemp supply chain , or

44:15

is this only for , like funneling certain

44:17

things into the cannabis supply chain ? Um

44:19

, it also tries to um

44:21

ban converted

44:24

cannabinoids . I think it's

44:26

. It's like trying to like cover

44:28

up a symptom when you're not getting to the root cause

44:30

, right , it's like you don't want people taking hemp

44:33

, changing it to thc and putting in the

44:35

supply chain . Then like actually

44:37

address that . But like , banning

44:39

converted cannabinoids is

44:41

just like a complete misstep , because the

44:44

cannabis industry is loaded with converted cannabinoids

44:47

. How do you think most people get cbn or cbc

44:49

into their products ? And so it's like we

44:52

should approach it from a scientific perspective , right , and

44:54

really like . So there's

44:56

all these things , but it's

44:58

on a fast pace . I think there's a big appetite by

45:01

regulators to get something

45:03

into place , which

45:06

simply means that it's harder to get

45:08

vetoed , which I think the US Hemp

45:10

Roundtable would love to see happen . It's just like this

45:18

is a bad bill , veto it . And so what we're trying to do as at least a beverage community

45:20

is like get in there and anyone that's been seeing my videos online

45:22

they know where I stand on this is like low

45:25

dose beverage , protect

45:27

that because it's not surviving in the cannabis

45:29

supply chain . So like let's create

45:31

an opportunity for people to at least get exposure

45:34

to these products . We'll have it be a

45:36

lead gen mechanism for

45:38

the broader regulated cannabis

45:40

supply chain . So there's

45:42

a lot of conversation to be had . Ccia

45:45

is a is a big voice here . You know they're

45:47

trying to protect the licensed cannabis

45:50

holders . You know

45:52

the origins council a

45:54

lot of ogs in the cannabis space have

45:56

their voice . The us

45:59

hemp roundtable , because of their prior positions

46:01

, are kind of not really

46:03

like a welcome voice , like with a lot

46:05

of the regulators , uh , in california , and

46:08

so it's like people like ourselves

46:10

like trying to step in and kind

46:13

kind of be in between and try

46:15

to come up with something responsible .

46:17

California is the most complicated place to make

46:19

policy change , especially in

46:21

cannabis . There's it's . We're such

46:23

a big state and we have so many cannabis

46:26

and now hemp businesses here

46:28

operating and everybody

46:31

has different incentives for

46:33

policy and makes

46:36

it really challenging for the industry

46:38

to come together and have an aligned

46:40

position on what should be done . The

46:43

industry is not one industry , it's many

46:45

industries , and you

46:48

hear from the regulators and you hear from the lawmakers

46:50

. Well , we need to hear an aligned position

46:52

from the industry . It's like , well , good

46:55

luck with that , because

46:58

there's a lot of different ways to

47:00

see what's

47:12

going on here and , unfortunately

47:15

, no change is is

47:17

like there's nothing about it that's good for anyone

47:20

in the supply chain , and

47:22

specifically because of the of the

47:24

lack of scientific understanding

47:26

that you touched on and and

47:29

like we don't . We don't need more complex

47:31

regulations in California for cannabis

47:33

operators . That's

47:35

, that's one thing that's for sure . Like we need

47:38

to make it easier for people to survive here

47:40

. It's already too hard

47:42

, so yeah

47:44

, Absolutely .

47:45

It's , yeah , multiple regulating

47:48

agencies . You know , I got a

47:50

list from one of our lobbyists about like all the different

47:52

conversations we need to have and

47:55

it was like no

47:57

joke . I had to scroll like my email screen

47:59

, like just could like shake

48:01

my head , like oh , we're supposed to do all this in the

48:03

next two weeks , uh , and

48:05

run our companies awesome exactly yeah

48:08

, yeah , but um , just

48:10

just one last point . I I think this

48:12

is like we've largely been talking about

48:14

California for the last five minutes Like this is just

48:16

a microcosm of , like what

48:18

is happening all around the states , like their

48:21

individual , like just

48:23

nuanced conversations , and , unfortunately

48:26

, what it's leading to is a lot of , again , fragmentation

48:29

and so like there's going to have to be a huge effort

48:31

on alignment of

48:33

regs across states if we do indeed

48:36

want to someday have the benefits of

48:38

interstate commerce and economies

48:40

of scale .

48:42

I mean good luck with that , but sure Sounds

48:45

like a utopia . And

48:48

thanks for the call out about all those other states

48:50

. And when we announced

48:53

this episode on Monday , we actually

48:55

thought we are going to be talking about a lot of

48:58

more state level , specific , exciting

49:00

and different and challenging obstacles

49:03

that businesses are facing and

49:06

instead we just got this slew of

49:09

exciting , topical and

49:11

important information from the

49:13

Fed . So we decided to shift

49:15

the conversation today , but we

49:18

will continue to have important

49:20

and in-depth conversations about unique

49:23

markets and if you're out there and

49:25

you're listening and you have a unique perspective on

49:27

one of these states that we haven't covered , please

49:30

reach out to us . We want to learn . We

49:32

want to make sure that we're platforming

49:34

the most important challenges

49:36

and opportunities across the ecosystem

49:38

.

49:39

Absolutely All right

49:42

. Well , that's another business

49:44

roundup that I think we've successfully

49:46

navigated . Big week . I

49:50

just wow . Yeah , like

49:52

you said , when we announced on Monday , we had none of

49:54

these topics really on the docket

49:56

, and all this has happened in the last like

49:58

three days .

49:59

Yeah , so I think we'll wrap . I think that's . It's

50:01

a wrap . You want to read us out , Ben ?

50:04

All right , folks , What'd you think ? How do we

50:06

look ? Let us know . We really

50:08

appreciate your constant support and

50:10

engagement . As Anne-Marie said at the top

50:12

of the show , we're just going to continue to just

50:14

keep building in public and doing more

50:16

and more , and we're

50:19

doing this all for you . So stay engaged

50:21

, Let us know what you think , Share like

50:23

, subscribe , do all the things

50:25

. I can't wait for next week . We

50:28

have a really great conversation . Chris

50:30

Jackson is coming on the line Going to give us a

50:32

little bit of a Michigan update what's

50:36

happening with his work with the Black Caucus in Michigan

50:39

and he's also our

50:41

chair at NCIA , so I get

50:43

to grill him a little bit on what

50:45

it's like to be involved on the national

50:47

discussion as well . So maybe a little

50:49

bit of a carryover from this . Until

50:51

then , folks remember , stay

50:54

curious , stay informed and

50:56

keep your spirits high Until

50:58

next time . That's the show .