This transcript has been auto generated
1
00:00:00,600 --> 00:00:06,719
[Music]
2
00:00:03,600 --> 00:00:06,719
[Applause]
3
00:00:09,200 --> 00:00:13,599
welcome I'm your host Hilary Bricken and
4
00:00:11,480 --> 00:00:15,719
this is the Cannabis law Now podcast
5
00:00:13,599 --> 00:00:17,480
where we regularly discuss issues
6
00:00:15,719 --> 00:00:19,480
related to the Cannabis industry
7
00:00:17,480 --> 00:00:22,160
including investment day-to-day
8
00:00:19,480 --> 00:00:24,199
operational issues and potential reform
9
00:00:22,160 --> 00:00:26,080
on the horizon that will impact all
10
00:00:24,199 --> 00:00:29,480
cannabis businesses and investors in the
11
00:00:26,080 --> 00:00:29,480
United States
12
00:00:30,199 --> 00:00:36,719
hi everybody welcome back to the podcast
13
00:00:33,120 --> 00:00:39,239
today we have Mark Hower on who is one
14
00:00:36,719 --> 00:00:41,520
of the most widely recognized leading
15
00:00:39,239 --> 00:00:43,200
advisers to the US cannabis industry and
16
00:00:41,520 --> 00:00:45,559
what's really fun about Mark is that
17
00:00:43,200 --> 00:00:48,000
prior to having his own advisory service
18
00:00:45,559 --> 00:00:50,440
to the industry he was the head of the
19
00:00:48,000 --> 00:00:52,719
Cannabis Practice Group at Reed Smith
20
00:00:50,440 --> 00:00:55,719
which is a giant law firm and he was
21
00:00:52,719 --> 00:00:57,840
doing deals in capital markets for 24
22
00:00:55,719 --> 00:00:59,359
years so Mark really knows his stuff
23
00:00:57,840 --> 00:01:01,359
both inside and outside the Cannabis
24
00:00:59,359 --> 00:01:03,800
industry when it comes to deal and deal
25
00:01:01,359 --> 00:01:06,040
making but as of today he is the chief
26
00:01:03,800 --> 00:01:09,000
of staff at hardine which is a
27
00:01:06,040 --> 00:01:11,200
well-known and really popular Nevada
28
00:01:09,000 --> 00:01:12,439
based cannabis company and dispensary
29
00:01:11,200 --> 00:01:14,799
and the only other thing I'll say about
30
00:01:12,439 --> 00:01:17,000
Mark before I let him take the mic is
31
00:01:14,799 --> 00:01:18,960
that he has a widely read newsletter
32
00:01:17,000 --> 00:01:21,360
called cannabis musings that he's had
33
00:01:18,960 --> 00:01:23,960
out since 2018 Mark welcome to the
34
00:01:21,360 --> 00:01:27,040
podcast ah it's great to be here I love
35
00:01:23,960 --> 00:01:29,320
talking cannabis law cannabis policy
36
00:01:27,040 --> 00:01:31,439
it's it's a whirlwind well you're
37
00:01:29,320 --> 00:01:34,560
definitely in good company and today's
38
00:01:31,439 --> 00:01:37,240
topic for the Pod is basically given
39
00:01:34,560 --> 00:01:39,439
your background which is sophisticated
40
00:01:37,240 --> 00:01:41,040
and also now intimately involved with
41
00:01:39,439 --> 00:01:43,640
cannabis I really wanted to bring on
42
00:01:41,040 --> 00:01:46,680
somebody who could give the straight and
43
00:01:43,640 --> 00:01:51,000
narrow to folks about their kind of top8
44
00:01:46,680 --> 00:01:53,280
to 10 pitfalls and beware alls for the
45
00:01:51,000 --> 00:01:55,159
industry in 2024 because I know you've
46
00:01:53,280 --> 00:01:56,479
seen a ton just right off the bat
47
00:01:55,159 --> 00:01:58,399
whether it's a new listener or a
48
00:01:56,479 --> 00:01:59,960
seasoned vet in the Cannabis industry or
49
00:01:58,399 --> 00:02:02,159
somebody that just entered in one of
50
00:01:59,960 --> 00:02:05,439
these states like Minnesota Ohio New
51
00:02:02,159 --> 00:02:07,200
York what would be at least your first
52
00:02:05,439 --> 00:02:08,840
Pitfall on the list for their
53
00:02:07,200 --> 00:02:11,720
consideration well I've been in this
54
00:02:08,840 --> 00:02:13,959
industry for coming up on seven years
55
00:02:11,720 --> 00:02:16,879
now which makes me both a veteran and a
56
00:02:13,959 --> 00:02:20,040
newbie at the same time and I and I
57
00:02:16,879 --> 00:02:21,560
respect that and that I you know I know
58
00:02:20,040 --> 00:02:23,000
a lot of people in the industry I know a
59
00:02:21,560 --> 00:02:25,599
lot of things in the industry but
60
00:02:23,000 --> 00:02:28,239
there's also a lot I I don't know
61
00:02:25,599 --> 00:02:30,400
relative to the you know our friends and
62
00:02:28,239 --> 00:02:32,959
colleagues who've been in this industry
63
00:02:30,400 --> 00:02:35,080
for a very long time um but the one
64
00:02:32,959 --> 00:02:38,480
thing that I've observed both as a
65
00:02:35,080 --> 00:02:40,319
lawyer and as a an observer you know
66
00:02:38,480 --> 00:02:43,159
writing about the industry and then now
67
00:02:40,319 --> 00:02:45,560
as an operator on the operational side
68
00:02:43,159 --> 00:02:48,400
and I tell everybody who wants to
69
00:02:45,560 --> 00:02:51,879
understand this industry is that you
70
00:02:48,400 --> 00:02:55,280
can't rely on logic and what works
71
00:02:51,879 --> 00:02:57,640
elsewhere when you think about the
72
00:02:55,280 --> 00:03:00,720
Cannabis industry and cannabis policy
73
00:02:57,640 --> 00:03:03,599
you know think technique
74
00:03:00,720 --> 00:03:06,040
and operations and you know and the way
75
00:03:03,599 --> 00:03:08,280
investors and business people think
76
00:03:06,040 --> 00:03:11,159
about running things in other Industries
77
00:03:08,280 --> 00:03:13,879
and making it work they generally don't
78
00:03:11,159 --> 00:03:16,319
work in the Cannabis industry expecting
79
00:03:13,879 --> 00:03:17,680
the way cannabis policy is going to work
80
00:03:16,319 --> 00:03:21,319
whether you know particularly on the
81
00:03:17,680 --> 00:03:25,159
federal level and the way the FDA or the
82
00:03:21,319 --> 00:03:27,840
DEA or congress approaches this industry
83
00:03:25,159 --> 00:03:29,799
deals with it what works in in some
84
00:03:27,840 --> 00:03:32,280
other industry whether that's tobacco or
85
00:03:29,799 --> 00:03:35,640
alcohol or you know consumer package
86
00:03:32,280 --> 00:03:37,840
Goods or you know food or beverage it's
87
00:03:35,640 --> 00:03:40,360
totally different here and I think that
88
00:03:37,840 --> 00:03:42,959
it all comes down to the
89
00:03:40,360 --> 00:03:44,959
problem that I I call the quantum
90
00:03:42,959 --> 00:03:47,879
physics problem of cannabis is that it's
91
00:03:44,959 --> 00:03:52,200
both legal and highly regulated at the
92
00:03:47,879 --> 00:03:55,159
same time and everything flows from that
93
00:03:52,200 --> 00:03:58,200
problem you've got an industry that is
94
00:03:55,159 --> 00:04:01,920
operating completely illegally and is
95
00:03:58,200 --> 00:04:03,239
just and exists purely by the grace of
96
00:04:01,920 --> 00:04:05,439
the federal governments and the
97
00:04:03,239 --> 00:04:09,319
Department of Justice not shutting it
98
00:04:05,439 --> 00:04:11,480
down but also is on the state level a
99
00:04:09,319 --> 00:04:14,680
lot of States was it
100
00:04:11,480 --> 00:04:16,759
34 at this point I I I I need to look
101
00:04:14,680 --> 00:04:19,560
that up I least forget the exact number
102
00:04:16,759 --> 00:04:21,759
but is completely legal but is
103
00:04:19,560 --> 00:04:24,080
incredibly regular and there are few
104
00:04:21,759 --> 00:04:26,880
other Industries out there that are so
105
00:04:24,080 --> 00:04:29,039
deeply regulated on on the state level
106
00:04:26,880 --> 00:04:30,240
everything flows from that problem of
107
00:04:29,039 --> 00:04:32,759
having to sort of
108
00:04:30,240 --> 00:04:35,000
comply with state law which is
109
00:04:32,759 --> 00:04:37,120
incredibly expensive and Incredibly
110
00:04:35,000 --> 00:04:39,160
difficult and then complying with
111
00:04:37,120 --> 00:04:41,440
illegality on the F and then you put on
112
00:04:39,160 --> 00:04:44,440
top of that that it's an incredibly hot
113
00:04:41,440 --> 00:04:48,280
button issue you know I grew up in the
114
00:04:44,440 --> 00:04:52,919
just say no era and it is you've got
115
00:04:48,280 --> 00:04:55,880
this sort of legacy of the the stigma
116
00:04:52,919 --> 00:04:58,680
around it and which is still ve very
117
00:04:55,880 --> 00:05:01,360
much out there um and drives a lot of
118
00:04:58,680 --> 00:05:02,800
the politics whether you know and so
119
00:05:01,360 --> 00:05:04,639
just because something is the right
120
00:05:02,800 --> 00:05:06,840
thing is the right approach what makes
121
00:05:04,639 --> 00:05:08,440
logical sense and you mentioned
122
00:05:06,840 --> 00:05:10,360
obviously the States they're picking up
123
00:05:08,440 --> 00:05:12,880
the slack for the feds because the feds
124
00:05:10,360 --> 00:05:14,800
are half in half out most of the time on
125
00:05:12,880 --> 00:05:16,560
enforcement and reform do you think the
126
00:05:14,800 --> 00:05:18,080
states are doing a good job I know
127
00:05:16,560 --> 00:05:19,560
you've worked with clients across the
128
00:05:18,080 --> 00:05:22,880
country do you think the states are
129
00:05:19,560 --> 00:05:24,280
nailing it I think that most States and
130
00:05:22,880 --> 00:05:28,160
the The
131
00:05:24,280 --> 00:05:30,160
Regulators out there want these wants
132
00:05:28,160 --> 00:05:32,520
this industry to survive
133
00:05:30,160 --> 00:05:35,080
and wants to do the right you know I I
134
00:05:32,520 --> 00:05:36,240
think that the execution it's hard to
135
00:05:35,080 --> 00:05:38,479
say that the
136
00:05:36,240 --> 00:05:40,840
execution you know in every state has
137
00:05:38,479 --> 00:05:43,160
been great you've had a lot of missteps
138
00:05:40,840 --> 00:05:45,000
lately certainly in New York City and
139
00:05:43,160 --> 00:05:48,600
New York state is just sort of the
140
00:05:45,000 --> 00:05:51,880
latest example you know California here
141
00:05:48,600 --> 00:05:53,199
the way it's structured makes it very
142
00:05:51,880 --> 00:05:55,080
difficult but I think you know I think
143
00:05:53,199 --> 00:05:57,440
if you distinguish The Regulators and
144
00:05:55,080 --> 00:05:59,639
the people behind it those offices from
145
00:05:57,440 --> 00:06:01,720
the laws themselves I think that the
146
00:05:59,639 --> 00:06:04,000
Regulators generalize it we genuinely
147
00:06:01,720 --> 00:06:05,639
want this industry to work and are are
148
00:06:04,000 --> 00:06:07,599
usually good to work with but they're
149
00:06:05,639 --> 00:06:09,479
also you know they tend these offices
150
00:06:07,599 --> 00:06:11,319
tend to be under staff they're sort of
151
00:06:09,479 --> 00:06:13,080
not making it up as they go along but
152
00:06:11,319 --> 00:06:16,919
don't have a lot of guidance from the
153
00:06:13,080 --> 00:06:19,599
regulations and the laws and so are
154
00:06:16,919 --> 00:06:22,160
facing novel questions that they're just
155
00:06:19,599 --> 00:06:24,120
not ready for that operators and lawyers
156
00:06:22,160 --> 00:06:26,880
are coming in with questions that work
157
00:06:24,120 --> 00:06:29,599
in other Industries for example merging
158
00:06:26,880 --> 00:06:32,680
companies or you know quirky ownership
159
00:06:29,599 --> 00:06:35,880
issues uh that just aren't contemplated
160
00:06:32,680 --> 00:06:37,639
by the regulations usually these the The
161
00:06:35,880 --> 00:06:39,759
Regulators want to work with you to make
162
00:06:37,639 --> 00:06:42,000
it make it done I think the problem is
163
00:06:39,759 --> 00:06:44,240
more on on the legal side in the way the
164
00:06:42,000 --> 00:06:46,280
statutes work you've got you know every
165
00:06:44,240 --> 00:06:49,000
state has has a completely different
166
00:06:46,280 --> 00:06:51,880
legal and Licensing ir reggulator and
167
00:06:49,000 --> 00:06:53,759
some work are flexible some are
168
00:06:51,880 --> 00:06:56,840
incredibly inflexible you know you've
169
00:06:53,759 --> 00:06:59,800
got some states that are fully fully
170
00:06:56,840 --> 00:07:02,879
require full vertical integration and
171
00:06:59,800 --> 00:07:06,440
have very few licenses others you know
172
00:07:02,879 --> 00:07:08,120
is Oklahoma has over 2,000 licenses I'm
173
00:07:06,440 --> 00:07:10,039
getting that number wrong also I should
174
00:07:08,120 --> 00:07:12,680
remember numbers better but there's
175
00:07:10,039 --> 00:07:15,080
thousands of licenses and you've got
176
00:07:12,680 --> 00:07:17,960
states where you know like Nevada for
177
00:07:15,080 --> 00:07:20,479
example is the laws are fairly business
178
00:07:17,960 --> 00:07:23,720
friendly and so it really is an
179
00:07:20,479 --> 00:07:26,800
interesting Dynamic it's hard to operate
180
00:07:23,720 --> 00:07:29,000
on the state level uh but at the same
181
00:07:26,800 --> 00:07:31,919
time I think it's more of a problem of
182
00:07:29,000 --> 00:07:33,840
the laws rather than the than the people
183
00:07:31,919 --> 00:07:36,560
themselves I think that's right too I
184
00:07:33,840 --> 00:07:38,280
think it's really tough to rule make
185
00:07:36,560 --> 00:07:40,120
create the law in this area with no
186
00:07:38,280 --> 00:07:42,400
blueprint really to look at because it's
187
00:07:40,120 --> 00:07:44,879
not Pharma it's not alcohol it's not
188
00:07:42,400 --> 00:07:46,599
tobacco I don't envy those regulators
189
00:07:44,879 --> 00:07:48,280
and I too empathize with them even if I
190
00:07:46,599 --> 00:07:50,280
don't always like the results of the
191
00:07:48,280 --> 00:07:53,800
regulatory now let's let's move on to
192
00:07:50,280 --> 00:07:56,639
another Pitfall I think still shockingly
193
00:07:53,800 --> 00:07:59,520
but I'm inside there's this perception
194
00:07:56,639 --> 00:08:01,759
that this industry is just rolling
195
00:07:59,520 --> 00:08:03,639
rolling in capital and the Cannabis
196
00:08:01,759 --> 00:08:06,199
sells itself and you don't really need
197
00:08:03,639 --> 00:08:08,080
brains or operational knowhow investors
198
00:08:06,199 --> 00:08:10,440
will come no matter what because it's
199
00:08:08,080 --> 00:08:12,680
such hot essentially Contraband and
200
00:08:10,440 --> 00:08:15,400
should sell like a vice product what's
201
00:08:12,680 --> 00:08:17,440
your take on that at this point yeah and
202
00:08:15,400 --> 00:08:19,680
that is that is definitely a myth about
203
00:08:17,440 --> 00:08:22,120
this industry it's it's one that's
204
00:08:19,680 --> 00:08:24,759
proven itself wrong time and again there
205
00:08:22,120 --> 00:08:28,199
are a number of folks out there who who
206
00:08:24,759 --> 00:08:31,599
do very well and have been very
207
00:08:28,199 --> 00:08:33,680
successful but think that that there has
208
00:08:31,599 --> 00:08:36,800
been but I I think that there the
209
00:08:33,680 --> 00:08:38,919
exception rather than the norm and there
210
00:08:36,800 --> 00:08:42,159
are companies out there that you know
211
00:08:38,919 --> 00:08:44,360
that are still we licensed companies
212
00:08:42,159 --> 00:08:46,959
that are still sort of you know making
213
00:08:44,360 --> 00:08:49,240
it work by selling into the black market
214
00:08:46,959 --> 00:08:51,760
sorry the illicit Market as well the
215
00:08:49,240 --> 00:08:53,279
unlicensed market so you know that
216
00:08:51,760 --> 00:08:55,880
there's a lot of rumors about that it's
217
00:08:53,279 --> 00:08:58,959
hard to sort of prove any of that but
218
00:08:55,880 --> 00:09:03,000
that remains a big problem but look I
219
00:08:58,959 --> 00:09:05,320
think you know the the focus here is and
220
00:09:03,000 --> 00:09:09,079
I guess my takeaway is that well cash is
221
00:09:05,320 --> 00:09:10,920
kid and liquidity is the most important
222
00:09:09,079 --> 00:09:13,399
thing for any cannabis company the
223
00:09:10,920 --> 00:09:15,800
reason is is because cash is really hard
224
00:09:13,399 --> 00:09:18,160
to come by and when I talk about cash I
225
00:09:15,800 --> 00:09:22,480
mean you know cash generally not
226
00:09:18,160 --> 00:09:23,760
physical cash back when things were from
227
00:09:22,480 --> 00:09:25,600
the sort of
228
00:09:23,760 --> 00:09:30,000
2016 to
229
00:09:25,600 --> 00:09:31,040
2019 period this industry was flood
230
00:09:30,000 --> 00:09:32,920
with
231
00:09:31,040 --> 00:09:34,519
investment particularly Equity
232
00:09:32,920 --> 00:09:37,360
investment with companies going public
233
00:09:34,519 --> 00:09:40,120
on the Canadian Securities Exchange
234
00:09:37,360 --> 00:09:43,560
valuations went through the roof on sort
235
00:09:40,120 --> 00:09:45,600
of crazy speculation on these stocks and
236
00:09:43,560 --> 00:09:48,640
and companies raised millions and
237
00:09:45,600 --> 00:09:52,360
millions of dollars on with barely a
238
00:09:48,640 --> 00:09:54,760
business plan and they it's similar to
239
00:09:52,360 --> 00:09:59,560
what happened in the first round of the
240
00:09:54,760 --> 00:10:02,200
uh doc com grou and in about mid 20109
241
00:09:59,560 --> 00:10:04,880
stock prices Came Crashing Down and
242
00:10:02,200 --> 00:10:06,959
liquidity just completely dried up in
243
00:10:04,880 --> 00:10:10,600
both the public and the private markets
244
00:10:06,959 --> 00:10:13,000
and it never has really recovered since
245
00:10:10,600 --> 00:10:16,079
then there's there's been a rise in
246
00:10:13,000 --> 00:10:17,959
lending um that's that tapered off for a
247
00:10:16,079 --> 00:10:20,200
while but it's starting to come back but
248
00:10:17,959 --> 00:10:23,120
that really only works for companies
249
00:10:20,200 --> 00:10:26,000
with a lot of hard assets because it's
250
00:10:23,120 --> 00:10:29,440
hard to lend against licenses it's very
251
00:10:26,000 --> 00:10:31,640
hard to lend against inventory because
252
00:10:29,440 --> 00:10:34,680
you can't quickly pick the stuff up and
253
00:10:31,640 --> 00:10:36,360
sell it you need State approval and so
254
00:10:34,680 --> 00:10:38,680
and and companies can't file for
255
00:10:36,360 --> 00:10:42,720
bankruptcy so it's a weird industry to
256
00:10:38,680 --> 00:10:45,800
lend into so there's just it's capital
257
00:10:42,720 --> 00:10:47,959
is extremely expensive whether it's debt
258
00:10:45,800 --> 00:10:49,800
or equity and there are very few
259
00:10:47,959 --> 00:10:51,920
investors who are really putting
260
00:10:49,800 --> 00:10:53,839
significant amount amounts of money into
261
00:10:51,920 --> 00:10:56,279
this industry you don't really have
262
00:10:53,839 --> 00:10:58,800
institutional Capital coming in you know
263
00:10:56,279 --> 00:11:01,000
none of the traditional uh institutional
264
00:10:58,800 --> 00:11:03,600
investors to touch the industry because
265
00:11:01,000 --> 00:11:07,279
it's illegal and you know the pension
266
00:11:03,600 --> 00:11:08,639
rules and foreign investors P Pension
267
00:11:07,279 --> 00:11:11,360
funds and foreign investors and
268
00:11:08,639 --> 00:11:14,120
insurance companies the like who
269
00:11:11,360 --> 00:11:17,360
fund institutional you know private
270
00:11:14,120 --> 00:11:19,639
equity and Venture Capital can't invest
271
00:11:17,360 --> 00:11:22,760
in Canabis you know and changing to
272
00:11:19,639 --> 00:11:25,000
schedule 3 isn't going to fix that
273
00:11:22,760 --> 00:11:27,959
rescheduling probably you know isn't
274
00:11:25,000 --> 00:11:30,079
going to fix that I'm sorry I I st
275
00:11:27,959 --> 00:11:32,560
banking if could ever pass wouldn't fix
276
00:11:30,079 --> 00:11:36,600
that it's really hard to come by money
277
00:11:32,560 --> 00:11:39,040
and so preserving cash keeping a clean
278
00:11:36,600 --> 00:11:41,079
balance sheet and managing liabilities
279
00:11:39,040 --> 00:11:43,920
is really th those are the companies
280
00:11:41,079 --> 00:11:46,120
that are going to survive now you
281
00:11:43,920 --> 00:11:51,160
mentioned it so we got to open the door
282
00:11:46,120 --> 00:11:53,480
third Pitfall the feds and rescheduling
283
00:11:51,160 --> 00:11:55,839
Etc are they coming to save us are they
284
00:11:53,480 --> 00:11:57,120
going to bring a method to the madness I
285
00:11:55,839 --> 00:11:58,760
think again there's a common
286
00:11:57,120 --> 00:12:01,320
misconception and maybe it's because
287
00:11:58,760 --> 00:12:03,519
people are more hopeful than informed
288
00:12:01,320 --> 00:12:07,040
that the feds want to regulate this and
289
00:12:03,519 --> 00:12:09,839
they want to bring an end to the
290
00:12:07,040 --> 00:12:11,680
dysfunction and the disjointedness lack
291
00:12:09,839 --> 00:12:13,880
of interstate commerce Etc what do you
292
00:12:11,680 --> 00:12:16,199
think I don't think that we're going to
293
00:12:13,880 --> 00:12:18,440
see any real movement any time suited
294
00:12:16,199 --> 00:12:21,040
this industry has always suffered from
295
00:12:18,440 --> 00:12:24,959
wearing rosecolor glasses when it comes
296
00:12:21,040 --> 00:12:27,240
to federal policy I think that schedule
297
00:12:24,959 --> 00:12:29,560
rescheduling to schedule three happens
298
00:12:27,240 --> 00:12:32,040
but I think that's that's only happening
299
00:12:29,560 --> 00:12:34,480
it's the executive branch doing it not
300
00:12:32,040 --> 00:12:38,240
the legislative branch doing it and it's
301
00:12:34,480 --> 00:12:40,079
all through in a administrative process
302
00:12:38,240 --> 00:12:42,160
but you know State banking I mean I
303
00:12:40,079 --> 00:12:45,760
remember conferences in
304
00:12:42,160 --> 00:12:48,480
2018 where you know people on stage were
305
00:12:45,760 --> 00:12:51,160
breathlessly anticipating State banking
306
00:12:48,480 --> 00:12:53,760
passing any day now and I've won a
307
00:12:51,160 --> 00:12:56,639
number of bets unfortunately that state
308
00:12:53,760 --> 00:13:00,079
Banky wouldn't pass it's just expecting
309
00:12:56,639 --> 00:13:02,240
Congress to do anything uh that requires
310
00:13:00,079 --> 00:13:04,279
political Capital even if it's the quote
311
00:13:02,240 --> 00:13:06,279
unquote right thing to do or makes
312
00:13:04,279 --> 00:13:08,240
perfect logic go going back to my first
313
00:13:06,279 --> 00:13:10,199
point we shouldn't expect Congress to do
314
00:13:08,240 --> 00:13:12,440
anything anytime soon you know that
315
00:13:10,199 --> 00:13:16,320
because it is still such a hot button
316
00:13:12,440 --> 00:13:19,000
issue because it's it's drugs and the
317
00:13:16,320 --> 00:13:21,279
people you've got a you know you got
318
00:13:19,000 --> 00:13:24,920
particularly in the Senate you've got a
319
00:13:21,279 --> 00:13:28,279
number of Senators who on it's primarily
320
00:13:24,920 --> 00:13:29,720
Republican Senators who are who really
321
00:13:28,279 --> 00:13:31,320
their constituents
322
00:13:29,720 --> 00:13:33,240
are the folks that vote in the primaries
323
00:13:31,320 --> 00:13:36,040
and the folks that vote in the primaries
324
00:13:33,240 --> 00:13:38,519
tend to be more politically engaged in
325
00:13:36,040 --> 00:13:40,680
more the extremes and that I don't mean
326
00:13:38,519 --> 00:13:43,120
that pejoratively I just mean that they
327
00:13:40,680 --> 00:13:45,680
they tend to be more hardcore and that's
328
00:13:43,120 --> 00:13:49,880
on the left as well but they're the ones
329
00:13:45,680 --> 00:13:52,639
who who make up that you know 20 25
330
00:13:49,880 --> 00:13:56,880
percentage of the country that don't
331
00:13:52,639 --> 00:14:00,360
want cannabis legalized and so why would
332
00:13:56,880 --> 00:14:03,079
a senator take spend that political
333
00:14:00,360 --> 00:14:05,560
capital and take that risk to legalize
334
00:14:03,079 --> 00:14:08,120
cannabis uh and I think that it's
335
00:14:05,560 --> 00:14:11,040
unfortunately just this reality you know
336
00:14:08,120 --> 00:14:12,600
the president can't unilaterally
337
00:14:11,040 --> 00:14:15,079
legalize
338
00:14:12,600 --> 00:14:17,040
Canabis the DEA there's there's
339
00:14:15,079 --> 00:14:19,320
questions about whether and I'm not an
340
00:14:17,040 --> 00:14:22,399
expert in this about whether the DEA
341
00:14:19,320 --> 00:14:24,800
could completely deschedule it but
342
00:14:22,399 --> 00:14:27,440
descheduling I wrote this in my cannabis
343
00:14:24,800 --> 00:14:30,759
museums recently descheduling isn't
344
00:14:27,440 --> 00:14:34,199
going to happen without full regulation
345
00:14:30,759 --> 00:14:35,480
in taxation as a practical matter I me
346
00:14:34,199 --> 00:14:37,800
you know they're not going to give up on
347
00:14:35,480 --> 00:14:40,279
Taxation and the FDA is going to want to
348
00:14:37,800 --> 00:14:42,360
say it all of bit now I think the the
349
00:14:40,279 --> 00:14:45,320
slight Wild Card which is kind of
350
00:14:42,360 --> 00:14:48,839
interesting is is H vice president
351
00:14:45,320 --> 00:14:51,160
Harris and you know she has been a
352
00:14:48,839 --> 00:14:53,680
champion of she has said in the past
353
00:14:51,160 --> 00:14:55,519
that she wants to legalize and so you
354
00:14:53,680 --> 00:14:57,880
know creates sort of an interesting
355
00:14:55,519 --> 00:15:00,120
little Dynamic but then again you know
356
00:14:57,880 --> 00:15:02,920
until unless the Democrats get rid of
357
00:15:00,120 --> 00:15:05,600
the filibuster which they didn't in 2016
358
00:15:02,920 --> 00:15:07,920
or sorry in 2020 when they took over the
359
00:15:05,600 --> 00:15:11,120
Senate I don't know how you get past the
360
00:15:07,920 --> 00:15:13,600
phoster fair enough and kind of in a
361
00:15:11,120 --> 00:15:16,720
similar vein
362
00:15:13,600 --> 00:15:19,040
another beyond the lookout for don't
363
00:15:16,720 --> 00:15:22,440
take it at base value we had a
364
00:15:19,040 --> 00:15:26,720
significant change to the administrative
365
00:15:22,440 --> 00:15:30,120
realm when it comes to agency difference
366
00:15:26,720 --> 00:15:32,079
and Ru making and some of you listening
367
00:15:30,120 --> 00:15:33,839
may or may not know the name of the big
368
00:15:32,079 --> 00:15:35,800
doctrine that everyone's talking about
369
00:15:33,839 --> 00:15:38,480
it's Chevron which is the name of a case
370
00:15:35,800 --> 00:15:40,920
back in the 80s that set precedent um
371
00:15:38,480 --> 00:15:43,440
precedence with federal courts that the
372
00:15:40,920 --> 00:15:45,079
court must give deference to an agency
373
00:15:43,440 --> 00:15:47,560
in the event essentially of ambiguity
374
00:15:45,079 --> 00:15:49,920
around their own rules and oftentimes
375
00:15:47,560 --> 00:15:51,680
this resulted in the agency kind of
376
00:15:49,920 --> 00:15:53,600
prevailing Bar None on the way that it
377
00:15:51,680 --> 00:15:56,880
would interpret its own rules Etc has
378
00:15:53,600 --> 00:15:58,600
big big impact small and far-reaching on
379
00:15:56,880 --> 00:16:00,920
the livelihood of many businesses that
380
00:15:58,600 --> 00:16:03,160
are regulated in this nation there's
381
00:16:00,920 --> 00:16:06,319
been a recent case that essentially
382
00:16:03,160 --> 00:16:08,959
overturned this Doctrine and Mark I know
383
00:16:06,319 --> 00:16:11,240
you keep a beat on it lots of opinions
384
00:16:08,959 --> 00:16:13,079
around what this means for the Cannabis
385
00:16:11,240 --> 00:16:14,880
industry and I think our listeners would
386
00:16:13,079 --> 00:16:16,040
benefit from your take on kind of how to
387
00:16:14,880 --> 00:16:18,440
approach that because it's very
388
00:16:16,040 --> 00:16:21,399
complicated and it's opaque my take on
389
00:16:18,440 --> 00:16:24,920
it listen to whatever I think about it
390
00:16:21,399 --> 00:16:26,839
you know this listen to The Experts and
391
00:16:24,920 --> 00:16:28,440
this goes to a broader you know like
392
00:16:26,839 --> 00:16:31,160
anything else out there there's a lot of
393
00:16:28,440 --> 00:16:33,720
opinions and a lot of them are
394
00:16:31,160 --> 00:16:36,480
incredibly underformed and when it comes
395
00:16:33,720 --> 00:16:38,800
to something like Chevron the Chevron
396
00:16:36,480 --> 00:16:40,959
Doctrine an administrative law it's
397
00:16:38,800 --> 00:16:43,880
something that's extremely Arcane
398
00:16:40,959 --> 00:16:47,000
extremely complex and uh you know just
399
00:16:43,880 --> 00:16:50,000
reading the statute alone or reading the
400
00:16:47,000 --> 00:16:52,040
the rule alone doesn't really sort of
401
00:16:50,000 --> 00:16:54,759
give you an answer as to how something
402
00:16:52,040 --> 00:16:56,920
will play out you need to have an
403
00:16:54,759 --> 00:16:59,399
understanding of the way the regulatory
404
00:16:56,920 --> 00:17:01,480
agency works you need to understand
405
00:16:59,399 --> 00:17:03,279
the the case law back there I mean it's
406
00:17:01,480 --> 00:17:05,880
like a lot of other areas of law you
407
00:17:03,279 --> 00:17:09,679
know tax law Securities Law the way the
408
00:17:05,880 --> 00:17:12,240
rule reads is has very little to do with
409
00:17:09,679 --> 00:17:15,319
the way it's actually practiced this is
410
00:17:12,240 --> 00:17:17,319
one of those areas where you know you
411
00:17:15,319 --> 00:17:20,640
particularly if you spend any time
412
00:17:17,319 --> 00:17:23,720
online on social media looking at you
413
00:17:20,640 --> 00:17:27,520
know people trying to uh prognosticate
414
00:17:23,720 --> 00:17:30,600
what it means you know most of them are
415
00:17:27,520 --> 00:17:34,039
wrong uh and you know there's a lot of
416
00:17:30,600 --> 00:17:37,360
non-experts giving advice in this space
417
00:17:34,039 --> 00:17:42,240
and so you know I try to preach that you
418
00:17:37,360 --> 00:17:46,039
really need to a cannabis law is so
419
00:17:42,240 --> 00:17:49,120
difficult because it is so new and
420
00:17:46,039 --> 00:17:51,600
because it has to thread this needle of
421
00:17:49,120 --> 00:17:54,200
again being illegal and highly regulated
422
00:17:51,600 --> 00:17:57,880
at the same time and
423
00:17:54,200 --> 00:18:00,440
so un so understanding something like
424
00:17:57,880 --> 00:18:05,159
the effects of sh on and what it might
425
00:18:00,440 --> 00:18:07,600
mean for federal policy going forward
426
00:18:05,159 --> 00:18:10,679
you know seek out the folks that
427
00:18:07,600 --> 00:18:13,400
actually practice that area of law you
428
00:18:10,679 --> 00:18:16,440
know don't don't just listen to somebody
429
00:18:13,400 --> 00:18:19,440
who you know who was a deal lawyer try
430
00:18:16,440 --> 00:18:21,400
to understand such as myself try to
431
00:18:19,440 --> 00:18:24,440
understand what Chevron could actually
432
00:18:21,400 --> 00:18:26,720
mean yeah I think that's fair advice um
433
00:18:24,440 --> 00:18:29,760
administrative law is its own animal let
434
00:18:26,720 --> 00:18:31,440
alone layering in the applications of
435
00:18:29,760 --> 00:18:32,640
cannabis and what it's going to mean
436
00:18:31,440 --> 00:18:34,360
with the federal government which I
437
00:18:32,640 --> 00:18:37,400
don't think anybody really knows the
438
00:18:34,360 --> 00:18:39,280
answer there anyway another area kind of
439
00:18:37,400 --> 00:18:40,760
moving along in our our little pit of
440
00:18:39,280 --> 00:18:42,000
despair here about what to look out for
441
00:18:40,760 --> 00:18:44,480
but these are good things people should
442
00:18:42,000 --> 00:18:47,720
be aware of them in my experience still
443
00:18:44,480 --> 00:18:50,039
again shockingly 14 15 years in seems
444
00:18:47,720 --> 00:18:51,760
like cannabis operators because they are
445
00:18:50,039 --> 00:18:53,200
in direct violation of federal law they
446
00:18:51,760 --> 00:18:55,640
believe that they have a license to
447
00:18:53,200 --> 00:18:57,159
violate every other law and that maybe
448
00:18:55,640 --> 00:19:00,159
enforcement isn't watching and I don't
449
00:18:57,159 --> 00:19:03,080
mean law enforcement I mean the SEC
450
00:19:00,159 --> 00:19:04,440
other state laws that could apply to the
451
00:19:03,080 --> 00:19:06,400
way they're running their businesses how
452
00:19:04,440 --> 00:19:09,559
they're treating their investors in your
453
00:19:06,400 --> 00:19:11,039
experience have people ignored those to
454
00:19:09,559 --> 00:19:13,559
their detriment and can you maybe give
455
00:19:11,039 --> 00:19:15,640
some examples oh yeah no this is this is
456
00:19:13,559 --> 00:19:17,919
somewhere where you should be listening
457
00:19:15,640 --> 00:19:21,080
to a deal of in corporate lawyer such as
458
00:19:17,919 --> 00:19:23,280
yourself or well I used to be lawyer but
459
00:19:21,080 --> 00:19:25,880
that is such a big problem and it
460
00:19:23,280 --> 00:19:27,720
remains a problem in this industry there
461
00:19:25,880 --> 00:19:30,960
is
462
00:19:27,720 --> 00:19:34,840
the the industry as you said is so used
463
00:19:30,960 --> 00:19:37,000
to you know being legal that it just it
464
00:19:34,840 --> 00:19:38,360
kind of figures all right well you know
465
00:19:37,000 --> 00:19:41,480
what's what's being a little more
466
00:19:38,360 --> 00:19:43,960
illegal going to hurt things and it has
467
00:19:41,480 --> 00:19:46,559
this sort of renegade attitude towards
468
00:19:43,960 --> 00:19:49,640
fiduciary duties it would keep me up at
469
00:19:46,559 --> 00:19:51,240
night seeing companies self-dealing you
470
00:19:49,640 --> 00:19:54,080
know affiliate
471
00:19:51,240 --> 00:19:55,720
transactions uh keeping relevant
472
00:19:54,080 --> 00:19:59,400
information from
473
00:19:55,720 --> 00:20:02,440
investors things like that not sharing
474
00:19:59,400 --> 00:20:04,960
the fact that such as the fact that a
475
00:20:02,440 --> 00:20:08,520
supplier or the or the owner of the
476
00:20:04,960 --> 00:20:12,520
building happens to be the the CEO
477
00:20:08,520 --> 00:20:15,240
related party companies that uh are set
478
00:20:12,520 --> 00:20:17,880
up and transact with the main business
479
00:20:15,240 --> 00:20:21,520
so that they're sucking economics out of
480
00:20:17,880 --> 00:20:24,760
the deal it is a uh it remain stuff like
481
00:20:21,520 --> 00:20:28,200
that remains a big problem and I still
482
00:20:24,760 --> 00:20:30,120
see it and it really what it it means
483
00:20:28,200 --> 00:20:32,400
asking the right questions as an
484
00:20:30,120 --> 00:20:34,120
investor as well as a you know somebody
485
00:20:32,400 --> 00:20:37,600
who's wants to do business with somebody
486
00:20:34,120 --> 00:20:41,200
else it matters it means asking the
487
00:20:37,600 --> 00:20:43,000
request questions as an investor what
488
00:20:41,200 --> 00:20:45,280
kind of affiliate transactions do you
489
00:20:43,000 --> 00:20:47,120
have what kind of controls what does the
490
00:20:45,280 --> 00:20:49,280
board look like what are your standard
491
00:20:47,120 --> 00:20:53,320
operating procedures to prevent to
492
00:20:49,280 --> 00:20:55,360
comply with law and so and making sure
493
00:20:53,320 --> 00:20:58,720
the basic fiduciary duties that a
494
00:20:55,360 --> 00:21:01,640
company needs that a board and a and the
495
00:20:58,720 --> 00:21:04,360
executive team need to follow are being
496
00:21:01,640 --> 00:21:06,880
followed oh yeah I'm kind of sighing in
497
00:21:04,360 --> 00:21:08,880
consternation here well because of the
498
00:21:06,880 --> 00:21:11,039
federal illegality and the fact that the
499
00:21:08,880 --> 00:21:13,760
States they're they are making it up as
500
00:21:11,039 --> 00:21:16,120
they go even if it's the good old
501
00:21:13,760 --> 00:21:18,039
College try but The Regulators are not
502
00:21:16,120 --> 00:21:19,880
necessarily paying attention to those
503
00:21:18,039 --> 00:21:21,400
particular issues because again like
504
00:21:19,880 --> 00:21:23,440
administrative right corporate
505
00:21:21,400 --> 00:21:25,840
transactional is its own animal with all
506
00:21:23,440 --> 00:21:27,840
of these checks and balances but that's
507
00:21:25,840 --> 00:21:29,600
not going to carry water with a cannabis
508
00:21:27,840 --> 00:21:31,840
regulator the companies are kind of on
509
00:21:29,600 --> 00:21:34,480
their own and I do think because of that
510
00:21:31,840 --> 00:21:37,320
it still attracts this element that I
511
00:21:34,480 --> 00:21:40,480
really hope will be winnowed down as the
512
00:21:37,320 --> 00:21:42,520
years progress and I think that's that's
513
00:21:40,480 --> 00:21:44,279
everybody's problem in attracting
514
00:21:42,520 --> 00:21:45,960
investment to the industry basically
515
00:21:44,279 --> 00:21:48,600
changing the image of the industry to
516
00:21:45,960 --> 00:21:51,159
more mature and trustworthy uh I think
517
00:21:48,600 --> 00:21:53,679
would be helpful on the whole now here's
518
00:21:51,159 --> 00:21:56,320
here's another little interesting one
519
00:21:53,679 --> 00:21:58,039
which I agree probably a red herring at
520
00:21:56,320 --> 00:22:00,080
the end of the day back when I first
521
00:21:58,039 --> 00:22:03,000
started in the practice the major
522
00:22:00,080 --> 00:22:05,880
concern was this idea of quote unquote
523
00:22:03,000 --> 00:22:07,520
back then big marijuana versus you know
524
00:22:05,880 --> 00:22:08,720
your craft your mom and pop companies
525
00:22:07,520 --> 00:22:10,799
that are starting from the ground up
526
00:22:08,720 --> 00:22:13,120
generational Farmers Etc do you think
527
00:22:10,799 --> 00:22:15,600
that is actually an issue and is it an
528
00:22:13,120 --> 00:22:17,760
issue today as we're now kind of seeing
529
00:22:15,600 --> 00:22:19,919
these Democratic experiments play out
530
00:22:17,760 --> 00:22:22,200
because to me I'm just seeing a lot of
531
00:22:19,919 --> 00:22:24,720
failure across the board generally
532
00:22:22,200 --> 00:22:26,000
regardless of size but what do you think
533
00:22:24,720 --> 00:22:29,360
I think it was
534
00:22:26,000 --> 00:22:30,919
also the concern was probably over it
535
00:22:29,360 --> 00:22:33,720
was probably more of a concern than it
536
00:22:30,919 --> 00:22:36,559
actually was you've got big companies
537
00:22:33,720 --> 00:22:38,039
are have had just as the same kind of
538
00:22:36,559 --> 00:22:40,000
financial difficulties that small
539
00:22:38,039 --> 00:22:42,919
companies have had you know very few
540
00:22:40,000 --> 00:22:45,600
large companies still make an actual net
541
00:22:42,919 --> 00:22:48,120
profit um they've e but they don't make
542
00:22:45,600 --> 00:22:50,320
an actual net profit just like a lot you
543
00:22:48,120 --> 00:22:54,600
know most small companies don't make an
544
00:22:50,320 --> 00:22:56,720
actual profit uh they the same CH most
545
00:22:54,600 --> 00:23:00,200
not the same but a lot of the same
546
00:22:56,720 --> 00:23:02,600
challenges that that big compan face uh
547
00:23:00,200 --> 00:23:04,919
apply to this to the small ones as well
548
00:23:02,600 --> 00:23:08,559
you know whether it's you know the the
549
00:23:04,919 --> 00:23:11,120
the impact of of taxes in 28 and having
550
00:23:08,559 --> 00:23:13,799
to comply with lots of the fact that you
551
00:23:11,120 --> 00:23:16,840
know you brand loyalty is still really
552
00:23:13,799 --> 00:23:19,720
hard to come by uh Supply chains are
553
00:23:16,840 --> 00:23:22,200
difficult uh testing remains a
554
00:23:19,720 --> 00:23:24,720
bottleneck you know all the big stuff
555
00:23:22,200 --> 00:23:27,640
that that that that makes this industry
556
00:23:24,720 --> 00:23:30,720
so difficult to to work in everybody has
557
00:23:27,640 --> 00:23:32,840
those problems and so you know the the
558
00:23:30,720 --> 00:23:36,080
part of the difference is that when you
559
00:23:32,840 --> 00:23:39,640
are a larger public company it does
560
00:23:36,080 --> 00:23:42,720
access to Capital is a little easier um
561
00:23:39,640 --> 00:23:45,440
but again that does what gets you so far
562
00:23:42,720 --> 00:23:48,120
you know and I think that the you know
563
00:23:45,440 --> 00:23:51,000
you still see a lot of concern that big
564
00:23:48,120 --> 00:23:54,000
cannabis is going to drown out small
565
00:23:51,000 --> 00:23:57,320
cannabis in the long run and I I'm less
566
00:23:54,000 --> 00:24:00,480
of a proponent of that I think that this
567
00:23:57,320 --> 00:24:03,799
there is still even with large you know
568
00:24:00,480 --> 00:24:07,520
once we someday see interstate commerce
569
00:24:03,799 --> 00:24:09,440
and legal federally legal Catabus um I
570
00:24:07,520 --> 00:24:13,200
still think that there is going to be
571
00:24:09,440 --> 00:24:15,760
room for the small producers who are pro
572
00:24:13,200 --> 00:24:19,000
who are providing some you know craft
573
00:24:15,760 --> 00:24:21,360
cannabis to the you know for lack of
574
00:24:19,000 --> 00:24:23,880
term the the Cannabis connoisseur or if
575
00:24:21,360 --> 00:24:25,760
you want to be smart about it canis St
576
00:24:23,880 --> 00:24:28,559
you know that that that really are
577
00:24:25,760 --> 00:24:31,520
focused on a higher quality more
578
00:24:28,559 --> 00:24:33,240
distinctive product um and that's okay I
579
00:24:31,520 --> 00:24:35,640
mean you know we have that with lots of
580
00:24:33,240 --> 00:24:38,840
other things uh you know where I think
581
00:24:35,640 --> 00:24:41,799
that it will be the harder place to be
582
00:24:38,840 --> 00:24:44,080
will be that middle where you've got um
583
00:24:41,799 --> 00:24:46,279
you know and sort of the midsize company
584
00:24:44,080 --> 00:24:49,600
that that has sort of one foot in each
585
00:24:46,279 --> 00:24:52,240
of those those areas uh that I think
586
00:24:49,600 --> 00:24:54,440
will be a bit more of a challenge um but
587
00:24:52,240 --> 00:24:56,640
I think that this the industry and the
588
00:24:54,440 --> 00:24:59,760
opportunity is big enough for both I
589
00:24:56,640 --> 00:25:02,760
hope so and I think you right if alcohol
590
00:24:59,760 --> 00:25:04,640
is kind of any indicator which it may be
591
00:25:02,760 --> 00:25:06,640
those consumer habits are just really
592
00:25:04,640 --> 00:25:08,919
tough to nail down in cannabis at the
593
00:25:06,640 --> 00:25:12,240
moment any reliable data I'd love to
594
00:25:08,919 --> 00:25:14,799
know and let's talk about another
595
00:25:12,240 --> 00:25:18,760
Boogeyman this one might be real I'm not
596
00:25:14,799 --> 00:25:21,720
quite sure this is a very divisive
597
00:25:18,760 --> 00:25:23,480
polarizing topic really depending on
598
00:25:21,720 --> 00:25:25,760
who's speaking and what they Advocate
599
00:25:23,480 --> 00:25:28,320
how they read into these things is
600
00:25:25,760 --> 00:25:31,480
another Pitfall to cannabis the cannabis
601
00:25:28,320 --> 00:25:34,000
industry as a whole this idea of
602
00:25:31,480 --> 00:25:36,760
competing with these hemp derived
603
00:25:34,000 --> 00:25:40,559
intoxicating canabo that have now sprung
604
00:25:36,760 --> 00:25:45,279
from the bosom of the 2018 farm bill I
605
00:25:40,559 --> 00:25:48,640
recently wrote in my musings that to me
606
00:25:45,279 --> 00:25:50,720
you know rescheduling is not the biggest
607
00:25:48,640 --> 00:25:53,120
thing facing or biggest thing that's
608
00:25:50,720 --> 00:25:56,159
going to happen to cannabis because to
609
00:25:53,120 --> 00:25:59,600
me you know it will rescheduling really
610
00:25:56,159 --> 00:26:01,399
will just make taxes well reduce taxes
611
00:25:59,600 --> 00:26:05,640
and make everybody's balance sheets a
612
00:26:01,399 --> 00:26:07,840
little cleaner hemp drives cannaboids uh
613
00:26:05,640 --> 00:26:10,640
THC and the like that to me is the
614
00:26:07,840 --> 00:26:14,640
biggest issue facing um non-em cannabis
615
00:26:10,640 --> 00:26:16,000
right now because it is you've got you
616
00:26:14,640 --> 00:26:18,600
know on the one hand you've got the
617
00:26:16,000 --> 00:26:20,360
licensed industry that is working
618
00:26:18,600 --> 00:26:23,279
through again this sort of State
619
00:26:20,360 --> 00:26:26,120
regulated federally illegal process and
620
00:26:23,279 --> 00:26:28,960
all of the hair that comes with that and
621
00:26:26,120 --> 00:26:32,159
then you've got you know from a consumer
622
00:26:28,960 --> 00:26:34,880
perspective a substantially similar
623
00:26:32,159 --> 00:26:37,440
project product maybe not identical in
624
00:26:34,880 --> 00:26:40,520
all ways but some of the products are
625
00:26:37,440 --> 00:26:43,679
indeed identical uh that you could buy
626
00:26:40,520 --> 00:26:47,640
at Total Line or at a you know a sports
627
00:26:43,679 --> 00:26:50,240
arena or at a gas station and you know a
628
00:26:47,640 --> 00:26:52,120
lot of it's tested some of it's not some
629
00:26:50,240 --> 00:26:54,679
of it you can buy over the Internet with
630
00:26:52,120 --> 00:26:57,240
a click uh without any sort of like you
631
00:26:54,679 --> 00:26:59,080
know adult signature required and it's
632
00:26:57,240 --> 00:27:02,679
all through this
633
00:26:59,080 --> 00:27:05,679
loophole uh in the 2018 Farm Bill the
634
00:27:02,679 --> 00:27:08,080
biggest question that nobody knows the
635
00:27:05,679 --> 00:27:10,200
answer to at this point is whether that
636
00:27:08,080 --> 00:27:11,919
loophole is going to get closed up in
637
00:27:10,200 --> 00:27:14,200
the upcoming farm bill that's being
638
00:27:11,919 --> 00:27:15,880
debated right now there's been some
639
00:27:14,200 --> 00:27:19,039
amendments proposed to the draft farm
640
00:27:15,880 --> 00:27:21,960
bill that will indeed close it up um and
641
00:27:19,039 --> 00:27:25,520
basically for lack of a term eliminate a
642
00:27:21,960 --> 00:27:28,440
lot you know this this industry uh the
643
00:27:25,520 --> 00:27:30,880
the sorry the the hemp derived tab
644
00:27:28,440 --> 00:27:33,840
industry what's also being referred to
645
00:27:30,880 --> 00:27:35,880
is intoxicating hemp which is probably
646
00:27:33,840 --> 00:27:37,120
you know not a fully accurate term
647
00:27:35,880 --> 00:27:39,919
there's not really a good way to
648
00:27:37,120 --> 00:27:43,840
describe it um or sort of a succinct way
649
00:27:39,919 --> 00:27:46,440
to describe it but if it doesn't then
650
00:27:43,840 --> 00:27:49,000
the the the licensed cannabis industry
651
00:27:46,440 --> 00:27:51,760
has a real problem because now it's it's
652
00:27:49,000 --> 00:27:54,240
not just competing against the illicit
653
00:27:51,760 --> 00:27:57,640
unlic Market but now it's also competing
654
00:27:54,240 --> 00:27:59,159
against the the hemp toide market and
655
00:27:57,640 --> 00:28:01,519
you know
656
00:27:59,159 --> 00:28:03,799
it's there isn't really great data out
657
00:28:01,519 --> 00:28:06,679
there yet but we're you know I think I
658
00:28:03,799 --> 00:28:10,480
think that most operators most license
659
00:28:06,679 --> 00:28:13,320
operators would tell you that it's it's
660
00:28:10,480 --> 00:28:14,840
it's hurting sales um it's hard to sort
661
00:28:13,320 --> 00:28:18,760
of you know
662
00:28:14,840 --> 00:28:21,760
think figure you know otherwise and so
663
00:28:18,760 --> 00:28:24,320
you know if I think that if the farm
664
00:28:21,760 --> 00:28:26,159
build doesn't close this loophole I
665
00:28:24,320 --> 00:28:29,120
think that you're going to see a lot of
666
00:28:26,159 --> 00:28:32,399
more Catabus licensed Catabus companies
667
00:28:29,120 --> 00:28:34,760
pivot because they would have to um I I
668
00:28:32,399 --> 00:28:37,720
think it's just this situation just kind
669
00:28:34,760 --> 00:28:39,600
of forced at hand yeah it's not ever
670
00:28:37,720 --> 00:28:42,240
something I would have predicted or
671
00:28:39,600 --> 00:28:43,880
foreseen that's for sure no I mean it
672
00:28:42,240 --> 00:28:46,399
was interest it's interesting that you
673
00:28:43,880 --> 00:28:49,600
know the two industries after the 28
674
00:28:46,399 --> 00:28:54,000
Farm Bill really sort of um split and
675
00:28:49,600 --> 00:28:56,720
sort of naturally because the the CBD
676
00:28:54,000 --> 00:28:59,519
hemp Drive CBD was really the focus that
677
00:28:56,720 --> 00:29:01,679
sort of you know I sort of fell apart
678
00:28:59,519 --> 00:29:04,519
because the FDA never did anything about
679
00:29:01,679 --> 00:29:07,480
it but now you know but then then H
680
00:29:04,519 --> 00:29:10,519
arriv canab THC sort of became the thing
681
00:29:07,480 --> 00:29:12,000
it also I think well from a from a
682
00:29:10,519 --> 00:29:14,720
policy perspective what I would really
683
00:29:12,000 --> 00:29:16,720
like to know because CBD was marketed
684
00:29:14,720 --> 00:29:19,240
For Better or Worse right in violation
685
00:29:16,720 --> 00:29:22,640
of federal laws as medicinal medicinal
686
00:29:19,240 --> 00:29:25,399
in nature and had these Curative effects
687
00:29:22,640 --> 00:29:28,320
for various ailments but now it's kind
688
00:29:25,399 --> 00:29:31,840
of been perverted into the fact that you
689
00:29:28,320 --> 00:29:33,320
can get high quote unquote from these
690
00:29:31,840 --> 00:29:35,440
cannabinoids and I would just like to
691
00:29:33,320 --> 00:29:37,799
know you know has the consumer sentiment
692
00:29:35,440 --> 00:29:39,799
shifted where people were never really
693
00:29:37,799 --> 00:29:41,880
interested that interested in CBD it
694
00:29:39,799 --> 00:29:43,840
really always has been about maybe
695
00:29:41,880 --> 00:29:46,039
getting stoned and this is the way to
696
00:29:43,840 --> 00:29:47,679
accomplish that so again when you look
697
00:29:46,039 --> 00:29:51,440
at cannabis from the federal policy
698
00:29:47,679 --> 00:29:54,240
perspective is it medicine is it a party
699
00:29:51,440 --> 00:29:56,320
instrument I don't know I mean this this
700
00:29:54,240 --> 00:29:59,159
is fascinating and frustrating at the
701
00:29:56,320 --> 00:30:00,880
same time but and and there's no good
702
00:29:59,159 --> 00:30:02,320
answer it really will come down to
703
00:30:00,880 --> 00:30:04,120
Congress and enforcement and what the
704
00:30:02,320 --> 00:30:06,679
states do and the states are starting
705
00:30:04,120 --> 00:30:08,480
again to pick up the slack to regulate
706
00:30:06,679 --> 00:30:11,799
it a number of different ways I mean
707
00:30:08,480 --> 00:30:13,760
talk about a patchwork quilt of headache
708
00:30:11,799 --> 00:30:16,559
that's being born I think at this very
709
00:30:13,760 --> 00:30:17,440
moment but with the last minutes that I
710
00:30:16,559 --> 00:30:21,080
called
711
00:30:17,440 --> 00:30:23,120
you I think kind of the last Pitfall
712
00:30:21,080 --> 00:30:25,360
awareness you know don't hang your hat
713
00:30:23,120 --> 00:30:27,320
on this maybe or don't get your hopes up
714
00:30:25,360 --> 00:30:29,320
too high I want to talk about the can of
715
00:30:27,320 --> 00:30:31,279
provisions case which I think at the
716
00:30:29,320 --> 00:30:33,159
outset of the Year people were getting
717
00:30:31,279 --> 00:30:35,279
pretty hyped for what this case could
718
00:30:33,159 --> 00:30:37,279
mean for a number of reasons number one
719
00:30:35,279 --> 00:30:39,640
facts and circumstances have changed
720
00:30:37,279 --> 00:30:42,159
from the last big kind of federal
721
00:30:39,640 --> 00:30:44,559
enforcement constitutionality of the CSA
722
00:30:42,159 --> 00:30:47,840
inate since the last case back in the
723
00:30:44,559 --> 00:30:51,000
early ASDS is quite different in that
724
00:30:47,840 --> 00:30:53,600
it's boy Schiller and these are very
725
00:30:51,000 --> 00:30:55,159
very well seasoned constitutional appell
726
00:30:53,600 --> 00:30:57,279
at attorneys that have gotten huge
727
00:30:55,159 --> 00:30:59,279
decisions before The Supreme Court in
728
00:30:57,279 --> 00:31:01,639
support of essentially civil liberties
729
00:30:59,279 --> 00:31:03,440
do you think we should be putting stock
730
00:31:01,639 --> 00:31:05,120
into this case and and if you do or even
731
00:31:03,440 --> 00:31:06,919
if you don't you know what does it mean
732
00:31:05,120 --> 00:31:09,480
for the industry I've been less
733
00:31:06,919 --> 00:31:12,360
optimistic than I think the average uh
734
00:31:09,480 --> 00:31:16,360
industry person about this case it's you
735
00:31:12,360 --> 00:31:19,960
know I always am I I'm always heartened
736
00:31:16,360 --> 00:31:22,960
by the Ingenuity of folks to try to
737
00:31:19,960 --> 00:31:26,120
figure out you know how do we make life
738
00:31:22,960 --> 00:31:28,720
easier how do we deal with fit us you
739
00:31:26,120 --> 00:31:31,159
know into the the system and the
740
00:31:28,720 --> 00:31:32,960
regulations and structure that we have
741
00:31:31,159 --> 00:31:35,880
the the cards we've been the cards we've
742
00:31:32,960 --> 00:31:37,600
been dealt s for mixing metaphors there
743
00:31:35,880 --> 00:31:39,240
can of Provisions is is one of those
744
00:31:37,600 --> 00:31:42,159
it's sort of trying to figure out all
745
00:31:39,240 --> 00:31:45,519
right well how do we thread this needle
746
00:31:42,159 --> 00:31:47,880
and make a a credible argument that you
747
00:31:45,519 --> 00:31:50,919
know the Congress shouldn't be
748
00:31:47,880 --> 00:31:53,440
regulating intrastate Commerce which is
749
00:31:50,919 --> 00:31:57,120
sort of the heart of of the can of
750
00:31:53,440 --> 00:31:59,880
Provisions case I don't think that this
751
00:31:57,120 --> 00:32:02,519
is going to successful even though I you
752
00:31:59,880 --> 00:32:06,840
know I I love the fact that people are
753
00:32:02,519 --> 00:32:09,480
trying to do this but I I don't have a
754
00:32:06,840 --> 00:32:13,000
lot of expectation for Success because
755
00:32:09,480 --> 00:32:14,960
one you know the the the the law firm
756
00:32:13,000 --> 00:32:17,240
and the companies that are behind Canada
757
00:32:14,960 --> 00:32:20,000
Provisions started working on their
758
00:32:17,240 --> 00:32:22,880
argument and to try to find some sort of
759
00:32:20,000 --> 00:32:26,039
path for over a year before they filed
760
00:32:22,880 --> 00:32:27,960
the case and what they filed was much
761
00:32:26,039 --> 00:32:29,799
narrower than what was sort of
762
00:32:27,960 --> 00:32:32,559
originally pronounced and sort of
763
00:32:29,799 --> 00:32:35,600
originally uh in the original sort of
764
00:32:32,559 --> 00:32:37,600
press about it it was sort of originally
765
00:32:35,600 --> 00:32:40,320
Ted going to be that they were going to
766
00:32:37,600 --> 00:32:43,159
focus more constitutionality generally
767
00:32:40,320 --> 00:32:45,039
and instead it's more just an attack on
768
00:32:43,159 --> 00:32:48,840
the the application of the Controlled
769
00:32:45,039 --> 00:32:52,399
Substances Act within intra on an
770
00:32:48,840 --> 00:32:55,600
inate basis uh so it's a much narrower
771
00:32:52,399 --> 00:32:58,399
and and then it's focusing on a policy
772
00:32:55,600 --> 00:33:01,559
argument that in earlier
773
00:32:58,399 --> 00:33:04,919
Supreme Court precedent no longer makes
774
00:33:01,559 --> 00:33:08,240
sense which is a harder thing to pull
775
00:33:04,919 --> 00:33:10,320
off and then so it would have to this
776
00:33:08,240 --> 00:33:12,880
case really needs to get to the Supreme
777
00:33:10,320 --> 00:33:14,240
Court in order for it to be successful
778
00:33:12,880 --> 00:33:17,919
in order
779
00:33:14,240 --> 00:33:20,799
overturn Supreme Court precedent and so
780
00:33:17,919 --> 00:33:23,960
you know fewer than 1% of cases that go
781
00:33:20,799 --> 00:33:28,559
up for C are actually accepted so you've
782
00:33:23,960 --> 00:33:31,799
got an extremely you know narrow window
783
00:33:28,559 --> 00:33:33,840
there to actually make it work and then
784
00:33:31,799 --> 00:33:36,159
you have to convince the Supreme sorry
785
00:33:33,840 --> 00:33:37,600
even to get to the Supreme Court and
786
00:33:36,159 --> 00:33:39,639
then you have to convince the Supreme
787
00:33:37,600 --> 00:33:42,480
Court to bother to overturn its own
788
00:33:39,639 --> 00:33:45,080
precedent based upon you know based upon
789
00:33:42,480 --> 00:33:47,000
a it's effectively a policy argument now
790
00:33:45,080 --> 00:33:49,440
you know you do have the and they've
791
00:33:47,000 --> 00:33:51,600
sort of latched on to the to Justice
792
00:33:49,440 --> 00:33:56,039
Thomas made a comment a number of years
793
00:33:51,600 --> 00:33:58,919
ago in in in a in a descent that you
794
00:33:56,039 --> 00:34:00,760
know that that the earlier case law
795
00:33:58,919 --> 00:34:03,880
earlier president doesn't make sense
796
00:34:00,760 --> 00:34:05,559
anymore so you know that sort of was the
797
00:34:03,880 --> 00:34:09,399
spark for the idea from what I
798
00:34:05,559 --> 00:34:11,839
understand but I just I don't think that
799
00:34:09,399 --> 00:34:14,879
we should ex it would be great if we got
800
00:34:11,839 --> 00:34:17,919
it but I don't think we should expect a
801
00:34:14,879 --> 00:34:19,960
success here that's just my two sets but
802
00:34:17,919 --> 00:34:23,200
then again I'm not a supreme court
803
00:34:19,960 --> 00:34:25,359
lawyer I wasn't a supreme court lawyer
804
00:34:23,200 --> 00:34:28,359
and you know I spent a lot of time on
805
00:34:25,359 --> 00:34:31,359
the Constitutional issues but you know
806
00:34:28,359 --> 00:34:34,200
they keeping to my prior arguments of
807
00:34:31,359 --> 00:34:37,440
listen to experts I would call myself an
808
00:34:34,200 --> 00:34:39,639
intermediate expert on this so seek out
809
00:34:37,440 --> 00:34:41,800
other advices such as yourself seek out
810
00:34:39,639 --> 00:34:44,760
other you know talk to people like
811
00:34:41,800 --> 00:34:48,119
Hillary here oh no no Mark is Mark is
812
00:34:44,760 --> 00:34:50,079
about ASI as I am um on something like
813
00:34:48,119 --> 00:34:52,119
this again highly specialized but I
814
00:34:50,079 --> 00:34:54,480
think the bottom line is folks probably
815
00:34:52,119 --> 00:34:56,839
don't bet the house on the results of
816
00:34:54,480 --> 00:34:59,440
one litigation matter and especially one
817
00:34:56,839 --> 00:35:01,200
like this that has quite a ways to go
818
00:34:59,440 --> 00:35:04,160
before I would even make it right to the
819
00:35:01,200 --> 00:35:06,079
big stage mark thank you so much for
820
00:35:04,160 --> 00:35:08,079
coming on to the podcast and giving us
821
00:35:06,079 --> 00:35:10,599
the ins and outs of these pitfalls and
822
00:35:08,079 --> 00:35:12,280
red herrings I love doing these things
823
00:35:10,599 --> 00:35:15,040
and putting people on notice I think
824
00:35:12,280 --> 00:35:17,720
it's hugely helpful and folks if you're
825
00:35:15,040 --> 00:35:21,079
still listening please sign up subscribe
826
00:35:17,720 --> 00:35:23,359
to receive Mark's newsletter cannabis
827
00:35:21,079 --> 00:35:25,920
musings you will be better off for it
828
00:35:23,359 --> 00:35:28,400
again Mark thanks thank
829
00:35:25,920 --> 00:35:31,119
you and that concludes today's episode
830
00:35:28,400 --> 00:35:34,740
of the Cannabis law Now podcast until
831
00:35:31,119 --> 00:35:38,960
next time stayer stay alive
832
00:35:34,740 --> 00:35:38,960
[Music]