E165 - Making cannabis fun again!

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

[00:00:08] All right. 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 market analysis through the lens of data.

[00:00:20] My name is Si Scott with Headset and I am joined as always by Emily Paxia of Poseidon.

[00:00:25] Hi, everyone. Welcome to the High Rise.

[00:00:29] Another week, another High Rise, fresh off of a week in Las Vegas for MJ BizCon where we got to see each other.

[00:00:39] We did for 25 seconds.

[00:00:42] 25 seconds.

[00:00:43] So it was nice to say hello to you there though at the party that Patrick put together which was popping off.

[00:00:53] Yes, yes it was. Yes, it was. I believe the party is the title is CEO Mixer, something along those lines.

[00:01:04] It was a lot bigger than that, I would I must admit.

[00:01:08] CEO and VC Mixer.

[00:01:10] Oh, and VC. Well, I do believe there are more more than CEOs and VCs there.

[00:01:15] But it was the place to be at. So shout out to Patrick for putting that on. It was great.

[00:01:21] And don't forget, we live in a world where you can really just call yourself a VC no matter what you do.

[00:01:28] And apparently a CEO as well.

[00:01:31] Because these jobs are so fun.

[00:01:34] These are, yeah, the best jobs.

[00:01:36] That's why we do it.

[00:01:37] Yeah, that's why we do it.

[00:01:38] But I'm still recovering, you know, slowly here.

[00:01:43] That's what Las Vegas will do to me.

[00:01:44] I think it was my 11th year.

[00:01:47] 10th or 11th.

[00:01:48] You know, we missed the first one.

[00:01:49] We sponsored the first one with Leafly at the time, but I didn't go.

[00:01:55] And then I went the second year.

[00:01:58] I mean, when it's double digits now, right?

[00:02:01] I mean, I don't know if that's a good thing or a bad thing.

[00:02:03] It's crazy.

[00:02:04] I mean, I was just saying how I used to view this, the attendance count at MJ Biz as like a leading indicator to how the industry was growing.

[00:02:13] Like, first year I went, it was like 3,000 people, then 10,000, then 19, and then 27,000.

[00:02:21] And it's like huge, huge growing of attendee base.

[00:02:26] And, you know, I think we all know, too, that it was one thing when we were all at the Rio together.

[00:02:34] And we enjoyed our time just being in one location, but now with it being at the convention center and during the week of AWS, no less.

[00:02:45] I think we think there's probably double the amount of actual registered attendees just in Vegas taking meetings.

[00:02:52] I think that probably feels right, right?

[00:02:55] Yeah, certainly.

[00:02:57] I did make my way to the show floor.

[00:02:59] I actually did a small panel with the Factbook group.

[00:03:04] And, yeah, took the time to check out the floor.

[00:03:08] And it looked good, as always.

[00:03:11] I mean, it's Las Vegas Convention Center.

[00:03:13] It's massive space.

[00:03:14] So they definitely fill it up still.

[00:03:17] There were some cool things, I thought, this year.

[00:03:19] They're like a seed area, like a genetics area.

[00:03:24] Yeah, yeah.

[00:03:25] And stumbled upon it right when they had finished a little talk with some genetics companies like DNA Genetics, which, you know, we know from way, way back.

[00:03:38] Actually, Brian, co-founder, knew Dawn.

[00:03:43] It's Dawn and Erin, I think from like high school.

[00:03:46] And we've been, yeah, so it's a small world, right?

[00:03:49] And we've been to their, they've got a spot out in Amsterdam, which we were talking to Dawn and it still has it, you know, where they sell the seeds and stuff.

[00:03:59] But those guys are like, they go way back.

[00:04:02] And I think back when Canada took off, they licensed with somebody, Canopy, I forget who it was.

[00:04:08] They licensed their genetics there early on.

[00:04:11] But they're still there.

[00:04:11] But it was kind of cool because a lot of MJBiz has become, for good reason, you know, this industry requires, I don't know, rolling paper companies.

[00:04:19] It requires machinery to package things.

[00:04:25] And you see a lot of that lighting, all that kind of support, vape hardware manufacturers.

[00:04:32] But it's great to see like, oh, these companies are the genetics.

[00:04:34] And they're responsible for like a lot of the genetics that you know, that you see in the strains in the stores.

[00:04:42] I think that, yeah, I actually love the legacy of the seeds and the genetics of our industry.

[00:04:47] Like those folks, when we first started getting into it, they seemed like, I mean, they're legends, some of the early seed groups.

[00:04:56] And, you know, as somebody who once received a postcard from Amsterdam with seeds embedded in it to try my own personal cultivation, which worked out.

[00:05:07] But, you know, I feel like that was like that was back before we even, you know, obviously started Poseidon.

[00:05:13] But it's fun to do that.

[00:05:15] And by the way, I've never I still have not made it to Amsterdam, which feels well overdue.

[00:05:20] But anyway, yeah, it's worth a journey.

[00:05:23] Yeah, I love seeing that.

[00:05:24] I knew there would be a lot of kind of industrialized equipment there around cultivation.

[00:05:29] And to your point, the back end of manufacturing, like the pre-roll machines, bottling equipment, because drinks are growing in interest.

[00:05:39] You know, Waters always used to have a huge exhibition there for the extraction.

[00:05:43] And now I know we've moved on from those types, the CO2 extractions into these different ways of getting to rosin, et cetera.

[00:05:51] But it does.

[00:05:53] It's an equipment intensive business.

[00:05:55] And those guys take up a lot of the square footage of the floor.

[00:05:58] So they do the seeds.

[00:05:59] Yeah, it is.

[00:06:00] And yeah, never, never too late to get to Amsterdam.

[00:06:03] It's it's an incredible city.

[00:06:06] It's shocking the canal system there.

[00:06:10] You know, you see it, but it's kind of like a Venice, not as insane as Venice canals, obviously.

[00:06:15] But yeah, surprisingly, like a lot of water.

[00:06:19] Very beautiful.

[00:06:20] The I asked on about it.

[00:06:22] Like, how's it going?

[00:06:23] Like, I haven't been there in 10 years, visited a shop.

[00:06:28] He said still there.

[00:06:28] And he said just less Americans.

[00:06:30] Less Americans are coming through.

[00:06:32] So more.

[00:06:33] Yeah, maybe other.

[00:06:34] He's like still plenty of tourists, but just coming from elsewhere.

[00:06:37] So you're you're you're ahead of the curve by not going.

[00:06:40] I don't know what's changed.

[00:06:42] But it's like I miss Burning Man, too.

[00:06:44] I just miss that.

[00:06:46] I mean, I have to believe a little bit of it is like Americans have access to a lot of stuff that they didn't have 10 years ago.

[00:06:52] And why?

[00:06:53] Why make a journey?

[00:06:54] Not that you would make that journey specifically, but it might pull you a little bit like, well, I can go to the Netherlands and I'm a fan of cannabis.

[00:07:02] Let's go check it out.

[00:07:04] Actually, why bother?

[00:07:05] I live in California, you know, and we'll yeah, we'll go somewhere else, especially, I mean, his perspective, you know, his audience, his customers for sure would be more inclined to make travel decisions based on on cannabis.

[00:07:18] Yeah.

[00:07:18] I mean, let's face it.

[00:07:19] We have only fans.

[00:07:20] So you don't need the red light district anymore.

[00:07:23] We have cannabis.

[00:07:26] So you don't need to go to the cafes there.

[00:07:28] I mean, it's just a different things are accessible.

[00:07:32] Everything's accessible.

[00:07:33] Yeah.

[00:07:33] God bless the USA.

[00:07:35] Right.

[00:07:38] I knew I was going to get you with the only fans.

[00:07:41] The smartest thing I've ever heard is the smartest business.

[00:07:47] Well, do you know what I learned?

[00:07:49] Actually, just a quick sidebar.

[00:07:50] We do sometimes do this.

[00:07:52] Only fans was started as a like a recipe and like DIY website.

[00:07:58] Did you know that?

[00:07:59] I did not know that.

[00:08:01] It does sound like kind of like reading Playboy for the articles, like use that argument.

[00:08:06] Like I'm just on here for the recipes and the DIY stuff.

[00:08:09] I don't know why it's all these charges on my credit card.

[00:08:13] No.

[00:08:14] So hear me out.

[00:08:15] This is actually really interesting because I know someone who has the payments processing

[00:08:20] platform that is used for highly regulated things like this or for Vegas or whatever.

[00:08:25] And it was started as this, yeah, like a content sharing platform where you could pay

[00:08:30] to access content.

[00:08:32] Unsurprisingly, no one was really paying for this because there's so much of it out there

[00:08:36] that's free.

[00:08:37] But there was a pivot.

[00:08:38] And I don't necessarily think it's the same folks who started it.

[00:08:42] I think it was the guy who owns it now.

[00:08:43] He bought it and liked the content creator aspect of it and thought, I think there's

[00:08:50] a different use for the use case for this technology.

[00:08:54] Correct.

[00:08:55] Just stumbling into the revenue.

[00:08:56] I love things like that though.

[00:08:57] The revenue.

[00:08:58] Yeah.

[00:08:58] Yeah.

[00:08:59] Yeah.

[00:08:59] Anyway.

[00:09:00] Yeah.

[00:09:00] Incredible.

[00:09:01] My hair does insane numbers, which is unsurprising.

[00:09:04] Yeah.

[00:09:05] Also at MJBiz, there was like a brands area under the Weedmaps umbrella.

[00:09:10] Um, I forget Weedmaps something.

[00:09:14] They, they had branded it and they, they did have like consumer brands there.

[00:09:19] So kind of like the genetic side, they had, um, you know, a handful of, of brands, which

[00:09:23] is, I would say at MJBiz kind of rare to see because it's not a consumer focused event.

[00:09:30] Um, you know, and I think there's value to be there.

[00:09:34] Obviously, you know, you want to get shelf placement, you want to drive investment or

[00:09:37] whatever, but there's really not that many, many brands, but one brand that I had a chance

[00:09:42] to go visit was a brand you might be familiar with in California cake.

[00:09:45] She hits different.

[00:09:47] I don't know if you've seen this brand, but they are like rocketing up the charts, uh,

[00:09:52] doing insane numbers, uh, in the vape category and they're going to be expanding categories.

[00:09:59] Um, but it was really great.

[00:10:00] Uh, got a bump into, uh, to Chloe there.

[00:10:03] Who's like the founder, I think CEO now.

[00:10:06] Um, and she talked about, and I was kind of like, what are you guys doing?

[00:10:09] So right, uh, to, to just kind of see, you know, yourself moving up the charts.

[00:10:13] Cause we see the data and headset, we see those numbers, but, um, it's always nice to kind

[00:10:18] of hear the story.

[00:10:19] And she mentioned like, uh, they're, they're trying to, you know, make cannabis fun again,

[00:10:24] like bring in the fun to cannabis.

[00:10:26] And, uh, I thought that was a great, a great way to put it, you know, especially at MJBiz,

[00:10:31] which is, you know, business focused, uh, conference, but, but I don't know, it really

[00:10:35] does seem to reflect in that brand.

[00:10:37] And I feel like it's stuff that you've talked about before.

[00:10:40] Um, I don't know, just, just kind of neat to see.

[00:10:43] So we'll share some numbers there and, uh, yeah, you gotta take a look at, look them up,

[00:10:50] look them up on headset.

[00:10:50] You'll find them on our, on our public site, I'm sure.

[00:10:54] And, uh, in the top lists.

[00:10:55] Um, but yeah, really, really cool stuff and good to kind of meet the operators.

[00:11:01] I love meeting the operators and that is definitely the reason I still go, even though I get so

[00:11:06] tired after being in Vegas, even though I was only there for 24 hours, but I mean, I was,

[00:11:12] yeah, I was there for 24 hours.

[00:11:13] I sat with no fewer, like sat with and chatted with no fewer than 15 different operators everywhere

[00:11:21] from like butter in Connecticut and these, uh, micro licensed guys called rodeo in Connecticut,

[00:11:26] which it's like, I get to learn so much just by sitting with them to like the holistic guys

[00:11:32] to the, anyway, it's just, it's just so helpful.

[00:11:35] And then, oh yeah, of course.

[00:11:37] Did you go on the flow hub party, the, uh, great American road trip bus?

[00:11:41] Did you know, I didn't get on the bus.

[00:11:43] Um, but I did do a interview with Kyle, um, and his camera crew, Kyle, the CEO of flow hub,

[00:11:51] flow hub being a point of sale and in the categories running around the country now on a tour bus.

[00:11:57] I think they posted it on LinkedIn.

[00:11:58] Um, really cool assets that they had cool graphics that they're putting together into production.

[00:12:04] Uh, from what I saw, I mean, it is, it's, it's really, really, really good.

[00:12:09] Um, yeah, it's so, yeah, yeah.

[00:12:11] But I do an interview.

[00:12:12] Yeah.

[00:12:12] I'm glad that because you guys are long partners, but I feel like, um, yeah, I mean, I feel like that is those,

[00:12:19] those meetings, those face to faces, that high concentration of it.

[00:12:23] I'm sure you had a zillion of them too.

[00:12:25] Um, you know, sat with financing partners, other investors.

[00:12:29] I mean, and then at the party, obviously it was like, uh, it was just like, uh, what's that called?

[00:12:34] Like where you're speed dating.

[00:12:35] I mean, I felt like it was just like person, person, person, person, and people you don't get to see maybe even all year.

[00:12:42] So it was good.

[00:12:43] Right.

[00:12:43] Yeah, it was good.

[00:12:44] It was good.

[00:12:45] Uh, after whatever, 11 years, I'm like, uh, another MJ biz, but I'm always happy when I, uh, when I go and get to see, uh, all the old faces and new faces.

[00:12:53] So, uh, definitely recommend it.

[00:12:56] And, um, yeah, Amazon, like you mentioned, was there, uh, AWS.

[00:13:00] I'm in Seattle.

[00:13:01] So like the flights down were super expensive because yeah, all the planes were slammed.

[00:13:06] I'm sure it's coming from San Francisco, same thing.

[00:13:08] Right.

[00:13:09] And then, uh, uh, on top of that, there was like a, the rodeo, like the, the big rodeo was in town too, which, uh, yeah, I was like, oh, that'd be cool.

[00:13:19] I've never been to like a proper rodeo.

[00:13:21] And, um, I don't know, the Uber driver I was with at the time was like, oh, you should go tickets are like $500.

[00:13:28] And I just was like, okay, nevermind.

[00:13:30] Maybe next time.

[00:13:31] But, uh, it would be cool, but there were a lot of like cowboys there, uh, for sure.

[00:13:36] There were a lot of good.

[00:13:37] Yeah.

[00:13:37] Good mix.

[00:13:38] Good mix.

[00:13:39] But, uh, yeah, I was, uh, Rosie and I were laughing because yeah, Rosie and I were laughing because we met some people.

[00:13:46] Oh yeah.

[00:13:46] Like good day farms.

[00:13:47] We met up with those folks and then we went out, uh, and, um, I mean the male to female ratio.

[00:13:53] I've never seen anything like it, but if you think about it, it's the rodeo, it's AWS, it's cannabis.

[00:14:01] I mean, it's like, it's a lot of dudes.

[00:14:05] It's a lot of dudes.

[00:14:06] But I was like, we were like, we went into the bathroom and we were like, we're it.

[00:14:10] This is nobody else's.

[00:14:11] I felt like I was down.

[00:14:14] Vegas is yours.

[00:14:15] Yes.

[00:14:16] The whole place.

[00:14:17] But, um, it was good.

[00:14:19] But I, I was also like, I was wishing I could like get, I was like, is there a Wrangler pop-up shop?

[00:14:25] Cause some of the jeans, those, those cowboys were wearing.

[00:14:28] I was like, those are cool.

[00:14:29] Anyway, good stuff.

[00:14:32] Yeah.

[00:14:32] Yeah.

[00:14:32] At least, at least find a good hat.

[00:14:35] Good cowboy hat.

[00:14:36] Correct.

[00:14:38] Well, um, kind of moving on here.

[00:14:40] Green, Green Wednesday.

[00:14:41] We talked about on the last podcast, the numbers are in.

[00:14:44] So I have some of those that can walk through a little bit.

[00:14:47] Um, shall I dive in?

[00:14:51] Dive in?

[00:14:51] Yeah.

[00:14:52] Dive in.

[00:14:52] Okay.

[00:14:53] Um, well, pre Thanksgiving holiday, Green Wednesday, a famously in our industry saw a 68% increase

[00:15:01] in total sales across the U S compared to the previous three Wednesdays.

[00:15:06] So we looked at an average Wednesday from the three prior Wednesdays, uh, 68%.

[00:15:11] Um, sales boost was across all categories, but beverages was the only category to see a triple

[00:15:17] digit spike 130%.

[00:15:19] And that is a lot because beverages is a small category, but I, I, I helped with that number.

[00:15:24] I bought some beverages.

[00:15:25] I did some green Wednesday shopping.

[00:15:27] Uh, I got more than beverages, but, uh, that was part of it.

[00:15:30] Uh, edibles, 97%, uh, flower, the category probably everyone cares about given it's the

[00:15:37] largest 64% increase in vapor pen, 62% increase.

[00:15:41] Uh, so those are the smallest spikes actually, but they're still, you know, good, good sized,

[00:15:45] uh, spikes.

[00:15:48] Um, all markets, uh, saw the boost, but not all markets are the same as some markets like

[00:15:54] Arizona, a hundred and 4% so doubled their revenue.

[00:15:56] Uh, Ohio, 94%, Illinois, 84%, Missouri, 83%.

[00:16:01] So, uh, you know, it's kind of a mix.

[00:16:03] Ohio's obviously a new market, Missouri, pretty new, uh, Illinois, Arizona, a little more mature.

[00:16:09] Um, but just good, good returns kind of tapers off Washington only 46%.

[00:16:14] So I guess I didn't buy enough to move the needle there.

[00:16:17] Uh, Nevada, 44%, Colorado, 44%, Oregon, 27%.

[00:16:22] So the smallest increase in Oregon.

[00:16:24] Um, and then last but not least, uh, discounting.

[00:16:29] That's the big reason, um, I think for the season here for green Wednesday,

[00:16:32] big reason why I went in, uh, to kind of see the deals I could get.

[00:16:36] And, uh, green Wednesday average discount jumped 30%, uh, from 24.6% across the previous three

[00:16:43] Wednesdays to about 32% on the holiday.

[00:16:47] So big jump there.

[00:16:49] Um, and then it just kind of varied on the different markets.

[00:16:52] Uh, you know, some, uh, like Washington saw some of the bigger highest discounts,

[00:16:58] uh, at 34%, which was a 12% increase over typical Wednesday.

[00:17:04] So, you know, it's, um, it varied, varied mix, but I think all in all a good, good day.

[00:17:11] I don't have the numbers for the week.

[00:17:13] Like we talked about last time in previous years, overall, the week is down because Thursday sales

[00:17:18] are down, uh, so much.

[00:17:21] Um, I, I don't, I don't, I don't recall if we talk about Friday, I think Friday was, you

[00:17:26] know, uh, black Friday was pretty quiet, uh, for cannabis anyways.

[00:17:32] Uh, any surprises there?

[00:17:34] Does that sound about right?

[00:17:35] More discounts, better revenue category mix.

[00:17:40] Yeah, it does sound more, right.

[00:17:42] I was kind of curious if Ohio, let's see, I was just trying to look at this Wednesday

[00:17:48] because one of the things I think we noticed last year was Merrill, Matrimor saw some of

[00:17:52] the biggest increases.

[00:17:53] Okay.

[00:17:54] So Missouri, Maryland and Ohio saw the biggest increase in discounts probably because they

[00:18:02] have not been discounting as much in general.

[00:18:05] So the difference is looking more significant.

[00:18:08] Is that the take?

[00:18:10] Is that what I'm understanding?

[00:18:11] I was just trying to read it while you were speaking.

[00:18:14] Yeah.

[00:18:15] Yeah.

[00:18:15] I think so.

[00:18:16] That makes sense.

[00:18:17] I think so.

[00:18:18] Yeah.

[00:18:18] I, you know, who knows all the nuance of the market.

[00:18:22] It's like talking to a group out of Ohio.

[00:18:25] And, uh, I think that, you know, they, the sales are good.

[00:18:29] I think they expect maybe a little more, but I also know that they're dealing with this,

[00:18:32] um, hemp market that's very, uh, prevalent in Ohio.

[00:18:37] And so, you know, that could, that could be dampening it.

[00:18:40] So maybe, you know, run some higher discounts, bringing people into the, the legal regulated market.

[00:18:45] I don't know.

[00:18:46] I don't know.

[00:19:15] Kind of held pretty strong on the Friday.

[00:19:17] So that was kind of nice.

[00:19:19] Definitely, you know, promotional activity driving Wednesday's, uh, sales, but still.

[00:19:25] Yeah.

[00:19:25] It was good.

[00:19:26] It seemed like people turned up.

[00:19:28] Yeah, they did.

[00:19:29] And speaking of retailers, um, we launched a retailer growth comparison benchmarking tool

[00:19:34] for green Wednesday.

[00:19:35] It'd be really interesting for you to plug in sunburn, uh, point, point it their way to

[00:19:40] see where they landed.

[00:19:41] Uh, you can basically benchmark yourself.

[00:19:44] If you're a retailer, you can benchmark yourself against roughly 1700 stores in the sample we

[00:19:49] used.

[00:19:49] We have more stores at headset, but we removed a lot of outliers, uh, just to get a good

[00:19:54] block of, of stores.

[00:19:56] Uh, the median revenue growth, 75%, uh, up median.

[00:20:00] Right.

[00:20:01] And, um, what did I say?

[00:20:03] The numbers for green Wednesday came in at 68% increase in total sales.

[00:20:07] So median stores, 75% in revenue.

[00:20:10] So a lot are below the median, uh, obviously, uh, as the median is defined, uh, and then

[00:20:16] profit is up 52%.

[00:20:19] Um, but you can, I'll, I'll post a link in the show notes so you can check it out.

[00:20:24] But, uh, basically you can plug in your, your numbers for green Wednesday this year.

[00:20:31] Um, and it'll, it'll show you the difference, right?

[00:20:36] Like how you do compared to this sample and like where you plot and you want to be up in

[00:20:42] the top right quadrant, which is just, uh, where you see, you know, revenue growth and

[00:20:48] profit growth.

[00:20:49] And then within that quadrant, there's like kind of a line that goes through it that if

[00:20:52] you're, if you're above the line, you're better than, than the median across here.

[00:20:57] Right.

[00:20:57] So, uh, really cool.

[00:20:59] I did.

[00:20:59] I talked to another retailer in at MJ biz that had plugged their numbers in.

[00:21:02] I'm like, are you in the green?

[00:21:03] I'm like, Oh yeah, for sure.

[00:21:04] So, so like they, they, uh, had a good results.

[00:21:07] Um, but I'd be curious to, you know, to hear how others are doing out there on it, but it

[00:21:13] is a really neat tool, very cool visual tool.

[00:21:16] And I'll, I'll definitely post it in the show notes.

[00:21:18] So if you're listening to this, look at the notes, you can click it.

[00:21:20] You can see the tool yourself.

[00:21:21] You could try it out, even if you're not a retailer, just to see how it works.

[00:21:25] I loved seeing that.

[00:21:27] And I love the way you guys make these interactive or dynamic, um, data mapping, um, resources

[00:21:33] for us on like four 20.

[00:21:34] I always love the heat map of the stores turning on in the sales.

[00:21:39] And, uh, and I thought this was really cool.

[00:21:41] I need to send it to a couple of our retail partners so I can see more data getting input

[00:21:46] to it.

[00:21:47] But it was really cool to check out.

[00:21:49] Yeah.

[00:21:50] Yeah.

[00:21:50] It is neat.

[00:21:51] It just shows you that you can have revenue up, but your profit could be down.

[00:21:54] Maybe you're discounting too heavily.

[00:21:56] You know, the, it's tough when, if your revenue's down and your profits down, that's like definitely

[00:22:00] where you don't want to be.

[00:22:02] Um, but you, you can see that it's, uh, it, it, it's yeah, not every retailer is created

[00:22:08] equal and this is across all the different States in this sample.

[00:22:12] So even within, you know, a market, you're going to have, have differences.

[00:22:16] So take a look, uh, it is a really cool little tool and a neat way to follow up if you're

[00:22:21] a retailer, uh, in the market.

[00:22:24] Cool.

[00:22:25] So that's green Wednesday.

[00:22:26] Um, yeah, yeah.

[00:22:28] On to, I guess the next holiday, which I guess would be like four 20, probably the next big

[00:22:34] sales day for cannabis.

[00:22:38] Yeah.

[00:22:38] Only four months away coming up fast.

[00:22:42] Um, well, let's talk about some news.

[00:22:46] I'm talking some news.

[00:22:47] Yeah.

[00:22:48] Some news.

[00:22:49] Now that I've got the access to this audio in, uh, in our podcast recording, I want to

[00:22:53] like figure out how to do like news, like, like, uh, like a news, like, yeah, yeah.

[00:23:00] Like there are transitions.

[00:23:02] Yeah.

[00:23:03] Let's try one here.

[00:23:04] Ready?

[00:23:04] See if I can do it.

[00:23:06] Oh my God.

[00:23:08] Time for the news.

[00:23:09] How was that?

[00:23:10] Was it hard hitting news?

[00:23:14] Not, not bad.

[00:23:15] Right.

[00:23:15] Not bad.

[00:23:16] Okay.

[00:23:17] First one.

[00:23:18] Uh, it's an end, the end of an era potentially in Texas.

[00:23:22] Um, particularly with respect to hemp derived Delta nine Delta HTS Delta eight THC products.

[00:23:29] Um, the governor out there, Dan Patrick, uh, said state lawmakers will prioritize enacting

[00:23:37] a ban next year on all THC products, including hemp derived Delta nine Delta eight THC products.

[00:23:42] Uh, there was a quote in the statement saying, uh, quote, dangerously comma retailers exploited

[00:23:49] the agricultural law to sell life threatening unregulated forms of THC to the public and

[00:23:54] made them easily accessible.

[00:23:55] Since 2023 thousands of stores selling hazardous THC products have popped up in communities across

[00:24:01] the state and many sell products, including beverages that have three to four times the

[00:24:07] THC content, which might be found in marijuana purchased from a drug dealer.

[00:24:12] Um, in quote, uh, you know, what, what stood out to me here?

[00:24:17] Uh, I mean, you know, obviously like the little hyperbolic with this life threatening stuff.

[00:24:23] I mean, for sure everything can be right.

[00:24:25] But, um, uh, I noticed that thousands of stores, thousands of stores, which is kind of what I

[00:24:31] thought you see some of these maps, you hear about this stuff.

[00:24:34] Um, but that's a lot of stores, right?

[00:24:38] And I know Texas is a sizable population, but when you hear thousands of stores, um, in

[00:24:45] this, in this, you know, hemp derived Delta nine, that's, that's pretty significant.

[00:24:50] I mean, I know when I was in Austin, um, over the summer, they were everywhere.

[00:24:55] There were at least four within that South Congress, um, area that you and I have been

[00:25:01] to with, uh, where the hotel San Jose and, and all that is at least four.

[00:25:06] And, um, you know, and, and then down in the East side, there were even more just, it's

[00:25:12] just, it was everywhere.

[00:25:12] And, um, all I can think about is like, we have just about a thousand stores of legal cannabis

[00:25:19] in California.

[00:25:21] And when you're like thousands they're talking about in the state of Texas.

[00:25:26] So yeah, plural, plural.

[00:25:28] So that's, it's really gone buck wild down there.

[00:25:33] And, and I, I agree.

[00:25:35] I mean, I think that's the big issue is like age verification.

[00:25:39] Is it happening?

[00:25:42] It's interesting.

[00:25:43] And then yeah.

[00:25:44] Following even the, if you're even trying to follow the rules on the hemp or whatever.

[00:25:49] And it's just like, and I agree.

[00:25:52] I mean, it's not, it's, it's life threatening.

[00:25:55] And as much as someone takes way too much THC, they could bug out.

[00:25:58] And we don't want that.

[00:25:59] That's not what we want.

[00:26:00] We don't want anyone to have the like Maureen Dowd moment, especially a kid.

[00:26:05] And that's not what we got into this for.

[00:26:08] So, you know, I was, I was happy to see him kind of stand up and think about articulating

[00:26:14] regulations around this.

[00:26:16] I'm not sure what that'll look like.

[00:26:17] I mean, they've also basically massacred the medical cannabis market that exists there that

[00:26:24] has an insane framework.

[00:26:25] Did you know they have to, when they stock the shelves of the retailers or for the delivery,

[00:26:30] they have to undo that every single night and put it back in the, yeah.

[00:26:34] Back to the distribution center.

[00:26:35] Yeah.

[00:26:35] So they have to like drive a bunch out, put it on the shelves, take it away.

[00:26:40] Yeah.

[00:26:40] And there's only three companies doing it.

[00:26:42] It's a, it might as well not exist.

[00:26:44] I mean, it's so wacky, which you know, this, this, this is, I don't know.

[00:26:50] I think it's good.

[00:26:51] We need to regulate this channel for sure.

[00:26:54] For all those reasons you said, it would have been nice if there was like a path for that,

[00:26:59] not, not specifically hemp, but just like expanding the medical.

[00:27:03] There's obviously demand.

[00:27:04] It's like, you're just going to get rid of all of this and there's enough demand to support

[00:27:10] thousands of stores.

[00:27:11] Right.

[00:27:12] So yeah.

[00:27:13] Where does all that go?

[00:27:15] Right.

[00:27:15] We're sorry.

[00:27:17] Border towns.

[00:27:18] You know, sorry.

[00:27:20] I tried to put.

[00:27:22] What's that?

[00:27:23] Sorry.

[00:27:24] I keep trying to put my phone on.

[00:27:25] Do not disturb, but it's not sticking.

[00:27:30] Keep going.

[00:27:32] Anyways, they need a framework for sure.

[00:27:34] But it is interesting.

[00:27:35] You know what, what happened with California in this market now, Texas you know, I know

[00:27:40] total wine sells these drinks in Texas.

[00:27:42] What does that mean for them?

[00:27:43] I mean, obviously it means they can't sell these drinks, but there I have heard in this

[00:27:49] happened.

[00:27:49] I had conversations at MJ biz around this too.

[00:27:52] Like there are distributors now in alcohol that are distributing both in, in a lot of

[00:27:57] these markets.

[00:27:58] And I think they're, they're identifying it as a growth channel for them.

[00:28:02] Right.

[00:28:03] So you're getting these operators that, um, you know, been in, in the alcohol channel forever.

[00:28:08] And, uh, there's this pretty big opportunity for them and now it's going away, but it also

[00:28:14] means there's just more interests aligned too.

[00:28:16] So just like the story gets stranger and stranger, you know, as, as it just keeps going on.

[00:28:23] But this, I was, I was actually surprised.

[00:28:25] Cause I mean, this has been in Texas for years and I would have thought Texas would be quick

[00:28:30] on this stuff, but, um, yeah.

[00:28:33] And I, you know, when's Texas enjoy following California's lead?

[00:28:38] Probably very rarely, but here they are right.

[00:28:40] Doing that wasn't lost on me myself.

[00:28:44] Um, I do think, you know, pragmatics, it's like, if you want to do this, like intoxicating

[00:28:52] hemp thing and you don't want to have a legal cannabis market, just use the alcohol infrastructure

[00:28:57] and call it a day.

[00:28:59] Like it's just not hard to contemplate.

[00:29:03] And, and just like anything else you'd have to ingest, just have some rules about the testing

[00:29:08] and labeling of it.

[00:29:10] You know?

[00:29:10] I mean, it's, um, anyway, I know here we are.

[00:29:15] It's like rocket science.

[00:29:16] It's so, so complicated.

[00:29:17] I mean, meanwhile, rocket science is actually happening on a day, daily basis.

[00:29:22] And that's true.

[00:29:23] And yet we cannot do these simple things.

[00:29:26] Nope.

[00:29:27] Um, next on my list, uh, Canadian government released a new study.

[00:29:32] Yeah.

[00:29:33] Um, that showed that the illegal market for marijuana has shrunk considerably since cannabis

[00:29:38] was legalized with only 3% of consumers saying they buy from illicit sources.

[00:29:43] Uh, 3%.

[00:29:45] That's, that seems like a very, very low.

[00:29:48] Mm hmm.

[00:29:50] Um, maybe Canadians are just, uh, a country of rule followers.

[00:29:55] Maybe.

[00:29:56] Yeah.

[00:29:56] I don't know.

[00:29:57] Maybe, I mean, maybe like, I mean, genuinely got rid of it, but I, I, you know, in, in British

[00:30:03] Columbia, you know, famous, right.

[00:30:05] Uh, for, for cannabis, it's hard to believe that it's completely in the legal channel, but

[00:30:11] that said, I did pull some headset data to see, you know, what does pricing look like?

[00:30:16] And it is cheap.

[00:30:17] It is cheap in Canada.

[00:30:19] It's super cheap.

[00:30:20] So, uh, in November, uh, I pulled Ontario, Ontario, Canada, the most populated province.

[00:30:27] Uh, and, um, a gram goes for nine 53 Canadian, which is $6 and 74 cents us, which beats Michigan,

[00:30:37] which is like our lowest prices and the markets we track, which comes in at seven 88 in Michigan.

[00:30:43] So, you know, us to us, if you convert the grams, it's like 15% lower, um, than even Michigan

[00:30:51] on a program price.

[00:30:55] I mean, but that's how you eradicate the illicit market.

[00:30:58] You make it accessible.

[00:30:59] They have a ton of retail access in Canada and the pricing is right.

[00:31:04] So it just beats it at that point.

[00:31:08] Um, it's also just not hard to procure from the legal doors.

[00:31:11] It's the whole thing.

[00:31:12] That's what we've been talking about.

[00:31:14] And I was really excited to see this data because, you know, last week we were in court

[00:31:19] for, um, the, uh, the can of provisions lawsuit that we're trying to get all the way to the

[00:31:26] Supreme court.

[00:31:27] And one of the things we're trying to argue is that legalization does actually help to,

[00:31:34] um, impact the illicit markets.

[00:31:36] And I, I loved seeing this data point coming out concurrent to that because we know it's

[00:31:41] not always true.

[00:31:42] For example, when a regulatory framework is not good, look at New York, which is improving,

[00:31:47] but it has not been good.

[00:31:49] Um, and there was no retail accessibility essentially across the state of New York.

[00:31:55] So that is changing and we're seeing it improve.

[00:31:58] And I think that, um, and that's a really important fact pattern.

[00:32:03] So, uh, it's, it's just really interesting and timely data that is out.

[00:32:08] So I'm glad we're talking about it today.

[00:32:10] I agree.

[00:32:11] And I think, um, it's, it's nice to see this come from the federal government of Canada

[00:32:16] as the federal government of the U S is trying to figure out, uh, where the stuff lands on,

[00:32:22] on scheduling and court cases, as you mentioned, are pushing this.

[00:32:26] It's like a great proof point to, to show off, um, as, as the end result, right.

[00:32:34] From a federal, from a federal group, you know, federal to federal.

[00:32:38] So I thought, yeah, good, good headline.

[00:32:41] Um, the, the can't go ahead.

[00:32:44] Sorry.

[00:32:45] Oh, and there was one other thought I had, which is, I don't know if you ever listened.

[00:32:48] There was an interview with James Cole back in the day, the author of the Cole memo, obviously.

[00:32:53] Um, and one of his points on creating banking, uh, you know, framework, it wasn't law, but

[00:33:00] creating something that the banks and FinCEN could have guidance and operate and support

[00:33:05] the industry was to even further eradicate the access to the illicit markets because it

[00:33:10] creates transparency and the flow of cash involved in the industry.

[00:33:14] Right.

[00:33:15] Um, his whole goal on that was to impact the cartels success of distributing cannabis into

[00:33:23] the United States or doing what they were doing up here in California, growing in the national

[00:33:28] forests.

[00:33:29] And, um, and he said, you know, very quickly when Colorado opened and after the Cole memos

[00:33:35] were introduced one, two, and three, there was a marked decline in the cartel activity

[00:33:41] and success of the cartel in terms of, uh, trafficking cannabis into the United States.

[00:33:46] And so he, he was very proud of that fact.

[00:33:49] And I think that's just like another thing that I try to raise when we're on the Hill is

[00:33:54] the importance of banking transparency as a, is kind of part and parcel with also legal

[00:33:59] access.

[00:34:00] But, um, but anyway, I just thought that was, it reminded me of him and his, one of his main,

[00:34:05] uh, thrusts of trying to achieve that.

[00:34:08] Yeah.

[00:34:09] Yeah.

[00:34:09] The Cole memo.

[00:34:10] I haven't thought about that in a little while.

[00:34:12] Yeah.

[00:34:13] Still.

[00:34:13] That's the best we've had right from the feds.

[00:34:17] Uh, yeah.

[00:34:17] When was that rescinded?

[00:34:18] Like seven years ago.

[00:34:20] Yeah.

[00:34:22] Still here.

[00:34:22] Almost eight.

[00:34:23] January.

[00:34:25] Crazy.

[00:34:26] Time to be alive.

[00:34:27] No kidding.

[00:34:29] Um, well, Canada, yeah, the market itself, uh, you know, year over year, uh, some declines

[00:34:35] kind of flowers down almost 10% edibles down 10%.

[00:34:39] These are top line dollar amounts, but we are seeing some growth and, uh, vape vapor pens

[00:34:44] up 4% concentrates up 5%.

[00:34:46] So a little, a little bit of growth in some categories overall kind of, kind of flat in

[00:34:51] the market.

[00:34:52] Uh, I'm sure, you know, with, I'm sure has to do with pricing.

[00:34:55] Um, but yeah, it's, uh, it's great that, that everyone's out of the illicit category.

[00:35:01] And, uh, so it should be in every market with legal cannabis, uh, like Pennsylvania, which

[00:35:08] is the next one on the list.

[00:35:10] Um, Pennsylvania, the strange state of, I don't know what it's a well-populated state,

[00:35:20] moderately progressive state.

[00:35:22] Uh, I don't know.

[00:35:24] And, and, and yet cannabis is, it's just a weird one, right?

[00:35:28] It's just a weird one.

[00:35:29] Um, the fact that it's still medical, the fact that it has a kind of a strange structure

[00:35:34] on the medical side, particularly when it comes to technology, which we experienced

[00:35:38] firsthand at headset, but with like how they allow access to, um, to the data basically,

[00:35:45] which is basically they don't, or you have to jump through a ton of hoops.

[00:35:49] Um, the whole thing I go on and on, but, uh, as, as seems to be the case, we're talking

[00:35:55] about legalization again in, in, in, uh, Pennsylvania, which seemed like, I don't know, we should have

[00:36:01] like a running counter of this, you know, and see, you know, how many times it's going

[00:36:06] to get introduced or discussed.

[00:36:07] Um, but this news item is related to the chairman of the Pennsylvania house health committee said

[00:36:14] that is forthcoming marijuana legalization bill would put legal cannabis sales in state

[00:36:19] run stores while letting private businesses have a chance to win cultivation or social

[00:36:25] consumption licenses, which is something in, in Las Vegas that's happening.

[00:36:29] Um, which we could have talked about, um, maybe we'll save that for another day on the

[00:36:33] consumption lounges, but, uh, yeah, this is interesting.

[00:36:37] Kind of unsurprising given that, that Pennsylvania seems to want to do whatever it wants to do

[00:36:42] with when it comes to cannabis, but also they have state run liquor.

[00:36:46] Um, at least they used to, I, I'm not sure if you're in Pennsylvania, let us know.

[00:36:50] Uh, I think it's still the case.

[00:36:52] Um, cause I remember last time I was there, which was some time ago, uh, someone was like,

[00:36:58] yeah, everyone just kind of goes across the border, um, to New Jersey or whatever from Philadelphia.

[00:37:04] So, uh, I could see how they see that model and they want to pick up that model.

[00:37:09] And it does remind me of, um, the LCBO, which is the liquor control board of Ontario in Canada,

[00:37:17] where when you go to Ontario, you go to Toronto, uh, you'll see these LCBO stores everywhere,

[00:37:22] right?

[00:37:22] Cause alcohol is sold through that.

[00:37:23] And I remember, uh, the OCS, which was the LCBO, uh, of cannabis in Ontario.

[00:37:30] And it was going to be a hundred percent run by the OCS.

[00:37:33] Everything was OCS, uh, like, like what's set up at the SQDC in Quebec, uh, where all

[00:37:39] the stores are owned by, um, the, the province there.

[00:37:44] So looking at that model, but LCBO or OCS bailed out right now, they have a website.

[00:37:50] I think you can order.

[00:37:51] They obviously do distribution, uh, but they've relied exclusively on private access there.

[00:37:57] And I think they were doing such a terrible job, uh, with the consumer side, uh, early

[00:38:02] on that they, they bailed.

[00:38:04] So, um, I don't know.

[00:38:06] Do you think that this will one, are we ever going to see adult use, uh, Pennsylvania?

[00:38:12] You know, I, I mean, honestly, I don't know.

[00:38:15] And two, um, is it, if, if we do see it, is this the model?

[00:38:21] I mean, I think this is ridiculous.

[00:38:23] I just think it could happen because we are living in an insane world.

[00:38:29] I mean, everything is insane, uh, but it could happen.

[00:38:33] And I think it would be such a bum out.

[00:38:35] I mean, and for the very reason, like, for example, in Canada, yes, they have those stores

[00:38:41] for, for liquor and it, it, it works fine.

[00:38:46] But like for cannabis, I just don't think this works.

[00:38:48] The category is too novel.

[00:38:50] People need to be able to dig in.

[00:38:52] And I'm also just a very much a believer in kind of the competitive market, the fair market,

[00:38:58] people getting out there with their products and retail experiences and letting the market

[00:39:02] dictate based on, on, you know, how well they serve the consumer.

[00:39:07] So I just think this would be a tremendous bum out.

[00:39:09] I feel like people will still drive to New Jersey, um, from the, those border areas

[00:39:15] of Pennsylvania.

[00:39:17] They'll still drive to the other border States which have adult use markets.

[00:39:21] If, if this is how it goes, I think it's going to be such an amazing, an immense bum out.

[00:39:25] Not to mention that it flies in the face of all the existing infrastructure around retail.

[00:39:31] Like why would you do that?

[00:39:32] And it's just going to hurt employment.

[00:39:35] It's going to hurt the existing operators that have infrastructure there.

[00:39:38] I just don't understand it who have been by the way, sticking in there through a medical

[00:39:43] market.

[00:39:44] And, and then you're going to rug pull the rug at the end and put them in these like depressing

[00:39:49] government stores with like probably like whitewashed packaging and no consumer experience

[00:39:55] or touch whatsoever.

[00:39:56] I don't, it just, the whole thing bumps me out.

[00:39:59] It's the opposite of what we were talking about in the very beginning, like what you were saying

[00:40:04] about, you know, making cannabis fun.

[00:40:07] Like, yes, this is a wellness category and that's a really cool and dreamy thing, but it's

[00:40:11] also a lifestyle category.

[00:40:13] Like it's a lifestyle consumer product category.

[00:40:16] And it would be a real shame to take that opportunity out of the hands of the Pennsylvania

[00:40:21] people.

[00:40:22] Yeah.

[00:40:23] Yeah.

[00:40:24] Yeah.

[00:40:27] Uh, that's the best way to put it.

[00:40:29] Yeah.

[00:40:30] Yeah.

[00:40:30] Uh, make cannabis fun again.

[00:40:32] Right.

[00:40:34] Yeah.

[00:40:35] Well, and this does not seem like the model that will do it, uh, for better for us.

[00:40:39] And I don't know where this stuff comes from.

[00:40:40] So it's, you know, I, who knows if I, I'm, I'm not super up on the politics of the Pennsylvania

[00:40:48] house and, uh, how things happen there.

[00:40:51] Um, I don't know if this person has like a ton of pull and he's like, this is going to

[00:40:55] be the future.

[00:40:56] Or if this is just one, one person's wild dream, um, to bum everybody out.

[00:41:03] But, uh, it's, it does, it seems strange, but on it, like I said before, like Pennsylvania

[00:41:09] has surprised me many, many, many times over the years.

[00:41:12] And so I'm, uh, I'm no longer surprised if this ended up to just be a great bum out.

[00:41:20] Yeah.

[00:41:22] Pennsylvania and Delaware are just like spinning in circles.

[00:41:24] Like we don't, we don't, we can't figure this out or surrounded by legal cannabis.

[00:41:29] Can't figure it out.

[00:41:30] Can't figure it out too much.

[00:41:33] Thanks for listening to the high rise podcast presented by headset.

[00:41:37] For more information on headset, visit headset.io.

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