E162 - Welcome back to the High-Rise!

[00:00:00] E162 – Welcome to the High-Rise podcast presented by Headset, the leading data and analytics company for the cannabis industry.

[00:00:07] E162 – Hey, we made it. Welcome back to the High-Rise, a laid-back, data-backed conversation where we talk all things cannabis from USMSOs, Canadian LPs, Products and Market Analysis through the lens of data. My name is Cy Scott and I am joined as always by Emily Paxia of Poseidon.

[00:00:26] E162 – Hi, everyone. Welcome to the High-Rise.

[00:00:29] E162 – I think it's been four months, five months, been a little while.

[00:00:35] E162 – It's been a minute.

[00:00:36] E162 – It's been a minute. We're still in 2024 here.

[00:00:39] E162 – Time's flying.

[00:00:42] E162 – But it's good to be back. So, yeah, I think, you know, really we just both got a little busy with our respective day jobs, for better or for worse.

[00:00:53] E162 – And it was kind of tough to align schedules here. But we're back and we're doing it live.

[00:01:00] E162 – That's right. And I think some of this, thank you to the active listeners who approached us at the various conferences recently asking for the High-Rise to come back, because that really did inspire us to get this going again.

[00:01:12] E162 – So thanks to all who expressed that to us. It's nice to hear it.

[00:01:17] E162 – Yeah, yeah, I totally agree.

[00:01:20] E162 – It's always a fun, I don't know, it's a fun conversation with you. It's fun to kind of dive into the industry, to look at the data, to really think deeply about it.

[00:01:28] E162 – So I'm happy to be doing this again.

[00:01:30] E162 – We are doing it live. We'll see how it goes. It's our first attempt.

[00:01:35] E162 – We're streaming from our studio to LinkedIn. Hopefully it's working. But if it's not, this podcast will be published like a normal.

[00:01:44] E162 – Yeah. And I want to acknowledge it's 1111. And we should have done it at 11am, but instead it's 10.

[00:01:51] E162 – Oh yeah, yeah. 10 Pacific. It's 11. It's 11 though somewhere.

[00:01:55] E162 – It's 11 o'clock somewhere in the mountain time. But I wanted to acknowledge our veterans, because veterans are very near and dear to our heart in the cannabis industry.

[00:02:05] Ever since we started working with the Canadian operators back in 2014, you know, cannabis has been seen to be incredibly helpful to those who are suffering from PTSD and other chronic pain as a result of their service to our country and to the Canadian country and other countries.

[00:02:23] So I just want to give a shout out to our veterans and acknowledge the importance of that population. And one of the reasons I think we all try to keep fighting for reform is for better access for the veteran population. So thank you.

[00:02:36] Well said. Well said, Emily. So we have a new format, obviously live. We're also doing this on video, which gives us some opportunity to share some data visually.

[00:02:48] I think, you know, in previous high rises. And if you're listening to this, it's still tricky. We'll try and publish what I put together, what we put together as far as any analytics. It's always hard, you know, when we're talking about numbers without like seeing something.

[00:03:02] So we're trying something new here, pulled some numbers, have some stuff to share. So we'll talk about, you know, basically we're early November. So how did October look overall for the markets?

[00:03:13] And then, Emily, I think you're going to cover some of the market performance of Q3 earnings for the publicly traded companies.

[00:03:22] That's right.

[00:03:23] Yeah, that'll be interesting. And then we'll get to the news. So, you know, similar again, always, always grounded in data is our goal here. It's, you know, the lens we have.

[00:03:36] And it's always interesting. So, yeah, why don't we, why don't we start with the October numbers?

[00:03:42] Let's do it. Take it away, data man.

[00:03:44] Yeah, let me, let me see what I got and see how I can share this stuff.

[00:03:50] Yeah, I thought, you know, I'll share a couple slides, kind of present them as we talk to them.

[00:03:56] But I'm not going to like try and not run through like a deck, you know, it's not a presentation.

[00:04:04] Okay, but I do want to talk about October 2024 retail sales. So hopefully everyone that's tuned in can see this.

[00:04:12] And again, if not, I will publish this and we'll figure out maybe what went sideways.

[00:04:16] But no surprise, California continues to dominate, you know, the largest population, largest market, large amount of sales, you know, close to $350 million in October.

[00:04:30] Followed up by Michigan.

[00:04:32] Michigan has got a much smaller population.

[00:04:34] I don't know if it's like a quarter of the population, 20% of the population to what we what we see in California yet sells a lot.

[00:04:43] This is going to be interesting to watch, I think, in the months ahead with Ohio having legalized.

[00:04:48] Like will the sales on the border cities decline?

[00:04:52] I think that long term that will be the case.

[00:04:55] I think right now it's not it's not so much the case because I think pricing is still pretty high in Ohio.

[00:04:59] So if you're used to shopping and you kind of had that pattern of crossing into Michigan to buy your cannabis.

[00:05:05] Well, now you're probably going to be doing the same thing.

[00:05:09] You know, just that trade off of convenience, just depending on how far you have to drive.

[00:05:13] So we'll still see what this looks like here.

[00:05:20] Let's see then from here.

[00:05:24] October retail sales month over month, year over year.

[00:05:27] So this is a lot to look at and I'll kind of walk everyone through it here.

[00:05:33] The the purple line on the left most side there right above Arizona, that's year over year percentage sales.

[00:05:42] You could see Arizona is a story, right?

[00:05:45] It's down about 25% year over year, October to October.

[00:05:48] And this is something I think Emily, you and I should kind of work through.

[00:05:52] Like it's like, what is this narrative?

[00:05:55] What is driving this?

[00:05:58] Yeah, not not great.

[00:06:00] And then month over month, you can see it's kind of rebounding Arizona there, you know, about three, four percentage points.

[00:06:06] And then month over month, comparing that to 2023 month over month.

[00:06:09] That's looking at October to September.

[00:06:11] Basically, what are we how did the month over month this year compared to last year?

[00:06:16] Like, is there some seasonality?

[00:06:18] Do we just see growth from September to October in the past?

[00:06:22] You know, it's a little tricky, but just again, the extra context.

[00:06:25] So I think the big takeaways here are Arizona, Florida, Nevada have taken pretty sizable hits.

[00:06:32] Missouri continues to grow.

[00:06:35] And then we've got Massachusetts also showing some year over year growth.

[00:06:39] And then month over month, you know, California, Arizona, you know, it's nice to see California growing because you can look at the year over year.

[00:06:46] But unfortunately, you know, that year over year column across most of the states here is declining.

[00:06:52] So that's something that, you know, we have to work through as well.

[00:06:55] So, yeah.

[00:06:57] And I do have, I think, just a little bit of context from what I'm hearing in the markets and seeing in the markets.

[00:07:02] And I know you have this, too, is just extraordinary pricing pressure.

[00:07:06] And that's that'll be something we'll talk about in the queue results, too.

[00:07:11] But I think especially in Florida and in Arizona, there was a lot of promotional activity and a lot of product coming online.

[00:07:20] So it got more competitive.

[00:07:23] I think we also can't ignore the externalities of this kind of rampant, intoxicating hemp market, which I wonder, I would love to look at the categories where the pricing pressure is really starting to show to see if there's something going on there.

[00:07:40] But that's just something I'm hearing and seeing in market.

[00:07:44] A hundred percent.

[00:07:45] And yeah, I was thinking that, too, especially like I know Florida top of mind, because I know during this whole campaign, you know, when what I've heard about Florida, there are a lot of these hemp derived THC stores that are popping up.

[00:08:02] So I'm sure that's the case.

[00:08:03] I kind of did a little digging like on Arizona to see and I found a few shops, but I think it'd be worth reaching out, start and talk, talk to people in these markets and see, you know, what those that are on the ground.

[00:08:13] What does it really look like?

[00:08:14] Obviously, there's the mail order, you know, people are getting stuff shipped, but for sure that's impacting.

[00:08:21] I've got some data on Florida sales.

[00:08:25] And let me go back and share my screen again.

[00:08:28] Between the live stuff and this, it's like a lot of screens.

[00:08:34] I need like multiple screens.

[00:08:35] Now I can see you.

[00:08:36] Okay.

[00:08:37] Before I couldn't see you when I was sharing, it's like, what's happening?

[00:08:41] That's okay.

[00:08:41] I just spilled a total glass of water all over my desk as we started recording this.

[00:08:47] So I'm multitasking over here too.

[00:08:49] So carry on.

[00:08:52] All right.

[00:08:53] So this is a little bit of a deep dive onto just California, New York and Florida.

[00:08:59] I didn't include New York.

[00:09:00] I didn't include Ohio in that last chart.

[00:09:03] The year over year is so significant that it's so out of bound that it really skewed the data.

[00:09:10] So I wanted to include it here.

[00:09:12] New York in particular.

[00:09:13] But you can see California, October 2023 versus September 2024 and October 2024.

[00:09:20] So on the furthest column there is last October.

[00:09:24] And then on the rightmost column for the state is this October.

[00:09:29] So you can see year over year, California declined a little bit, but it has bounced back a little bit from September.

[00:09:33] New York's seeing a little bit of month over month growth and significant year over year growth.

[00:09:38] And Florida is kind of going the opposite way all around, right?

[00:09:42] So you've got year over year decline.

[00:09:43] You've got month over month decline.

[00:09:45] So that's pretty challenging.

[00:09:48] Here's this Florida overall.

[00:09:50] You can see a year's worth of data going back to November 2023.

[00:09:54] And you can see it continuing to decline pretty significantly here, particularly in the middle of this year.

[00:10:01] I'm not sure what that drop off, October to September is coming from.

[00:10:07] Campaign stuff.

[00:10:08] I really don't know.

[00:10:10] Maybe seasonality with people just not going to Florida in the summertime as much, even though it's medical.

[00:10:17] And I guess you could it's kind of strange, you know, like the tourism.

[00:10:21] I don't know how that works with sales, given it's medical.

[00:10:23] But, you know, maybe that's it.

[00:10:25] But it has fallen off quite a bit.

[00:10:28] Yeah, I think there is some of that, though.

[00:10:30] Like some people in South Florida, for example, leave South Florida in the summertime and they go up to there's a lot of wealth down there.

[00:10:38] And so they'll go up to the Hamptons or to other areas of the country because it's so incredibly hot.

[00:10:44] So that's just something to know.

[00:10:46] And then I do wonder there.

[00:10:50] I want to look at the medical card trends because there could have been some falling off of medical cards while people were waiting to see if adult use was coming and whether or not they wanted to go through the process of renewing that.

[00:11:01] But that could also be another intoxicating hemp market impact that we're seeing there.

[00:11:07] But I know the promotional activity in Florida and pricing is is extraordinary.

[00:11:15] So we'll have to see.

[00:11:17] Yeah.

[00:11:17] And here's a look at category sales again, that kind of same time period, October, September this year, October last year, month over month, year over year.

[00:11:26] That's M-O-M-Y-O-Y.

[00:11:27] Right.

[00:11:29] Look at the year over year.

[00:11:30] Look at the year over year for vape.

[00:11:32] Look at the year over year for edibles, topicals, even beverage year over year.

[00:11:37] It's like falling off a cliff.

[00:11:39] And I think that, you know, if I had to had to guess, I mean, I feel like vape, edibles, beverage, you know, are the types of products that you could get in the hemp markets pretty readily.

[00:11:53] I mean, flower too.

[00:11:54] Right.

[00:11:54] To some extent.

[00:11:57] But those are pretty big hits.

[00:11:59] Concentrates, on the other hand, has grown year over year.

[00:12:02] Right.

[00:12:02] On the medical side.

[00:12:04] You know, I don't I don't I don't know.

[00:12:06] I'm not familiar, you know, with the hemp market that well.

[00:12:09] I don't know if there's concentrates.

[00:12:11] I mean, it seems like that wouldn't be very cost effective given how much concentrate you'd need versus like a two milligram, five milligram drink.

[00:12:21] Right.

[00:12:21] Right.

[00:12:21] So that could very well be it.

[00:12:24] You know, just kind of understanding what's what's going on in the market.

[00:12:29] Are they for people focused on on concentrates more?

[00:12:31] They're focused on.

[00:12:32] I mean, capsules is so small, kind of doesn't really.

[00:12:35] You know, it's a it's a tenth of the concentrates market.

[00:12:38] So when you see that year over year grow, you know, sometimes these small categories move quite a bit with just a little bit more sales.

[00:12:44] But the big categories are pretty, pretty significant.

[00:12:48] Yeah.

[00:12:48] Yeah.

[00:12:48] I mean, I think the edibles category, specifically gummies, is definitely in competition with the intoxicating hemp market, which is, you know, rampant with it.

[00:12:57] And then beverage, which is sold in other channels.

[00:13:01] I think that's that's definitely it.

[00:13:03] On the vapor pens, I was a little surprised by this.

[00:13:06] And I do wonder if it's just a competitive market.

[00:13:09] Big category.

[00:13:11] Big category.

[00:13:11] And the pricing is just coming down as.

[00:13:14] Yeah.

[00:13:15] Yeah.

[00:13:15] That's true.

[00:13:16] Pricing is always a thing.

[00:13:17] Discounting is always a thing in Florida.

[00:13:19] So.

[00:13:20] Yeah.

[00:13:20] Could just be continuing to accelerate.

[00:13:22] Now, all these factors pile in.

[00:13:24] But not not a great trend for Florida.

[00:13:27] And obviously with the news, which we'll touch on, you know, not great for the market overall.

[00:13:33] Right.

[00:13:34] I mean, we we also are hearing consumer products companies tracking trends around what's going on on some of the pricing dynamics in their markets as well and sensitivity on the consumers part.

[00:13:48] Something to think about for sure.

[00:13:51] So on the other side, we have New York.

[00:13:56] New York continues to be a good standout market.

[00:14:00] Yeah.

[00:14:00] Seeing really nice growth.

[00:14:03] Yeah.

[00:14:03] This is a great trend.

[00:14:05] Right.

[00:14:05] If you just do like a linear regression through this, that's the direction we want to see every market.

[00:14:09] Unfortunately, it's not often the case, especially as they mature.

[00:14:13] So we're on that ramp right now in New York.

[00:14:15] Looking good.

[00:14:16] Hasn't hit the August numbers in October.

[00:14:19] But I think, you know, travel, tourism, all that stuff that happens in August, you know, falls off a little bit.

[00:14:25] But the market is still still growing nicely.

[00:14:28] I wanted to call out some standout brands.

[00:14:31] I thought this was interesting.

[00:14:32] And this is something that I think with our audience, I'd love to know more of like the kind of data that would be interesting to you.

[00:14:38] You know, the category stuff's interesting as always.

[00:14:42] But it's like the categories are driven by the brands.

[00:14:44] And I find it fascinating to dive into these brands a little bit beyond just the name, beyond just their numbers.

[00:14:50] And maybe we can do that, you know, as part of the high rise.

[00:14:54] Do like deep dives from time to time on interesting brands.

[00:14:58] But here, what I pulled was standout brands and how they sold from October to end of September.

[00:15:09] So end of Q3 and their position, their category rank.

[00:15:12] And I only pulled the ones that, you know, were top brands.

[00:15:15] And then we're in like the one or two position in the category.

[00:15:18] So what I think is the big interesting takeaway here for me was the variety.

[00:15:24] You don't see, I mean, heirloom maybe is an exception.

[00:15:27] Heirloom has gotten, you know, four categories on here where they're the top two.

[00:15:32] But, you know, for edibles, you know, you've got off hours.

[00:15:37] For pre-roll, you've got Ruby Farm.

[00:15:39] For flower, you've got Dank by Definition.

[00:15:42] You've also got pre-roll number two, Dank by Definition there.

[00:15:45] And then concentrates the MFNY.

[00:15:47] So kind of a nice diverse assortment of brands that are kind of really excelling in their categories, more or less.

[00:15:55] Some of these brands will only be, you know, in a handful of categories.

[00:15:59] Some are in a broader set.

[00:16:01] But just to see these, you know, top one and two across some of the biggest categories in the market, this variety is nice.

[00:16:10] It's not all just hyper-concentrated to one brand owns, you know, pre-roll flower and edible and beverage and everything else.

[00:16:16] It's a nice mix here.

[00:16:17] Yeah, I agree with you.

[00:16:19] And having spent time in the New York market recently, I was seeing some interesting affinity for brands.

[00:16:24] And that Heirloom brand, super interesting story.

[00:16:27] I know you know them well.

[00:16:28] But just the fact that they were, you know, long-running apple growers in Syracuse, New York.

[00:16:34] And now they shifted to another type of crop in the central part of the state.

[00:16:39] But I thought that was a really interesting and compelling brand story as well as just to the point about the competition from the non-traditional regulated market.

[00:16:52] Florida did close to, or New York did close down a lot of those stores and is opening more stores.

[00:16:59] And now we're seeing the impact of that in a positive way.

[00:17:03] Yeah.

[00:17:04] And good call on Heirloom.

[00:17:05] I did get a chance to visit out there.

[00:17:07] And it's really neat to see kind of the New York market, how they've enabled kind of these farmers.

[00:17:14] It's not a farmer's market, but you can go to the farm more or less, right?

[00:17:19] And it's not that, you know, I went and toured their grow or anything, but it's all they produce everything at the same place that they have their apple orchards.

[00:17:31] They have their distillery, right?

[00:17:34] So it's all kind of right there.

[00:17:35] And actually, when I went to visit, I totally thought I was in the wrong place.

[00:17:39] I'm like, this can't be right.

[00:17:40] Just because I'm so used to most cannabis markets being, you know, ostracized in the sense of you're way out there in some industrial park in the middle of nowhere.

[00:17:50] You know, nondiscreet, not a place where like tourists come to spend time.

[00:17:54] So that was really neat.

[00:17:56] And I think a really nice piece of legislation that New York did to be able to support that.

[00:18:01] And I think other states should look at that, especially, you know, when we look at these sales numbers and the states, you know, sales are declining.

[00:18:07] It's like the states want this tax revenue, right?

[00:18:10] They want the regulated market.

[00:18:12] I think getting consumers excited about brands and engage with brands is a big piece of that.

[00:18:17] And it's really hard to do when you just walk into an adult use, you know, cannabis retailer with a security guard out front and, you know, no real marketing versus going to an apple orchard and learning about, you know, the history of the company, right?

[00:18:32] So, you know, a neat trend.

[00:18:35] And I know we've always been excited about New York, but it's finally kind of neat to see it coming together.

[00:18:41] Absolutely.

[00:18:42] The other on this slide here, just to call the percentage of brand sales.

[00:18:45] This really just kind of echoes what I was saying about the different like specialties of these groups.

[00:18:51] Like Ruby Farms, 90% of their brand sales went to their pre-roll.

[00:18:54] I think by definition it's 80-20, where 80% flower, 20% pre-roll.

[00:18:59] So you can see that they're specialized in these areas.

[00:19:01] Whereas Heirloom, a little more broad, where you've got 46% of their sales going to VapePen.

[00:19:06] And this is all dollar sales that we're talking about here.

[00:19:09] So I think that's, you know, where I ended with the headset data on the market.

[00:19:17] Obviously, you know, it's a tiny snapshot of what's happening.

[00:19:21] But I really just wanted to pull like some interesting trends.

[00:19:23] I think the takeaways for me, year over year is looking pretty painful in a lot of markets.

[00:19:28] I think it's worth looking deeply at markets like Arizona just personally or as part of the high rise to try and understand what's happening there.

[00:19:36] You know, New York.

[00:19:37] I don't have, I didn't share Ohio data, but it does look good and it's growing as you would expect a new adult use market.

[00:19:44] You know, so just going to be interesting to watch, you know, as the year progresses.

[00:19:48] What we're going to try and do at the high rise is the first podcast of the month.

[00:19:54] So when we come to December, we'll try and look at November numbers in a similar way.

[00:19:58] And I think at the following weeks, we'll just kind of pull stories out of what we're learning and kind of go a little deeper.

[00:20:05] We're going to go like deeper on heirloom or go deeper on Arizona or wherever it is, just to kind of continue that till we have more stories with the next month's sales.

[00:20:14] Yeah, I mean, and I think, you know, some of the themes that we do, we do have to consider are like, for example, in Ohio, they rolled out the market without pre-rolls as a approved category.

[00:20:25] That's one of the hugest categories.

[00:20:26] And so that is difficult in terms of when people are looking at the growth rate of a new market.

[00:20:32] In addition, they can't do any advertising, any advertising whatsoever.

[00:20:37] And they did have the hemp products out there.

[00:20:40] Now, Ohio, just like Missouri, has now instituted what I understand.

[00:20:44] I think they're going to push through a ban on those products.

[00:20:48] Having, yeah, having just spent time in the Missouri market, that market is really interesting.

[00:20:53] It's a pretty regulated market, but it's pretty well regulated, I think.

[00:20:58] Everyone who I spoke to there is actually pretty happy and the pricing seems to be doing okay there.

[00:21:05] But it's an interesting market.

[00:21:07] I never would have thought that I was going to go to Missouri and be like, this is one of the best markets I've seen in a while in terms of how it's running, the happiness of the consumers, the happiness of the operators.

[00:21:20] So I'm curious if, you know, Ohio is looking at that.

[00:21:26] You know, there's and then the opposite sides of that are in Florida or these other markets where it's been pretty rampant and the pricing pressure has been heavier.

[00:21:36] There is one other thing.

[00:21:37] This is through that.

[00:21:39] This data was through the end of Q3, right?

[00:21:41] Yeah.

[00:21:42] Well, October.

[00:21:43] This includes October.

[00:21:44] This includes October.

[00:21:45] Okay.

[00:21:46] That's great.

[00:21:47] Because another thing I should have thought about with Florida was actually there were a ton of retail door closures due to the hurricanes.

[00:21:56] Oh, yeah.

[00:21:56] Yeah.

[00:21:57] And as you and I saw last year with the hurricane, and as you know, on the shorter day months, we know this actually impacts the cycle of the sales trends in these markets.

[00:22:11] So Florida actually, you could hear it in the operating companies, quarterly earnings calls, especially with Curaleaf and Verano.

[00:22:19] But I know also from Sunburn, we had to close stores whether or not the hurricane hit there.

[00:22:24] You had to be very careful and thoughtful about your employees.

[00:22:26] You don't want them to be in a place of danger.

[00:22:28] And so we would close things, you know, out of caution to make sure everyone was safe and protected.

[00:22:37] So that did impact, especially with the two back-to-back hurricanes within that timeframe.

[00:22:43] So I think it's something to think about in terms of the numbers.

[00:22:48] But it just occurred to me that that was relevant to that time.

[00:22:51] Yeah, great point.

[00:22:52] And this slide again, Missouri, almost 10%.

[00:22:56] I think it's what, 7%, 8% year-over-year growth.

[00:22:59] It's the only one with any strong year-over-year growth, apart from New York, apart from Ohio, which I didn't include in this slide only because the growth is so massive, you know, with these new markets that it just really skewed the chart.

[00:23:13] And you couldn't really notice any nuance of these other markets.

[00:23:16] But just for a more mature market, let's say, Missouri is the one that's doing super well.

[00:23:21] Yeah.

[00:23:22] And yeah, Florida, that's a really good point.

[00:23:24] September, October, tough season for weather.

[00:23:29] Yeah.

[00:23:29] Yeah.

[00:23:30] Well, do you want to talk a little bit about MSO performance since you're on it?

[00:23:34] Oh, my God.

[00:23:36] I know.

[00:23:36] Yeah.

[00:23:37] Yes, I do.

[00:23:39] You know, it's been interesting.

[00:23:41] The earnings calls have been kicked off starting last week and will carry on through this week.

[00:23:46] For example, I believe Ascend is doing their earnings call on the 12th.

[00:23:50] But last week we heard from Verano, CureLeave, Trulieve, GTI, TerraSend.

[00:24:00] And, you know, it was soft in general, I would say, with GTI being one of the outliers to that with a 4% growth.

[00:24:10] Which, you know, was a beat on what they had anticipated.

[00:24:15] But kind of across the room or across, yeah, across the room of companies that were reporting, the top line was a little bit decreased.

[00:24:24] You know, adjusted EBITDA was a little bit compressed.

[00:24:28] And also margins were a little bit depressed.

[00:24:32] I do think some of that, as I heard, had to do from, for example, Boris at CureLeave addressed this.

[00:24:38] The closures in Florida where they have a lot of exposure.

[00:24:41] I think they have 85 doors there.

[00:24:44] You know, places like that, you would definitely be feeling that.

[00:24:47] But, you know, it was an interesting quarter.

[00:24:51] Some of them cited pressure in Illinois and New Jersey on more retail opening.

[00:24:57] I think we're just getting into a world where operators who enjoyed limited competition are now facing more competition.

[00:25:10] Just like we've had in California forever and a day in Colorado or Oregon or Washington.

[00:25:16] And, you know, while I think this is going to take a little bit of a setting and resetting in terms of brands, development, retail, consumer experience, merchandising,

[00:25:28] I think that competition breeds excellence.

[00:25:32] And so I'm looking forward to how these operators are going to assess what occurred in the last couple of quarters and try to drive to operational excellence on the go forward.

[00:25:45] I think that we'll probably see continued cost containment efforts, especially in terms of SG&A, trying to look for ways to drive growth going forward.

[00:26:00] Now, yeah, and that was one of the things is just like what the data showed.

[00:26:06] We weren't really seeing growth in this quarter.

[00:26:08] And I think that that's something the industry is now trying to assess and establish where the pricing at the consumer is going to land and how they can do more land and expand to increase more consumer-based frequency of purchase, etc.

[00:26:24] So it was an interesting quarter and difficult.

[00:26:30] But at the same time, you know, the industry has faced broader headwinds, trying to understand what was going to happen with this election.

[00:26:39] The stocks are really getting punished today because of news of potentially Rick Scott as the lead of the Senate, I think.

[00:26:50] Did I get that right?

[00:26:51] I haven't seen that news.

[00:26:53] Yeah, it kind of started bubbling up over the weekend.

[00:26:57] And some people said some disparaging things about the potential investability of this industry because of it.

[00:27:05] I have a different point of view.

[00:27:07] I think a lot of people are freaking out because the outdated perception is that red is bad for cannabis.

[00:27:18] But I'm not necessarily sure I agree with that.

[00:27:21] And I'm waiting to see what's going to happen on the go forward.

[00:27:26] But I don't, you know, I don't think, I don't think a ton of movement's going to happen soon just because we're not a priority probably in terms of what's going to happen from a legislative standpoint.

[00:27:40] But once again, this is why we have the Supreme Court case that we've brought because we're trying to step outside of these other branches of government.

[00:27:48] But yeah, so the MSO performance has been difficult.

[00:27:52] You can see on this chart, like even GTI, who had, again, the best quarter beat on their numbers again on Friday.

[00:28:00] We had like the drop off on the news of Florida not passing and potentially a red wave.

[00:28:06] We saw some resuscitation on Thursday of last week.

[00:28:10] And then again on Friday, it started going down.

[00:28:12] And then today, everything is way down.

[00:28:14] And I think, you know, regardless of the metrics of the businesses, I know these CEOs and management teams are going to be looking internally to try to improve their quarters.

[00:28:25] But the stocks just continue to be punished because of the perceptions of catalysts that may or may not develop around our industry.

[00:29:05] Yeah, yeah.

[00:29:06] Companies with zero exposure to Florida saw a pretty steep decrease, including Ascend and Terrasend.

[00:29:13] Companies with, you know, well-indexed exposure to Florida, like Curaleaf, Cresco, Verano, obviously Trulieve, I would say they stepped down even further.

[00:29:24] GTI has limited exposure to Florida through their footprint relative to the broader footprint.

[00:29:30] But you can even see it here.

[00:29:32] That was a big step down.

[00:29:33] And I think it was, as we had feared, a massive blow to sentiment that that didn't pass.

[00:29:39] Now, just to remind everybody, it didn't pass because it's an incredibly difficult hurdle rate of 60 percent plus.

[00:29:48] The governor, Ron DeSantis, used taxpayer dollar to go against it and went heavily on not fact-based but fear-based campaigning on it.

[00:29:58] And the third thing to that is just we should acknowledge that it did get 57 percent of the vote, which is actually pretty good.

[00:30:08] I do want to note one thing we had talked about earlier is a rhyme to Ohio.

[00:30:15] Ohio had been polling above 60 percent going into about August of last year.

[00:30:20] And it ended up, I think, dropping down.

[00:30:23] Did it close at 57 percent was the actual tally?

[00:30:26] I think it was something like that.

[00:30:27] And this is exactly what happened in Florida.

[00:30:30] At the Marijuana Policy Project, we always knew that the opposition and prohibitionists come in at the 11th hour with a strong fear-based, not fact-based approach to taking these campaigns down.

[00:30:45] And it's pretty strong.

[00:30:49] So you just have to say a few things like in Florida, which is essentially a state that's anti-California, DeSantis said this will be just like California in terms of crime and smoking on the streets.

[00:31:02] By the way, people are not smoking on the streets in California.

[00:31:05] I think that is like a very confused notion because it's not legal to do that.

[00:31:09] Second thing is the kids will start consuming.

[00:31:14] We know it's the opposite.

[00:31:15] Youth usage declines in legal regulated markets.

[00:31:18] And the third thing was that they were trying to say there was no Home Grow, which it wasn't explicitly called out as a part of Amendment 3.

[00:31:27] But that's because the way the citizens' initiatives have to be written, they have to be incredibly specific or narrow or else they won't be allowed on the ballot.

[00:31:37] So it wasn't that Home Grow wasn't included.

[00:31:40] It was just that you couldn't articulate seven different points about a piece of legislation that would have been dealt with in the implementation period.

[00:31:49] But here we are.

[00:31:52] Here we are.

[00:31:53] I remember Ohio, when we looked at the analysis on the high rise some time ago when it legalized and the abortion issue was on the ballot and it was very binary.

[00:32:05] Blue, red, right, was the split on abortion.

[00:32:07] And then cannabis was a little more purple.

[00:32:09] Like you saw a little more or a lot more people pro legalization that were in like rural areas where more red voters are.

[00:32:20] Florida, I looked last week to try and get a sense of that.

[00:32:25] And unfortunately, I couldn't find any age stats from the 2024 election.

[00:32:28] But there is a UFL, I think University of Florida has this election lab and they published some numbers and they looked at age stats of voters across a few markets or a few states that publish it for the 2024 election.

[00:32:42] So they included Colorado, Delaware, Georgia, I think Iowa, Michigan, North Carolina, Pennsylvania, Virginia.

[00:32:49] And I say I think Iowa because maybe it's Idaho.

[00:32:52] I can't read my my terrible handwriting here.

[00:32:56] And it was 26 percent less than 40, 40 or under.

[00:33:01] And then 73 percent were, you know, over 41, you know, kind of rounding here.

[00:33:07] So that's like three quarters of the voters are, you know, are older.

[00:33:12] Right.

[00:33:12] And then of that, of those that are 65 and over, it's like a third, like 34 percent.

[00:33:18] Right.

[00:33:18] So older voters are coming out and Florida, you know, has a I think an older population, you know, retirees and stuff.

[00:33:26] So interesting.

[00:33:27] Right.

[00:33:27] If it is not so much red blue, but more age driven, like just the perceptions of cannabis because you're, you know, 65 plus, maybe you're very against it because that's how it's been your whole life.

[00:33:40] If, you know, maybe that also had an impact and it is with with a third of the voters 65 up.

[00:33:45] And this is, again, a spectrum of voters across different states is not specific to Florida.

[00:33:50] You know, you'd think I mean that obviously there was a number that voted for it.

[00:33:55] Right.

[00:33:55] Because if this this whole population, this whole cohort said no, it would have it would have been it would have failed like even even more.

[00:34:03] It wouldn't even reach the levels it did reach.

[00:34:05] So I think, you know, that's got to play into it a bit.

[00:34:08] All these things again.

[00:34:09] Right.

[00:34:09] Everything that came out, the misinformation you pointed out, age, the demographics of the voters and so on.

[00:34:16] But yeah, crazy how much money was spent on it.

[00:34:20] I'm like, one hundred twenty, one hundred forty million dollars on.

[00:34:23] Yeah.

[00:34:24] One hundred and forty million for the citizens based initiative.

[00:34:28] It's wild.

[00:34:29] It's very expensive to do it.

[00:34:31] And and that's why I think it's so insane, because it was really driven by you have to get so many signatures to even get it on the ballot.

[00:34:43] And the fact that that many people wanted to vote on it and then their own governor.

[00:34:48] It's also very anti-Florida to misuse tax like tax dollars.

[00:34:53] They don't like to tax things there.

[00:34:55] So to misuse the taxpayer dollars and to direct it against them is is just insulting.

[00:35:03] Yeah.

[00:35:04] Well, you know, that's kind of part.

[00:35:06] Oh, wait.

[00:35:06] A politician did something not great.

[00:35:10] Oh, my God.

[00:35:10] I'm so shy.

[00:35:10] I know.

[00:35:12] I know.

[00:35:12] Yeah, I guess that one hundred forty million to put into context.

[00:35:15] I mean, that's that's like more than October sales of Florida all in.

[00:35:21] Right.

[00:35:21] More than September sales.

[00:35:23] The whole market.

[00:35:25] Huge amount of money.

[00:35:26] Huge amount of money and a very disappointing result.

[00:35:28] And I mean, to be honest, I've gotten so used to them passing.

[00:35:32] I think we've talked about this before where way back markets would be on the ballot and it would be like kind of nail biting.

[00:35:40] And a real celebration and not that we don't celebrate them every time, but you start getting used to it like anything.

[00:35:47] Right.

[00:35:47] It's like, oh, Ohio has it on the ballot.

[00:35:49] For sure.

[00:35:50] Everybody understands that this is net positive and it'll pass.

[00:35:54] And, you know, obviously oversimplifying all the work that goes into it.

[00:35:58] But that was just, you know, my expectation like, yeah, you know, I know maybe it's polling or it's going to have trouble.

[00:36:02] But of course, it's going to pass because this is 2024.

[00:36:04] And this is, you know, where we're at with cannabis, you know, whatever, 14 years later since the first or 12 years later since the first adult use stuff got voted in.

[00:36:15] But unfortunately, it didn't didn't happen.

[00:36:18] Same with North Dakota.

[00:36:19] Same with South Dakota.

[00:36:19] Right.

[00:36:20] Which is I think was a another attempt at those markets.

[00:36:23] So it really does, you know, kind of beg the question, what is the future?

[00:36:27] Is it just is it going to be, you know, red blue?

[00:36:29] Like are we are we capped out on markets here?

[00:36:32] Are there markets that are going to be coming in the US?

[00:36:35] Does it matter?

[00:36:37] Any thoughts?

[00:36:39] Does it matter?

[00:36:40] Yeah, it matters.

[00:36:41] I mean, you know, aside from the fact that I'm sorry for the businesses that are there that were impacted by this, but like, here we are on Veterans Day.

[00:36:52] And to have a medical card in Florida, you have to kind of do these two appointments a year.

[00:36:56] You've got to pay a couple hundred dollars to have your medical card.

[00:36:59] It's unlike any other medication that requires almost no effort.

[00:37:04] This requires effort.

[00:37:05] And it does just make me feel sorry that access wasn't set to increase and improve.

[00:37:13] And I'm just sorry about it.

[00:37:16] I feel like it's a real shame.

[00:37:17] But what about when I'm thinking about other markets?

[00:37:22] Yeah, we'll see.

[00:37:23] I think we could see more coming.

[00:37:25] I mean, I didn't think we would see the Northeast have legal adult use cannabis to the extent we have it by now.

[00:37:33] I didn't think we'd have New York, Connecticut, Rhode Island, Massachusetts.

[00:37:37] You know, I mean, it's it's incredible.

[00:37:39] I'm Maryland, Missouri.

[00:37:42] I'm still reeling from my trip to St. Louis.

[00:37:45] I'm I'm like obsessed with the Missouri market.

[00:37:48] And the next one I can't wait to get to is to check out the Louisiana market, which has a very, very opposite kind of medical program to Florida where it's very easy and you can be from out of state.

[00:38:00] And I mean, that kind of jives with what I think of as the vibes in Louisiana.

[00:38:07] But I think I think other markets could be interesting.

[00:38:09] I'm, you know, obviously watching to see if what if anything will happen with this farm bill and more states taking steps like New Jersey, Missouri, Ohio on on hemp to try to drive it into a regulated market.

[00:38:25] But we'll see.

[00:38:26] Do you think we have more states coming?

[00:38:28] Yeah, yeah.

[00:38:28] I think I think Pennsylvania has got to eventually.

[00:38:32] Yeah, I mean, it's it's insane that it's such a holdout, especially when you're just mentioning all those markets in the northeast.

[00:38:40] And yeah, it's surrounded by by it.

[00:38:45] Right.

[00:38:46] I think Midwest to some opportunity there.

[00:38:50] But yeah, I don't think it's over, but I think it's it's getting harder.

[00:38:53] And oh, yeah, that was another interesting regulatory step.

[00:38:58] I saw.

[00:39:00] Wait, did I lose you guys?

[00:39:01] No, no, I got you.

[00:39:02] OK, that's weird.

[00:39:04] I'm not seeing my thing.

[00:39:06] Was the the approach of Tennessee, which is to say because the THCA rule has been a bit of a loophole for some for many states.

[00:39:18] But the thing with Tennessee is the temperature at which it is heated up.

[00:39:24] What is the THC, you know, balance at that point?

[00:39:29] And that's that's the way because when you decarboxylate or heat THCA, it becomes delta nine.

[00:39:35] And that's that's the potency that most states would look at to consider intoxicating properties of the plant.

[00:39:45] So I saw that Tennessee was looking to do that.

[00:39:47] So anyway, interesting.

[00:39:49] Yeah, that is very interesting.

[00:39:53] Well, we'll see what the future holds.

[00:39:55] I don't want to end on like a negative note.

[00:39:57] You found some pretty interesting news about a study of over 20,000 people in New Zealand.

[00:40:05] Yeah, which is about the population of New Zealand.

[00:40:08] Just kidding.

[00:40:09] New Zealand.

[00:40:09] Kiwi.

[00:40:12] So 20, 23,500 people in this study saw that or this study found that cannabis use is associated with a reduced with reduced consumption of other substances.

[00:40:25] The substances that they include in the study are alcohol.

[00:40:28] So 60 percent reported low or alcohol.

[00:40:31] 60 percent reduced synthetic cannabinoid use.

[00:40:36] So I guess that'd be like the delta eight and the kind of wacky, the wacky stuff.

[00:40:42] 44 percent less morphine use.

[00:40:45] Like that.

[00:40:47] Yeah.

[00:40:47] And then 40 percent decreased methamphetamine use.

[00:40:53] Well, those are good numbers.

[00:40:55] That's what we see in each market, too.

[00:40:57] I mean, it's like every state that opens, you see a decline in alcohol consumption.

[00:41:01] You see a decline in use of opiates.

[00:41:03] You see these declines concurrent to it.

[00:41:06] And I think it's an important trend to note.

[00:41:09] I just thought this was a big study relative to their population.

[00:41:14] And I think, you know, it made me think back to all of the high rise episodes we did where we talked about what's going on in broader categories such as Bev Elk and the decline in wine and spirits sales and beer sales.

[00:41:27] While cannabis is, you know, a new and emerging consumer product category that's kind of playing in their space.

[00:41:35] And so it's one of the things that I try to think about as a overlay contextually to the political levers that are being pulled constantly around the growth or not growth of our industry.

[00:41:53] And so and also the, you know, just the consume.

[00:41:58] It's just important to note consumer trend shifts and and proclivity.

[00:42:03] And I think that cannabis, you know, we're going through another interesting cycle here as you do in an emerging market.

[00:42:11] But from a consumer product standpoint, this is very relevant on the go forward, I think.

[00:42:18] So I just I just think it's important to to track that.

[00:42:23] And, you know, headset being the data analytics provider that has always, you know, reviewed this as a consumer product category.

[00:42:30] I just think it's it's important for us to all keep in mind.

[00:42:35] Yeah.

[00:42:36] Yeah.

[00:42:36] The impact, the broader impact.

[00:42:39] Yeah.

[00:42:39] And then in this article I mentioned Bloomberg Intelligence reports cannabis poses a significant threat to the alcohol industry.

[00:42:45] And we know that they've invested in Canada.

[00:42:49] I wonder, you know, what that means here for the U.S.

[00:42:53] I'm sure they would love some way to grow some catalyst.

[00:42:56] I think that if I was running a beverage alcohol company, I would prefer to participate in this, given that people are going to be consuming it regardless one way or another versus artificially.

[00:43:10] We're hoping that the regulations keep keep it smaller, you know, et cetera.

[00:43:16] I would see it as an opportunity if I was them.

[00:43:18] And I think they do, too.

[00:43:19] Otherwise, they would have made those pretty massive investments into the into the category way, way back with with Canada legalization.

[00:43:28] So that was episode 141, I think.

[00:43:31] Like, yeah, and the show notes here.

[00:43:34] So we'll link it so you guys can all go back and listen to to that and that kind of discussion.

[00:43:39] But thanks for finding that that piece of news.

[00:43:43] Yeah.

[00:43:43] It's just good to see that it's, you know, all these sales, all these trends at the end of the day, like it's positive in a lot of voice, positive in so many ways.

[00:43:51] And this is one of them, just decreased consumption of certainly more debilitating things like meth, morphine.

[00:44:00] So good to see.

[00:44:04] We're totally better than meth.

[00:44:09] Nailed it.

[00:44:10] Nailed it.

[00:44:11] Well, that'll do it.

[00:44:11] Thanks for joining, everybody.

[00:44:13] And we'll see you next time.

[00:44:20] Thanks for listening to the High Rise Podcast presented by Headset.

[00:44:23] For more information on Headset, visit headset.io.