Join Emily and Cy as they host Darren Weiss, President of Verano as they discuss the genesis of the historic lawsuit filed against the federal government challenging cannabis prohibition under the Commerce Clause. The lawsuit argues that the federal government's current contradictory stance on cannabis - where it is illegal at the federal level but allowed and regulated in many states - violates the Commerce Clause by interfering with intrastate cannabis commerce.
The lawsuit is spearheaded by law firm Boies Schiller Flexner with support from a coalition of cannabis companies. Verano president Darren Weiss explains how the Commerce Clause was originally intended to regulate commerce between states, not commerce within states. He argues the federal regulation of intrastate cannabis markets contradicts the original intent.
Cy, Emily and Darren discuss how the contradictory federal policy impacts businesses of all sizes, from multi-state operators down to small social equity licensees. The lawsuit aims to open up banking, reduce tax burdens, and create fairness across the industry. While the case will likely take years to reach the Supreme Court, it represents a new front in the ongoing fight for cannabis law reform.
00:00:00 --> 00:00:10 Welcome back to the high rise, a laid back data back conversation where we talk all things cannabis from US MSOs to Canadian LPs, products and markets through the lens of data.
00:00:10 --> 00:00:14 I'm joined as always by Emily Paxia of Poseidon.
00:00:14 --> 00:00:16 Hi everyone, welcome to the HiRise.
00:00:16 --> 00:00:21 I'm Cy Scott with Headset and today we have a very special guest with Darren Weiss, President of Verano.
00:00:21 --> 00:00:23 Thanks for joining us today Darren.
00:00:24 --> 00:00:26 Thank you so much, Sy, for the invitation.
00:00:26 --> 00:00:27 So glad to be here.
00:00:28 --> 00:00:37 Yeah, it's great to have you here because we have some huge news that happened this week related to the Commerce Clause litigation.
00:00:37 --> 00:00:40 And I know Verano played a big part in this.
00:00:41 --> 00:00:47 And you're also a lawyer, so you can speak to it much better than I can, I'm sure.
00:00:47 --> 00:00:54 And of course, Emily, you as well with Poseidon and wrangling this stuff from the earliest days.
00:00:54 --> 00:01:03 So I thought, you know, with Of course, there's always a lot going on, but this is such a notable thing, such a big deal I think for our space.
00:01:03 --> 00:01:07 So I really just wanted to dive into it and what does this mean?
00:01:07 --> 00:01:08 How do we get here?
00:01:08 --> 00:01:11 What's the path forward and so on?
00:01:11 --> 00:01:16 And it's a real privilege to have you both here because you've been so close to it.
00:01:16 --> 00:01:19 So let's start with just kind of the background, the story.
00:01:19 --> 00:01:22 Like how did we get to this week?
00:01:22 --> 00:01:25 I know it didn't just happen yesterday, right?
00:01:25 --> 00:01:26 Yeah, right.
00:01:26 --> 00:01:29 So instead of burying the lead, I'll just, you know, get right to it on.
00:01:30 --> 00:01:38 So everyone knows now that Boy Schiller Flexner with David Boyes as lead counsel are really representing the industry on this case.
00:01:38 --> 00:01:42 And I want to talk in very inclusive terms because this is really an industry effort.
00:01:42 --> 00:01:44 And we'll get more to that.
00:01:44 --> 00:01:50 But this all actually started in the summer of twenty two.
00:01:50 --> 00:01:52 And I was when I was.
00:01:52 --> 00:01:57 on the board of ascend and we had a phone call with them about representing us on a different matter.
00:01:57 --> 00:02:06 And actually, David Boyce was the one who was like, I don't know why this industry hasn't challenged the decision of Gonzalez versus Reiche.
00:02:07 --> 00:02:08 And we started to dig in on this.
00:02:08 --> 00:02:14 And a lot of people have heard about the dormant commerce clause as it pertains to interstate commerce.
00:02:14 --> 00:02:19 But this was a different angle and it was about intrastate commerce, which...
00:02:20 --> 00:02:30 Sometimes when I'm trying to be extremely simplistic, I try to liken it to the Rohrbacher-Farr Amendment, but like with real legal framework around it and an actual law.
00:02:30 --> 00:02:38 And so, and it really does have to do with industry running at the state level where there are legal programs.
00:02:38 --> 00:02:45 And so Darren can speak a lot more intelligently to that with his background and wisdom, but this, so that's how it started.
00:02:45 --> 00:03:04 So, Abner actually at Ascent, I gotta give him a ton of credit, he sunk his teeth into this and we started looking at it and a group of us got together, Jason Wilde was around the horn at that time, I know Verona was looking at it, everyone was looking at it, but it seemed as though maybe this wasn't an effort that we should be leaning in on because SAFE had so much promise at that time.
00:03:04 --> 00:03:12 And at that time SAFE had a lot of weight to it because it was going to be monumental if it actually did get introduced in past.
00:03:13 --> 00:03:17 Fast forward to December 2022, that did not happen.
00:03:17 --> 00:03:19 And we all know what happened.
00:03:19 --> 00:03:21 It was not a fun time to be in cannabis.
00:03:21 --> 00:03:22 It felt pretty terrible.
00:03:22 --> 00:03:26 And I remember I called up Abner and I said, Abner, we gotta get back on this.
00:03:26 --> 00:03:31 And so we got back on the calls with Boies, Schiller, Flexner, Verano was right there with us.
00:03:31 --> 00:03:41 So we had this great coalition of people and we started to talk to them because with these cases, there's a ton of information sharing that has to go on.
00:03:41 --> 00:03:51 there's a ton of polling people and coalition support together to support a law firm who is going to endeavor on a pursuit through a constitutional case like this.
00:03:52 --> 00:04:00 We got on the phone with them and then, actually it was Jason Wilde was like, I have a list of other firms we should call just to do a little litmus test on this.
00:04:00 --> 00:04:08 So we talked to a range of firms across the entire spectrum of kind of political ideology from the most conservative.
00:04:08 --> 00:04:13 to again kind of boy schiller flexor, which tends toward the more progressive mindset around the issue.
00:04:13 --> 00:04:36 Just to make sure, you know in cannabis sometimes I feel like, and you know I love this concept of inviting strange bedfellows to the table, like test your hypothesis, don't sit in an echo chamber, try to talk to people who have different ideologies and see if fundamental aspects of your perspective make sense whether or not they have like a religious or another moral thought around cannabis is one thing.
00:04:36 --> 00:04:39 just testing it from this legal standpoint.
00:04:39 --> 00:04:46 And one of the phone calls that actually stood out to me the most was the one with Jones Day, because they are so incredibly conservative.
00:04:46 --> 00:04:49 And I have to give it to the two lawyers that I got on the phone with.
00:04:49 --> 00:04:51 They had me on the phone, we had an hour call scheduled.
00:04:51 --> 00:05:04 They had me on the phone for two hours speaking with enthusiasm about how they could view how this case that was originally heard and then decided upon in 2004, 2005 could.
00:05:04 --> 00:05:07 have a different standing given so many different aspects of it.
00:05:07 --> 00:05:12 And I'll say this, like, I'm not a lawyer, but I'm a curious human.
00:05:12 --> 00:05:20 And sitting on the phone with lawyers and hearing them argue, kind of like develop arguments about these cases is endlessly fascinating.
00:05:21 --> 00:05:25 And we had, we spoke with multiple other firms and other firms agreed to actually represent us.
00:05:25 --> 00:05:26 They were pretty excited about it.
00:05:26 --> 00:05:31 And in the end, we decided to select Boyschiller Flexner for a number of reasons.
00:05:33 --> 00:05:40 If anyone looks up David Boyce's track record at the Supreme Court, or just in general, it's monumentally impressive.
00:05:40 --> 00:05:50 And the second thing was that we just felt like they had originated interest in the case and having a firm like that take up a mantle around cannabis just is really meaningful to us.
00:05:50 --> 00:06:00 I feel like when I'm on the Hill, I hear kind of pejorative comments about how seriously or unseriously we're taken as an industry and.
00:06:00 --> 00:06:03 having these kinds of partners out there is really meaningful.
00:06:03 --> 00:06:19 So that's how we got to this point and immediately got great support from groups like Verona who just immediately kind of understood why we needed to be standing together holding hands and providing everything we could to a firm like that to support a case.
00:06:20 --> 00:06:26 And Darren has some really important points about then what happened in terms of plaintiffs and everything.
00:06:30 --> 00:06:34 Yeah, thanks Emily and I appreciate the introduction.
00:06:34 --> 00:06:46 I will say that I think it's important to understand for those who are watching this just the incredible effort that Emily has put forth in herding the cats, so to speak.
00:06:47 --> 00:06:56 Our industry is often accused of being disjointed, of being unable sometimes to speak with one voice despite the fact that we have so much in common.
00:06:58 --> 00:07:05 big versus small operators, social equity versus non-social equity, ancillary versus plant touching.
00:07:05 --> 00:07:19 But the truth is, this case, I think, just perfectly encapsulates in many ways the very foundational and fundamental questions of freedom, of choice, and of democracy.
00:07:19 --> 00:07:25 And that's why I am so excited to really be a part of this.
00:07:25 --> 00:07:26 And I am so excited.
00:07:26 --> 00:07:35 so grateful to Emily and some of these other companies and folks who really poured their heart and soul into this to get this going.
00:07:35 --> 00:07:44 We joined the case after the failure of SAFE, or I should say the second most recent failure of SAFE, right?
00:07:44 --> 00:07:47 It's been an ongoing saga.
00:07:47 --> 00:07:53 Because we came to the conclusion, perhaps too late, but came to the conclusion nonetheless.
00:07:53 --> 00:07:56 that the federal government just was not going to bail this industry out.
00:07:56 --> 00:07:59 They just don't care in the way that we do.
00:08:00 --> 00:08:02 And it's deeply upsetting to me.
00:08:02 --> 00:08:05 It's deeply upsetting to my company.
00:08:05 --> 00:08:21 And frankly, I think it should be deeply upsetting to all Americans who believe in a system of government that demands that the folks that we put into legislatures and the folks that we send to Capitol Hill are really representing our interests.
00:08:21 --> 00:08:32 Ultimately, we have an issue that has been decided by 38 states across this country.
00:08:32 --> 00:08:37 The citizens of this country want access to this plant.
00:08:37 --> 00:08:50 They have put in the time and effort through their tax contributions to building robust regulatory programs to govern access to the plant.
00:08:50 --> 00:08:58 And at the same time, both they and the industry in general is demonized and treated as criminals.
00:08:59 --> 00:09:00 And that's deeply upsetting.
00:09:01 --> 00:09:07 So that was certainly part of the reason that we joined.
00:09:07 --> 00:09:14 And the other thing that is so exciting about this case, and I think speaks to what Emily was hinting at, is just the broadness of the appeal here.
00:09:14 --> 00:09:17 So this is not an MSO issue.
00:09:17 --> 00:09:18 This is not.
00:09:19 --> 00:09:21 a single state operator issue.
00:09:21 --> 00:09:25 This is an issue for everyone who cares about this plant and this industry.
00:09:25 --> 00:09:37 This is an issue for everyone who is demonized, for everyone that has to deal with onerous tax rules, who can't get a bank account, who has their bank accounts closed or is denied for a mortgage.
00:09:37 --> 00:09:48 This is an issue for essentially freedom loving Americans, cannabis loving Americans, or even folks who aren't necessarily into cannabis, but recognize the importance of cannabis.
00:09:48 --> 00:09:58 of the change that we as citizens can push as it relates to issues that are of importance.
00:09:58 --> 00:10:01 So this is extremely exciting.
00:10:03 --> 00:10:06 I think the other, you know, we talked a little bit about Boy Schiller and their involvement.
00:10:06 --> 00:10:11 It's been really amazing to work with them bringing this piece of litigation.
00:10:11 --> 00:10:17 Obviously this has been a many years effort.
00:10:18 --> 00:10:26 But we also know that it's going to be a couple of years in addition until we really get this resolved through litigation.
00:10:26 --> 00:10:30 This is not something that the lower courts are going to decide.
00:10:30 --> 00:10:34 This is not something that the intermediate appellate courts are going to decide.
00:10:34 --> 00:10:36 This is an issue for the Supreme Court of the United States.
00:10:37 --> 00:10:38 And that's important.
00:10:38 --> 00:10:47 It's important for folks to realize that we do not expect to win this case in district court or at the intermediate appellate courts.
00:10:48 --> 00:10:51 a very important principle of law called stare decisis.
00:10:51 --> 00:10:54 It's Latin for the decision stands.
00:10:54 --> 00:10:58 And it's a principle that judges are supposed to adhere to.
00:10:58 --> 00:11:04 And it basically means that if an issue was decided in a previous case, you're bound to that decision.
00:11:04 --> 00:11:06 And so Gonzales V.
00:11:06 --> 00:11:08 Reich is the law of the land.
00:11:08 --> 00:11:13 And the lower courts should adhere to that decision.
00:11:13 --> 00:11:16 The Supreme Court also has this principle of stare decisis.
00:11:16 --> 00:11:22 But Of course, they don't always follow it because they are the final arbiters of these issues.
00:11:22 --> 00:11:27 So we're looking forward to taking this through to the end.
00:11:27 --> 00:11:34 We are certainly prepared to do so and happy to talk about the discrete legal issues and arguments as well.
00:11:34 --> 00:11:45 But I'll just echo Cy, your statements about how momentous this is, not only because of who's involved, not only because of the issues involved.
00:11:45 --> 00:11:55 but also because it really is in my mind the first time that industry is saying, you know what, we're sick of this.
00:11:55 --> 00:11:58 We're sick of working the back room.
00:11:58 --> 00:12:02 We're sick of trying to use lobbying and other efforts.
00:12:02 --> 00:12:03 We're going to take a stand.
00:12:03 --> 00:12:13 We're going to put our names on a piece of paper and we are going to get this in front of the American people and force the government to stop this insanity.
00:12:14 --> 00:12:20 Yeah, I know it was great to see all the press pick up when the news hit on Thursday, the 26th.
00:12:20 --> 00:12:26 And so I think there's a lot of interest out there for all those reasons that you mentioned, right?
00:12:26 --> 00:12:35 Not just the operators themselves, but just Americans living in these markets that have all this uncertainty around the category, even just as a consumer.
00:12:35 --> 00:12:41 I think it's tough for many people that aren't really close, as close as we are to it.
00:12:42 --> 00:12:46 You know, you mentioned it's going to take some time all the way to the Supreme Court.
00:12:46 --> 00:12:49 And I think that that's a really good point to make.
00:12:49 --> 00:12:57 I feel like given all the drama around safe, we got to a point on this podcast where Emily wouldn't even say the word.
00:12:59 --> 00:13:03 It was like Voldemort to her here.
00:13:03 --> 00:13:04 Exactly.
00:13:05 --> 00:13:11 You know, and like the, you know, scheduling situation and we're all so eager, right.
00:13:11 --> 00:13:16 And Certainly, I'm one of the more impatient people out there to see some change.
00:13:16 --> 00:13:20 But I think the message here is we have to be a little bit patient.
00:13:20 --> 00:13:21 This is a process.
00:13:23 --> 00:13:26 There's a way these things work when this stuff gets filed.
00:13:26 --> 00:13:30 And if we see losses early on, that's part for the course, right?
00:13:30 --> 00:13:33 It's not, oh, no, it's all done.
00:13:33 --> 00:13:34 It's over.
00:13:34 --> 00:13:40 I could just see those headlines capturing the sentiment on social media, right?
00:13:40 --> 00:13:43 Where, you know, all of a sudden, no, you know, just like safe.
00:13:43 --> 00:13:47 Oh, but it's actually this is all part of the process, just the way this stuff gets done.
00:13:48 --> 00:13:57 Is there is there It's not, and I would say, sorry to interrupt, it's not only that it's part of the process, it's also part of the design.
00:13:57 --> 00:14:04 So typically the Supreme Court does not take every case that is presented to it.
00:14:04 --> 00:14:16 When a case is, when litigants wanna bring a case to the Supreme Court, they petition for a writ of certiorari, excuse me, another legal Latin term.
00:14:17 --> 00:14:20 which is basically an application for the court to take the case.
00:14:20 --> 00:14:25 And the overwhelming majority of cases are turned down.
00:14:25 --> 00:14:39 The Supreme Court will only take cases that pose interesting or novel or important questions or controversies as they relate to issues of constitutional law, of issues of federal law, etc.
00:14:39 --> 00:14:44 And so the design of this case, of course, were challenging settled...
00:14:44 --> 00:14:45 precedent here.
00:14:45 --> 00:14:47 I talked about starry decisis.
00:14:47 --> 00:14:51 The design of this case is in fact to lose at the district court.
00:14:52 --> 00:15:11 We fully intend to lose at the lower courts to create that controversy because now we've got this disconnect between Gonzalez-Vireige and these other decisions and some of the more recent dicta written by Justice Thomas, which we could talk about as well.
00:15:12 --> 00:15:14 And so that's very much part of the plan.
00:15:14 --> 00:15:16 and it's important that folks recognize this.
00:15:16 --> 00:15:35 Like you said, there's a very much a reactionary element to folks who watch this industry and somewhat understandably just given the last couple of years and how many times we've all been kicked in the ribs, but it's important for folks to understand that.
00:15:36 --> 00:15:57 Absolutely and I guess to that To that point you mentioned Thomas and just kind of the courts are a little bit different 2005 was a long time ago and when you think about cannabis in those days I mean, I didn't get involved in this space till 2010 and it was still pretty I don't even know if you could call it an industry, right?
00:15:57 --> 00:16:09 It was like there was a medical structure in you know, certain markets like California pretty pretty loose, but a very different world than what we see today.
00:16:09 --> 00:16:19 So like in that, I'm sure that came up in discussions with, yeah, with Boy Schiller, with the groups that are, you know, supporting this.
00:16:19 --> 00:16:27 So what has changed, you know, what are kind of some of the things that make this interesting to a group like Boy Schiller?
00:16:27 --> 00:16:34 Cause I can also imagine, just like the Supreme Court doesn't hear every case, I'm sure Boy Schiller is probably picky on the types of things that they wanna Mm-hmm.
00:16:34 --> 00:16:50 um you know uh litigate so yeah what uh i don't know what are those items that are you know so different today than they were back at gonzalez versus reich Yeah, I'll just jump in on a couple of quick things and then I'll pass it to Darren.
00:16:50 --> 00:17:00 I feel like, so I also had the absolute honor to talk with Randy Barnett who argued Gonzalez versus Rach and when we were doing diligence on this case.
00:17:00 --> 00:17:04 And he's a professor at Georgetown, unbelievable guy.
00:17:04 --> 00:17:11 And he also, by the way, worked on the Obamacare case, which has similar aspects to it as this case.
00:17:11 --> 00:17:16 There's multiple things you can look at that have changed over the years since that case was argued.
00:17:16 --> 00:17:18 But one of which is that you're absolutely right.
00:17:18 --> 00:17:26 I mean, when this case came about, it originated obviously before it was even heard before the Supreme Court, so it was early, early days.
00:17:26 --> 00:17:30 And it was basically just caregiver networks in California.
00:17:30 --> 00:17:38 I think there were fewer than 10 technical medical markets and you're absolutely right, I don't think one of them had a for-profit business structure in it.
00:17:38 --> 00:17:45 In fact, if you think about it, California didn't have that until we converted to, what's it called, Proposition 60.
00:17:45 --> 00:17:47 for.
00:17:47 --> 00:17:52 And so these things have changed drastically with obviously the opening of the Colorado market.
00:17:52 --> 00:18:04 And to Darren's exact point, we now live in a country where over half of the population lives in a legal market at some level where cannabis is exchanged and people are paying taxes which we can talk about.
00:18:04 --> 00:18:10 I mean, there's a lot of things that point to that this is actually now a business whereas in 0405 it really wasn't.
00:18:10 --> 00:18:15 And to your point about, you know, the different aspects of the business.
00:18:15 --> 00:18:28 Now there's actual frameworks that the states have established around it, like testing it, track and trace systems, both government systems and also the platforms that the operators use at their point of sale and all the way through to their cultivation.
00:18:28 --> 00:18:32 So there's a lot of infrastructure that's been built around this that did not exist.
00:18:32 --> 00:18:36 It just, it wasn't even, I don't even think a concept in 2004 at that point.
00:18:37 --> 00:18:39 And now we have a more complex.
00:18:39 --> 00:18:45 track and trace system than most of our food that we consume in the United States, which is concerning on some levels.
00:18:46 --> 00:18:52 But I would never want the burden of what we go through in this industry to be applied across the board because I don't think we could afford to eat.
00:18:52 --> 00:18:55 But you know, these are just things that have changed drastically.
00:18:55 --> 00:19:01 And I heard this as an echo, like I said, not just from Boies Schiller Flexner, but also from Randy Barnett.
00:19:01 --> 00:19:02 I heard it from Jones Day.
00:19:02 --> 00:19:03 I heard it from Paul Weiss.
00:19:03 --> 00:19:08 I heard it from these other firms about how the entire landscape has shifted.
00:19:08 --> 00:19:25 And then there have been also other precedent cases set by the Supreme Court over the years that have pointed in the direction of observing, and you could even look at a big example of this is what happened with the sport betting industry not too long ago, and David Boyce was involved with that too.
00:19:25 --> 00:19:35 And if you just look at the trajectory of those cases, a little bit of a different angle on it, but the point remains, it's a discussion about how business is regulated once it becomes so.
00:19:36 --> 00:19:42 big and important in terms of contributing to the GDP or the economic impact of our country.
00:19:45 --> 00:19:47 Yeah, so Emily, you're absolutely right.
00:19:47 --> 00:19:57 We've had some monumental shifts in the way that cannabis is produced and consumed across the country.
00:19:58 --> 00:20:15 Just in terms of the regulatory rigor that is applied to the industry, and that's everything from rules and regulations around labeling and packaging all the way to, as Emily pointed out, to fail and tracking.
00:20:15 --> 00:20:26 But I think it's also important to provide some context just on the Commerce Clause itself and the way in which Commerce Clause jurisprudence had developed.
00:20:27 --> 00:20:29 I'm a very foundational guy.
00:20:29 --> 00:20:41 I like to sort of understand context when I think about issues because I think it helps color the way that I am able to wrap my head around where we see societal changes.
00:20:42 --> 00:20:59 You know, the Commerce Clause, for those who don't know, was, is a provision of the Constitution that was very much a part of the bargain that Americans entered into, or the pre-Americans, the colonists, after independence.
00:20:59 --> 00:21:08 And this was done at a time when the vast majority of regulatory power and government power rested with the states, in fact, all of it.
00:21:08 --> 00:21:09 There was no federal government.
00:21:10 --> 00:21:26 And there was a lot of concern at the time that giving the certain powers to this as-yet-unknown federal entity would end up resulting in a monarchy or a system of government that wouldn't be representative of the people.
00:21:26 --> 00:21:38 And so the folks who drafted and ratified the Constitution were very circumspect about the rights that they wanted to give to the federal government.
00:21:38 --> 00:21:47 They realized, however, that in order to have a functioning nation, we needed to have a system of commerce that was not protectionist.
00:21:47 --> 00:21:57 California couldn't say, you know, you can't import apples from Washington, right, because that wouldn't allow for the free movement of commerce across the country.
00:21:57 --> 00:22:08 And so what they did was they put this clause into the Constitution that said that Congress has this exclusive power to regulate commerce among the states, meaning between the states and the Indian tribes as well.
00:22:09 --> 00:22:21 And for a very long time, it was interpreted just in that way, that the government's power was really about commerce between the states, not things that were wholly intrastate.
00:22:22 --> 00:22:35 Around the World War II period, in between World War I and World War II, the Supreme Court started taking a more expansive view of the Commerce Clause, and there's a famous case in the 30s.
00:22:35 --> 00:22:40 about a man who was growing wheat on his farm.
00:22:40 --> 00:22:42 And the wheat was really for his own purposes.
00:22:42 --> 00:22:44 He was gonna use it to feed his animals.
00:22:44 --> 00:22:46 He was gonna use it to make bread for his family.
00:22:46 --> 00:22:51 At the time, the government was trying to control the supply and price of wheat.
00:22:52 --> 00:22:57 And they made up laws as to how much wheat someone could grow.
00:22:57 --> 00:23:02 And this guy grew more wheat than he was supposed to.
00:23:02 --> 00:23:07 and the government came in and they seized his wheat and they fined him.
00:23:07 --> 00:23:10 And he argued that this wasn't fair.
00:23:10 --> 00:23:13 This was wheat that was not intended to move into commerce.
00:23:13 --> 00:23:24 And the Supreme Court said, well, you know, you can't tell wheat that you're growing on your own farm apart from wheat that comes from a neighboring farm or a farm across state lines.
00:23:25 --> 00:23:27 And they said, no, this commerce clause is so important.
00:23:27 --> 00:23:29 We are actually going to...
00:23:30 --> 00:23:38 interpret it such that the federal government has the power to regulate, even something that may not have been intended for interstate commerce.
00:23:38 --> 00:23:47 And that was really the point in time when we saw a high watermark in Commerce Clause jurisprudence, and it's been sort of that way ever since.
00:23:48 --> 00:23:57 Because of these changes on the Supreme Court, however, we've started to see a softening of that mentality of the way of interpreting the Commerce Clause.
00:23:58 --> 00:24:02 and recognition that there are things that should be left up to the states.
00:24:02 --> 00:24:05 It's more true to the original intent of the framers.
00:24:06 --> 00:24:08 Cannabis is one such thing.
00:24:08 --> 00:24:13 Cannabis is the way that we regulate cannabis right now is it's wholly intrastate.
00:24:13 --> 00:24:17 By definition, our products can't cross state lines.
00:24:17 --> 00:24:22 We have, as Emily said, these seed to sale tracking systems that we did not have in 2005.
00:24:22 --> 00:24:36 So that not only do we have a robust regulatory program, but unlike the wheat, that we couldn't tell its provenance in interstate commerce, we know when we look at a package of cannabis based on the seed to sale tracking where it comes from.
00:24:36 --> 00:24:41 California cannabis is not the same as Illinois cannabis or Massachusetts cannabis.
00:24:42 --> 00:24:44 And so that's important.
00:24:44 --> 00:24:49 And in 2005, even though we had cannabis, we didn't have seed to sale tracking.
00:24:49 --> 00:24:53 The way cannabis was bought and sold was generally in bulk form.
00:24:53 --> 00:25:00 And so that fungibility argument was much more prominent than it is today.
00:25:01 --> 00:25:07 So this is an extremely important component of this case.
00:25:07 --> 00:25:14 The other piece to this that's really important is just the way in which the federal government has dealt with cannabis.
00:25:14 --> 00:25:20 In 2005, there hadn't been major changes to federal law or policy.
00:25:20 --> 00:25:27 related to the implementation of the Controlled Substances Act.
00:25:27 --> 00:25:34 The government was very concerned about limiting cannabis and cannabis use and cultivation in the United States.
00:25:35 --> 00:25:38 They enforced the CSA with gusto.
00:25:39 --> 00:25:53 If you fast forward to today, we've had years and years and years of riders to appropriation state-regulated medical cannabis programs.
00:25:54 --> 00:26:07 We've had years and years and years of a policy, in some cases written, in some cases unwritten, as to the use of prosecutorial discretion related to cannabis programs.
00:26:07 --> 00:26:15 And the government has taken this hands-off approach, other than, of course, taking our tax dollars, which is significant, right?
00:26:15 --> 00:26:19 Justice Thomas wrote in an important opinion.
00:26:20 --> 00:26:25 often referred to as the Standing Akimbo case, Standing Akimbo versus the United States.
00:26:25 --> 00:26:29 He said, you know, the government basically is trying to have this half out, half in, half out regime.
00:26:29 --> 00:26:31 They're tolerating cannabis.
00:26:31 --> 00:26:37 It's hands up, you know, nothing we can do about it, but at the same time they're trying to take the stand that cannabis is still completely illegal.
00:26:38 --> 00:26:40 It makes no sense, right?
00:26:40 --> 00:26:42 You have a substance that...
00:26:43 --> 00:27:00 in one case is highly regulated, has the imprimatur, the okay of all the regulatory authorities, but at the very same time the exact same product is completely verboten and it's asinine, honestly.
00:27:00 --> 00:27:02 There's nothing really else like it.
00:27:02 --> 00:27:12 And so this change is super important just in terms of the way in which Americans can and experience cannabis.
00:27:12 --> 00:27:18 And as Emily said, it's a majority of Americans, an overwhelming majority of Americans right now who have access to this plant.
00:27:19 --> 00:27:53 Amazing and it's amazing the history of the commerce clause and yeah, certainly how it's been used in the United States for many things The it's kind of funny going from wheat to weed here But but I mean it's probably something most Americans don't think about you know that fact We just kind of take it for granted You know all this stuff and the way it works between states and within states, but It is a really interesting point on that story.
00:27:53 --> 00:28:01 It's just like doing, growing it for himself or whatever and gets shut down and a lot of parallels to what we're seeing here.
00:28:03 --> 00:28:13 When, I guess, they, as you guys did the work on this, where do you see some challenges, some risks?
00:28:13 --> 00:28:15 And is it?
00:28:15 --> 00:28:23 Is there pretty smooth sailing through or there are a couple of things that might be like a bit challenging for everyone to kind of watch out for.
00:28:25 --> 00:28:31 Yeah, I mean, this is a case that will require patience and attention to detail.
00:28:31 --> 00:28:41 And that is something that I think, you know, it's interesting, we've had this arc of wanting for change and it hasn't happened, hasn't happened, hasn't happened.
00:28:42 --> 00:28:48 I think with this, we're just going to have to be very patient and watch how this unfolds and let the good work get done.
00:28:48 --> 00:28:52 But I do think we'll anticipate that there will be some challenges.
00:28:52 --> 00:29:00 But one important thing is, to make sure that the general populace understands the intention behind this case and what it's really about.
00:29:00 --> 00:29:03 And Darren's been doing an excellent job of articulating that.
00:29:03 --> 00:29:12 But we have been trying to build more coalition outside of the industry around this because this issue does pull so well across both sides of the aisle.
00:29:12 --> 00:29:18 So this is not a polarizing issue actually when you look at how the constituents rank in on it.
00:29:18 --> 00:29:26 But we do need to have conversations across the spectrum of political ideology to help people to understand what we're trying to achieve here.
00:29:26 --> 00:29:31 We're not trying to go crazy and ask for the entire world to change.
00:29:31 --> 00:29:43 We're just trying to achieve being treated equally by our government and being respected within the legal regulations that we operate under and within these states.
00:29:43 --> 00:29:55 Because I think the states have done, I mean, there are a few exceptions, as anyone who listens to the podcast knows how I feel about some of the states, but many of the states have done a pretty good job of trying to establish legal frameworks for this to operate.
00:29:55 --> 00:30:11 And you know, just especially when we spoke with the plaintiffs that are named in the case and very important to this case, because they really, the aspects of them doing business within the state of Massachusetts and then dealing with...
00:30:11 --> 00:30:19 and navigating the reach of the federal government into interfering with their businesses and the way that it explodes their cost of doing business.
00:30:20 --> 00:30:26 If they can, I mean, there's like the cost of doing business explodes and then there's the barriers to doing business that exists because of this.
00:30:26 --> 00:30:39 And it comes in every form and fashion, just including everything from the banking issues, we all know about the fees, if you can get the banking, the rates you pay on interest, if you can get a loan, insurance.
00:30:40 --> 00:30:45 anything from even leasing vehicles, which you can hear from, Gaussi talk about at Trevett.
00:30:45 --> 00:30:48 I mean, these things are extraordinary.
00:30:48 --> 00:30:53 And if, if you could do business without all of those aspects, you could actually have really nice businesses.
00:30:53 --> 00:31:02 We know businesses have failed or have failed to launch because of this, especially in the state of Massachusetts, because it's a pretty, it's a pretty, competitive market out there.
00:31:02 --> 00:31:04 But I think that.
00:31:05 --> 00:31:23 But we do anticipate there could be challenges and we're trying to get ahead of it by being very clear and intentional about what we're all trying to do here as an industry from small businesses all the way through to the quote unquote larger businesses, which we always kind of laugh about because these companies are doing a great job of generating revenue and moving to free cash flow.
00:31:23 --> 00:31:30 But when you look at their market caps, it's just not we're not in like quote unquote big business.
00:31:30 --> 00:31:31 We're not Amazon yet.
00:31:31 --> 00:31:33 I mean, even just that.
00:31:33 --> 00:31:58 The limitation around the up listing potential for the public companies I think a lot of people overlook the importance of the flow through that has on small business because the distortion of valuations that exist make it very hard for small businesses to raise money because they get relative valuations comparable valuations to the public companies and if you're trying to raise money and you have limitations about how much equity you can Give up.
00:31:58 --> 00:32:12 It's it's quite a limiting factor and when you don't have small business financing All of these things are impacting these businesses, but I do anticipate that there will be challenges, but one of them is to make sure we're very clear about the optics of what this case is really trying to achieve.
00:32:12 --> 00:32:13 And it's not just...
00:32:14 --> 00:32:15 Go ahead Darren.
00:32:15 --> 00:32:16 I'm sorry, go ahead.
00:32:16 --> 00:32:19 I was just gonna follow up on that thread.
00:32:19 --> 00:32:23 I think you raised such an important point that bears emphasis here.
00:32:23 --> 00:32:32 I mentioned earlier about how this case isn't about MSOs or small businesses or social equity versus non-social equity, et cetera.
00:32:32 --> 00:32:40 One of the beauties of this case and one of the things that got me so excited initially and certainly keeps my excitement going.
00:32:41 --> 00:33:00 is the fact that the issues that the interpretation of the commerce clause, essentially, which is where this all boils down to, the impacts of that are felt in so many different ways and by so many different businesses and verticals.
00:33:00 --> 00:33:08 And frankly, they're felt a lot more acutely by the small businesses.
00:33:08 --> 00:33:24 You know as it relates to some of the issues that Emily said around Getting loans about getting you know affordable insurance about Being able to maintain bank accounts having access to real vendors and third parties.
00:33:24 --> 00:33:39 You know, we generally can't use You know large payroll companies or certain ERP systems You know things that are just so basic and fundamental to doing business in a sophisticated way.
00:33:40 --> 00:33:43 And frankly, you know, the big guys, they can figure it out.
00:33:43 --> 00:33:48 They have the resources to develop capacities internally.
00:33:49 --> 00:33:50 The small companies don't.
00:33:51 --> 00:33:52 And they're suffering.
00:33:52 --> 00:33:54 They're dying as a result.
00:33:54 --> 00:34:00 At the same time, you know, as we have this very significant and important social equity angle, right?
00:34:00 --> 00:34:03 Because we've seen the failures of these social equity programs.
00:34:04 --> 00:34:13 which is very much based upon the fact that these businesses can't be treated like any other business.
00:34:13 --> 00:34:16 There's also impacts to the large businesses.
00:34:16 --> 00:34:18 Emily mentioned uplisting.
00:34:18 --> 00:34:24 There are issues with respect to access to meaningful debt markets.
00:34:24 --> 00:34:34 There are issues, of course, with inefficiencies and inconsistencies as it relates to you know, regulation and impact.
00:34:34 --> 00:34:41 And so there really are, you know, I like to think of this as like there's something for everyone in this case.
00:34:41 --> 00:34:45 It doesn't matter if you're left, right, pro-cannabis, anti-cannabis.
00:34:45 --> 00:34:48 This really isn't even about cannabis in so many ways.
00:34:48 --> 00:34:54 It's about freedom, it's about choice, it's about democracy, and it's about fairness.
00:34:54 --> 00:35:01 And the fact that businesses who are interested and wanna get involved in this space should be treated fairly.
00:35:01 --> 00:35:03 Yeah, great, great points.
00:35:03 --> 00:35:12 And I think it's also good to think about, it's not just the business owners or the shareholders that are impacted by the federal position.
00:35:13 --> 00:35:16 It does impact the employees, right?
00:35:16 --> 00:35:29 And there's close to half a million employees out there in this space that struggle with things like, losing a bank account, just for being an employee of a company, I've seen that.
00:35:29 --> 00:35:39 you know, happen at companies that I've been at, you know, not getting approved for home loans, right, because of their employer.
00:35:39 --> 00:35:45 There's all sorts of challenges that just exist that go beyond just the companies themselves.
00:35:45 --> 00:35:52 And it does impact, you know, a lot of the just people somewhat, you know, involved and then those that aren't like as a consumer.
00:35:53 --> 00:35:59 You know, there's challenges with being eligible for jobs, like jobs in the government.
00:35:59 --> 00:36:19 And there's like legislation that's trying to come around to fix that, but I have my doubts given how the federal government has done anything towards this stuff, but it's all kind of impacted just by the federal position, this kind of half in, half out, as you mentioned that they seem to be in.
00:36:19 --> 00:36:22 And you're absolutely right on the small business.
00:36:22 --> 00:36:23 We've made that case quite a bit.
00:36:23 --> 00:36:25 We've had guests on the podcast.
00:36:25 --> 00:36:37 you know, that are smaller organizations, kind of social equity groups that struggle disproportionately, I think, to get, um, you know, banking just in general, and then you combine that with cannabis, right?
00:36:37 --> 00:36:50 And, and I know when, when safe was coming around and people talk about it and like the argument, um, that some people had against it was, well, you know, there's plenty of banks and cannabis, there's plenty of credit unions that support, you know, cannabis operators.
00:36:50 --> 00:37:06 And, um, one, I don't think that there's, there are plenty, but I do think that at this proportionately supports larger operators that, you know, can find those resources a bit better than the smaller businesses that just don't have the same optionality, right?
00:37:06 --> 00:37:13 So it is, it kind of gets lost in the wash when people just say, no, there is banking, you know, it's like, no, yeah, technically, that may be true.
00:37:13 --> 00:37:18 But I think it's, you know, papering over what the reality is for a smaller operator out there.
00:37:18 --> 00:37:21 So, yeah, all of this stuff.
00:37:22 --> 00:37:28 it's great to make that extra clear that this isn't just about the larger organizations being involved.
00:37:28 --> 00:37:30 There are smaller organizations involved.
00:37:30 --> 00:37:32 This will support consumers.
00:37:32 --> 00:37:37 This will support employees when we have some of this change.
00:37:37 --> 00:37:41 So I think it's very important.
00:37:41 --> 00:37:47 And I think very interesting to see this kind of come to light.
00:37:47 --> 00:37:49 I don't know.
00:37:49 --> 00:37:56 It's like we've all been Hopefully something happens beforehand and maybe this accelerates things.
00:37:56 --> 00:38:09 I think in some ways it's not a great look for the parties and government that have always been supportive and have said that they're going to change things and then haven't continued to campaign on those things.
00:38:09 --> 00:38:13 This is the world we're in and I think it looks great for them.
00:38:13 --> 00:38:19 So maybe that it will accelerate some change hopefully or they say, okay, well, this is a problem.
00:38:19 --> 00:38:20 We talk about...
00:38:20 --> 00:38:27 you know, legalizing and you know, federally and making some change, but we just haven't so much that now we're getting sued.
00:38:27 --> 00:38:32 So I got to hope that it opened some eyes out there.
00:38:32 --> 00:38:35 Um, any, I mean, how do you guys feel about it?
00:38:35 --> 00:38:36 Are you guys excited?
00:38:36 --> 00:38:39 Was the news, was it like, uh, kind of great to see?
00:38:39 --> 00:38:42 I know you guys both have been working on this for, for some time.
00:38:43 --> 00:38:47 Um, a lot of cooks in the kitchen, I'm sure a lot of conversations, uh, a lot of.
00:38:47 --> 00:38:54 You know, herding cats, as you mentioned, Darren, you guys, does it feel great that it's out there?
00:38:56 --> 00:38:57 Is it sense of relief?
00:39:00 --> 00:39:01 Maybe not really fun.
00:39:01 --> 00:39:13 mean look, Emily can probably speak to this better than I can just because she's been really doing the yeoman's work of herding those cats, certainly more than I have.
00:39:13 --> 00:39:17 But yeah, I mean, we were very excited to get this filed.
00:39:18 --> 00:39:27 This is, as you say, something that's been in the works for quite some time and a story that needs to be told and an argument that needs to be made.
00:39:27 --> 00:39:30 And I'm excited that it's...
00:39:30 --> 00:39:31 getting picked up.
00:39:32 --> 00:39:45 You know, the timing is also, I think, just works out quite well in that we, you know, at the end of August got the news that HHS is recommending a reschedule.
00:39:45 --> 00:39:58 And so what this means is that with this case, we now have all three branches of government, at least on this issue, right, we've got the executive branch for the rescheduling, the legislative branch.
00:39:58 --> 00:40:03 through SAFE or SAFER and the States Act and some of these other pieces of legislation.
00:40:03 --> 00:40:05 And now we've got the judicial branch as well.
00:40:05 --> 00:40:15 And, you know, I'm no military historian, but I'll tell you that my guess is that being able to wage a war on multiple fronts is probably the way to go, right?
00:40:15 --> 00:40:17 So I think that's important.
00:40:18 --> 00:40:28 Yeah, I mean, I think for me, this has been, first of all, I can't say enough about the folks who have stepped up early and believed in this and that we've worked so well together.
00:40:28 --> 00:40:44 I mean, in an industry where for 10 years, I've seen people kind of work sometimes against each other or create friction in situations, this has been one of the most refreshing experiences ever to see the groups from big to small coming together.
00:40:44 --> 00:40:47 hearing the plaintiff's stories about what it's like to operate in this industry.
00:40:47 --> 00:40:56 I mean, it reminds me of early days of when I got into this and I had a lot of people kind of saying like, oh, you're trying to get weed legalized.
00:40:56 --> 00:40:57 It's going to hurt all these people.
00:40:57 --> 00:41:05 And then I would hear amazing stories about people who had medical benefits of cannabis or that their kids stopped having seizure because they have access to cannabis.
00:41:05 --> 00:41:12 This is like breathing new life into the way I feel about this industry because I get to hear the stories of.
00:41:12 --> 00:41:18 operators at every level and think about how their businesses are affected and how they could potentially change.
00:41:19 --> 00:41:22 I know, Cy, you know I was on the board of Marijuana Policy Project.
00:41:22 --> 00:41:29 Morgan and I personally contributed to consultants and state levels and federal levels for 10 years.
00:41:29 --> 00:41:35 And when you see a lot of change in some instances, it's really inspiring.
00:41:35 --> 00:41:39 I remember in the election when we got seven of the eight adult youths.
00:41:39 --> 00:41:42 programs passed when I was on the Board of Marijuana Policy Project.
00:41:42 --> 00:41:49 That was an immensely exciting time and it felt like we were seeing great change happening within the industry.
00:41:49 --> 00:42:13 And then on the federal level it feels like we've just been kind of treading water slash a little bit backsliding with things being removed like the coal memo and you know we have been waiting for the Garland memo for a while now and I don't understand how much more support a memo could get because it really is just a memo and there's so much support I as we've talked about, Rob Nichols from the ABA is such an immense supporter of banking reform.
00:42:13 --> 00:42:18 There's so much support for a new memo and we'd love to see it and I hope we get there.
00:42:18 --> 00:42:30 But I think that, you know, Darren's point is the right point is like, we've leaned in on the legislative branch for a long, long time and now it's time to take a different avenue through our one of the other branches of government.
00:42:30 --> 00:42:35 It's one of the amazing things about being an American is that we have the checks and balances.
00:42:35 --> 00:42:36 We have...
00:42:36 --> 00:42:47 the executive branch, which we are seeing some of the things happening around the HHS and Biden stepping up last fall, as you and I remember, to make comments about that.
00:42:47 --> 00:42:52 And then the subsequent move by HHS, and now we're waiting to see what the DEA is going to do.
00:42:52 --> 00:42:56 And then we know what's been going on in the legislative branch for a long time.
00:42:56 --> 00:43:01 And I don't even think it's so much about cannabis as it is about what's going on in the legislative branch.
00:43:01 --> 00:43:03 And then we have the judicial branch.
00:43:03 --> 00:43:13 I think as Americans, it is our job to think about how we can work through every branch of our government to get the best outcome for the citizens of this country and for the people who run businesses.
00:43:13 --> 00:43:27 I mean, I can't wow, I'm becoming incredibly patriotic maybe because it's Friday, but I can't get I mean, maybe because I come from a small business family, like to me, Main Street to me, small business is what is the defining characteristic of America.
00:43:27 --> 00:43:36 And then what you can do together with resources of larger companies and driving innovation and driving change, this is when America works best.
00:43:36 --> 00:43:39 No matter what is happening at the federal level, it is coming from the grassroots.
00:43:39 --> 00:43:42 And I get really excited when I think about this.
00:43:42 --> 00:43:49 And I think our industry, like what the GDP numbers just came out and I feel like cannabis is not even like reflected in what is happening in this country.
00:43:49 --> 00:43:51 And it has so much immense potential.
00:43:51 --> 00:43:52 So I'm just.
00:43:52 --> 00:43:54 you can tell I'm really excited by this.
00:43:54 --> 00:44:05 And maybe it is that I get to sit in the room with the lawyers and the great minds like Darren and Lynn and Jason and Brett and Abner and all these people who have these great visions.
00:44:05 --> 00:44:11 And then also hearing the constitutional lawyers who've had success in the halls of our government.
00:44:11 --> 00:44:14 And it gives me a great hope that we're onto something here.
00:44:14 --> 00:44:18 It won't be an easy path and it won't be overnight, but it's a good effort.
00:44:18 --> 00:44:20 So I'm excited.
00:44:20 --> 00:44:23 Okay.
00:44:23 --> 00:44:24 Exactly.
00:44:25 --> 00:44:40 Well, um, I just want to, you know, thank you both again, uh, for all the work, uh, that's gone into this and all the work that I think will continue to go into this, I'm sure there'll be plenty of phone calls and conversations over the years ahead related, um, to, to this stuff.
00:44:40 --> 00:44:41 So, so thank you so much.
00:44:41 --> 00:44:44 And Darren, thanks for taking the time.
00:44:44 --> 00:44:55 Um, you know, on such short notice, given the news just came out and, uh, I know you're, you're busy traveling, but to jump in and kind of help explain this issue to the audience of the high rise.
00:44:56 --> 00:44:58 I'm sure it's well received.
00:44:58 --> 00:45:00 So thank you so much.
00:45:00 --> 00:45:11 And yeah, let's do it again as this progresses and we learn more and as we hopefully get this thing to the finish line here.
00:45:11 --> 00:45:15 But thanks again and looking forward to seeing where this goes.
00:45:16 --> 00:45:16 Thank you.
00:45:16 --> 00:45:17 Absolutely.
00:45:17 --> 00:45:18 Thanks so much.