Most Recent Interviews
- Anthony WileSavvy Cannabis Investors Pivoting to Markets Beyond North America
- Pete KadensRunning Cannabis Operations in Multiple States with Pete Kadens
- Sundie SeefriedHelping Cannabis Businesses Get & Keep a Bank Account
- Dr. Patricio Stocker, PhDPharmaCielo is Growing Cannabis At The Equator to Export to The World
Renowned cannabis investor and advisor Leslie Bocskor gives us his prescient insights into where the cannabis industry is heading in 2015 and the exciting technologies that are emerging. Leslie goes into detail as to why he believes Las Vegas will become the Silicon Valley of Cannabis very soon.
Matthew: Hi, I’m Matthew Kind. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.canninsider.com/trends. That’s www.canninsider.com/trends. Now here’s your program. Leslie Bokskor of Electrum Partners is perhaps one of the most recognized cannabis investors. And as the founding chairman of the Nevada Cannabis Industry Association is one of the state’s most outspoken advocates. I am pleased to welcome Leslie to CannaInsider today. Welcome Leslie.
Leslie: It’s a pleasure to be here. Thank you so much for having me on the show Matt.
Matthew: So listeners get a sense of geography, can you tell us where you are in the world?
Leslie: I’m in Las Vegas, Nevada.
Matthew: Okay, and can you tell us a little bit about your background before getting into the cannabis industry?
Leslie: Sure I’m an investment banker, and I’m working corporate finance by trade and have for the last 25 years. I was one of the first investment bankers to specialize in the internet and media back in the mid to late 90s when it wasn’t even that popular. At the time you may recall, Paul Cornman wrote an article in Red Herring where he said the internet would never amount to much. There wasn’t much money to be made on it. I’ve spent my time, I’m looking for disruptive business models and trends that would fundamentally change the way we do business, live on a massive scale, and that’s sort of what brought me to the cannabis industry.
Matthew: So we’re not too early in the cannabis thing. You think now is the time, it’s coming out on the main stage.
Leslie: Not too early. A friend of mine who is a very noteworthy invested said, “Leslie, we’re not at the ground floor. We’re still in the basement. We’re at the beginning of the beginning.”
Matthew: Oh good. That’s the right place to be.
Leslie: Yes it is. It’s an incredible time. This is an unique moment in history that will never be repeated again. It’s something that a friend of mine who is another investment banker, owns his own brokerage firm, said this is the type of opportunity that you could wait many lifetimes to see repeated.
Matthew: Great. I agree by the way. Now let’s talk a little bit about your investing. What type of cannabis investments are you interested in?
Leslie: Well great question. We are interested in investments that range over a fairly broad spectrum. I like to look at the industry as six separate segments and we’re interested in every one of them. We are interested in businesses that are in the recreational cannabis industry, and that would be cultivation, processing, retail. We are interested in businesses that are in the medical marijuana industry which is actually a very new industry. We are interested in business that will be approaching the nutriceutical and supplement market which is going to be gigantic. We are interested in businesses that are in the pharmaceutical and life science market with the hundreds of cannabinoids in the cannabis plant as well as terpenes and other compounds that are unique to it. There will likely be many, many, many pharmaceutical products being researched and developed over the coming decades based upon the cannabis plant. We are interested a great deal in the industrial hemp market. Hemp is a massive product and a massive industry in and of itself. We don’t even know the sizes. There aren’t even any whitepapers currently that document what the ultimate size of the industrial hemp market will be. It’s going to be massive.
We are interested in the ancillary markets which can be broken up into B2B ancillary products; cultivation equipment, real estate base, software and services, things like that as well as the B2C ancillary markets. So I would say that our interests as investors spans all of those industries and then we have another overlay on looking at investing which is based upon the markets that are developing as each state in the United States and Canada and other countries, but primarily the US and Canada right now start to open up states with different regulatory frameworks and new markets open up. We also look at those as each state is a separate market.
Matthew: Okay. So you’re putting together a fund right now, and you don’t shy away from investments that touch the plant. Can you just talk a little bit about why some investors shy away from that and why you aren’t?
Leslie: Sure. Other investors shy away from it because of the friction between the federal illegally and the state legality. The conflicts between the existing legal environments creates something that most people feel is a risk they’re not willing to add to the other risks that are part of investing normally. We have looked to the guidance given by FinCEN, the Financial Crimes Enforcement Network that works with OFAC and deals with anti-money laundering and other issues. We’ve looked at the guidance given by the Department of Justice, and what we’ve said is if there’s existing guidance, which there is, that tells banks that they can do business with legal cannabis businesses in states with regulatory frameworks where the businesses are operating in line with the regulatory framework, then the bank can take the deposits of those legal cannabis businesses. We look at that guidance as providing a set of parameters that if we exceed that type of criteria, it is good enough for us to invest in. So the difference between us is we’re saying if it’s good enough for the federal government to say a bank can do business with that cannabis company, then it’s good enough for us to invest in.
Matthew: Now are you accepting new investors into your fund now?
Leslie: Yes we actually have many investors who have come to us and that are contemplating coming into the fund. We have not officially started accepting funds yet. We expect to be doing that within days, a week, two weeks. It has been an arduous process to make sure every T is crossed and I dotted so that we can present our investors with the best possible framework for executing our strategies. And so we are about to accept capital in the immediate future.
Matthew: And your investments will be some equity, some loans, both, what will that look like, that mix?
Leslie: It will probably be a across a very broad array, and will be a mixture of both many times. Every individual investment will be looked at differently. I feel I anticipate more often than not we will be making equity investments.
Matthew: Now I heard you give a talk on a panel about due diligence, and that’s a huge topic and for some of us who never seen a diligence list, they really may not understand how much is involved. But can you just give us a quick summary from maybe even an entrepreneur’s point of view, an investor’s point of view why it’s so important to have a diligence list and how to make sure it’s successful for both parties?
Leslie: Absolutely. Due diligence is one of the most important exercises and practices in business especially when you’re contemplating investing or bringing in investment. From the investor’s side due diligence is the system that you set up for creating a check list that allows you to go through an investment and make sure it fits your criteria. Have you checked the background of the operators and when you’ve checked what have you found? Have they had previous successes? Have they had previous liquidity events? Have they had a track record of success? Are there any outstanding issues that you should be aware of with any of the major operators? Has the business had any issues? Is there anything associated with that you should be aware of?
From the entrepreneur’s prospective the more substantial your due diligence package, the better prepared it is, the better evaluation you will be able to defend in your business in terms of attracting investment and bringing it in. If you have an incomplete due diligence package, what will happen is in the process of negotiating with your investors, they will look at your lack of due diligence. They will look at your lack of information, and they will use that as a mechanism to attack your evaluation and bring it down. Saying, wow, you haven’t prepared your outstanding agreements. We don’t understand what the potential liabilities are. We don’t have a complete record of all of your assets, and we don’t have a complete record of all of the debts of people that owe you money and you have not perfected the debts to make sure that they’re absolutely executable and that the debtors will be able to perform according to your debt because you haven’t properly structured it and things like that. If you haven’t done that when an investor is coming in to invest in you, they will look at those things and they will attack that as reasons to lower your evaluation. So what happens is your due diligence file, your due diligence practices can directly affect the evaluation and your cost of capital.
Matthew: Great points. For any new or prospective entrepreneurs out there listening, what are the big problems in the cannabis industry that need to be solved?
Leslie: The biggest problem in the cannabis industry in my opinion has to do with a lack of substantives, self-regulatory organizations. When the alcohol industry transitioned from prohibition to a legal industry in 1933 within one year they had self-regulatory organizations set up to establish standards around packaging, potency, product integrity, marketing and advertising. And since that time the alcohol industry has been incredibly successful at using the self-regulatory organizations to be able to monitor the alcohol industry so that the federal and state governments do not have to come in and regulate them. For example right now there was a recent poll that said 73 percent of children under 18 that don’t drink say the reason they don’t drink is because of communication from their parents about alcohol. That program, getting the parents to talk to the kids about alcohol, was entirely put into place by the alcohol industry through its various self-regulatory organizations. Those organizations created the material, created the context and created programs to help parents understand how to communicate with their kids about alcohol, and gave them talking points, created programs that would teach them how to have those conversations. The result is it’s reduced youth alcohol consumption dramatically.
In an industry like cannabis where many of the cannabis manufacturers market to our own inner children, the problem is that those products are thereby being marketed to children as well. They can’t differentiate that candy bar, that brownie, that cookie, that lemon drop from being something that should be for them. And we need self-regulatory organizations without a doubt to establish standards that will be promulgated throughout the industry so that we will not be having issues about products being created that will have an appeal to people under 18. We need to have programs that instruct parents how to communicate with their children about cannabis, both recreational and medical marijuana. We need to have programs that educate parents and other types and anybody who has cannabis in their home, lock it up. They should be locking up their prescription medications as well. Every 18 minutes in the United States somebody dies from prescription medication. And so whether there’s prescription medication or cannabis we need to have lockable medicine cabinets where it’s kept. We need to have edibles kept in lockable boxes in the refrigerators where it’s kept. These things need to be segregated and kept separately, and the people who can make that happen are going to be self-regulatory organizations. The single biggest problem, in my opinion, in the industry is that we are still setting up the self-regulatory organizations that will be establishing the standards and monitoring the practices of the participants in the industry to make sure that we’re avoiding the issues I just described.
Matthew: You mentioned the packaging and the childproofing education. One thing that jumped out at me while you were talking is that if there’s an entrepreneur out there that can still communicate a strong brand while childproofing, that’s a homerun. Where it doesn’t attract kids, but it’s still very esthetically attractive, but can prevent kids from getting in there. That sounds like that would be something interesting.
Leslie: Absolutely. And I couldn’t agree with you more, and we’re going to see that happen. What we’re going to see is self-regulatory organizations are comprised of the industry participants. And so we will see industry participants, the various industry leaders starting to step up and establish those self-regulatory organizations and leading them. So exactly what you’re describing is what’s going to happen.
Matthew: Now switching gears, in Nevada you’re a huge advocate for Nevada, and I want to hear why. But first can you give a brief update of what happened in Nevada in November and why that’s important?
Leslie: We had in Nevada in November a series of events take place. First off we had the granting of the provisional licenses by the Department of Public and Behavioral Health and that was huge. I think something like 260 provisional licenses were granted. We additionally turned in the petitions for our adult use initiative which will be in the ballot box in 2016. As well we had ArcView, the ArcView Investor Network had a conference here, and we had the MMJ Business Daily conference here. We also had a Women Grow event, and we had the NCIA yearly banquet. All of that took place inside of two weeks. It was a real banner month for cannabis in Nevada.
Matthew: Without having recreational use being legal in Nevada, do you really think they can become the leader, take it away from Colorado, Washington, now Oregon?
Leslie: Nothing that we need to take away from anybody. Nevada is likely going to be a leader in the industry, and we are heading towards recreational use within the next couple of years. We should have it, as I said, on the ballot box in 2016. There’s a possibility that it could get approved legislatively in 2015. And so we are already heading there in addition to having too that our regulatory framework, regardless of whether it’s medical or recreational, which is very much based upon the experience the state has had in regulating gambling which was illegal at the time that the state began to regulate it. It has positioned us to be a leader in regulating cannabis as well. And so we are establishing our leadership not based upon our market and it being recreational or not recreational. We’re establishing our leadership based upon creating a regulatory framework that is business friendly and beneficial to the state, the industry and the citizens and users as a whole. And that’s based upon our experience as establishing the gold standard for regulating another taboo subject which was gaming at the time. That is now accepted everywhere, and the gaming regulation in Nevada is looked at as the gold standard worldwide.
Matthew: Now is the permitting process too expensive and too oriented towards big business to the point where it’s boxing out small family operations?
Leslie: So the answer to that is we want to make sure that this is once again a well regulated industry. And we established a merit based system for determining who is going to be able to participate in that. And it doesn’t matter whether it’s big business or small families. It’s not about the size of your business. It’s about your ability to put together a very comprehensive and well thought out plan. There are many big businesses who put together and who spent a tremendous amount of money to get their licenses approved that did not get provisional licenses because they did not score high enough in the merit based system. And there are many small businesses that did score very highly because they assembled the right team, the right program and put together a better application. So the fact of the matter is the merit based system is going to be able to benefit those who put together the best team, the best program and the best product.
Matthew: One thing I do notice about Nevada is that there is regulations there, but they’re probably more laissez faire than the other states that are allowing medical or recreational cannabis. Is there anything else about Nevada that just makes it a homerun for cannabis there?
Leslie: Yes, I would use… I wouldn’t say we’re laissez faire, I would say that we are being reasonable. We’re having an honest conversation amongst reasonable people about the nature of cannabis, it’s use, medical marijuana, which is why we’re the state that allows anybody from any state, any jurisdiction that has medical marijuana recommendation to come into our dispensaries and purchase cannabis. And so that, in my opinion, is a differentiating factor. I think that we are not… what we have established is a very forward thinking prospective on it, and we’re getting away from the old propaganda that was based upon lies and misinformation.
Matthew: What technology or trends do you see disrupting the cannabis business the next one, three, five years? I know it’s changing so quickly, but you have a focus on disruption so I would like to hear your opinion on that.
Leslie: I think that the cannabis industry is going to actually be a hot bed of innovation because of the friction between federal and state law and the patchwork of different regulatory environments on a state to state basis. What you’re going to see is innovation that’s going to have to be adaptable and take into account all of these differences on a state to state basis; the federal laws, the banking issues, etcetera. And so what’s going to happen is the tremendous upward pressure that is coming from all of the interest in getting into this business, all of the opportunity that it’s creating, the profitability that exists in the business, the rapid growth that exists, all of that capital and that economic force is going to be creating opportunities that will result in innovation being developed to take those other issues into account. That innovation will not only be applicable to the cannabis industry, it is going to be applicable to other industries.
For example, there’s a business out there named CannaBuild. Zach Marburger who is now in Denver, he developed a tool that is going to be providing information to end users to avoid the discomfort of going into a dispensary and not knowing what to get, not knowing what the differences are. He’s created a tool that’s going to allow for a user to be able to understand what they need to get before they get there, to have an actual person walk them through that process so they can walk into the dispensary already having decided what they’re going to get and just going in to pick up their purchase. Rather than having the uncomfortable experience of going in and walking in and not knowing what to get and not understanding and feeling overwhelmed. Not all together different than the way people went into video rental stores and didn’t know what they were going to watch for the night, and walked around trying to figure out. Which is why NetFlix became such a massive opportunity and a massive business going from a $10 million valuation into a $28 billion valuation or whatever the number is right now, over a 15 year period. We’re going to see the same type of innovation come out of the cannabis industry that will be applicable to other industries as well.
Matthew: Leslie I love talking with you. You have a ton of energy, enthusiasm and wisdom. In closing how can listeners follow your work and connect with you?
Leslie: They can get in touch with me through www.electrumpartners.com. That’s www.electrumpartners.com. They can also follow me on Twitter @Leslie Bocskor. And we are very likely going to be launching a website sometime soon. We’re contemplating right now the Electrum Report which will be a daily or at least four times a week newsfeed of the most significant articles in the cannabis industry that affect the cannabis industry that we curate and then present four times a week for people to read.
Matthew: Great. Thanks to Leslie Bocskor for being on CannaInsider today. Thanks Leslie.
Leslie: Thank you Matt. Have a great day.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. Every five star review helps us to bring the best guest to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.canninsider.com, email us firstname.lastname@example.org. We would love to hear from you.
Understanding the changing landscape of concentrates with James Slatic, CEO of Med-West. James talks about why not all vape pens are the same and how discreet infused products like their gums, sprays and sublingual tablets are changing the game. Learn more at Med-west.com In this interview we will reveal how the market for discreet cannabis products will look in the years ahead.
Matthew: Hi, I’m Matthew Kind. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That’s www.cannainsider.com/trends. Now here’s your program. Cannabis consumers are moving more and more away from flower and choosing concentrates. We’re going to find out why that is and learn about the most exciting innovations on the cannabis concentrate front with our guest today James Slatic, CEO of MedWest. Welcome James.
James: Thank you.
Matthew: James I want to dig into the extract market, but first can you tell me at a high level what MedWest does?
James: Sure, MedWest was one of the first CO2 extraction companies. We started back in 2009, and we provide a wide array of CO2 extracted cannabis medicines and soft gels, sublingual pills, oils and of course the most popular, well-know thing, the vape pen cartridge system.
Matthew: How did you get involved in extraction and concentrates? What’s your background?
James: Well I think like many in cannabis, by accident, you know. I’m a 30 year entrepreneur. I’ve been starting companies since I was 23, and we always try to find the niches. In entrepreneurial business we say in niches there are riches. And I stumbled upon the medical cannabis world back in 2008, and originally started as doing packaging. I started a company called www.popbottles.com, and we supplied, you know, compliant packaging to about 350 dispensaries around California. And just from networking through the industry I started, you know, going to the conferences, the business conferences and you know, met the OrganaLabs people in Colorado and started learning about the CO2 extracted medicines and really saw that as a thing for the future and for, you know, helping people with medical conditions and just kind of went from there and the rest is history, as they say.
Matthew: Now for listeners that are not that familiar with concentrates or maybe just have a slight understanding of what it is, how can you help orient them about what concentrates actually are and why the market is turning or pivoting so quickly to concentrates and it’s taking more market share from the flower?
James: Well that’s a very deep question. I think the simple explanation is concentrates are basically taking the flower and extracting down the essential elements, the active ingredients. A number of ways to do that, you know, we use CO2 because of the laws here in California against hydrocarbon extraction, but many other states use solvents such as hydrocarbon extraction like butane. And once you remove the active ingredients out of the flower then you can mold it into any number of delivery systems. And so, you know, everything from the famous, you know, pot brownie that everybody knew or heard of before, you know, medical cannabis, and then everything into sort of high tech stuff. I mean we have soft gel capsules with all kinds of varying amounts of CBD and so forth. And so concentrates are now just getting more scientific, and I think the consumers are learning that it provides a doseability or repeatability and you know, lack of stigma. You know, if you light up a joint or a pipe somewhere, everybody within a city block can smell it, versus a concentrate which, you know, looks medical, acts medical and both the people that use it in adult use consumption fashion as well as for medical conditions, it’s very doseable and repeatable.
Matthew: Now you talked a little bit about the categories your concentrates are in, but not everybody is familiar with the sublingual or sprays. Can you talk a little bit about what those are?
James: Sure. It’s just taking the essential ingredients and it’s (5.02 unclear) that you put it in. The sublingual is basically a pharmaceutical sugar base, and so sublingual just meaning that it’s designed to, you know, melt in your mouth. The best way is under your tongue, and it’s what’s called an oral mucosal where it goes in through the mucous membranes of the mouth, and it’s a great delivery method especially for my pain patients because it doesn’t matter what you had to eat or drink or when. It’s going to take effect the same way every time and last the same amount of time. And very similar to a spray, you know, these cannabis sprays that are coming on the market too, they’re also absorbed through the mucous membranes of the mouth. So it takes effect very very quickly, you know, less than 10 seconds and you know, usually very doseable.
Matthew: So you’re saying that it’s more consistent with the concentrates. You can dial in what you want to feel or a patient, what symptoms they want to treat a little easier than the flower?
James: Well definitely. You know, flower is going to, you know, it’s still always going to have a place in the market, but it tends to, as we all know that consume cannabis, you tend to get as high as you’re going to get right away. And then from that point on, you know, five minutes, ten minutes, twenty minutes, you know, you’re going to have that gradual decrease in the effect. So you’re going to need to redose or whatever. Plus when you burn cannabis you tend to get the supporting cannabinoids tend to become fugitive on those temperatures, meaning they escape and are not inhaled into the vapor stream. So that’s why people tend to get, you know, really high and maybe get some of the paranoid effect from these high dosages of THC that are in the highly bred strains now we see, you know, 24-25 percent THC. You tend to get a big hit of that when you burn the cannabis and all the other supporting cannabinoids have a place in the effect and those seem to get across the blood brain barrier better when they’re ingested or you used another method other than smoking.
Matthew: Now you mentioned the other cannabinoids. Let’s talk about CBD for a second, and you have a CBD gum. Can you just describe at a high level what CBD does for patients and a little bit about your gum?
James: Yeah, the Cannabidiol gum is, you know made from a 99 percent, pure 99 plus percent pure CBD extract that we have derived from hemp. As far as I know the only one on the market. We have an exclusive thing to import that. The gum, you know, it’s a great delivery method because it puts it into your system and it’s really being effective for a lot of my diabetic patients with a blood sugar modulation effect. So you know, not being a scientist, you know, to go into all the, you know, medical conditions and what we’re seeing in the CBD research, I’m going to advise all the listeners to just, you know, Google it, CBD and cancer and post traumatic stress. Now we’re seeing some great indications with Alzheimer’s. But, you know, what we try to do with our CBD pills and we have a spray and now the CBD gum that you mentioned was just provide an inexpensive method to get CBD into your bloodstream.
It seems that, you know, my patients are just getting effect from… a good effect from having a modulated amount of CBD in their bloodstream all the time. So, you know, with three or four pieces of gum a day, 25mg a piece, and you can get 100mg in your bloodstream at different times during the day, and without the market and clinical research needed because of the, you know, government interference. It’s hard for me to point to multiple studies. I’d say most of our things are coming from our, you know, hundreds and thousands of patients just giving us their, you know, their personal anecdotal evidence.
Matthew: Right and I know there’s a lot of restrictions on what we can talk about because of the FDA and so forth, but CBD seems like it lends itself to treating certain symptoms more than others. I’ve heard everything from anxiety to autoimmune disorders. Is that kind of the universe of what you’re hearing as well?
James: Yeah it is. You know I’m very excited with this calming effect of CBD. Certainly, you know, it’s not, you know, putting people out or anything, but we are getting a lot of reports and I can give my personal attribute that, you know, a couple pieces of gum and you know, maybe it’s placebo effect, but I definitely do feel that it has a calming effect on the body. You know, as it effects neurotransmitters, it probably makes sense that it does that. So you know, at my age and with my family history I think I’m most excited with the, you know, research news that came out last week about the efficacy in fighting amyloid plaque, you know, which is a lot of the cause of Alzheimer’s.
Matthew: Yes, great point. You offer a cannabis oil syringe. How are patients using the syringe?
James: Multiple ways. Every way from just putting a dab on their finger and rubbing it on their gums to, you know, putting it in teas. And I have a number of cancer patients that, you know, put the cannabis oil because it has, you know, all the supporting cannabinoids and they put it in their, you know, their herbal tea at night or in the morning and just mix it in. And then of course your adult use people, you know, use it, you know, with their just smoking flower, as a bowl topper in the dabbing apparatus.
Matthew: Now are your products only available in California or in other states where medical marijuana is legal?
James: Well our, you know, because of the state laws, everyone knows the companies is you know, domiciled and owned directly in that state, produced in that state, but you know, these same medicines are produced in Washington and Colorado and Arizona and in Michigan.
Matthew: And when I walk into a dispensary I know you’ve got a bunch of different lines of products. What should we look for?
James: The name brand is our flagship and that is where, you know, the medical chocolate and the vape pen cartridges and the CBD/THC sprays and gum are all under the Bang label. So that is the best way, and I think more things are going to just migrate and that will just be our corporate brand. You know we may have one or two, you know, medical CBD pills or so forth that come out under one of the other labels, but most everything will be under the Bang family.
Matthew: Okay so I’m in a dispensary and I wanted to get a cartridge for my vape pen, what is the… let’s say, how much does it cost to get a refill on a cartridge for a vape pen? I’m just trying to give the audience an idea of the cost. I know it varies.
James: Well there’s two, you know, there’s two sizes; the half gram and the full gram. So they’re usually at retail for $30 for the half and $50 for the full.
Matthew: Okay, and the concentrate, extractions and concentrates are moving so fast. It’s really hard to keep up with them. Where do you see this going in the next 3 to 5 years? I mean it’s just unbelievable, the sublinguals and the syringes and everything, the gum. I mean it’s really… this has come about much faster than I even anticipated. Where do you see it going?
James: Well my prognostication skills aren’t that great. I would have bought, you know, Microsoft back in 1984 if I could have seen the future, but I think you’ll see more of a, you know, a trend like you’re seeing now. From the investor’s side, you know, places like ArcView that have shown us how many people want to invest in this space. There are getting to be some very sophisticated, well-funded and great researchers, scientists that are examining coming into the space at various speeds. So I think sort of like, you know, like the computer world. I think you’re just going to see an acceleration of the curve that’s started already, and there’s going to be more and more science behind more precision in dosing, more precision in blending the cannabinoids to get certain desired effects. We’re going to have more details on how CBD, CBN, CBG, THC and how these so called entourage effects work together and help certain conditions and everything from, you know, your mood on down. So I think that, you know, it’s just going to be more and better and, you know, like when the internet started and then holy crap who envisioned, you know, Facebook and everything else that’s come to pass. And I see the same thing because, you know, cannabis market is growing 67 percent a year, and upon adult use coming in California and Nevada, Maine and some other states in the next presidential election in 2016, you know, I just think that the curve is, you know, very much at the infancy.
Matthew: And as we close how can listeners learn more about MedWest and the Bang chocolate and the vape pen and all the different products you offer?
James: I think the best place to start is www.medwest.com, and you’ll see all that in there. We have a good variety of information on there for patients, dispensary owners and so forth, and that’s always a good place to start.
Matthew: Well James thanks so much for coming on CannaInsider today. We really appreciate it. If you enjoyed the show today, please consider leaving us a review on iTunes. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us email@example.com. We would love to hear from you.
Alan Brochstein, an expert on cannabis stocks and Jay Czarkowski a dispensary owner turned consultant highlight all the pivotal events that took place in 2014 for the cannabis industry.
– The states that legalized in November
– The wild roller coaster year for cannabis stocks
– The provisions in the omnibus spending bill that prevent the DOJ and DEA from going after cannabis businesses that are following state laws
– How tribal lands are opening up to cannabis
– Nevada, the next state to have a huge impact on the cannabis industry
– The next big brand in cannabis
– Clinical Trials for cannabis as a medication
– Colorado: what worked, what didn’t from a regulatory and business point of view
– Hemp, its time has come, get ready
– Marijuana Business Daily Conference in Las Vegas
– How public opinion is changing even in conservative states
– What 2015 and 2016 look like for the cannabis industry
Matthew: Hi, I’m Matthew Kind. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That’s www.cannainsider.com/trends. Now here’s your program. Today we’re going to have a little bit different of a show. I’ve invited two guests Alan Brochstein and Jay Czarkowski to help us digest and understand all the huge changes that have taken place in the cannabis industry in 2014.
A little background on both Alan and Jay before we get started. Alan is an expert on cannabis stocks and investing and is the founder of 420 Investor and 420 Funders, as well as a frequent writer on Seeking Alpha. Jay Czarlowski is a dispensary owner turned cannabis consultant. Jay is a managing partner at CannaAdvisors where he helps clients with not only obtaining cannabis cultivation and dispensary licenses but also with all aspects, the design, build, grow process that comes after winning a license. Welcome to CannaInsider Alan and Jay.
Male: Thanks for having us today.
Matthew: So much ground to cover, 2014 was a huge huge pivotal year guys. Let’s get started with you Jay. What happened in the November election and how should we be thinking about this?
Jay: Well Matt I’m certainly no political analyst, but I can tell you this, the big votes were of course Alaska, Oregon, Washington D.C. and Florida. The first three of course passed. Florida did not, but the important thing about Florida, got 58 percent of the vote. Fifty-eight percent was more, from what I understand, than the last five governors, winning governors received, and I think the most any president got in Florida since Eisenhower. So, you may want to scratch that because I don’t know if that’s accurate.
Matthew: No, no. Fifty-eight percent is what I heard too, and that is absolutely massive.
Jay: And here’s what’s important. It didn’t pass because of course they needed 60 percent, but the people have spoken. You know the voters are on record and the majority of voters in Florida, they want medical marijuana. So hopefully even though it did not pass by referendum, hopefully the legislators take notice and they make something happen in 2015.
Matthew: Now there is certain oils that are legal in Florida though, correct? Is it CBD oils or do you know exactly?
Jay: Sure the CBD or the… it was a limited bill that was passed legislatively for a very very small number of operations just for oil. That program is not yet off the ground.
Matthew: Okay. Now turning to the stock market, Alan, what a crazy roller coaster year it was. Can you just kind of take us back to January all the way up to now? What are kind of the high points of the year?
Alan: Sure. Well the high point of the year that was easy. That was March 18th, and the way I look at it the stocks went up about 7-fold. And going into the year, exactly a year from now, there was a lot of optimism. The stocks has already started to move in anticipation of Colorado, and a lot of stocks doubled the first day of the year. It was so surreal watching the long lines in Colorado and the national and actually global media jumped onto this. So there was…and I had a pretty good vantage point to see what was going on and there were a lot of people who were just learning about the fact that there are stocks that are tied to the cannabis industry. And so we went about two and a half months of just non-stop, up every day and the biggest part of it, from my prospective, was not so much just that these companies that we began the year with started going up, but they multiplied. There were like… we now have about 250 companies, and we started the year with maybe 30 or something like that. And most of them actually aren’t even tied directly to cannabis. So as the years played out, Matt, the market’s been in decline. It’s been pretty steady, not too many bounces. And the way I measure it we’re actually down slightly year-to-date right now.
Matthew: Now the Omnibus Spending Bill, this kind of dovetails into what you were just talking about, Alan, is that in the Omnibus Spending Bill that President Obama signed, they’re withdrawing funds from the Department of Justice and the DEA to go after states that have some sort of framework or laws on how marijuana should be regulated from a medicinal or recreational point of view. Now that the federal government at least said they’re not going to pursue enforcement of this, do you see larger companies going public in pursuing cannabis profits?
Alan: I don’t know if that’s playing a role, but I think the issue about companies getting more involved is definitely topical. We’ve seen this year several companies get involved in Nevada or Illinois. For instance, and some smaller companies or larger ones in the space and then some smaller ones have actually expressed interest in, or done operations in Washington and Oregon and other states like that, even in California to some degree. So this has been a year of a lot of testing by these public companies to see kind of what they can do without getting in too much trouble. And most of the issues that have come up this year have not been related to marijuana. They’ve been related more to penny stock type issues of that matter. So I think this will probably put more wind in the sails of the companies that do want to cross what’s called the green line. So it is very timely.
Matthew: Jay now you’ve watched Colorado go from a medical marijuana market to a medical and recreational or adult use market. What has that change felt like for you as a former dispensary owner? How has the market changed?
Jay: Well certainly it’s difficult to quantify anything negative that’s come from that change. If anything, adults now have a safe, legal access point for cannabis and cannabis products. You know, there’s some talk in Colorado that teen use has not gone up. In fact some will say that teen use has actually dropped. Crime is certainly down in Colorado. In Denver that’s a well publicized statistic. It’s been great for the industry, and now that we have almost a full year behind us of legal cannabis in Colorado and the world has not ended, I think it’s only going to, you know, set the mark for other states in the country, if not other countries across the world to follow in our footsteps.
Matthew: Now Alan you’re in Texas. Now Texas is coming along, but it’s not Colorado. How have you seen public opinion change in your travels, but in specific in Texas?
Alan: You know it’s funny. I’ve travelled a lot this year. Colorado four times, Vancouver which is really maybe the capital of cannabis in North America. But here in Texas it’s interesting. They just hired… MPP just hired a full time lobbyist, and it’s definitely something that we’re working on. There’s been a lot of research out of the Baker Institute, which is part of Rice University. Very pro-cannabis in terms of there was a Texas Monthly article cover story I believe on PTSD for instance. So I see things changing here. There was a marijuana investment conference in September. A ton of interest really from across the state with that. We are on track right now to move towards, in 2017, medical marijuana in Texas. So I think it’s tough. I think I can see how we’re similar to Florida. Whereas Jay pointed out and you discussed the 58 percent approve it, and that’s medical not legal cannabis. But I’ve seen over the last couple of years a big move towards that direction, an open-mindedness towards medical. We’re probably, even in Texas the majority do support it, but there’s a very vocal minority.
Matthew: Now Jay there was a big change in how the federal government looks at cannabis growth in tribal lands all across the country. And you tell us what happened, how the federal government stepped away and what the opportunity is going to be?
Jay: Sure that’s a very very new development that I don’t even think has really fully presented itself yet in terms of details. All we know is that the federal government made an announcement that they would not interfere with tribal nations if they wanted to develop, you know, cultivate and sell. Now I’ll make a couple of examples. CannaAdvisors has begun to look into this only because we have a close relationship with a gal who has done a lot of grant writing for a number of Indian reservations in the west. So she has very very close relationships with a lot of these tribes. What would be a homerun, I will use Colorado as an example is if it would be possible to develop a relationship with an Indian reservation in Colorado where you could not only cultivate it and sell it on the tribal lands, but cultivate it and then distribute out to, you know, any number of dispensaries in Colorado. I think that would present a large number of regulatory issues, you know, potentially at the federal, state and local level. But it’s a conversation worth pursuing. Where it will go, we’ll have to cover that at the yearend review in 12 months I guess, but it’s a very exciting prospect for sure.
Matthew: Go ahead Alan.
Alan: I’ve done some research on that. I’m actually going to take the under in terms of the potential there right now. I think it could play a role in some states, you know, like Jay just mentioned in Colorado where it’s already legal. But the fact is from what I’ve determined the Indian tribes have to follow federal law and state law. And the federal law right now it’s not legal. That was just a Department of Justice interpretation or administrative letter. And as we know that Department of Justice is living on borrowed time right now because we’ll have a new president no matter what in a few years. So to go against state law is going to be a big challenge. I think it was one of these stories that just popped up out of the blue, and it sounds very promising, but I think there’s a lot more exciting things going on in that story.
Matthew: So just to help me understand what the tribal land opportunity and the potential problem is is that potentially the tribal lands might not have as much work to do satisfying certain regulatory requirements because they’re in a sense they’re island within a state and they may be able to do things a little bit easier or on a larger scale or maybe perhaps with a little less oversight. Is that what you’re thinking, Jay and Alan, that that’s what some people are saying the opportunity is?
Jay: Well I think all those things are possible. Let me give you an example. I’ll just use Colorado as an example because I live here and this is where we started our business five years ago. It certainly might be possible for a Colorado Indian reservation to begin to cultivate vast amounts of cannabis flower, but you know how is our state regulatory agency, the MED, how are they going to feel if, you know, the dispensaries begin to purchase from the Indian reservation. I don’t think any dispensary owner would put their license in jeopardy if the state of Colorado did not approve. Then there’s of course all the testing requirement, inventory control and tracking requirements. I think it will be very messy, but again I think it’s an idea worth pursuing and developing and you know seeing where it goes.
Alan: I’ve been tracking this whole concept for a while, but my thinking was it would play out in Canada where they have the federal system and there’s already, I think they call them aboriginals, they’re not Native Americans, kind of a weird term. But I think there’s a bigger likelihood that some of the tribes up in Canada are able to secure a license with Health Canada and for something really big to happen in the United States.
Matthew: Now Alan turning to Nevada, I know you follow a few companies there that are doing big things. Can you tell us what happened as far as Las Vegas granting licenses and who you think will benefit the most from that going forward?
Alan: Sure I know Jay probably can weigh in here too. He’s more expert about this than I am given he’s consulting. But from my prospective, so I’ve been watching this. I have to say, this has been quite remarkable, the amount of transparency from the local level. I’ve watched several county and city hearings that have been… they’re recorded but there are also live web cast on the internet. Very transparent process and as I mentioned earlier we’ve seen some public companies get involved in this process. And the state really tried to avoid some of the problems that have been dogging Massachusetts which still isn’t up and running yet despite the fact that it should have been more than a year ago, if not even longer. So the whole process has run into some problems. You know, I’m not going to point fingers but I will say this. The patients are going to lose.
So there will be some delays in Nevada, and there’s a lot of uncertainty right now about the full number of licenses, but it’s going to move forward. This is exciting to public company investors because there are a couple, actually there’s more than a couple because there’s some lab plays as well. There’s a handful of companies that are publically trading that are involved in this process. Nevada has reciprocity, meaning that anybody that holds a card in another state that comes to Las Vegas on vacation will be able to access these dispensaries. And so it’s going to be a much larger market than you would think based upon just the local population. On top of that, it’s pretty evident that if not in 2015, certainly in 2016 Nevada will be legal. So right now Colorado is the king of cannabis, and it probably will remain so, but I bet you Nevada can give it a run for the money.
Matthew: Jay how about you? What do you think about Nevada?
Jay: Yeah, you know, Nevada is clearly going to be the next great state in the cannabis industry for a lot of the reasons that Alan just mentioned. The reciprocity with other medical states is going to be big, certainly with California being right next door with their one million or so patients. But what’s also important to understand that I don’t think may people do understand is the folks in Nevada over the last few months put forth a petition drive to get legalization on the ballot for 2016. They have to do it that far in advance. And they got the votes that they needed. So if something does not happen legislatively in Nevada in 2015 in terms of full on legalization, it will be on the ballot in 2016. Now I can tell you this. The republicans who currently control things in Nevada, they are very interested in taking care of this issue before the 2016 election for obvious reasons. So don’t be surprised if you see Nevada legislatively pass recreational legalization in 2015.
Matthew: Ah they want to get credit for it is what you’re saying.
Jay: Well they want to get it done before the issue brings out a larger number of democratic voters in 2016, younger voters potentially.
Matthew: Now staying on Nevada for a second, Jay, how many licenses were granted exactly, and do you think that… how do you think the number of licenses that were granted will affect the supply of cannabis that comes onto the market initially and then down the road? Because it was kind of a lot wasn’t it? Is it in your mind?
Jay: Sure if you break it down between dispensary and then cultivation and infused products production, the original state law only limited the number of dispensary licenses. That limit by law was a total of 60. For different reasons, some disparity between local approval and state approval, that number was going to end up being between 40 and 50 would be my guess. Probably closer to 50 to start. Now they were very very generous with cultivation licenses and infused product licenses. Of course there were really no limits, and almost everyone, every team who put forth an application received a license. Now clearly there will be a number of those groups that just don’t have the business wherewithal or the capital to execute, but the majority of them will. Will there be an oversupply of cannabis in Nevada? I just have a tough time believing that there will only because, you know, we’ve been at this now in Colorado for years and we have yet to really have an oversupply that really greatly drives the price down. So even with a large number of cultivation licenses, I’ve got to believe that things are going to be okay. The industry will develop, and I don’t think there will be too big of an oversupply.
Matthew: Now switching gears. Alan you’ve probably heard about the Marley Natural announcement from Privateer Holdings in Seattle. Can you tell us a little bit about that and your thinking? Is this the next big brand of cannabis?
Alan: Yeah it’s too early to say. Obviously it’s a great name, and I have a lot of respect for Privateer. I think most people are familiar with Leafly and come on, and this is actually their fourth area of focus. I think the bigger point, Matt, is that we don’t have brands yet. I’ve been watching the Pot Barons of Colorado. It just ended last night, six episodes. And that was one of the big takeaways. Everybody wants to be the next big brand. And it takes a lot, and the laws right now make it very difficult. For instance, listening to Tripp Keber, who obviously wants to be one of those brands. I think he said it takes $5 million per state to set up the license, you know, the production for the licensees that they want to use. So it takes a lot of capital. So we’ll see if Marley ends up being that brand. There are several others that are front runners, but it’s going to be a tough fight I think as long as we have federal illegal, you know, federally illegal makes it very difficult to establish these brands.
Jay: You know I have some strong feelings on that as well. Guys, and again I’m a big fan as well of what… a big fan of Privateer. I think Brandon’s doing a great job. He has over the last couple of years, but you know I’m certainly a fan of Bob Marley. I used to spend time in Jamaica as a kids and certainly smoked plenty of ganja back in those days. But I mean let’s face it, you know, the industry needs some fresh brands. You know you can only go so far promoting, you know, Bob Marley, Cheech and Chong. I think the industry is ripe and the consumers want some new brands. And I think we will see the start of that of some new brands being developed certainly in 2015.
Matthew: Maybe a Martha Stewart brand?
Jay: You never know.
Matthew: Now Jay you have some interesting ideas around greenhouses versus indoor growth. Can you tell us how you think about this and how the general public should start to maybe shift their opinion of growing plants indoors?
Jay: Sure, I don’t even think they’re really interesting ideas. I think it’s just getting back to basics the way horticulture, the way plants are grown in the world. Now, you know, all these indoor grows, these warehouses, you know, our first grow five years ago was certainly in a warehouse and a lot of them still are today because that’s really where the industry came from. Not from warehouses but from people’s basements, spare bedrooms or garages. And you know, growing indoors was where a lot of this had to be grown over the last 75 years because it had to be hidden. It was illegal. In a lot of the warehouses today in Colorado some of the indoor warehouse operations that are touted is the best operations in Colorado are really just, you know, great big basements. There’s a lot of unnecessary technology. There’s a lot of energy used on lighting. Then of course the light creates heat so we have to use more energy to provide cooling. It’s just not sustainable. And there are larger, more efficient greenhouse operations being built today. Some of them are in operation today in Colorado and there’s certainly many greenhouse operations operational in California and probably a couple of other states.
Indoor growing is just not sustainable. And if you think about it objectively, what else do we grow in a warehouse under artificial lighting? I cannot think of a whole lot except for maybe micro grains. You know I will make a bold statement here today on CannaInsider. The majority of these indoor warehouse grows in Colorado, I just don’t think are going to be around in the next two to three years only because they’re just simply not going to be able to compete economically with the more efficient greenhouse operations. You know we stumbled into this as we were growing our consulting business 12 months ago by hooking up with a gentleman who has been in the horticultural industry for 35 years. He had a PhD in horticulture, worked with some pretty big companies, consulted all over the world. And we began to learn from him that really cannabis is just another plant. It’s certainly unique in a lot of ways, but I think we’ll see in 2015 more traditional horticulture coming into this industry.
Alan: I’d add to that Matt or I’d actually ask a question towards Jay. Isn’t the move towards more extracts which are used for either, you know, direct concentrates or for edibles. Isn’t that going to hasten that move even more?
Jay: Well yeah. You know certainly, I think ideally, Alan, for producing oil I think eventually we’ll want to grow cannabis in fields if you could, you know, clean it up for the oil extraction process. But you know, efficient cultivation of cannabis is only going to drive cost down. It will certainly drive the cost of oil down. So yes I think greenhouse growing is absolutely the way to go especially if you’re just going to turn it all into oil and extract.
Matthew: Now looking back on the year in investing, Alan, what are some of the companies that really stood out? Maybe pick an MVP, and then if you could go back in time to January 1st, which company would you have made the most money in if you put $10,000 in?
Alan: Yeah the MVP is easy. I think GW Pharma is a company… I think we can argue maybe about the valuation that in terms I always ask my subscribers, do you trust the company and are they moving forward. And unfortunately for the 250 or so companies I’m tracking, the vast vast majority I’d have to answer at least one of those questions no. But GW Pharma, I think almost everybody would say yes, but it’s expensive. And so for your listeners that don’t know GW Pharma is a UK company, and they really… I would award them MVP this year because while they were talking about childhood epilepsy and their approach to it, they really pushed it this year and it’s almost a miracle what’s going on. And they started a clinical trial with the FDA, and we could be within two years of these… I mean I don’t know if you know anybody with childhood epilepsy, but the treatments are terrible, the symptoms are horrible and we need this to happen. And to have it happen in a way where we can get doctors on board, and that’s the way GW Pharma’s approaching it, you know, through the FDA.
I think this will be one of the greatest stories ever for cannabis quite frankly and it’s playing out right now. After that, it gets a little bit rougher to identify companies that we can feel really, really good about. To answer your question specifically which company could you have invested in at the beginning of the year. I don’t even want to answer that because quite frankly I don’t have the exact answer. There’s a bunch of what I think are not very good companies that had great years. There’s also some companies that I think are okay that didn’t have such good years. So there are many companies that are still up a lot from the beginning of the year Matt.
Matthew: So March 18th though that was the…that’s when it really just kind of all exploded and it’s just kind of been all over the place since then, but has gone down.
Alan: No it hasn’t been all over the place. It’s been death by a thousand cuts I would say. Unfortunately it’s been, you know, it’s the best of times and the worst of times. And at the beginning of the year I was so nervous and cautious and you know, I guess people hear what they want to hear. I wrote a few articles about it, and it wasn’t sustainable and it brought in people. And I know we’re seeing this in the industry as well. When there’s a lot of money to be made quickly that leads to short cuts and the wrong type of activity quite frankly. And so the rest of the year it’s been trying to correct. I mean I don’t think that you can make the case that penny stocks are a great place to be. Unfortunately that’s where our industry is right now because of the banking laws and all sorts of stigma issues. Whatever the reason we have to deal with what we’re dealing with, but unfortunately even though the prices are, you know, essentially unchanged, some are up, some are down from a year ago. It’s not like people can invest in the space and think that they’re investing in blue chip companies. We’re not there yet.
Matthew: Now you mentioned banking, Alan. Jay what do you see happening with banking in 2015?
Jay: Well Matt I have been predicting and hoping for changes in the banking regulations for five years. So I don’t want to predict that it’s going to be fixed in the next year, but clearly things are heading in the right direction. In Colorado we are supposed to have a credit union opening up in 2015 and it’s going to cater to the cannabis industry. I don’t know the details on that, but I am actively looking to find out only for our own in house and our client purposes, but it’s a big problem. It’s shocking. I know of two or three businesses and they don’t even touch the plant. They’re ancillary businesses to the cannabis industry that just had their accounts shut down last month. So it’s still a problem, and gosh I can’t wait for it to be fixed.
Alan: Jay I tried to open a bank account. I don’t touch cannabis. I don’t, I mean I’m saying my business doesn’t touch cannabis. I couldn’t open a bank account because I used the word cannabis. I mean it’s ridiculous.
Alan: Hey Matt I was in.. well we were all in Nevada last month, and I thought one of the most interesting presentations was by the CEO of First Nevada. Is that the name? No, I’m blanking out on the name, but Security, First Security, sorry I don’t remember the name. But there is a bank in Nevada that obviously there’s no business open yet there, but when it’s open there will be banking in Nevada. And this is really exciting. One of the takeaways I got from his presentation, he’s kind of a trailblazer. So he’s opening all of these accounts, but nobody’s doing business yet. And so if they don’t get shut down, then it’s a go. And they are a state licensed bank. They’re not a federally chartered bank. But he said in his presentation at the conference that for the banking system to really get fixed, we need to see cannabis rescheduled. So that’s something to look out for.
Matthew: Now Alan there’s some clinical trials going on in terms of marijuana as an actual medicine that we would kind of think of as a medicine that a doctor prescribes. Can you tell us a little bit about that?
Alan: Yeah, you know, I think this is one of the most essential things for the industry. I’m actually working on something right now for year end. We need medical marijuana to be more medical. And this has to do with not just like you walk into a dispensary and it doesn’t seem like it’s medical, but it’s also, it goes a lot deeper than that. It goes to standardization of product. It goes to delivery mechanisms. No other medicine in the world is smoked. And maybe this is the exception. But we need to see clinical trials. We need to see proof. Even though the anecdotal evidence is clear, we need to see this done in a way where doctors can feel more comfortable about prescribing cannabis to their patients. This will help all the states where we have legal cannabis or medical marijuana right now. It will also help states like mine, Texas, or the others like where we just missed in Florida. When they have that evidence they will be able to move forward.
One of the travesties this year was Dr. Sue Sisley’s work on post traumatic stress disorder. This was a project that was funded and ready to go in the University of Arizona. There was some politics and they fired her. Recently she just received a $2 million grant. This is incredible. It was from the state of Colorado which is really nice. The recycling, reinvesting into the industry. The problem is and I just communicated with her this weekend, she can’t get the cannabis. In the United States there’s only one place to get marijuana for your studies and it’s from NIDA, the National Institute on Drug Abuse which is kind of ironic. They’re not about promoting marijuana research. And they have been stymied by NIDA so far, even though NIDA approved it in June after the March application. So hopefully that goes through. I think PTSD, I mentioned childhood epilepsy earlier. These are things that I can’t imagine anybody not wanting to help these patients. The veterans are a primary audience there. These people, whether it’s pain or trauma, psychological stress that they come back from after fighting on behalf of us, we know that cannabis can help them. We need to study it. I’m kind of excited about this. I think we’ll see more of this next year.
Matthew: Jay switching gears to hemp. You know hemp doesn’t get as much attention or the spotlight like cannabis does, but this Omnibus Spending Bill that went through looks like there’ll be even less enforcement on hemp. But in particular in Colorado how do you see that helping the state? How do you think hemp is going come into play in Colorado?
Jay: Well, you know, I know as of two years ago growing hemp became legal in Colorado. I am not a hemp expert. I’m not very involved in hemp production right now. But I can tell you this much, Matt, we’re the only industrialized nation in the world that does not grow its own hemp. And that’s quite shocking especially with all of the uses that we could, as a nation, with our ingenuity what we can do with the hemp plant. And that’s beginning to happen now. What do I see in it for Colorado? I see Colorado becoming the national leader in not only the production of hemp, at least for the time being. I think there’s probably better areas in the nation to cultivate hemp, but right now if we’re it and there’s other states that are following on our heels as we speak. Once we begin to process the hemp and begin to make products from it, you know, we’ll probably have a short window where we could establish ourselves as a leader.
Matthew: Now that plays right into the next question. Where do you see Colorado? What did they do right in 2014, and what did they get wrong overall?
Jay: Sure, well, I think the most important thing that we did right in Colorado in 2014 was January 1st of last year? And I’ll tell you this, the Czarkowski family was up early that morning, and we all travelled down to Denver. It was about 6:30 in the morning New Year’s Day, and we went to the 3D dispensary just because we wanted to be there to witness the first recreational sale and we did. And what was very telling and very important about that first recreational sale it was to a US Army veteran who suffered from PTSD. And this young man was not able to purchase cannabis legally because PTSD was not one of the accepted medical conditions in Colorado to become a medical marijuana patient. So he was there day one to purchase cannabis to treat his PTSD. The biggest thing Colorado did right was to make that big leap and become the first place in the world where people could by cannabis legally. That was huge.
Matthew: Wow there’s probably a lot of excitement there that morning I would imagine.
Jay: It was very exciting. I had no idea until we pulled up and there were probably no less than a dozen satellite news trucks parked out front. And there was so much national and international press that this young Army veteran, he had to actually make two purchases because they could only fit about half of the press in the dispensary at a time. So he kind of went through two purchases so that all of the press could have a chance to photograph him and everything else. Now what has Colorado done wrong and, you know, where do we have to go? I mean we’re pioneers in this. So do we… does Colorado have it all figured out, of course not. We have a long way to go, but Colorado has taken a lot of steps to improve things this year. I think one of the big improvements has been on the labeling of edibles and more accurate dosing, more accurate labeling. That’s a big step in the right direction. There’s still a lot of work to be done.
Alan: From the outside it seems like the government and the industry are working very well together Jay.
Jay: For sure, you know, I think the industry and the state regulatory board are working well together. I think there’s a number of local municipalities that are very supportive of the industry, and there’s also a number of local municipalities that are quite hostile to the industry even now after five years of medical. But the state as a whole, you know, they are, you know, enacting the will of the voters.
Matthew: Yeah. Now looking ahead to 2015 and I also want to lump in 2016 because that’s just such a huge year. Alan why don’t you tell us what you see coming down the pipe for 2015-16.
Alan: Well we didn’t really touch on Canada too much.
Matthew: Yeah let’s touch on Canada.
Alan: Well so that would be part of my response. I think when we talk about things like this usually people are focused on which state is next. And I think we haven’t talked about Canada and I’ll do that in just a second, but also California. And it’s interesting because Jay and I are both very bullish on Nevada but that could change in a heartbeat if they got things right in California. That would be one of the most amazing things, and it’s possible that they could get some competition. You know Jay laid out a case where maybe Nevada goes legal in 2015. That may push California in 2016. So I think we are down the road already and there’s no turning back. And so we’ll see some of these states play out and obviously California would be a big one.
I think Canada is really interesting and most Americans aren’t really paying attention to it. But they have a federally legal marijuana program, medical marijuana program up there, and you know there’s large scale production facilities that are being constructed right now. It’s not a perfect system at all and it’s been off to a slow start, really need to go there, but certainly a little bit of a disappointment in 2014. But I think that’s going to really come on strong and they may move towards legalization in Canada in 2016. They have, there’s some federal election there and that’s already an issue that’s being discussed. So I think that could definitely be something to keep an eye on. I’m not looking for any sort of progress on federal legalization, but I am hoping that in 2015-16 we see potentially rescheduling or at least a discussion about that. There were hints this year of conversations between the FDA and the DEA, and I think that would be huge if we could see that next year. I think that would help unlock the banking problems as well.
Matthew: How about you Jay?
Jay: Well in 2016 we’ll certainly see a number of states legalize cannabis. And like Alan I also love the program in Canada, the first federal program. In terms of states that I think are going to go in 2016, I think a lot of people are betting on Arizona, Nevada and a number of New England states as well as Canada. One thing that I like about New England is that it’s a small area. So if one state in New England, I’m going to use Rhode Island as an example, Rhode Island is looking pretty good for possible legalization in 2015. Well what is that going to mean for the medical program in Connecticut which is quite limited right now when people could just travel across the border. You know drive 30 to 45 minutes and purchase cannabis legally. I think as more states begin to go legal it’s going to put a certain amount of pressure on other states to follow suit.
Matthew: Yeah that makes sense. But you know one thing that intrigues me is that some states, Jay, just don’t get it right are just doing it. You know we gave Colorado a good score here overall, but some states are just doing a terrible job and they’re not creating functioning markets. I mean will they really feel that pressure to change as the other states, you know, turn up the heat a little bit or is it just they’re so mired in dysfunction that there’s no hope?
Jay: Well I don’t know if it’s dysfunction, and I hate to use the word ignorance, but let’s just say a lot of people in a lot of places are still learning. You know, whenever we move in to a new state and we begin to compete for licenses, you know, it’s new. It’s new to a lot of people and a lot of times what people don’t understand is scary and we run across that a lot. You know I make the joke out at Massachusetts, certainly in Connecticut when we’re working out there competing for licenses. You know, everywhere we went the local government, local officials, you know, you would think that we were working with plutonium. I say that word all the time, but you know you would think that we’re dealing with plutonium. But as people begin to get comfortable with this, which let’s face it, in a lot of places now people are beginning to get more comfortable with this. And as people become more comfortable with this plant and they realize that not only is it a lot less harmful than alcohol, but there are also tremendous benefits to its use, I think we’re going to see government officials in a lot of states and local municipalities begin to pass laws to grant their citizens access.
Alan: I think that’s really well said. I think it’s scary for a lot of people. And we see a lot of these programs. Jay, I’m sure you’re very critical of them like New York State what they just proposed, very similar to Minnesota. Highly, highly restrictive, not good enough patient access. When we do see a state come on it takes longer than we’d expect. Everybody’s worried about who’s making money instead of helping the patients. I think over time this all gets better.
Jay: Sure. It’s a lot of stepping stones. I’ll use Illinois as an example only because right now in terms of a state and you know, we’re supposed to hear any day now, possibly this week on who won licenses in Illinois. Talk about a restrictive program. To become a patient in Illinois, you have to go through a background check. You have to be fingerprinted. Now you can go to the pharmacy, get a giant bottle of Percocet and drive home with that and a bottle of Jack Daniels, but if you want to get some cannabis, I mean they literally, you know, treat you like a criminal. But you know, keep in mind the reason that is is because when it was time to pass that law in Illinois, and they needed to get the votes that they needed to make it happen, they had to give these concessions. It’s a stepping stone. Do I think the program in Illinois is going to be that restrictive in, you know, three or four years, god I would think absolutely not, and the same with Minnesota and New York.
Matthew: Now Alan and Jay too, you were both at the Marijuana Business Daily conference in Las Vegas this year. Can you just king of paint a picture of what it’s like there for the people that might not have gone, and how it was different from last year, how much it’s grown or changed?
Alan: I’ll take that first. I wasn’t at the one from the year before, but I attended a lot of conferences this year. And it struck me for the first time, at least in my observation, that one of the big problems for this industry has been new entrance versus people who are more entrenched not getting along. And it seemed to me that everybody was getting along and realizing that both those camps bring something to the table. So that was one of my major takeaways. I was able to obviously review the statistics from a year ago when the number of people was, you know, more than 100 percent I believe. So obviously the industry, it was a great sign for the industry that that many people were willing to take the time to participate. But my takeaway was really just maybe more of a hope for better cooperation among the players in the industry.
Jay: You know, it was only 25 months ago that MJ Business Daily held the first true business conference, and that was in Denver and there were maybe a couple hundred people there. That’s when I met some of the first folks that we began to work with in Massachusetts. I think I remember that was the event I met Steve D’Angelo for the first time. It was a small event. The following year which was, you know, 13 months ago in Seattle it was at a horse race track outside of Seattle, and I think there were about 500 to 600 people there, and it was a good event. You know, this year I don’t know what the final was. Was it 3,500 or 3,600, and I think more people that wanted to get in, I think, from what I understand from talking to some of the security folks, 40 to 50 people that attempted to sneak in without a ticket and that were eventually escorted off the property. It was crazy. You know people came from all over the world to the last business conference in Vegas. You know, I don’t mean to shamelessly promote anyone, but I can tell you this, a lot of different businesses are coming out of the woodwork putting on conferences. You know, I feel that the MJ Business Daily was the first, and I feel like they just do such a great job with trying to do what they can to, you know, come up with a good board of speakers without any favoritism, the people that are their friends, to really put forth good content. I know next year their fourth annual conference is going to be back in Las Vegas. And god if I were to make a prediction of attendance, I’m going to say it’s going to jump from 3,500 to 10,000.
Alan: I thought it was in Chicago actually in May.
Jay: They’re doing something different. They’re going to have a mid-year conference this year. So they’re going to conferences now… the big one is still going to be in Las Vegas in November of 2015, but they’re going to have a mid-year conference in Chicago in May.
Alan: Got it. Thanks for clearing that up.
Jay: Yeah and they were originally, when they came out with their marketing for the Chicago conference, they said that they expected about 1,000 people. But I can tell you this, you know, my company is going to be one of the sponsors. And I received an email from them a couple of weeks ago where they tripled the amount of event space. So, yeah, you know, what does that say for attendance, I think they’re probably going to end up with a lot more than 1,000 people in Chicago.
Alan: And kudos to them. They stepped it up. They brought in a professional from the outside who’s been working with them since, I think, since May. And he’s done a really good job. That’s great for the industry.
Jay: Yeah they’re doing a good job.
Matthew: Well in closing, Alan, can you tell us where listeners can learn more about your work at 420 Investor and elsewhere?
Alan: Sure. So www.420investor.com is where I can be found, and I’m pretty known for that. And that’s our community focused on publicly traded stocks. And this year I also opened another community called www.420funders.com. It’s evolving a little bit. The primary focus there, Matt, was to connect… there’s still a huge problem. A lot of people that want to invest in the industry and a lot of private companies that are seeking investment they can’t connect. And so that’s one of the answers that I have to create a way for them to connect. But I’m also taking that concept one step further. Recently I started focusing on some of the people in the market who are investing on behalf of others like Privateer. ArcView doesn’t actually invest on behalf of others, but I’m trying to bring a level of outside review to some of these entities like Poseidon Asset Management as well or Electrum Partners. So I’m going to be hopefully spending some of my time helping people who want to invest in private places, find people that can help them or also invest directly if that’s what they choose. And that’s www.420funders.com.
Matthew: Well that’s helpful because I know there’s a lot of investors that would like to find a way to participate but don’t know where to start. So that’s great. Jay, can you tell us a little bit about what CannAdvisors does and how listeners can connect with you?
Jay: Sure, the easiest way to find us is go to www.thinkcanna.com, like think about it, t-h-i-n-k. And of course when spelling canna, please don’t forget to put two n’s in the middle. I think we can also be reached through www.cannaadvisors.com. But we have been in the industry since 2009. I like to describe us as a group of battle scar veterans from the early days here in Colorado. And we have been competing for and winning competitive licenses, building operations and managing facilities since 2009.
Matthew: Well Alan and Jay, thank you so much for coming on CannaInsider and doing this yearend wrap up. I really appreciate it, and Happy New Year to you both.
Alan: Happy New Year to both of you.
Jay: Matt, thanks for having us, and Matt and Alan Happy New Year.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us firstname.lastname@example.org. We would love to hear from you.
After perfecting alcohol home delivery with a very convenient and easy to use app, Nestdrop.com turned their focus to cannabis home delivery. In this interview with Michael Pycher, Co-founder of Nestrdop we’ll learn how you can enjoy home delivery of alcohol and cannabis.
In this interview you will learn about:
– Michael’s background as a commercial director
– Where the idea for Nestdrop came from
– How Nestrdrop works
– Where you can use Nestdrop
– How you can order alcohol with Nestdrop
– Why the City of Los Angeles is trying to shut down Nestdrop
– and More
Matthew: Hi, I’m Matthew Kind. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That’s www.cannainsider.com/trends. Now here’s your program. What is it like to create a mobile app that allows users to have alcohol delivered to their home and then pivot to have that same app also include medical marijuana? We’re going to find out the answer to that question with the founder of Nestdrop, Michael Pycher. Welcome Michael.
Michael: Good to be here Matt.
Matthew: Michael can you give us a high level understanding of what Nestdrop is exactly?
Michael: Of course, happy to do so. Nestdrop is the first mobile app in the country to allow patients to go about finding a local collective, joining it, browsing the medicine that’s available to them and place a request for an order within two or three minutes, and then having it delivered to them in an hour or less. It also allows them to, in the Los Angeles area, find alcohol near them as well.
Matthew: How did you get started in this business? What’s your background?
Michael: So I actually don’t come from a tech background. I was a commercial director for a number of years in Los Angeles shooting a number of different lifestyle commercials. And after some time I realized I wanted to step into a space that I could start from scratch and build something for the long term, and I wanted to create something a little more permanent. And so I started to look at other things outside of commercial directing. And my business partner and I, we met overseas, and we grew close and we saw that there would be, you know, what’s the technology that can be created that there’s a need in the market. There’s a market and there’s something that we can provide. What can we bring that isn’t there yet?
And so we initially stepped into alcohol because you’re allowed to bring alcohol to someone’s doorstep, and we wanted… we thought it would be safer for people to be able to get the product rather than having to go out and get on the road. You know, this isn’t an end all be all to drunk driving, but it helps them avoid it. It helps them not have to do that. So we saw there’s a lot of value there, and so we went for it. As we started to develop that, we would, you know, we meet new people. And we heard of a story of one of our partners in the company who has a close family friend who was suffering from cancer. And she has morphine and the morphine doesn’t work anymore, and you can only take so much morphine and the chemo made her incredibly nauseous, and so she started looking towards CBD to find some sort of relief. And when we heard this story our understanding of what marijuana could do for people started to change. And we educated ourselves. We looked at the market. We understood the space. We looked at the medicine itself as to whether it’s viable, whether it’s actually helping people. And the more research we did, the more we looked into it, the more we became ardent believers. And so we decided if we already have this technology for alcohol, perhaps we can take the same thing we created there, and we’d been doing deliveries for a while with alcohol already, maybe we could apply that to medicinals.
And so it was a very quick transition. It was a matter of getting on our first vendors, reaching out and finding people who wanted to participate with us. And once we had that the technology was already in place, and we were able to get medicinal marijuana ramped up relatively quickly, and I haven’t looked back since.
Matthew: You know, I just want to rewind a little bit here because you got traction really quickly on the alcohol piece type, and I feel like it was a clever way that you did it, a very savvy way. Can you talk a little bit about that?
Michael: Well we realized that we’re not going to be able to tell people to go out there and party and get drunk while at the same time wanting to send the message like be responsible, be smart about it. So we took an approach that was sort of like the cool older brother. Like we know you’re going to have fun. We know people are going to drink. We’re not going to pretend as though like you shouldn’t do that, but if you’re going to do that, just do it smart. Like please just be smart about it. So we put out a little bit of messages, a little bit of advertising out there to get the word out. But then what we found was strongest was the users, the customers really liked our product. They were really happy and they just started… we didn’t really even get that big of a marketing push going, but people started talking about it and we like to believe that just because we put a really good product out there. It doesn’t cost them. It’s free deliveries. It doesn’t cost them. There’s no markup on the product and it’s quick, and we felt as long as we’re putting out a product that did what it said it did and didn’t cost the customer an extra arm and a leg, we hoped people would gravitate towards it and we were fortunate enough that they did. People would post pictures on their Instagrams, post pictures on their Facebook. Oh, look at this, alcohol just came over here. It’s the coolest thing. And fortunately for us putting the good product forward, people were happy, people, were satisfied, and they would tell their friends about it. And that happened to spread the word around. So we got really lucky with that, that people were actually really happy because word of mouth we feel is the best kind of publicity you can get.
Matthew: I want to dig into the medical marijuana aspect in a minute, but just one or two more questions on the liquor piece. Have you become like a liquor retailer or do you go to the local, closest liquor store closest to your customer and then pick up what they want and take it over?
Michael: So we’re actually just the means of communication. We’re the technology, and that’s all we are.
Matthew: Oh, got it, got it. Okay interesting. That’s the best place to be. Okay. And what area of the country do you currently serve right now?
Michael: So right now for alcohol we currently serve most of metro Los Angeles. We’re spinning down to Marina del Rey and all the way up to Tarzana. For medicinal, medicinal marijuana we’re also in all of metro LA. Now we’re in San Francisco, San Jose, Oakland. We’re going to be coming to Oregon soon. We have Temecula, Oxford, San Diego and Orange County coming very soon as well. So the medicinal marijuana is spreading very quickly and very aggressively which has been wonderful. Now we just have to keep up with that with our alcohol side of things.
Matthew: So let’s say I’m a medical marijuana patient living in Southern California, and I’m listening to this interview right now. I have an iPhone. Is it iPhone or Android that you can use Nestdrop on?
Michael: As of today you can only get medicinal through Android. We’re hoping that within three to four weeks it will be available on iPhone as well. Right now unfortunately iPhone has a very stringent stance on medical marijuana which we’re trying to convince them why this is important that patients that have iPhones also be able to access this. But if you have an iPhone, you can get alcohol.
Matthew: Okay. So can you walk me through step by step how someone with an Android device and soon iPhone, what do they actually do? How does this process work?
Michael: Of course. So they’re going to go log into the app and they’re going to create an account. At that point we have to find where they want the delivery to go to. So you can either use your current location where the GPS finds where you are, or you plug in an address that you want it to come to. At that point we know which collective to connect you to. And so we know this is the collective that we believe to have the best product and this is closest to you, and so we’re going to show you their inventory. If you find something you like, if you find the medicine that you’re looking for, you will then be prompted to agree to the terms of joining that collective and you’ll have to upload your documentation, your photo ID and your medical recommendation of doctor’s recommendation.
Once you upload that material it’s encrypted. It only lives locally on your device. It’s not sent into the cloud or anywhere. You select your medicine and then you can check out, and you place your order. That process, if you know where you’re going, the process can take about two to three minutes. Then the collective will review your documentation, make sure that everything’s legitimate and make sure it hasn’t expired, make sure they can clearly read everything, and if all is good, they will let you join that collective and carry out and fulfill your order. If something’s wrong, they’ll cancel and they will let you know why, but the process is rather intuitive. We try to walk you through it in the app, and it’s the fastest way to be able to get your medicine. We have patients all the time that tell us they’re either immobile or they can’t drive, and the ones who need it the most to be honest are the ones that can’t get to dispensaries, the ones that don’t have the option to easily get outside of their home. And so we’re really happy that it’s so easy for them to just go on the phone and within minutes have the medicine brought to them.
Matthew: So if I’m a prospective patient, but I don’t have a card yet, how does that work? Is there suggestions of like doctors near me that see prospective medical marijuana patients that have chronic pain or some other ailment?
Michael: Coming very soon. As of today, no, but we’re aware and we’re working on it and we hope to have that available around the corner, hopefully within the first quarter of early 2015.
Matthew: Now I’m sure this answer is somewhat changing all the time, but what percent of your deliveries are just medical marijuana? What’s just alcohol, and is there both?
Michael: Certainly. So as of right now because we’ve been around for much longer with alcohol, we only launched medical marijuana a couple of weeks ago, and medical marijuana is only available on Android as of late. The bulk of our orders are alcohol, but the medicinal is picking up very fast and very aggressively. And we’ve been… it’s catching up pace a lot quicker than what we actually were anticipating. So now it’s just a matter of us keeping up with the pace of the growth. But yeah, the bulk of the orders I would say, right now, I would say 75 to 80 percent of the orders remain to be alcohol just because medicinal marijuana is so new.
Matthew: Well it’s a good thing you named your company Nestdrop and not something related just to alcohol because you have a lot of flexibility there.
Michael: We knew early on that we were going to be looking at other verticals.
Matthew: Okay good.
Michael: We didn’t want to make it too specific.
Matthew: So do the drivers, do you know if they’re medical patients themselves? How does that work? Because it can’t be just any ole driver can it?
Michael: Correct, no it cannot be any ole driver. Every driver is a medical patient, and they’re a medical patient that belongs to the particular collective that they’d be servicing. We’re not trying to stretch any laws. We’re completely compliant with all the laws, and we’re adamant about that and we’re very strict about that. So if an order gets placed, you can’t just call up a courier. You can’t just like, hey buddy can you run this over there. Specifically a collective can only bring the product to another person within the collect via a member that is also a patient at that specific collective. And so we facilitate that, and we went through lengths to make sure that that was what was set up. So every driver is a patient.
Matthew: So I can see the incentive for a dispensary to want to sign up with Nestdrop because hey I’m going to get more business here. I don’t have the technology to do this myself. I may not have the app name recognition, but to get an idea of how much more business a dispensary might get, I mean, is there any idea or anything you can… any information you can give there?
Michael: Of course. As far as we don’t know how much we’re adding on to their business because we don’t inquire like what’s the business now and this is how much we’re going to grow it. We want… that information is their own private information. So I don’t know if we’re doubling, quadrupling, you know, quintupling their business. We don’t know. All we know is that if you’re a collective in a specific area, there is probably another 40 to 50 to 60 other people in your area, and it’s going to be hard for you to be able to differentiate yourself from your neighbors. It’s a really competitive space, and you need that extra edge to be able to have the differentiating factor and marketing is that and technology is that. Nestdrop takes care of both of that. The technology and the storefront is already there, and we do the marketing on their behalf, giving them the one up on the competition in their local area.
Matthew: Okay. And again, you’re in different geographies, but do you have an average on how long a delivery takes?
Michael: Yep. An hour or less. On average, we’ve been averaging probably around 35-40 minutes, but we say that it’s going to be an hour or less. And we’ve had actually situations where we got there too soon. The customer had thought we’d, you know, get there within 45 minutes to an hour and we actually got there in 8 minutes and they were still in the shower for example. So we’ve had a couple of time where that happened where we’re calling, we’re not there and the driver leaves and they’re like guys what happened? We’re like, where were you, we were there. We were there waiting for you a while. Like, oh you kind of got here too soon. So it’s kind of a middle ground. Customers expect there to be like a half hour lull in between.
Matthew: That is…I can see where this would be very helpful particularly for patients that are home bound or in hospice or something like this, that’s very helpful. What about the demographics? Has anything surprised you about the demographics for your customers are? I mean you have some sense because you have their IDs and so forth, but I mean is it just this total across the board spectrum? Is there more people of a certain age or what information can you tell us about your demographics?
Michael: So Nestdrop actually doesn’t have access. We don’t see the patients’ information and IDs when they place an order. As I mentioned it’s encrypted and it’s sent in a vault to… a vault that only that collective the order is going to has access to. So their information is kept very private. The only thing that we can see is when a customer reaches out to us and we talk to a customer, and we can engage with them and we know who they are. So when that happens we get a sense of who our customers are or if they… through alcohol, you know, our dispensaries sometimes will tell us yeah it was this kind of, it was you know, it was an older woman or it was a younger guy just to let us know if a situation happened. You know like for example, we got there too soon and the guy was in the shower.
Our demographics seem to be extremely, extremely varied. It’s not what we suspected. There’s older people who are seasoned businessmen who you know, can’t openly… don’t want to openly partake in going to dispensaries and don’t want to openly be out there in the world, but want to be able to use the medicine discretely. We have older women actually who have some sort of, whatever condition is ailing them, that are very regular users because they need pain relief. And alcohol has been so varied. We have collectors. We have people who order regularly for parties or hosting. And then you have like the younger crowd, that you know, they’ll place a smaller order because they have a few buddies coming over. So it’s been extremely, extremely varied which is great. For alcohol it tends to be around the mid-thirties. Males tend to be the most frequent. For medicinals, like I said, we don’t have access to that information so it’s hard to get a gauge on who specifically is ordering what.
Matthew: I don’t know if you saw this, but Amazon filed a patent that for technology that would allow for your order to be placed by Amazon before you actually place the order. So it would be a predictive kind of artificial intelligences that says, okay Michael wants a six pack of Heineken—just using your alcohol example—and you haven’t even thought about it yourself yet. I mean seeing how technology’s progressing, seeing how things are changing. There’s this exponential growth in technology evolution. Do you see this type of thing coming to the cannabis, the alcohol arena? It seems even crazy to pose this question, but it looks like this type of thing is starting to happen.
Michael: I’ve got to say we haven’t hired any mind readers yet which Amazon might have found. But I think it’s important regardless of what industry you’re in. If the technology is coming out, it’s important to stay with the times. So no matter what’s the most latest and greatest, we intend to be able to adapt to whatever the space allows for. And mind you there’s different… we can’t play by the same rules Amazon can because we’re currently dealing with specially regulated products. That means you need to have an ID. You need to be of a certain age. You have to show that ID in order to be able to place an order with alcohol and both with medical marijuana. So we have to follow different restrictions and guidelines that Amazon might not require just because it’s regulated products. But if there’s technology out there can predict an order before it happens, we’re all about it. That’s for sure.
Matthew: Yeah that would be great if that could happen. Like it’s getting around lunch time here in Colorado. Like if there’s some artificial intelligences that knows what I want for lunch before I can think of it, then I would be down with that.
Michael: I would have been down with that for a long time. That would be great.
Matthew: So your focus is California right now. And 2016 might be a huge year for cannabis in California. What do you think is going to happen there?
Michael: From all the whispers and conversations behind closed doors, it sounds like California will join the ranks of Oregon, DC, Washington and Colorado as far as legalizing marijuana. It’s a really opportune time right now to get in the space and establish yourself as a player in the medical marijuana space because we believe, from everything we’ve heard, it seems pretty convincingly that California will legalize marijuana. Again I don’t want to speak prematurely on the issue and I don’t want to presume anything. And so we’re going about operating as though… the same whether it happens, whether it doesn’t happen. But I think that there’s enough education and there’s enough knowledge amongst the everyday citizen, even if they don’t use medical marijuana, that everyone tends to understand that it’s no longer a harm to society, no longer, the perception. There is an economic boost that will come from it. It’s not hurting people. There’s people who genuinely need it, and they are now seeing more of the benefits versus the downsides of having this around. And so with that further education and with less naivety about the subject, we’re hoping that enough people out there would agree. And so 2016 we think is going to be a pivotal year , and we hope it’s going to go in the right way.
Matthew: So this Uber-like technology for a lot of different market verticals has an amazing impact in making our society so much more efficient. We don’t have to… we can share resources much more efficiently. How far do you see this technology going? Are you going to be getting into any other verticals apart from alcohol and medical marijuana?
Michael: We are. We actually have a number of other verticals on the way we’re really excited about coming up very soon that are a lot more… they’re not as controversial as alcohol and marijuana, a lot more user friendly. And we’re really, really excited about those. The technology we’ve created is a platform for people to get these services brought to their door. And there’s a lot to do. There’s a very long term picture that we’ve been creating, and those verticals will be coming in a lot faster than what we initially anticipated because we are really happy with the technology that we’ve created. We’ve worked out the bugs, and we know how it works. So now it’s just a matter of keeping pace. And there’s so much cool things that’s going to come down the road. I mean if you were talking about Ubber five years ago or someone would get into a car of a stranger to get a lift or Air B&B, people would have looked at you like you’re nuts. And now it’s become commonplace all over the world. And so we want to be able to help innovate and help bring these types of technology to people. And we’re the first and currently the only app that can bring you your medicine through a phone, you know. And we want to continue to innovate and continue to have the new stuff because that’s what users want, and if that’s what they expect, that’s what Nestdrop hopes to deliver.
Matthew: And in closing how can listeners learn more about Nestdrop?
Michael: www.nestdrop.com has all the information of what we do, who we are and you get a little feel for what we’re about.
Matthew: Great. Thanks so much to Michael Pycher of Nestdrop for coming in CannaInsider today. Thanks Michael.
Michael: Thank you so much Matt. All the best.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us email@example.com. We would love to hear from you.
Tripp Keber and his business Dixie Elixirs have been highlighted on 60 Minutes and more recently The Pot Barons of Colorado. Tripp is perhaps the most successful and visible entrepreneur in the cannabis space. In this interview you will learn about:
– Tripp’s background
– How Dixie Elixirs was started and how it got its name
– About the innovative delivery methods Dixie is developing for Cannabis
– Why Tripp believes we are in the midst of an exciting social change
– Why infused cannabis products are the future of cannabis
Matthew: Hi, I’m Matthew Kind. Each week I’ll take you behind the scenes to interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That’s www.cannainsider.com/trends. Now here’s your program. If you recognize anybody in the cannabis industry from TV, it is probably our next guest Tripp Keber, CEO of Dixie Brands of Denver, Colorado. While Dixie has a full line of cannabis infused products, they are still best known for their elixirs which are infused drinks. Tripp has been featured on 60 Minutes and most recently as a central figure at MSNBC’s The Pot Barons of Colorado. Tripp, welcome to CannaInsider.
Tripp: Good afternoon Matt and Happy Holidays to you and your listeners.
Matthew: Well thank you. Tripp, can you tell us a little bit about your background and how you got into this business?
Tripp: Sure well, you know, it’s been a fascinating ride, if you will, certainly the last five years have been the most challenging, but certainly the most exciting five years of my professional career. You know, I moved to Colorado. I ended up here in February of 2002, so celebrating, you know, 12+ years of successful living in Denver, Colorado. In 2009 I realized as the development industry, real estate development industry was really drying up, that there might be another opportunity and that was the Green Rush. So, you know, my career has generally been truly entrepreneurially have a high tolerance for risk. So I typically applied that. I’ve had various technology companies back East that were both national and international. Then recently I followed into the real estate development building resorts primarily in the South, specifically in the state of Alabama. And then certainly for the last five years been focusing my efforts solely on cannabis, both direct to the plant as well as ancillary service companies.
Matthew: And where does the name Dixie come from?
Tripp: Well, you know, ironically as I mentioned, we had a resort development company that was based in Alabama. And so some of my original team members, if you will, were also from the state of Alabama, and we named the company really to pay homage to those relationships. And so I never did I think that it would develop such a well-know brand, if you will. And so it really was something as simple as that, just that we had a commonality from the state of Alabama. I was born in Washington D.C. which is technically below the Mason-Dixon Line, so I was comfortable with it.
Matthew: Is Alabama considered the heart of Dixie? That might be a bone of contention, I don’t know.
Tripp: I don’t know. I’m not going to argue it since I grew up in Washington D.C. and now live in Denver, Colorado.
Matthew: Right. Now jumping into Dixie’s product line, can you tell us a little bit about all the different products you offer?
Tripp: Absolutely. I mean, I think Dixie Elixirs and Edibles was known for its flag ship product, Matt, which is that of the elixir. And that was a medicated soda. The media referred to it as a pop soda which technically was accurate I guess, but it truly drove me nuts because I thought we certainly had to the ability to develop something so much more sophisticated. But the elixir is indeed still our most popular product. It is the flag ship. Behind that there are 13 other delivery systems, if you will, innovative product lines give both the medical marijuana and the adult use consumer choice. And those would include edibles, which would be, you know, Colorado Bars and Dixie Rolls and the chocolate truffles. More recently to include now our Dew Dixie Mints which are a sublingual placed in your mouth offering 5mg, a truly low dose of active ingredient THC. And then certainly not to exclude our, you know, various lines of topical. So we have pain salves. We have muscle relief lotions and bath soaps. So all combined at any given time we have generally between 130 and 150 product skews, individual products. And we’re really excited about what 2015 has to offer which will include a minimum of three new delivery systems. So I’m really excited to start talking about those early in the next year.
Matthew: And which of the elixir drinks, which flavor is the most popular?
Tripp: You know, it’s tough to say because it really is based on seasonality. You know, we have our, you know, we started with three flavors in 2010 which were not exactly sophisticated. They were cherry, orange and grape. And fortunately today, four and a half years later, we have a much more sophisticated flavor and taste profile to include Sparkling Pomegranate and Peach. We have an Old Fashioned Sarsaparilla. So it’s difficult to say, but I mean we do some of the all time favorites which are that of the peach and, as I mentioned, the sarsaparilla. But it varies and on occasion we bring in new flavor profiles to tease the market, but really I think the single most popular elixir these is the brand new Dixie One which I think we’ll probably talk about a later, but that is a 5mg, 5 active milligrams of THC with a watermelon cream and it’s just absolutely a fabulous product that tastes delicious.
Matthew: Now that also kind of solves the problem or mitigates the problem of dosaging which is a big problem especially for tourists coming to Colorado who have no idea and tend to eat a whole candy bar or drink a whole drink. Can you talk a little bit about dosaging and Dixie One there?
Tripp: Absolutely. You know, Dixie has been notorious for being extremely conservative with respects to the levels of active ingredient, again THC, across all of our products. I think that’s primarily because the owner and CEO, meaning myself, has never had a real strong relationship with cannabis. And so when embracing cannabis of under the adult use rules here, I was always nervous that we were going to get too much. But, you know, more than a year ago we realized that it was likely that the adult use consumer was going to have a very very different interest and/or relationship with this plant from that of the medical marijuana patient who traditionally was a seasoned veteran and could ingest or enjoy a much higher dose.
And so with that we launched the thought process and bringing an innovated delivery system or delivery systems embracing a low dose. And so in the state of Colorado on dose is 10mg of active THC. We took it even more conservatively now, and so our Dixie One Elixir which is a watermelon cream, offers 5mg. And after about six months of reviews, sort of analytical data, it’s ironically out pacing the sale of the 75mg, our highest dose elixir, by almost three to one. And so I would suggest that this theory that we had, the adult use consumer wanting a lower dose and potentially being able to ingest more products over a longer period of time, just really paid off.
Matthew: Yeah people, I mean, maybe it’s just human nature. When people are eating an edible or having a drink it’s like, do you think they just don’t want to do the math where they’re saying okay I have to drink a quarter of this and it’s already open, and I like the flavor. Is that part of the theory behind it?
Tripp: You know I think so. If you go to a restaurant these days and you look at the portions that Americans are eating, it really is obscene. I think that coupled with the fact that Americans are not necessarily known for their discipline, and you know I’ll take part of the responsibility. These products, the taste profiles are truly superior. I mean they’re quite tasty, delicious if you will, and so we thought it would be prudent to offer obviously a very favorable taste profile, but also a lower dose to ensure that the adult use consumer was not going to consume too much of that active ingredient THC and have a negative experience. And I think you’ll start to see this concept apply to across all of our delivery systems, product lines. And then equally if not more importantly, if you can see other manufacturers follow suit as well. We’re really excited about what that product is going to offer to the state of Colorado’s out of state tourists but also citizens, residents here in the state that want to embrace marijuana for the first time or potentially for years and years to come.
Matthew: Great point. Now just rewinding a little bit, why did you choose to focus on elixirs out of the gate and edibles or infused products? I mean was that something when you decided to get into the cannabis industry that was your focus immediately or did you pivot to that?
Tripp: No, I did it for the simple reason I just wasn’t smart enough. I just did not understand how to cultivate marijuana. So there were really three options, right. You could grow marijuana for medical patients. You could be in marijuana infused products manufacture, or you could be a retailer serving the medical marijuana patient, if you will, the medical marijuana community. As I said, I don’t exactly have a green thumb. If I never grew marijuana, I’d probably be a happy guy. I mean, fortunately we have an incredibly sophisticated grow teams that focus on the commercial cultivation of marijuana. We have a strategic partnership with MedCanna who’s done an amazing job. But you know, as I said, I also didn’t understand really how you could market to, I mean, if you look at the economic or excuse me, the demographics of the medical marijuana patient, included a 23 year old lift operator who potentially had chronic pain which represented about 80 percent of the qualifying conditions, all the way up to maybe a 75 year old grandmother who had glaucoma. I just wasn’t smart enough to figure out how we could actually market to those individuals collectively.
And so we really figured out a way in which that we could develop a product or set of products that would allow us to medicate the masses. And again you know, 4 ½+ years later with 150 products, we’ve done an excellent job giving both that patient as well as the adult use consumer a broad selection of choice to embrace. It’s really paid off.
Matthew: Now moving to Dixie Dust, this is a pretty innovative thing that you’re doing here. Can you tell us how the Dust works?
Tripp: Sure. I mean, the Dixie Dust is really a highly concentrate, excuse me, a highly concentrated connoisseur grade THC. And it’s basically granulated oils, and it can be smoked or vaped. And you know, it’s certainly very popular with both the medical marijuana patient and/or the adult use consumer. To be blunt, on any given day we typically have a backlog because again you’re taking a very very highly concentrated oil and then rendering it into really a solid or a granulated oil. And as we both know, the dabbing community, concentrates community is very popular and growing. And so it’s been an interesting ride. I mean, it is not obviously our core focus because it represents a relatively small percentage of our overall revenue, but those hard core medical marijuana patients have really embraced this product coupled with the brand that they’re comfortable. These products are triple lab tested, and so that gives them the confidence based on the quality assurance, the quality control that Dixie has been committed to for, you know, 4+ years to reach out and embrace these products.
Matthew: Now let’s talk a little bit about CBD. Can you talk about some of the benefits that you’ve seen generally in the market with CBD and what about CBD excites you?
Tripp: Well you know cannabidiol, also known as CBD, in my humble opinion is truly a wonder drug, if you will. And this is where the true medicinal and redeeming qualities, if you will, of cannabis sativa and/or cannabis ruderalis which is also industrial hemp reside. And you know, 3 ½ years ago when we started to develop the intellectual property associated with our product line, which was under Dixie Botanicals, you know many people within the industry suggested that I would end up in jail in short order because our intentions were not only to distribute that to medical marijuana patients which was the community we were serving here in Colorado, but potentially consumers from around the country if not the globe.
And we started successfully distributing this product, cannabidiol rich products, whether they be tinctures or pharmaceuticals or a few skews associated with the topicals line, and we started distributing it domestically. I believe on probably no less than three separate occasions people reported me to the Drug Enforcement Agency for the distribution of what they believed was a CSA controlled substance Schedule 1. The fact of the matter is cannabidiol derived from industrial hemp which is a sister plant to marijuana or cannabis sativa, is really considered a dietary supplement. And so as long as it has below .03 percent THC, this is a product that is safely distributed, and candidly is one of the fastest growing segments of the industry. And we grew a business that was zero to millions and millions of dollars in a relatively short period of time. And that was exciting because patients and enthusiasts from around the country could embrace CBD for any purpose, whether it be stress or anxiety or anti-inflammatory purposes and do so safely without maybe the undesirable effect of, you know, euphoria. And so it’s been exciting. It’s been an amazing run. I mean it’s been widely reported that I successfully sold that company in June of this past year, 2014, and am in a non-compete environment for the next six months and that will expire early in 2015, and I think you’ll see some exciting things coming from this company associated with cannabidiol.
Matthew: Oh great. Now switching gears to AM Focus, can you tell us a little bit about that and kind of frame our understanding about how we should be thinking about Dixie Scripts and in particular AM Focus?
Tripp: Well, I mean, the AM Focus was script, if you will, that was created for people who really required pain relief, but also want to remain functional, I mean, focused and active. And I always have difficulties pronouncing some of these terms, but I mean ashwagandha has been out, and it’s to help mitigate the effects of stress without being a sedative. And so these scripts are great for chronic pain relief. They provide a consistent, reliable, long-lasting effect. And so obviously the key ingredient being THC, which is generally associated with euphoria and can assist with pain relief, but incorporated with other aspects, what we will call the entourage or a synergistic effect, really allow you to remain focused and alert. And so an incredibly popular product line that we continue to sort of build out on. So I think you’ll see again in 2015 some more products that will be focused on the active ingredient THC, but again allowing a patient and/or a consumer to really function efficiently throughout a day.
Matthew: Now I want to talk a little bit about brand building because Dixie’s just done an incredible incredible job with that, and I just want to understand how this works because my 65 year old mother would like a Dixie Elixir but so would my 21 year old cousin and those are two totally different demographics, and I just want to know how you did this. Is it accidental to some extent or is it intentional? What’s going on here?
Tripp: Well I mean first of all thank you very much for the generous compliment, and it really validates what I have stated was our initial mission is we wanted to give all aspects of the community, both the medical marijuana community which is what we served for the first 4 years and then more recently, since January of 2014, the adult use consumer. We wanted to give them choice, and you know, I’ve said it before, but you know, stealing from one, Matt, is plagiarism, borrowing from many is research. I laugh because I don’t drink coffee, but my business partner does. On any given day I call him part of the Starbucks nation. And you know, I understand fundamentally that drinking soda is generally not a good idea. It’s just not healthy, but on any given day or week I was consuming not one, not two, but three plus Izzes, if you will. And Izze is a soda here in the state of Colorado.
It’s distributed actually around the country, and they just did an excellent job marketing to me. I mean the product’s packaging was really attractive, and the flavor profiles were adult, and they, you know, really represented an effervescent product. And you know, if you look at Dixie 2.0 which is what we serve for the last 3 years of the medical marijuana regime, it looked almost identical. And so really looking at consumer packaged goods and seeing who are some of the thought leaders or the category leaders and really leveraging on that. Additionally, you know, we identified what we hoped to be best of breed thinkers, and whether it be strategic vendors like marketing agencies, originally Vladimir Jones, more recently Grit which is a Denver based agency. We really leveraged those skill sets that were not necessarily cannabis-centric or focused, and then brought them into our space, into our industry, educated them about the marijuana plant and really pivoted from there. And so it’s been incredibly exciting, and you know so many people give me the credit. It’s really unfair because there’s so many, you know, there’s dozens and dozens of team members, and then hundreds of vendors from all over the country that support this company. And you know, I would suggest that it’s truly paying off because I believe based on what we’ve dealt with for the last 8-9 months that Dixie is arguably one of the most recognizable brands in the country now as it relates to adult use marijuana.
Matthew: I would agree with that for sure. Now looking ahead to the next 12 months, I understand Dixie just raised some more capital. How are you going to use that capital to expand and grow into different markets?
Tripp: Well first and foremost everybody understands that you are not allowed to, by state and certainly not by federal law, to transport cannabis across state lines. And so by definition the industry is extremely inefficient. I just finished building, when we’re all said and done, about a $5 million mousetrap. And I would humbly submit that this is one of the finest state of the art marijuana facilities in the US. But unfortunately I have to build that in states like Arizona, Oregon, Washington, Nevada, Illinois, Massachusetts, Maine, if I intend to bring my brand there which obviously I do. And so these funds that we’ve subsequently raised from accredited investors and truly some amazing business partners that really check the box on a bunch of different categories. We use those monies to assist with the build out of our facilities and ultimately bring the brand to both medical marijuana patients, such as Arizona, but also adult use consumers now in Oregon and Washington State. And so I think you’re going to see hockey stick growth associated with Dixie brands over the next 12 to 24 months.
Matthew: And that does present some challenges there because there’s no interstate commerce allowed. So you essentially, do you have licensing partners in these different states? Is there some states where you’ll do some acquisitions? I mean, how does that work?
Tripp: Yes all the above. I mean the one thing that is consistent in this industry and that is change. And so each individual mark is unique unto itself, and so literally through the use of our legal partners, our legal teams and then our adept marketers, we really dig deep as to what each market will allow us to do legally because you’re really only as strong as you weakest link. So we are committed and truly passionate about compliance. And so in some cases it’s an arm’s length relationship where Dixie brands identifies the affiliate partner. And other times it’s potentially closer. It all just depends on what the market allows for. But to be very very clear, Dixie brands is really an IP firm, an intellectual property firm and does not deal directly in the manufacturing, cultivation and retail distribution of marijuana. It really is focusing on processes, formulations, innovative delivery systems and licensing that intellectual property to our partners. And that’s how we’re able to successfully bring that brand within the confines of each states’ laws successfully.
Matthew: Now where do you see the supply in demand dynamic in Colorado and perhaps Washington as well, settling in the next few years?
Tripp: Well, you know, that was what we call OTH, Matt. That is over the horizon, and it’s incredibly challenging to forecast what next quarter’s going to look like. I mean, you know, the adult use consumer, I think we all knew was going to show up and ring the bell on January 1st of this current year ’14. But I don’t think anybody and that includes myself, and I’m slightly embarrassed, sheepish if you will, you know, as considered a thought leader. I just had no idea what the voracious appetite was going to be for marijuana infused products.
I mean literally there are lines out the door with shops limiting one unit per customer, and the pricing has really gotten out of hand. But you know, I think you’ll start to see that. I mean at any given time my company has as much as a half a million dollar backlog, but as we create efficiencies in our production systems, we’re quickly catching up to that. But I think fortunately for me as a manufacturer but potentially unfortunately for cultivators, you know, cannabis in the state of Colorado and what ultimately will be Washington State, is clearly becoming commoditized and so prices are dropping at a precarious rate. And I think there was a statistic that was attributed to the department of revenue that there’s a million square feet in the city and county of Denver right now that is under construction associated with commercial cultivation of marijuana. And so that is going to flood the market. I read recently, Andy Williams who is a great friend and a business partner of ours, has 7,000 pounds of adult use marijuana in his vaults right now. If that were to be dropped onto the market, that would be disruptive.
I think three years ago cannabis was selling for between $350 and $400 an ounce for medical marijuana patients. Most recently I read about a distributor here in the state of Colorado, Live Well, that has 13 licenses. I think today they launched an ad campaign for marijuana to be sold $79 an ounce. And so that is disruptive pricing. For me as a manufacturer, that lowers my cost of goods sold. So I’m very very excited about being able to potentially offer products at a more affordable rate, and I think everybody benefits from it.
Matthew: I think that’s a great point for any entrepreneurs out there listening, you know, moving up to the top of the value pyramid with value added services, not just having a commodity is a really important thing to keep in mind. Now on TV you often appear as this larger than life persona that perhaps came out of the womb conquering industries. Can you tell us about a time when things didn’t look quite so rosy and there may have been some serious challenges that you had to push through in order to succeed?
Tripp: Well you know, I appreciate the compliments, and I’m sure my mother would appreciate it, but you know, I put my pants on like everybody else, and there are thousands if not tens of thousands of cannabis entrepreneurs, not only here in the state of Colorado but around the country that are conservative the same amount of respect and if you will an, you know, “atta boy”. Because in this industry you have to be delusional confident in yourself in order to be successful, and I think maybe that’s where you refer to that sort of larger than life. But you know, you referenced MSNBC’s Pot Barons of Colorado. You know just most recently last Sunday in Episode #3 you saw the true trials and tribulations. On any given frame I had my hands, my face in my hands or I was biting my nails. I mean there was an incredible amount of stress associated with this manufacturing facility because, you know, literally we were trying to manufacture widgets with a construction site swirling around us with the fire department trying to permit a facility that they’d never had any type of historical experience with.
And so, you know, listen not all days are perfect. I mean again, crisis management, if you will, by hour. And so what that delusional confidence, if you will Matt, truly keeps me going and you know, there’s been some dark days over the past 4 ½ years, but the future is so incredibly bright, not only for Dixie but the overarching industry, and it’s truly an honor, it’s a privilege to be part of it, to work alongside so many passionate men and women that are really changing the world for a much better place.
Matthew: Now is there anything on the political landscape that worries you right now. I mean we just had a very positive last couple of weeks because the Omnibus [ph] spending bill included a provision that would not allow the Department of Justice to go after states that have a framework of law set up for marijuana. But is there still anything on the horizon where you say hey, this is a threat and we should watch it?
Tripp: Well you know, I don’t have a crystal ball, but I can tell you the state of Colorado has got a very very strong regulatory framework with the majority of the state regulators and the state legislators in support. It’s important to note, Matt, that the state of Colorado was profiting immensely from this newfound industry potentially as much 60 plus million dollars have ended up in the state coffers from the sale of medical and adult use marijuana this year alone, and that’s probably only through the end of September. And so I think the states were previously “NIMBY” right, not in my back yard, are truly reaching out embracing. I have personally hosted delegations from all over the country, shoot, all over the globe, that are watching with great fascination, curiosity as to this wacky, social experiment that is taking place. I get it, right. We’re in the midst of political and legal change. We read about that every single day. You just mentioned this historic act with that Omnibus bill, but I think more importantly that it’s paying much greater dividends, much more a creed of value to our industry is the fact that we’re in the midst of social change, and that is so incredibly evident this past year. Marijuana has gone mainstream, and that is ultimately sort of debunking,demystifying the fact that there’s, you know, people in dark allies manufacturing pot brownies and serving them up to the public. That very well may be the case, but it’s probably from a gang member or from some loosely organized organization that is not fully compliant. And so that political, legal but most importantly social change is really what’s going to continue with the momentum we have in 2014 and beyond.
Matthew: Tripp, as we close, how can listeners learn more about Dixie Brands?
Tripp: Well Dixie Brands, I mean, we certainly have our website which is www.dixieelixirs.com, and we’ll continue to build out a more robust website. The reality is on any given day there is some journalist or some media outlets such as yourself that has been incredibly generous in making sure that the world understands that there are men and women here in the state of Colorado that are fully committed to building an industry under the strict rules and regulations with the state and supported us. We operate at the pleasure of the state of Colorado and ultimately the federal government. And so our intention is not only to do so responsibly as we bring the brand, but equally if not more importantly, to really educate the adult use consumer to embrace marijuana responsibly. We fundamentally believe that oil, if you will, infused products are the future of cannabis. And I think that ultimately is what makes Dixie Brands and its affiliate partners’ future so incredibly bright.
Matthew: Tripp, thanks so much for coming on CannaInsider today. We really appreciate it.
Tripp: It is absolutely my pleasure. Again I truly appreciate the opportunity. I wish you and your listeners a Happy Holidays, and good luck to us all in 2015 and beyond.
Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes. Every five star review helps us to bring the best guests to you. Learn more at www.cannainsider.com/itunes. What are the five disruptive trends that will shape the cannabis industry in the next five years? Find out with your free report at www.cannainsider.com/trends. That's www.cannainsider.com/trends. Have a suggestion for an awesome guest on www.cannainsider.com, email us firstname.lastname@example.org. We would love to hear from you.