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Top Opportunities for Cannabis Investors and Entrepreneurs with Patrick Rea of CanopyBoulder

patrick rea canopy boulder

Patrick Rea is the co-founder and CEO of CanopyBoulder. CanopyBoulder is a seed-stage business accelerator program and venture fund for the cannabis industry.

Listen in as Patrick shares details about the most promising startups in the cannabis industry and gives tips to founders on how to talk with investors.

Why should you listen to this episode? 
If you listened to the first interview with Patrick three years ago, you took away prescient insights on where the cannabis industry is today. Patrick offers that 20/20 insight again in this episode and helps you understand the context of the cannabis opportunities for the next two to three years.

Key Takeaways:
[1:37] – What is CanopyBoulder
[4:08] – How life has changed since the beginning of CanopyBoulder
[5:55] – How cannabis entrepreneurs have evolved in recent years
[7:18] – Patrick talks about how he and his cofounder divide responsibilities
[11:25] – Patrick discusses the virtual accelerator model
[14:12] – Entry points in contributing to CanopyBoulder
[15:09] – Common questions from investors
[19:15] – Patrick highlights some success stories
[23:22] – Turning traction into momentum
[25:33] – Patrick talks about teaching entrepreneurs new skills
[32:40] – Patrick talks about a perfect pitch deck
[36:46] – Who is a good candidate for CanopyBoulder
[38:06] – Patrick answers some personal development questions
[43:21] – Contact details for CanopyBoulder

Learn more at:
http://www.canopyboulder.com

Read Full Transcript

Matthew: Hi. I’m Matthew Kind. Every Monday look for a fresh new episode where I will take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. Now here’s your program.

The public has finally woken up to the massive opportunity in investing in the cannabis industry, but not all the opportunities are the same. Both investors and entrepreneurs have to decide if they’re going to pursue opportunities that touch the cannabis plant, or go after ancillary business models and investments that don’t. Here to help us get a perspective on this is Patrick Rea, Cofounder of CanopyBoulder. Patrick, welcome back to CannaInsider.

Patrick: Matt, it’s great to be here. Thank you for reaching out, and it’s always fun to talk with you.

Matthew: Tell us where you are today. Give us a sense of geography.

Patrick: I am in lovely Boulder, Colorado today. A place that I know you know very well Matt. In fact, our new Canopy office is just about five or six blocks away from The Cup, the coffee shop where we met first in 2014.

Matthew: Yes, great location. I’m really excited for you. That’s an incredible location.

Patrick: Yeah we love it.

Matthew: I want to get into all that, but for listeners that are not familiar with CanopyBoulder, because it’s been a few years since you’ve been on, give us an update. Tell us what CanopyBoulder is and everything you’re doing really quick.

Patrick: Cool. Really, CanopyBoulder, we are for investors. We’re an investment company. We’re a venture capital firm. We invest in a very active way in the form of a business accelerator, and we invest follow-on funds in the top companies that come through our business accelerator program. So, that’s for investors. For entrepreneurs, we’re a business accelerator, kind of a startup factory. We focus on ancillary products and services. We do not invest in any businesses that touch the plant for a lot of reasons. We love software, technology and services in any mix that can combine to solve the industry’s acute business problems in a unique way.

So, we’re looking for and wanting to solve the problems of the businesses that touch the plant. Generally, those licensed business that cultivators, extractors, infused products companies and dispensaries. For the entrepreneurs we’ll invest $30,000 in each company that we accept into our 16-week business accelerator program, which we modeled off of Tech Stars. During that 16 weeks, our investment community will review the companies and make recommendations for follow-on funding, usually in the form of a $50k convertible not, but we can do more. Everything culminates well with multiple demo day events where we bring in investors, industry pros, VIPs and media. Then for another month we help the teams with fundraising. For mentors and industry folks, it’s a way for them to engage in some of the most interesting dynamic and innovative startups coming into the cannabis industry. So, it’s pretty inclusive for a lot of people, and we love it.

Matthew: So, when we first talked it was back in 2014, and we met at The Cup there in Boulder, and you were telling me about this was more like a concept then, and then it just launched. Now it seems like CanopyBoulder is mature. It’s fully mature. You have an ecosystem. You have graduates. You have investors. It’s firing on all cylinders, but let’s just kind of rewind. What’s your life been like? This transition from the conception of CanopyBoulder to where you are now, to this full ecosystem of investors, entrepreneurs, all that’s happening. How has your life changed? How has your perspective on CanopyBoulder changed?

Patrick: You know, we have a bigger team. We have more experience. We have a larger ecosystem. So, I don’t know if we’re completely mature. I have a lot of friends that would probably never connect that word with me. Life gets better and better every day. We’re really, I think, executing on the original strategy, improving our tactics generally, and expanding that ecosystem of founders and mentors, industry pros, partners, investors every day. Sometimes I look at the numbers, and I’m just blow away. I mean, because so many people plan, but turning those plans into reality is like threading a needle while surfing pipeline. It’s such a hard thing to do and so many things have to come to place at the same time to make things work, and we’ve just been blessed through building a really great team, having great partners and engaged mentors and an alumni network that still comes around and helps out and does mentor presentations and shows up and makes instructions for the new teams.

We had an idea and did a bunch of research that indicated this model, this business accelerator model would work in the cannabis industry, but you never know until it starts to happen. It’s happening. So, we’re really excited about that.

Matthew: How would you say the entrepreneurs have evolved since the first cohort? How they’ve changed? Did they morph as the industry morphed, or is there any other differences that you’ve noted?

Patrick: The entrepreneurs are stronger. We certainly, in our first class, we had a really strong cohort. I know a number of them have been interviewed on the CannaInsider podcast. I think you’d probably agree that there are some teams in there with just really impressive people.

Matthew: Yeah definitely.

Patrick: By in large, the quality and the pedigree of the entrepreneurs and the teams that apply for the program is increasing and they’re more complete folks that really have that sort of entrepreneur product fit. They’re more complete teams. Fewer solo founders. It’s gotten better for sure. Still one of the biggest challenges in our business model is finding the entrepreneurs and the teams that are investment ready and worthy investment. We spend a lot of time in this big ecosystem that has been created around Canopy is really helpful in sort of herding those strong entrepreneurs into the program and we’re very grateful for that.

Matthew: How do you and your cofounder, Micah Tapman, divide responsibilities? How does that look?

Patrick: First off, really there’s four founders of Canopy, myself, Micah. We had an early stage seed investor out of Lake Forest, Illinois, Mark, who also is a cofounder. Then ArcView is a partner, and I like to consider them a cofounder of Canopy as well. So, we really have four, but from an operating standpoint, it’s Micah, myself and the staff. Micah is a perfect example of a cofounder that can really make a dramatic impact on teams’ capabilities, and we stress this to the founders here as well all the time. It’s always about team when you’re launching a business because you’re going to have to zig and zag and you need somebody that can zig and zag there right with you and support you on the down days and really amplify the up days.

I like to joke that Micah started law school around the age of five at the dining room table. His father, Ken, advised a lot of businesses that were working with tribes to build out oil and gas pipelines in the U.S., which is a very complicated business from a legal perspective. Ken is also now a thought leader in arbitration and mediation. Micah is very good with legal contracts, sometimes better than some of the lawyers we work with. He’s really good with business models, strategy and working towards shared, collaborative, positive outcomes amongst groups. So, he’s a real master here. It’s great to have him aboard. I couldn’t ask for a better partner.

In addition, Micah CanopyVentures, and that’s the growth fund that we’re raising for to focus on investments in the companies that make it to that growth stage where the company has found product market fit and the growth slope becomes really steep, capital is need to keep up with demand, not to generate it. We still have the early stage fund and the accelerator model, but we’re growing in to that next level up to support, not only the companies that come through and graduate from Canopy, but to seize on the opportunities with companies that don’t come through Canopy that we assess and think are right for investment as well at the right terms.

Matthew: Smart. Why limit yourself if you don’t have to. That’s a great idea, to work with other entrepreneurs too that didn’t go through the accelerator.

Patrick: Yeah. We get calls all the time from folks who want our help. I mean, we’ve invested in 73 companies, over 80 direct investments in these companies. You build up a lot of experience doing that. I think what we’d like to do is help not only the companies that are not coming through the program with investment, but also make sure that the other investors that come in and we build syndicates, we’re coming in at good terms that are fair and that are supportive to the entrepreneur but also balance in a way that will eventually be a win for the investor as well.

Matthew: There are other accelerators, most notably TechStars, looking to make a virtual accelerator model. TechStars is based there in Boulder, I should mention. What do you think about that model? What’s your thoughts on it? Does that take away from obviously some of the benefits of being together? Do you think it could work? Would it have to be a hybrid model where there’s some time in person or some time away? What do you think about that in general?

Patrick: Yeah, we’re very supportive of education, and we believe very strongly in give first mentality that TechStars has led with since day one. We’re very close with the TechStars group. They’re offices are very close to ours, and we’re very lucky to have a good relationship with them. We’re really comfortable right now with our approach that brings the team to Colorado for a very specific reason. There are advantages, very specific advantages, for ancillary products and services companies to find their footing in Colorado, in the cannabis industry. The reason is that the industry here is “mature”, relative to the other states.

Growth is starting to slow, but it’s still robust and a very safe and business friendly environment for not on the ancillary companies but the licensed producers. We talk to and stay very close to a lot of license producers, cultivators, the edibles, the extractors, the dispensaries. What we started hearing from them, which is very interesting, is that they’re not just trying to keep up with demand. They’ve got their head down in their business all the time, and they can barely take a day off. Things have shifted in the market and these CEOs are no longer just trying to figure out how to keep up with demand, but now they’re looking for ways to compete and steal market share from their competitors.

This has been a real interesting shift over the last 12 months here. I know you would see this right away, if you were back in town, but when you talk to these CEOs they get very specific, and we’ve heard it from a couple of them, that they’re no longer working in their business, they’re working on their business, which means they’re looking for the tech, the data, the software, the media, things that are going to give them a competitive edge. So, the business accelerator model works, and it’s great for the cannabis industry, but in Colorado, on the ground here, we think there’s a distinct advantage for the startups and the companies that come out and try to find their footing here because of that shift in the market, which isn’t really happening anywhere else right now.

Matthew: That’s really interesting. Tell me, what’s the minimum amount of money that is necessary to contribute to CanopyBoulder to become involved? I know you mentioned $50,000 convertible note. What are the different entry points?

Patrick: For investors we do have a minimum, but we find a way for people to be involved, through SPDs and the like. I’m happy to talk offline with any accredited investors about that. You can reach me at Patrick@canopyboulder.com at any point. We have opportunities for investors to come in to our funds always, if they’re accredited. We’ve got 70+ companies as well that are out there raising capital to fuel their businesses. If an investor wants to get involved in investing in the cannabis industry, I strongly recommend that they go to www.canopyboulder.com.

Matthew: What would you say is your number one or number two question, your most common questions you get from prospective investors or even current investors? What are they asking you that you hear over and over?

Patrick: Valuation is always a question. Valuation in the cannabis industry is an interesting thing. Certainly now we know pretty quickly where a company’s valuation should be, just based on the volume of experience that we’ve had. Not only are we making our own investments and negotiating terms, but we’re watching the teams go out and raise capital from outside investors, and we help with that. We’ll get involved and be a independent third party data point for another investor, for a team that’s come through Canopy and participated in that fundraising.

So, valuation is one of those things that every investor thinks that cannabis companies should have a discount on their valuation because it’s cannabis, and every entrepreneur thinks there should be a premium on their valuation because it’s cannabis. So, usually we all end up where we should, but sometimes it takes some good conversation and understanding and listening to make sure that we get there. So, valuation is a big one.

A lot of the time also we get investors that we’re introduced to and we have a talk with them and we try to understand their motivations, why cannabis and what areas they want to invest in. Have they made any investments already? We do a lot of consulting, unofficial consulting for these investors. Certainly more formalized consulting with our fund investors and our colleagues that are running funds here to help them make better decisions. We often hear from an investor that their friend has an inside track on this deal. At this point, we know the core questions to ask about virtually every segment in the industry. We spend a fair amount of time helping investors get up to speed and make maybe more informed decisions than they will on their own with their buddy who brought them a deal.

Matthew: Do you ever see investors get involved and be advisors for some of the entrepreneurs?

Patrick: Absolutely. One of the things that we’re trying to cultivate here at Canopy is more engagement. There’s a lot of investment funds out there and investors. They’re nice when they’re raising money, but then afterwards it’s kind of like a black box. The whole fund becomes this secretive thing and all the companies and what’s going on. We’re really an open model. We believe that this industry, and especially the companies that are starting in this industry, need all the support they can get, and that they need to be open to sort of the universe, and everyone who is involved, whether it’s mentors, industry people, media, to help.

We’re very supportive of that kind of concept where an investor becomes an active advisor. Maybe even become, and we’ve had a couple teams where this has happened, an investor, actually a mentor has become an investor and then joined the team. You can get some great experience on your team that way and really fill in some gaps on your team’s expertise by targeting specific mentors and investors. Right now we have a couple hundred mentors on our list that want to be active with the companies. We’ve got about 2,500 investors that have reached out to us and said they want to invest in either our funds or the companies that come out of the program. So, it’s a big community. It takes a fair bit of time to manage that.

Matthew: Okay let’s pivot to the entrepreneurs. Can you highlight a couple success stories from the different cohorts?

Patrick: Yeah, sure. Honestly every company that graduates from the program, because it’s a grind and it’s very demanding, I consider that a success. We have had a handful of teams, a couple handfuls of teams, that have done exceptionally well. BDS Analytics is one of those companies. It was a team that graduated from our first class in 2015 and they’re doing point of sale data and research and analytics for the cannabis industry. So, they collect all the data, the checkout data from the dispensaries and then they sort of mill it together, normalize it and sell that to the brands and companies that are interested in what’s really selling and what’s driving the market, not what they hear in the sales pitch from a vendor, but what’s really happening at the store level.

Roy, one of the cofounders, he was my first boss at a venture capital firm in Rhode Island, and we stayed in touch for 15-16 years and then kind of lured him into the space with this great idea because no one was doing it. We knew that it was going to be something that everybody would want, not just the brands or a CEO, but a marketing manager and even investors. They want to know what the truth is. How can you get to the real numbers? That’s one.

Wurk was founded by Keegan Peterson down in Denver, and that’s another success story where again there weren’t many, if any, players that were going after payroll processing and HR management. WE know that is a not sexy category. It’s not like VR or AI or something that is on trend right now, but as a business, it is incredibly sexy. You’re CFO is going to get really excited about this one where you have really high retention. You have really solid monthly recurring revenue and growth, and then exit multiples are astronomical in a very active M&A market.

The third I’d probably point to is Front Range Biosciences. That’s a situation where we had one of our mentors, Nick Hoffmeister, who had been a mentor at TechStars and raised a quarter of billion dollars for companies that he had started or worked with in the past. Had this idea and a team of entrepreneurs in the biotech space, and he utilized Canopy’s program and sort of wrangled them together. We made an investment in them and they’ve done exceptionally well. They’re doing tissue culture work right now, clean stock clones and things like that. Solving some major problems in the industry. All the teams, these founders have done this elsewhere, and they’re bringing over their skillsets to the cannabis industry, and they’re doing a great job building a community of supportive investors, advisors, board members around them that are there for them when they hit little speed bumps, as ever business will, they have really built a strong community around them.

Matthew: Anything you see in common among the entrepreneurs where they seem to get momentum and keep it? Because sometimes there’s these initial bursts and excitement, but since there’s not a proven business model yet, that fades quickly. When you see the spark and then the traction is there anything you can say there, any themes or trends you see where you see the pattern over and over again? Like this entrepreneur has the spark, has traction and then turns it into momentum.

Patrick: Well, I mean, I think it’s just generally their approach. The common threads that we see with the entrepreneurs, they listen. We say, you have two ears and one mouth, use them in that order. Engage and listen, be inquisitive, ask questions, take that feedback, work with your team and engage with the appropriate people to execute on these ideas. Inquisitiveness, great communication skills. They have that sort of entrepreneur market fit that they’ve done it and they have credibility and the right to win at what they’re doing. So, they have that expertise.

They even keel generally. They’re not erratic, or not horribly erratic, which enables them to be very decisive when they need to be. We had one of our founders hire in a senior member to his team recently who he had worked for in the past. So, kind of the same situation I had with Roy. This guy had been his boss, and things weren’t working out. It became apparent very quickly that this guy was just not the right fit, and that founder moved decisively and let him go. Now we’re working to find a replacement and that’s not easy. At the same time, life isn’t easy, business isn’t easy, and these are the hard things that you got to be ready and able to do. When you see those things happen you just got to really, it really bolsters your confidence in the people that you’ve invested in.

Matthew: So, you teach a lot of skills at CanopyBoulder that some entrepreneurs don’t have, specifically around negotiation and pitching and things like that. Can you tell us about that? How you get the entrepreneurs ready to talk to investors, ready to pitch their value proposition and so forth.

Patrick: A business accelerator is designed, in my opinion, it should be designed to be a very intensive process. There’s a lot you need to learn to be able to run a business, to do the sort of thrust and parry with investors and customers and partners and employees. So, we do a lot of mentor presentations and educational sessions. One thing that we focus on is venture finance and bringing everyone up to speed on the art and the science of raising capital, managing investors and connecting capital raise to your business.

We spend a lot of time talking about and making sure everybody understands venture capital, because if you’re going to go out and raise money, you will have investors that will try to throw you curveballs, or use one of multiple terms for the same thing to see if you get tripped up. It happens. People try to do that with me and I hear stories. We spend a lot of time there. We also spend a lot of time, almost every one on one meeting we have with a team. There are questions that come up and we say early on we’re not here to be the interim CEO. We just want to help you make better decisions. We encourage the teams to do the research. The saying is, we don’t care what you think, we care what a lot of other people think who will be your customers, your partners. So, go out and do the research. Get out of your head and out of your business plan and get in the market.

Pitching is a big thing as well. We’ll do pitch practice every week until demo day. Sometimes we’ll do multiple pitch practices per week. What we’re trying to do is make sure that those teams are very clear, there’s no confusion. It’s super apparent what they’re saying and how they’re going to do it. Communication is like pitching and catching. Somebody’s got to be able to catch what you’re throwing. A lot of the times you may be talking to what you think is one of the world’s most sophisticated investors and experienced people who have no idea anything about the business that you’re talking to them about. You got to keep it really simple and break it down to the fundamentals for everyone, and just go into meetings making sure that you are continually informing and educating and checking in and making sure people are picking up what you’re laying down. So, we spend a lot of time doing that.

Matthew: Well, now that you’ve mentioned it in terms of someone trying to use a different term for the same thing, I want to do a Jujitsu reversal on you, and ask you, can you give us an idea what that is. Because there’s people that don’t want to get tripped up and they want to catch that. Is there anything that you can tell us like, hey, if someone asks you this in this way and then this in another way, this is what they’re trying to get at or they’re trying to trip you up. Anything you can say here?

Patrick: In venture finance there’s a lot of terms that kind of mean the same thing. Discounts and coupons and (29:01 unclear). People will throw you curveballs. What I’ll do in the office in meetings or in pitch practice I’ll say okay I’m going to put my prickish VC cap on right now, so get ready. Then you just put on a different persona and you can just go after people and rip into them. I’ve been on the other side of the table where the entrepreneurs are and had a venture capitalist just lay into me or investors just really go after minute details and nuanced parts of a contract. It can really get you off base.

Often what they’re doing is they’re trying to assess you in how you react to stress and challenge, not necessarily how you’re going to act. When you’re uncomfortable and you’re stressed it’s really important to maintain calm and clarity and make sure you understand what they’re talking about. It’s okay to say you don’t know, and defer to your team. We coach the teams that if some investor is going deep on something, say, that is a great question that I don’t have the answer to, but what I can do is let’s schedule a call and I’ll have my lawyer or I’ll have my CFO or I’ll have somebody on, and we’ll workshop this one. I want to make sure you are completely comfortable with what we’re doing here. Sound good. Do the parry, deflecting off to another meeting is sometimes all you need to do.

Matthew: Yeah, I know what you mean. It’s okay as long as it stays in the realm of constructive, but sometimes, you’re right, you just someone that’s like I’m just going to move into the agitation gear and see if I can ruffle some feathers, and I just want to see what happens.

Patrick: It’s going to happen, it’s going to happen in life. In any relationship you’re going to have a moment where it moves into that uncomfortable zone. How you handle that is sometimes more important than how you handle the good times. Because if you can make it through those moments of agitation and uncomfortableness with someone, you then built another sort of block in the foundation of a relationship with someone. We definitely put our teams through that on a regular basis. In pitch practice, every week we do pitch practice and we say, after somebody’s done their pitch we say all right investors, what questions do you have. So, everybody in the group starts asking questions as if they were an investor. Then we’ll say okay, let’s shift to feedback and then we give feedback. It’s sort of like a dress rehearsal for the Q&A I guess.

Matthew: Let’s talk about pitches just a little bit more because investors want to use their time efficiently and give feedback to entrepreneurs, and entrepreneurs want to have a great pitch deck. So, if you were to wave a magic wand and give a perfect pitch deck template to an entrepreneur listening, what would it look like in terms of length, the number of slides, the size of the font, what not to include, what to include?

Patrick: That’s one of the first sessions that we do here. Right now I’m looking out and everybody has posted up on Windows, the walls, their first version of their pitch decks. We’re Tuesday in the second week of the program. It’s very important to keep it simple. We practice for a pitch in front of a room full of investors as our primary content piece. What do you need to pitch in front of a room of investors that are sitting around. You got a screen behind you. In that one, you want to keep the deck very visual. The more words, and there’s actually research that goes to support this, the more words and numbers that you have on a slide, the less effective of a communication tool that that slide will be.

We encourage the teams strongly to have strong visuals that support the narrative, because if your investors are reading your screen, they’re not listening to you or they’re just partially listening to you. They might miss some of the nuance that you’re trying to communicate. In addition, if they’re reading and they rip through the content of the deck and they reach for their smartphone, you just lost them. The smartphone is your enemy. You want to keep their attention and keep them nodding and following along as long as you possibly can.

Ideally we’re targeting a five minute pitch, and in that five minute pitch we want them to grab attention immediately. We want them to identify and to find a problem, a very acute market problem quickly. We want them to quantify that market or that problem. It’s not the size of the cannabis industry. It’s the size of the target addressable market that your business will specifically solve a problem for. So, then you want to go into the solution. How do you solve this for this problem? If you have a demo, can you show the demo? No, live demos. That’s always a recipe for disaster. Screen capture videos, animating, whatever you can do. Demo. Then talking about your team. Who’s going to do this and why are they uniquely qualified to be successful.

What have you done so far? What kind of traction do you have in the market or with your idea? That’s another important thing to show some data points and be tracking certain data points. Ideally they’re moving up and to the right. Then you want to talk about timeline. What are the financials, rough financials of the business? You know they’re going to be wrong. You just want to avoid that sort of crazy hockey stick or something that won’t tie to your more detailed financial model. You want to communicate how you’re going to make money. What’s your investment ask? How much are you raising and what sort of valuation metrics or caps or whatnot? What runway that’s going to give you. How are you going to use the funds. And then we like the teams to wrap up with those three reasons why they want to invest or investors will want to invest. Why they’re special. Of course at the end you want to say thank you.

Matthew: Great summary. That’s very helpful. For prospective and current entrepreneurs that are listening and are wondering is CanopyBoulder a fit for me? Am I too young, too old? Am I the wrong type of person. I’m not very techy, or I’m too nerdy? There’s a lot of ways people disqualify themselves in their mind where they say oh I’m not a fit for this or I am. Maybe you can tell us who you think is a good candidate and what you’re looking for.

Patrick: I think good candidates are folks that have experience in what they’re wanting to do. If their business is very IP heavy, they understand intellectual property. If they are data heavy business that they want to do, then they understand data and analytics. That’s really important. Age? Certainly if you’ve never worked really in a business before, or you don’t have any startup experience, maybe you should go and get some experience first before you launch into that first startup. For folks who have more experience, you’re in high demand. Investors really appreciate more seasoned managers and business people who come into the industry. They definitely have a better chance of raising money for sure.

Matthew: Patrick, I like to ask a few personal development questions for listeners to get a sense of who you are. With that, is there a book that has had a big impact on your life or way of thinking that you’d like to share?

Patrick: Yeah absolutely. There’s really two books, and they both were published by folks who have been a part of or have founded or have cofounded TechStars. The first one is Venture Deals. That is really a great primer for venture capital and venture investments. The idea is it’s written for entrepreneurs so they can be smarter than your VC or smarter than your lawyer in a negotiation. It really is something that I would highly recommend any aspiring entrepreneur read or download and listen to while they’re going for a jog or a walk or a bike ride. Very important to make sure that you know how and when and where and why people invest, and when, where, how people raise money.

The second book is Do More Faster, and it’s a real great foundational piece that helps the entrepreneurs that come into the Canopy program understand how we need to work. An accelerator is a set period of time generally, compared to an incubator, which it often doesn’t have deadlines. We’re also investing, so we want the teams to come in and be doers. They want to get things done and Do More Faster is a grouping of little stories that cover all sorts of different things, from avoiding cofounder conflict to optimizing your email communications, to any number of the things that we’re going to cover in the program here. So, it’s a great book to read and use to think about a lot of the important things that you’re going to cover when you are starting a business.

Matthew: Is there a tool, web-based or otherwise, that you consider vital to your day to day productivity?

Patrick: Yeah, absolutely. I’ve got three. Slack. Slack is our internal messaging service that we have all the teams on. We encourage all the teams to get their teams on it. Again, something that TechStars uses and is really a great way to get your team out of your inbox. It works really great, sort of these private text and chat ribbons for business. The second is Calendy. It’s a scheduling tool for folks. The thing I probably like to avoid most in my job is that nauseating email back and forth trying to set up a phone call. Can you do it at this time or that time? Sometimes I’ll be like hey, just to avoid this, do you want to pick a time that works for you and works for me. Here’s the link to my calendar. For the right people it works really well.

The third thing is DocSend. DocSend is this great tool that we encourage all the entrepreneurs and founders when they’re putting together better due diligence packets to put it up on DocSend. What you can do is kind of like Dropbox or Google Drive, but it has all these analytics. So, you put a password on a document, upload it to DocSend and send that to an investor, he or she clicks on the link, puts in the password. You get an alert. They’ve gone and looked at your documents. Then, you can actually go in and look at their experience with your documents. So if you have a 15 slide deck, you can go and see that investor is looking at for the longest period of time. Are they interested in the finances? Are they more interested in the team? That can help you have a more productive and informed conversation with that investor.

Matthew: Very cool. You’ve got a lot of legal documents whirling around there, between entrepreneurs and investors and stuff. Do you use a tool to manage that at all?

Patrick: Yeah. We have a great group of law firms that we work with, and they help keep everything together, but that’s just one of those things where you’ve got to be organized and diligent about tracking, organizing and keep tabs on all the investment documents. It’s one of the easiest things to drop, and I’m not saying I’m perfect or we’re perfect with it, but yeah we have a ton of legal docs. We use a Google Drive for our teams where we put in all those things from subscription agreements to safe templates to convertible notes to operating agreements, IP assignment and contractor. We’ve got a library of legal documents that we give to the teams. That can be a massive savings for them when they’re trying to develop their own stuff.

Matthew: That’s great. Well, Patrick, how can listeners connect with you and find CanopyBoulder?

Patrick: We believe very firmly that there’s nothing better than showing up. So, we’re right downtown Boulder. If you’re interested in being involved in the cannabis industry, we strongly encourage you to come out to Colorado and spend a day or two just seeing what it’s really like. Because sometimes media representations of what’s actually happening aren’t necessarily accurate. We love to have people into the office to sit in. If you’re an entrepreneur, reach out to us through www.canopyboulder.com, and we can schedule some time for you to sit in and learn about what’s going on.

For investors, same thing. We have a whole forum on www.canopyboulder.com where you can go and express your interest. Again, we’ll reach out to you, follow up, profile, get an understanding of what you’re trying to accomplish and try to honestly help you make better business decisions because I think the more and better business decisions that we can all make, the healthier this industry is going to be. On social media, I’m pretty active on Twitter @patrickrea. We’re very accessible all the time because we’re trying to build this really fun, exciting, helpful community so we welcome all comers.

Matthew: That’s great, and I want to encourage any listeners that are serious entrepreneurs and also accredited investors to reach out to Canopy because we need everybody to make this the biggest industry in the United States. We really need talented people out there, both in the investor community and entrepreneurs. I’ve had people ask me if it’s too late. I’m like are you kidding me? It’s not too late. It’s nowhere near too late. This is perfect timing. Please reach out to Patrick and Patrick thanks so much for coming on and telling us what’s happening in the investor/entrepreneur realm, and I wish you all the best for this cohort. I’m sure we’ll be having some of them on the show to let listeners hear what they’re doing.

Patrick: Thank you Matt. We are having a great time, and the vision of helping the industry grow is something we’re working on every day. You’re doing that as well, and I just want to applaud you for what you’ve accomplished and what you’ve done also for the industry as well. It’s something that should not be overlooked at any point. So, thank you.

Matthew: Thank you Patrick.

If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email. We would love to hear from you.

Please do not take any information from CannaInsider or its guests as medical advice. Contact your licensed physician before taking cannabis or using it for medical treatments. Lastly the host or guests on CannaInsider may or may not invest in the companies or entrepreneurs profiled on the show. Please consult your licensed financial advisor before making any investment decisions. Final disclosure to see if you’re still paying attention. This little whistle jingle you’re listening to will get stuck in your head for the rest of the day. Thanks for listening and look for another CannaInsider episode soon. Take care. Bye-bye.

 

Blockchain Disrupting Cannabis?

blockchain and cannabis

The CEO of Twitter and Square is Jack Dorsey. Last week Jack said “blockchain is the next big unlock.”

What Jack means by “unlock” is that it’s a disruptive but massively beneficial change.

In this episode, Matthew Kind details how blockchain will change the cannabis industry and your life. This is not an exaggeration and it is already happening.

Key Takeaways:
– Quick primer on blockchain and Bitcoin
– How blockchain technologies will impact chain of custody for cannabis plants
– How blockchain technologies will guarantee the authenticity of your cannabis
– Airing of Don Tapscott’s Ted talk on the financial impact of Bitcoin

Important:
Get your free cheat sheet “The Five Trends Disrupting The Cannabis Industry”
https://www.cannainsider.com/trends

Diamond CBD Review & Coupon Code

Diamond CBD Review

Get the full review and ratings of Diamond CBD products including CBD Oil, Gummies, Topicals and more.
Gummies have been a popular seller in dispensaries for a long time. That is why it is no suprise that pure CBD gummies with no THC are a popular seller online. Learn why here.

Interview with Johann Hari, Author of Chasing the Scream

Johann Hari

Johann Hari is the author of Chasing the Scream, The First and Last Days of the War on Drugs. Johann walks us through all the alarming and rarely mentioned ways the war on drugs hurts societies and how ending prohibition brings order. Johann details how countries around the world are ending prohibition and the amazing results they are seeing as a result.

*Get the FREE CannaInsider Podcast for your smartphone, CLICK HERE.*

Key Takeaways:

[1:31] – Why rats only choose drugs when they are alone and unhappy
[10:37] – What happens to the drug market in MD when a dealer gets arrested?
[14:40] – Johann discusses Arnold Rothstein and Rosalio Reta
[22:31] – Do humans have an innate desire to experience altered reality
[37:34] – The results of drug decriminalization in Switzerland and Portugal
45:13 – How to find Johann’s Book, Chasing The Scream.

Read Full Transcript

Matthew: Hi, I’m Matthew Kind. Every Monday and Wednesday look for a fresh episode where I’ll take you behind the scenes and interview the leaders of the rapidly evolving cannabis industry. Learn more at www.cannainsider.com. That’s www.cannainsider.com. Do you know that feeling when you sense opportunity, when you see something before most people and you just know it will be successful, then you're ready. Ready for CannaInsider Consulting. Learn more at www.canninsider.com/consulting. Now here's your program.

Today’s guest is Johann Hari. He has written a captivating book called Chasing the Scream: The First and Last Days of the War on Drugs. If you’re like me and you feel like you had a good understanding on the genesis of the war on drugs, you’re about to be enlightened. Welcome to CannaInsider Johann.

Johann: Hi Matt, lovely to be with you. Thanks for having me.

Matthew: To give listeners a sense of geography, can you tell us where you are in the world today?

Johann: I am in fact in London at the moment.

Matthew: Great.

Johann: London in England I should say as you can probably tell from my voice.

Matthew: Right.

Johann: Now I want to jump into Chasing the Scream, but before we do let’s talk about an article you wrote for the Huffington Post this year called the Likely Cause of Addiction has been Discovered and is not What You Think. This article has been shared over a million times I believe, and what did you uncover here and it obviously resonated with a lot of people? What about that article has people talking so much?

Johann: Well it’s a short extract from the book, and I guess… so I discuss it in much more detail in the book, but I guess it’s now a hundred years since drugs were first banned. And four years ago when I started writing about… started writing the book, I think I realized I knew that we were coming up to this centenary, and in a way I thought I knew a lot about this subject. I’ve written about it for a long time. It had been in my life for a long time. One of my earliest memories was trying to wake up one of my relatives and not being able to and as I got older realizing we had drug addiction in my family. But actually I realize that there were just loads of basic questions about this issue that I didn’t know the answer to like why were drugs banned a hundred years ago? Why do we continue with this war on drug users and drug addicts even though so many of us can see it can’t work? What do the alternatives really look like and what really causes drug use and drug addiction?

When I was looking for these answers just for myself, I realized I couldn’t find them in the books I was reading that too often we discuss this in a really abstract way, you know, as if life is a philosophy seminar, and we could talk about it in this very abstract way. And I didn’t want to do that. I wanted to find out… I wanted to find out how these, the answers to these questions have really changed real people’s lives. So I ended up going on this big journey across nine different countries and spending time with lots of different people from a transsexual crack dealer in Brownsville, Brooklyn to you know, to the hit man for the deadliest Mexican drug cartel, to the only country that’s decriminalized all drugs from cannabis to crack. And I guess what I discovered is almost everything we think we know about this subject is wrong. Drugs aren’t what we think they are. Addiction is not what we think it is. The drug war is not what we think it is, and the alternatives to the drug war aren’t what we think they.

And I guess the one that most surprised me was the one that you asked about first which is about addiction. You know if you’d said to me four years ago, I don’t know, what causes heroin addiction? I would have looked at you like you were a little bit simple minded and I would have said, well heroin causes heroin addiction. You know we’ve been told, you know, it seems kind of obvious right. We’ve been told this story for a hundred years. It’s become part of our common sense. We think that if you, me and the next 20 people who walk past your door all used heroin together, on day 21 we would all be heroin addicts because there are chemical hooks in the heroin that at the end of it our body would start to physically need.

The first thing that alerts me to the fact there’s something not right about that story was when it was explained to me if after this interview you or I step out onto the street, and you know, I’m hit by a car and I break my hip, I’ll be taken to hospital. It’s quite likely I’d be giving a lot of diamorphine. Diamorphine is heroin. It’s medically pure heroin. It’s much stronger than you would ever buy on the street because it’s not got all the contaminants that drug dealers inevitably put into it. And then you or me, if that happens, will be given that diamorphine, that heroin for quite a long period of time. Anyone listening to this, anywhere in the developed world, lots of people near you are totally, legally being given heroin in hospitals.

If what we believe about addiction is right, if the story we’ve been told for a hundred years is right, what should happen? Those people, at least some of them, should leave hospital as heroin addicts. They should try to score on the streets. There have been studies of this, that doesn’t happen. You will have noticed your grandmother was not turned into a junkie by her hip replacement operation. When I learned that it just seemed so odd to me that even though the facts behind is so robust, I didn’t really know what to do with it until I went and interviewed a guy called Bruce Alexander who is a professor in Vancouver. And incredibly important figure in the world of addiction, and I think has really revolutionized how we think about it.

Bruce explained to me, the theory of addiction that you and I have in our heads and almost everyone has in their heads comes from a series of experiments that were done earlier in the 20th Century. They’re really simple experiments. Your listeners can do them at home if they’re feeling a bit sadistic. You get a rat and you put it in a cage, and you give it two water bottles. One is just water and one is water laced with either heroin or cocaine. If you do that, the rat will almost always prefer the drugged water and almost always kill itself. So there you go, that’s the theory of addiction. You might remember there was a famous partnership for drug free America.

Matthew: Sure, sure.

Johann: Advert, yeah this thing like, you know, it will happen to you. In the 70s Bruce came along and said hang on a minute. We’re putting the rat in an empty cage where it’s got nothing to do except use these drugs. Let’s try this differently. So Bruce built “Rat Park” which is a different kind of cage. And Rat Park is basically heaven for rats. Anything a rat could want in life is in Rat Park. It’s got cheese. It’s got colored balls. It’s got tunnels, but crucially it’s got loads of friends. It can have loads of sex, anything a rat wants. And they’ve got both the water bottles, the drugged water and the normal water, but here’s the fascinating thing. In Rat Park the rats don’t like the drugged water. They hardly ever use it, and none of them ever use it in a way that looks compulsive. None of them ever overdose. There’s really import human examples I can tell you about in a second if you want, but what Bruce says is that this shows that both the right wing and left wing theories of addiction are wrong.

The right wing theory is that it’s a moral failing, you know, you indulge yourself, you know, you indulge yourself, you are a hedonist, all of that. The left wing theory is your brain gets hijacked. You get taken over. You’re left powerless. What Bruce says is it’s not your morality and it’s not your brain. To a much larger degree than we’ve appreciated before, addiction is an adaptation to your environment.

Matthew: Wow that’s crazy.

Johann: There’s huge implications for that. I mean there’s a guy called Peter Cohan, he’s a professor in the Netherlands, who says, you know, we shouldn’t even use the term addiction. We should think of it as bonding. Human beings have an innate need to bond, and when we’re happy and healthy we’ll bond with each other and with the people around us. But when you can’t do that because you’re isolated or traumatized or beaten down by life, you will bond with something that gives you a sense of pleasure relief. Now that could be, you know, it could be gambling. It could be cocaine, it could be pornography, but you will bond with something that gives you some sense of pleasure because that’s what we have to do.

And this different theory of addiction has massive implications for the drug war. You know, the drug war is based on the idea that the drug is what causes the problem, and so we need to physically eradicate the drug from the world. If in fact the vast majority of people who use that drug don’t develop addiction, if in fact it’s isolation and trauma that are the largest drugs of addiction, suddenly the fact that our whole approach looks different, because what we do at the moment is we take people who are addicts if they’re isolated and traumatize, and we isolate and traumatize them further thinking it will make them stop.

You know, I went out with a group of women in Arizona who were forced to go out on a chain gang wearing t-shirts saying I was a drug addict and dig graves. You know, we do that to them and actually okay that’s an extreme thing, but actually that’s pretty much what we do to addicts all over the world. We humiliate them, stigmatize them and cut them off. You know, and those women will never get a job again because they’ve got criminal records. They don’t jobs in the legal economy. We certainly do that to addicts all over the United States and in Britain. And you know in that prison at one point I asked to go to been shown solitary confinement block which they use a lot, The Hole it’s called. And I went to The Hole, and there were women in these tiny little stone cells and were put there for the month for like the most minor infractions. And I suddenly thought this is the closest you could ever get to a literal human reenactment of the experiment that guaranteed addiction with rats. And this is what we do thinking it will make people stop, but also has implications I think, much wider implications, than just drug policy.

We’ve created a society where for a lot of our fellow citizens life is… life looks a lot more like that first cage and a lot less like Rat Park. You know we talk a lot in addiction about individual recovery and that’s really important, but we need to talk much more about social recovery. Something’s gone wrong with us, not just as individuals, but as a group and I think we need to think differently about that too.

Matthew: Wow that’s fascinating and somewhat unintuitive, but once explained it makes sense. You’ve come up with a lot of unintuitive ways to think about the war on drugs and how we can think about better. Can you talk a little bit about your findings in your book about what happened in Maryland when drug dealer’s arrested?

Johann: Yeah, you know, the book is told through the stories of people I met or got to know or researched and learned about, and they’re really a broad range of people. One of them is a cop I got to know in Baltimore called Lea Maddox. He’s really an amazing person. Lea signed up to be a cop with one reason in mind. Her best friend, Lisa, who she’d know since she was a kid was murder by what she believed was a drug gang, and the day Lisa’s body was found Lea went and demanded the sign up papers and she went into the cops with one goal and one goal only which was to destroy and break drug gangs.

And for years she obsessively enforces the drug laws. She will bust people just for using a joint. But Lea’s really an honest person and Lea started to notice two things that kind of troubled her. One was the people they arrested were mainly African Americans, even though African Americans we know, and there’s lots of evidence and they’re more likely to be drug users or drug dealers than anyone else in America, and Lea really isn’t a racist so she was troubled by that. The second thing was even more troubling for her which was if you’re a cop and you arrest a, I don’t know, a rapist, the less week there’s less rape in your town. If you bust a drug dealer, Lea noticed two things, firstly there’s no less drug dealing, right? There’s someone on the corner the next day. The drug price doesn’t go up. So we know that, you’re not disrupting the supply.

But what struck her stranger was the murder rate actually goes up, and this is a pretty consistent finding. It was Lea’s anecdotal observation, but it’s proven if you do a drug bust, the murder rate increases and that’s basically because when you ban drugs they don’t’ disappear. They’re transferred from doctors and pharmacists to armed criminal gangs. And those armed criminal gangs work different from the doctors and pharmacists. If you or me walk into a doctors or a pharmacist to try to steal their prescription drugs, they’ll call the police. The police will take us a way. So that pharmacy doesn’t need to be violent or intimidating right because they’re operating with law and they have recourse to the law. If we go out to a local coke or weed dealer and try to rob them, obviously they can’t ring the cops. The cops would arrest them, so they have to be violent and intimidating. And they have to establish their patch by violence and they have to maintain it by violence.

And if you knock one of them out either, you know, they’re killed or you arrest them, what you do is you trigger a turf war for control of their patch, and there’s a huge amount of violence until someone emerges on top. The Nobel Prize Winning economist, Milton Freedman, calculated there are 10,000 additional murders every year in the United States that are the result of this war for drugs of dealers fighting out and people getting caught in the middle. And Lea, you know, Lea had gotten into this to bankrupt the drug gangs, and suddenly she realizes oh god, actually I’m the one keeping them in business. You know prohibition and the drug war are what keep them going. The alternative is to reclaim that trade for pharmacists and doctors is the way countries that I went to have tried with remarkable results.

So Lea quit the police and she retrained and now she’s a lawyer who spends a lot of her time trying to get the convictions of people like the people she arrested quashed to end the drug war. She’s a really extraordinary person.

Matthew: So this is crazy and unbelievable. You make the point that the DNA of gangs that deal in illegal drugs is to create unspeakable violence because that’s kind of how they stake out their patch. Can you tell us a little bit about Rosalio Reta in Mexico in the Zeta gang and maybe a little bit about Arnold Rothstein and how they kind of play that part?

Johann: Yeah. I basically, you know, Rosalio is someone who really… I think about him a lot. I wanted to understand this dynamic. Obviously if you think about housing project in the US right and there is going to be one here, if one is listening to this, where say 5 to 10 percent of the economy is controlled by armed criminal gangs in the drug trade. So that place is going to be a really miserable place to live. If you look at northern Mexico where I went, it’s 70 percent of the economy, 7-0 percent. So basically you just end up with a situation where the armed criminal gangs can pay better wages than the states so they end up owning the cops, and they own the state and they hijack the whole infrastructure.

One of the ways I tell that story in my book is I got to know and interviewed a guy called Rosalio Reta who between the ages of 13 and 17 was a hitman for the deadliest Mexican drug cartel and killed about, butchered and beheaded about 70 people. And I went and interviewed him. He’s now in prison in Tyler County in Texas in constant solitary confinement because he’s the only person who’s ever been in that kind of cartel who can kind of tell what it’s like from the inside and hasn’t been killed. So every time he’s ever taken out of solitary, he’s immediately stabbed by one of the other prisoners who knows they’ll get loads of money from the Zetas for killing him.

Rosolio grew up in Laredo which is just on the American side of the border, but it’s kind of twinned with Nuevo Laredo on the Mexican side. And he would kind of go back and forth, you know, when he was a little boy. He’s about 26-27 now, but when he was a little boy he would go back and forth across the border like most people do just to buy candies and things. And he was recruited when he was 13 to be a hitman. They like having, they like using kids. They call them the expendables partly because kids that age don’t really understand death in the same way I think. And yeah they kind of kept him very heavily coked up and this guy Miguel Trevino who was the, at that time, number three in the Zetas, later rose to be number one in the Zetas. And exactly that dynamic you’re asking about which is right into your question, so Rosolio did unbelievably horrific acts of violence.

It’s important to understand this has nothing inherently to do with drugs. This is to do with prohibition right. Ask yourself where are the violent alcohol dealers today? They don’t exist right. They did exist under alcohol prohibition. It’s not that they were drunk. Al Capone wasn’t an alcoholic and he wasn’t using alcohol in heavy amounts and therefore committing violence. Today the drinks isle at Wal-Mart doesn’t go and shoot the people who work in the local liquor store in the face, right. Even though nothing’s changed about alcohol, it’s the same drug that people were killing each other over during prohibition in Chicago. What’s changed is the legal regulatory framework.

Often we talk about, you know, drug related violence, and people think what that means is someone using drugs, losing it and killing people right. In the book I cite, there’s a really important study of this by Professor Paul Goldstein who looked at everything that was described as a drug related murder in New York City in 1986. The exact figures are in the book, I’m saying this from memory, but I think they’re right. Two percent of the killings were like where someone had used drugs and lost it, right, or killed someone and there was drugs in their system. I think 7 percent were an addict who was kind of committing a property crime in order to feed the habit and something went wrong. And all the rest, the overwhelming majority were armed criminal gangs killing each other to gain control of the trade, right. So actually the overwhelming majority, they’re not drug related. If we banned milk and people still wanted to buy milk and therefore criminal gangs provided it, the milk trade would work this way. Would we call those milk related murders. Well you could, I mean, it would make as much sense.

But what you get with that dynamic and I tell this story about the inside of the… it’s Rosolio’s life inside the cartels, is often when you look at what’s happened to northern Mexico, and it’s really pretty scary when I went there, but often when you look at what’s happened in northern Mexico, it looks like, kind of like Jeffery Dahmer style psychosis, right, it’s so extreme the violence that you just think oh, this is just a bunch of psychos. It’s not. It’s the function of the system. The way it works is if you’re the guy who’s prepared to breach the moral taboo a little bit more than the other guys, you will gain a brief competitive advantage. So if you’re the first person to say, we’re not going to kill the other side, we’re going to kill the other side’s pregnant women, then you get a brief competitive advantage. If you’re the person that says, actually we’re just going to kill their pregnant women. We’ll kill them and put them on YouTube, put it on YouTube, then you get a brief competitive advantage.

If you’re the first person to say, you know we won’t just kill them and put it on YouTube, we’ll cut off their faces, sew their faces onto a football and mail the football to their relatives, which is something that actually happens, then you get a brief competitive advantage because the nature of a prohibition based system is whoever is prepared to push the violence further will control a little bit more of the trade. So this insanity, and clearly it requires a degree of sadism for people to do this obviously, but that whole cruelty and violence is the product of the system we’re in. Where else, what other system would have given 13 year old Rosolio Reta an enormous financial incentive, like an enormous financial incentive, to go and butcher and behead people? Where else would have taken, what other system would have taken a 13 year old boy and taken him to a training camp where he was taught the mechanics of how you dissolve a corpse right? Where would that have happened.

I think that’s where about I tell the story of a transsexual crack dealer in Brownsville, Brooklyn called Chino Hardin who was conceived when his mother who was a crack addict was raped by his father who was an NYPD officer. So he’s a child of the drug war in the purest sense. And Chino, you know, is one of the most empathetic and decent people I know, but from the age of 13 when he starts selling crack on his corner, he’s drawn into the requirements of violence. You know you cannot be empathetic in that situation. You have to be terrifying or you’re going to be destroyed. And these dynamics are playing out, not just in, clearly what’s happening in northern Mexico is much more extreme because it’s a larger portion of the economy, but these dynamics are playing out pretty much everywhere in the developed world except the places I went to where there have been experiments with legalization and you just see this whole dynamic bleed away.

Matthew: Gosh that’s so crazy to think that, you know, the prohibition causes the violence because you’re right we’re so engrained to think it’s the drug. It’s the drug that’s causing the people to change, but it’s really prohibition. The direct result of that is this compounding and escalating violence because you’re saying if you have that escalating sense of violence, you have a competitive advantage in the trade of this prohibited substance, whatever it may be; milk, heroin, alcohol. Now is there an innate sense for humans that they just want to experience altered reality? This is something we can’t legislate a way or you know, point a gun at group or a population and say don’t get high, don’t get drunk. It’s just something that’s part of humans that we need. Would you say that’s accurate?

Johann: One of the most interesting people I interviewed was this guy called Ronald K. Siegel who is a very distinguished retired professor at UCLA who advised like three American Presidents, the World Health Organization, and one of the things Ronald K. Siegel spent his career doing was giving drugs to animals and monitoring animal drug use. And basically it turns out this applies not only to humans, but pretty much to most living species. You know elephants get drunk. Birds get drunk. You know, mongoose’s like hallucinogens. You know the massive range of animals that get, you know, mashed up in all sorts of different ways. And he argues, I think he’s right, the intoxication impulse is a really deep and innate human drive, and it’s ineradicable.

You know you look at a little kid who will spin around and around and around to make themselves dizzy even though they know it will make them sick, that’s the first manifestation, and all children do that. It’s been observed that all kids do that. That’s the first manifestation of the intoxication impulse. Obviously it manifests differently in different people, but there has never been a human society where humans did not seek out intoxicants in the environment and use them. The only society where there were no naturally occurring intoxicants were the poor Inuit in the Arctic, and they would starve themselves to get altered mental states because this is just so deep in human nature. I tell the story in the book of the Temple of Eleusis. In ancient Greece, 20 miles away from Athens, every year there was this extraordinary rivalry at the Temple of Eleusis where people would go for this massive drug party where they would this hallucinogen and they would experience states of ecstasy. And you know, it sounds pretty much like Burning Man, and it was forcibly shut down when the Emperor Constantine converts to Christianity.

Yeah this is a really deep and innate human impulse. And one of these that’s kind of surprising to me in the research actually is the, you know, quite how large the proportion of this was. If I said to most people, I mean your listenership is going to be more informed on this matter, but you know most people you say to them, what proportion of currently banned drug use do you think does no harm to anyone, doesn’t damage their health, doesn’t make them addicted, anything right? The actual figure is 90 percent, 9-0 percent and that doesn’t come from like the Drug Policy Alliance or a group supporting drug reform. That comes from the UN Office of Drug Control who are the main drug war body in the world, even they had to admit that a few years back, although I’ve noticed they’ve taken it down from their website. Rather embarrassed that people picked up on it.

So it’s important to understand this is a deep human impulse, and in the vast majority of people, the vast majority of the time, it’s a healthy impulse, you know, they have a good time. They find a chemical, they have a good time with it and they don’t get addicted. It doesn’t damage their body. It doesn’t damage their mind. Great, now the other 10 percent who are addicted which includes some people very close to me, including some of my closest relatives, they are in fact people who were seeking out the drugs to deal with a deep sense of pain that preceded the drug use. You can look at this. I cite a really interesting study that looked at, it was a really interesting and weird study, it look at five year olds, and it just monitored five year olds with their parents. I think it was only the mothers.

Basically you get a five year old, you put it with its mother and you give them like a task to do together, right, and you know building blocks or whatever. And they monitor them literally, I think it’s for five minutes. It was a very short period of time. And they monitor basically how supportive the mother is, how good their relationship is, how connected they are. And then it just follows, it goes back them when they’re 18 and figures out if they’re addicts. And what it finds is just by looking at five year old and how connected they are with their parent for five minutes when they’re five, I forget the figures. They’re in the book, but you can predict to an incredible degree of accuracy whether they will be addicts, you know, years 13 years later when they grow up.

So what that tells us is, and it really relates to Rat Park and what we were talking about there, addiction is a very real tragedy. Addiction is not the earthquake. Addiction is one of the aftershocks of underlying pain and trauma. Now aftershocks are bad. An aftershock can bring a building down after an earthquake. It’s not a trivial thing. It’s a very very serious things. But it’s important to understand what the real cause of it is and what explains, you know, I guess I would say, you know, if you want to think about this in their own lives. I forget the drug laws for a second right, I’ve got in front of me, I’m feeling a little bit ill so I’ve got one of those dissolvable vitamin C things that you put in water and you drink it.

You’ve probably got a drink in front of you, right?

Matthew: Yes.

Johann: Totally forget the drug laws, totally legally you and I could be drinking vodka now, right. We could both be drunk. You and I probably got enough money in the bank that we could go off and be drunk, buy loads of vodka and be drunk for three months, right, and never sober up, you know, until our money runs out, right. We’re not doing that and very few people do that. Not because anyone externally is stopping us, but because we’ve got things we want to be present for in our lives. We’ve got jobs we love. We’ve got people we love. We’ve got things we want to do. You know the reason why most addicts do what they do is because they can’t bear to be present in their lives because their lives are too painful. And the answer is to make their lives less painful, and there’s a place where they did that, you know, Portugal and the results were incredible and I can talk about that if you don’t mind.

Matthew: Sure, sure, please.

Johann: Yeah, yeah it’s fascinating that you know, totally honest, I put off going to the places where they’ve tried the alternatives, the drug war for one, and I was thinking to myself why was I doing that. And I guess I kind of thought what if I go to the places where they’ve tried the alternatives and that doesn’t’ work either, then this will be a book about and irredeemable human tragedy or just a, you know, a very deeply engrained human tragedy. But then I went to the places; Switzerland, Portugal, Uruguay, you know, I interviewed people from Colorado and Washington who led the successful campaigns. And it was really kind of extraordinary.

Portugal to me was one of the most striking examples, oh and Vancouver as well. Portugal was one of the most striking examples. And in the year 2000 Portugal had one of the worse drug problems in Europe, indeed in the world. One percent of the population was addicted to heroin, just kind of mind blowing. And every year they tried the American way more. They arrested more people. They imprisoned more people, and every year the problem got worse. And one day the Prime Minister and the leader of the opposition got together and they basically said look, obviously we can’t carry on like this right. We can’t, you know, we can’t have an ever increasing proportion of our population addicted to heroin.

So they decided to set up a panel of scientists and doctors, and basically they said to them go away, look at the evidence and tell us what would genuinely solve this problem and they did something really smart. They agreed in advance to do whatever the panel recommended. So it just took it at politics. So the panel goes away. It looks at all the evidence. Led by an amazing man called João Goulão, and they come back, and they said, decriminalize all drugs from cannabis to crack, but and this was the crucial thing, take all the money we currently spend on arresting and imprisoning drug addicts and spend it on turning their lives around, on learning the lesson of Rat Park which is reconnecting them this society.

So partly that was things that we think of as treatment in America and Britain like, you know, residential rehab and psychological support, and that does have real value. But the biggest part of the program is something completely different. It was subsidized jobs for addicts and microloans for addicts so they could set up businesses. So let’s say you’re a mechanic, got an addiction problem. When you’re ready, go to a garage and they’ll say if you employ this guy for a year, we’ll pay half his wages. Really simple, the goal was to make sure that every addict in Portugal had something to wake up for in the morning and something to get out of bed for. And it’s been nearly 15 years and the results; injecting drug use is down by 50 percent, 5-0 percent in Portugal. Overall addiction is down, overdose stats are massively down, HIV transmission among addicts is massively down. And one of the ways you know it’s worked so well is almost no one wants to go back.

I went and interviewed this guy called Joao Figueira who led the opposition to the decriminalization. He’s the top drug cop in Portugal. And he said to me, everything I said would happen didn’t happen, and everything the other side said would happen did, and he talked about how he felt ashamed having seen this work in practice that he had spent 20 years arresting and harassing drug users before the decriminalization because it didn’t work and this way did. And he hoped the whole world followed Portugal’s example. And it was so exciting to see that these alternatives were working. It’s important to understand there are limitations to what they done in Portugal as well.

So in Portugal they’ve decriminalized use, but they haven’t legalized sale. So the drug trade is still in the hands of criminal gangs. The best way to put it is they’ve shut down orange is the new black, but they still have Breaking Bad, right. But this is not perfect which is why you have to look at legalization. And legalization does not mean a kind of free-for-all. You know, it doesn’t mean having a crack isle in CVS, right. There are places that have tried legalization and it’s working extremely well. Obviously your listeners will know very well about the extent of the marijuana legalization in Colorado and Washington. And you know, it’s very revealing if you look at 53 percent of people voted for the legalization, but now support of legalization is way above that level which means that when people saw it in practice, they liked it and they thought, you know, a higher number of people thought it worked than before, significantly higher.

In Switzerland to where they’ve legalized heroin for addicts it’s a different model, significantly different model. And the way it works is if you’re a heroin addict, if you go to a doctor, the doctor will refer you to a clinic and that clinic will provide, will give you heroin in the clinic. You have to go there. And it’s really fascinating to go there. It looks like a kind of, I went to one of the ones in Geneva. It looks like a kind of fancy Manhattan hair dressers. You turn up and people go into a little booth and they inject the heroin, and then they leave to go to work because they overwhelmingly get jobs. When the chaos of street use ends people get their lives together. They help them get housing. They help them get employment, and what’s fascinating is you can stay on that program as long as you want, right. They’ll never kick you off. There’s no pressure to reduce your dose. But what’s fascinating is most of the people on the program, the overwhelming majority, just choose to reduce their dose and eventually stop because their lives get better, and they can bear to be present in them. So you don’t want to on smack the whole time if your life is getting better.

Matthew: They’re creating their own Rat Park.

Johann: Exactly, and that’s a good way of putting it. And you know there’s obviously, they’re not going to drug dealers, right. Heroin dealing, you know, was just absolutely decimated by this because why would you go to a street dealer to buy a much more expensive contaminated product when you can go to the doctor and get a much cheaper, purer product. Obviously you don’t do that. So what we see is, you know, there are models of legalization that work, and this is a much more sensible way to spend the money. And it’s interesting because Switzerland, you know, when I’m explaining it to Americans, I’m trying to say Switzerland is an extremely right wing country. I’m a Switzerland citizen as well as a British citizen. Switzerland is an extremely right wing, this is not like… this isn’t like San Francisco voting to legalize heroin. This is like Utah voting to legalize heroin, and they did it.

It’s very interesting the way they won the argument. Their campaign was led by an incredible person called Ruth Dreifuss who was the first female president of Switzerland and who I interviewed. Really she is an amazing person. And she ran it not on a kind of liberty based argument. A very different way, and I think such an argument that we really need to use in the drug reform movement in the US. And it was actually an order based argument. Everyone in the world where legalization has prevailed generally liberty based arguments which is like it’s your body, you can do what you want with it, which I am philosophically sympathetic to, just don’t get much traction. People don’t like those arguments. What works are order based argument, what Switzerland is.

The drug war means anarchy. It means unknown criminals selling unknown chemicals to unknown users all in the dark. Legalization means order. It means we take these criminals. We bankrupt them. We take these chaotic addicts and we put them in nice clean clinics where they’re not in our public places screwing things up and being chaotic and spreading disease and all those other things. Legalization means the restoration of order. It means the opposite of anarchy. And that really, you know, Swiss people voted twice in referenda by really huge margins; 70 percent to keep heroin legal for addicts for precisely that reason because of that argument. It wasn’t because of compassion or anything else. My Swiss relatives, you know, they met Michelle Bachmann that led Bernie Sanders. They thought they were being nice, you know, and also because of the enormous fall in street crime. I think the figure was, there was a 93 percent fall in burglary. It’s something absolutely extraordinary, once that was introduced. Again it’s very striking. That was extremely controversial before it was introduced. Once it was introduced, it worked incredibly well. It’s not very controversial anymore in Switzerland.

Matthew: The one thing I worry about here is we have entrenched interests, pharmaceutical companies, private prison systems, prison guard unions that don’t seem to welcome this ending of prohibition. Do you see that dissolving just by the mere fact that it’s so successful in Switzerland and Uruguay and Portugal?

Johann: No it’s not going to dissolve. There are corporations who have one thing. They are legally obligated to do one thing and one thing only which is maximize profit for their shareholders. They’re going to carry on doing that. They’re never going to stop. What we have to do is overwhelm them, and we have to… which of course has happened. If you look at, you know, all sorts of things, corporations are stopped from doing all sorts of things. Think about what the United States was like at the turn of the 20th Century what corporations were allowed to do then. There are loads of things, for example, promote tobacco to children which they’re not allowed to do now. That’s not because those companies saw the light. It’s because ordinary citizens organized and demanded that these companies be stopped by the government from doing, and that’s what we need to have when it comes to the drug war. They’re not going to go away. They’re not going to stop doing what they do, but we need to make our voices louder than their voices so that the government has to regulate them and stop them from committing the most kind of egregious acts.

And you know anyone listening to this who thinks oh that’s such a tall order, you know, I would tell them the story about one of the most amazing people I met in the journey for my book. And in the year 2000 there was a homeless street addict in Vancouver called Bud Osborne. And he was in a place called the downtown East Side of Vancouver which was a notorious area, has the largest concentration of addicts in North America and possibly the world. It’s regarded as like the place at the end of the line in the city at the end of the line in North America. And Bud was watching his friends die all around him. People would shoot up behind dumpsters so the cops wouldn’t see them, but obviously, you know, if you’re hiding so no one can see you and you start to overdose then no one sees you. Your body is found a day later. You die.

And Bud thought I can’t just watch this happen. I can’t just watch my friends die all around me, but he also thought I’m a homeless junkie, what can I do. And he had a really simple idea. Got together with a group of the addicts and he said, when we’re not using which is most of the time even for hardcore addicts, why don’t we have a timetable and why don’t we just… not with the police, not with nurses, not anyone else just us, why don’t we patrol the alleyways, and when we spot someone O.D.-ing just call an ambulance, right. It’s a really simple idea. And so they started to do it, these addicts, just on their own. And within a few months the overdose rate started to really significantly fall in the downtown East Side which is great. Because, you know, it mean people were live who would otherwise have died, but it also meant the addicts started to think about themselves differently.

They started to think oh maybe we’re not like the pieces of rubbish people say we are. Maybe we can do something. So they started to organize. First thing they did is they would turn up at public meetings to talk about the menace of the addicts, and they would sit in the back and they’d… after a while they would kind of put up their hands and they go oh, I think you’re talking about us. Is there anything we can do differently. And sometimes people would be really angry and sometimes they’d, you know, they’d say things like oh you leave your needles lying around. And Bud said, that’s fine we’ll extend the patrol, we’ll pick up the needles and they started doing that. And as they got more involved, Bud had learned that in Frankfort in Germany they had opened safe injecting rooms where addicts could use the drugs legally and be monitored by doctors and that it had virtually ended overdosing in Frankfort. And he was like great we got to do that here, but there had been nothing like that in North American since Harry Anslinger, the birth of the drug war in the 1930s.

But Bud thought alright we’ll start demanding it, and they decided to at this very large and dedicated group of addicts, their friends and supporters decided to target the mayor of Vancouver. It was a man called Phillip Owen, he was a very unlikely person to target. Phillip Owen was a rich right wing businessman from a very wealthy family who had no idea about addiction and so the addicts should be taken and forcibly detained at the local military base and never let out, this was the idea where he was coming from. If you pitch at Mitt Romney, that’s kind of like the American equivalent to Philip Owen. And they started… everywhere Phillip Owen went, they turned up in huge numbers and they had with them a coffin, and the coffin said something like who will die next, Phillip Owen, before you will put a safe injecting room. And this goes on for years. And they will say things like at public meetings like, you know, do you remember our friend who asked you a few months ago who would die next Phillip Owen before you open a safe injecting room, well she was the next person who died. She’s dead now because you didn’t open a safe injecting room.

And after 10 years, totally to his credit, Phillip Owen says who the hell are these people and incognito he goes to the downtown East Side and he just spoke to loads of addicts, and he was totally blown away. He had no idea their lives were like this. He had no idea there were people in such pain, and he then went and met Milton Freedman, the Nobel Prize winning economist who was really good on the drug war partly because he had grown up in Chicago under alcohol prohibition. And Phillip Owen came back and he held a press conference and he had the Chief of Police and a Coroner and a representative of the addicts, and he said he was never going to speak about addiction again without an addict present, and he was going to open the first safe injecting room in North America and the most compassionate drug policies in North America and that things were going to change.

And Phillip Owen opened the first safe injecting room, and his conservative party was so horrified they deselected him and his political career ended, but they selected a right wing candidate who was opposed to it and he was beaten by the more liberal candidate who then won and kept the injecting room open. And when I went to the downtown East Side and interviewed the people involved the injecting room had been open for 10 years and the results were in. Deaths by overdose were down by 80 percent, and average life expectancy had increased by ten years which are like, you don’t get figures like that in epistemology except when a war ends which is what this was. And Phillip Owen told me and it was the proudest thing he ever did and he would sacrifice his entire political career all over again. And Bud, who I got to know well, and you can hear the interviews with him on the website www.chasingthescream.com he died last year. He was only in his early 60s, but he had been a homeless addict during a drug and it takes a toll on you.

And when Bud died they sealed off the streets of the downtown East Side where he had lived as a homeless person, and they had this incredible memorial service for Bud. And there were lots of people in that crowd who knew that they were alive because of what Bud did. You know as a direct result of the activism, the Canadian Supreme Court has ruled that addicts have an inalienable right to life and that includes the right to have a safe place to use drugs. That can never be taken away now. Anyone listening to this thinks uh, the drug war is such a big thing, the forces ranged against us are huge. I would just say to them, you are so much more powerful than you know. It’s hard to think of a more disempowered person than a homeless street addict. Bud didn’t wait for a leader. He didn’t wait for someone else. He didn’t ask permission from anyone. He didn’t sit there and ring his hands and say oh it’s so hard. He just started, and because of what he did an enormous number of people who would have died is still alive. If he can do it, we can do it.

Matthew: Great points Johann. I think that’s a good place to close. What a wonderful summary of your book and your travels and your discovery you’ve given us. Again that book’s called Chasing the Scream. It’s available at www.amazon.com and most places online. How else can listeners find your work Johann?

Johann: They can go to www.chasingthescream.com and they can hear all the people we’ve pretty much talked about like Rosolio Reta, the serial killer and Bud and Chino and Lea Maddox, the cop in Baltimore. You can hear interviews with all of them at the website as well. And you can hear like, you know, I think particularly people are interested in marijuana, you know, the story of why marijuana was first banned. It was a crazy story. The story of the man who launched the modern war on drugs, Harry Anslinger. The story of how he stalked and killed Billy Holiday the jazz singer and just the, you know, and what happens when you legalize marijuana. So yeah loads of stories there as well.

Matthew: And this audience is definitely partial to listening to books. That’s how I have Chasing the Scream on the audible app.

Johann: Oh great.

Matthew: Just so everybody knows when you sign up to be with Audible they give you one book for free. It’s a great first book to get if you like to listen to audio books.

Johann: Crazy I probably shouldn’t say this, but if you sign up, you claim that as your free book and then you cancel, you get to keep the free book. So you can in fact get the audio book for nothing if you want to. Maybe I shouldn’t say that. I’ve been hearing really good things about the audio book. Apparently the guy who read it is really good.

Matthew: Yes.

Johann: I was slightly worried because the poor guy has to do like, you know, Mexican voices, Portuguese voices, he has to do the voice of a transsexual crack dealer from Brownsville Brooklyn. He has to do the voice of the president of Uruguay.

Matthew: Yes. It’s a wide range.

Johann: Yeah it’s slightly torturous for him, and he has to be my posh English voice. It’s very, yeah, problematic. I feel sorry for him.

Matthew: Well Johann, thank you so much for coming on CannaInsider we really appreciate it.

Johann: Great. Thank you so much.

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