Most Recent Interviews
- Paul BenhaimEp 267 – Hemp Entrepreneur Building a Global Hempire
- Roy BinghamEp 266 – Everything You Need To Know About The Latest Trends In Cannabis – with Roy Bingham of BDS Analytics
- Ron Basak SmithHow Hemp Packaging Is Saving Our Oceans – with Ron Basak-Smith of Sana Packaging
- Cameron KelucheThis Groundbreaking Biotech Technology Is Revolutionizing Cannabis And Beyond – with Cameron Keluche of KelSie Biotech and SUM Microdose
Diane Czarkowski from ThinkCanna.Com gives us a state-by-state update on where we are in the legalization process. Diane reviews how key elections in November may allow medical and adult use in several states. Diane also reviews the common mistakes applicants make when applying for a license.
Matthew: Hi, I'm Matthew Kind. Each week I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at CannaInsider.com. That's C-A-N-N-A iInsider.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 CannaInsider.com/trends. That's C-A-N-N-A insider.com/trends.
Now here's your program.
And now for a brief on the state of cannabis legalizations. Since the pace of legalization is always changing, I thought I'd bring out an expert to help us understand where we are at this moment in time. I'd like to welcome Diane Czarkowski with CANNA Advisors on the show.
She is going to give us some background on what's going on with legalization, kind of state by state. Especially as we have ballots coming up here in November that promise some significant changes. Welcome, Diane.
Diane: Thanks for having me, Matt.
Matthew: Sure. How many states are there where medical marijuana is legal right now?
Diane: Right now there are 23 states that have some form of medical marijuana laws in place.
Diane: There actually might be a few more, but they're so restrictive in what conditions are recognized by the state that even the larger drug policy organizations like the Marijuana Policy Project and the Drug Policy Alliance don't even really recognize those states because they just feel that they're way too restricted to be able to count them.
Matthew: Right. So I think this is something a lot of people don't understand, is that there are states where medical marijuana is legal but because the bureaucracies and policies are so inept and unorganized that patients actually can't get medical marijuana. So that's an important thing to consider as we talk about the number of states where things are legal. Not every place is Colorado that's legalized. It's much different, state by state. Which ones do you think...?
Diane: Every state is so different in how they put together their form of decriminalization laws and regulatory structures and even the conditions that they recognize. It varies drastically from state to state.
One state could pass a medical marijuana law that might even restrict the actual flower from being used. It might only have the ability to have like a CBD-enriched oil. But if you go to another state it might be just limited to people with cancer and glaucoma or some severe conditions that don't address the broad spectrum of patients that could really benefit from it.
Matthew: Great points. What states are on the horizon for both legalization of medical marijuana and then adults use? Formally called recreational use?
Diane: Right. The ballots this November, we're seeing a lot of focus on Florida for medical marijuana. They did pass some legislations earlier to allow for five cultivation licenses, but I think that was an effort by some politicians to get a CBD-only type of law into place to see if they could appease the public vote, and then hopefully not pass this much broader and much more comprehensive medical marijuana law that comes out in November.
Then we also have Oregon and Alaska both going for adult use legislation. Then on the horizon beyond that, there are other states that are looking for either much more broad and all encompassing medical marijuana policies, and then also adult use legislation. So, Arizona, California, Maine, Massachusetts, Nevada, Montana, Rhode Island.
It's really becoming more and more popular to see some type of legislation going into place. We just hope that it doesn't all go down the road of being CBD-focused, which might restrict the availability of the medicine to patients as well as other cannabinoids that are very beneficial to patients that wouldn't be allowed to be produced.
Matthew: Great points. Now, Nevada seems to be a state that kind of sticks out because, at least in the early goings here, it seems like the politicians really want to get on board the legalization bandwagon, and in a significant way. Could you tell us a little bit about how you think Nevada is going about it differently than other states?
Diane: We're very excited about the Nevada regulations and what's coming out of that state. I think maybe because they've already embraced the other sins, if you will, that they're a little bit more open to a regulated market.
And one of the things that we really like about Nevada is that they will have a reciprocity component to it, where they will allow medical marijuana patients that have proper ID to be able to purchase cannabis when they're in their state. They won't have the ability to have delivery services like residents will, but they will have the ability to be able to obtain cannabis while they are in the state which is huge for Nevada because, you know, they have such a huge visitor profile.
Matthew: Yeah. Millions of tourists.
Diane: That's one thing that we really like about Nevada. Another thing that we like is that they're already getting a lot of leverage to put forth an adult use ballot on, I think, 2016 is when they hope to put that on the ballot.
Matthew: I think Nevada excites me the most because, as you said, they've kind of embraced other sins but in this case, cannabis use might be called a virtue so we won't include it in the sin category, but I think you're right.
Diane: Definitely not.
Matthew: I think they have the right attitude, it seems like. At least from my cursory glance.
Diane: They have a good attitude. Exactly. And they also realize that, like other states are coming to realize, that they could really benefit from taxing it and certainly they're getting tremendous amounts of fees for licensing the businesses there, and they can benefit from the sales.
Matthew: True. Now I know there's a lot of interest right now as legalization sweeps the country, where people are saying, "You know, maybe I want to throw my hat in the ring and I want to apply for a license." It's way more complicated than that, that I've come to find out.
It takes a lot of capital and paperwork and all these different things that most people don't consider. Can you just give us a brief summary of what you think people don't consider but should if they're wanting to invest in either a dispensary or a cultivation license, and what that all entails?
Diane: Well, it really varies so much from state to state, but one thing that we see that has pretty much proven true as each new state rolls out their medical marijuana programs for businesses, many of the states don't even have a business structure. They just kind of do the decriminalization for the patients. But then they don't give the patient a legal way to access their medicine. They still have to purchase from the illicit market.
And in states where they are putting together a business structure what people don't understand is this is like a giant government RFP. And it takes months and months and months of preparation, working with people, like ourselves, who are familiar with this industry and how other states have rolled out their specific procedures of planning.
It takes a lot of capital. Sometimes you have to show that you have over a year's worth of operational capital on hand to make sure that your business exists after they award you these coveted licenses.
And then building your team so that you have a lot of subject matter experts on your team, not just the "master grower." That's usually the first person that people think of to hire, but someone who's good with security, someone who really knows security, or someone who really understands logistics and facility design and things like that. And it really takes time for you to build the right team that a government regulator is going to look at and say, "They're going to be able to carry out things the way we want them to, and they're going to make us look good." They definitely don't want to choose a licensee that isn't going to carry out the regulations as they see them.
Matthew: Right. And it seems like the trend is even more so in this direction, because states have kind of learned from other states on doing things differently than was done in the past. Can you talk a little bit about how Illinois... they kind of did a private licensing application process. Did they do that because they had learned the lessons of other states that did a public license application process and all the fallout? Can you tell us a little bit about that, how Illinois did things a little differently?
Diane: Well, I'm not sure what you between public and private. I know that...
Matthew: I thought, like, Massachusetts, didn't they do it where it was open to the public, the application process? And then Illinois, it's private. So you can't really see all the people who applied. Is that accurate?
Diane: Oh, you're right. In those terms, yes, after the people submitted their applications, Massachusetts did post the name of the business organization and also the main point of contact, which I actually thought was odd. I think most places don't publish that kind of thing.
I think it's given Massachusetts a lot of heartburn because that whole rollout is falling apart because the licensees that they did award licenses to have been further scrutinized because of all this public access that they've given, and the program still hasn't rolled out, and it's been nearly a year since they awarded the initial licenses.
Illinois, contrary to Massachusetts, they have not published the names of the applicants. I'm fairly certain that they will post the licensees when they're awarded, but I'm not certain how much information they will actually disclose to the public.
Matthew: Great. Great information. Thanks so much, Diane. Well, we hope to have you on again soon, because everything is changing so quickly and we need updates. If listeners want to reach out to you, what's the best way to contact CANNA Advisors?
Diane: The best way to contact CANNA Advisors is to go to our website. It's ThinkCanna.com. T-H-I-N-K C-A-N-N-A.com, or you can call us at 720-708-3154.
Matthew: Thanks, Diane.
Diane: Thanks, Matt. Thanks for having me.
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 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 CannaInsider.com/trends. That's C-A-N-N-A Insider.com/trends.
Have a suggestion for an awesome guest on CannaInsider.com? Email us at feedback@CannaInsider.com. We'd love to hear from you.
Alan Brochstein founder of 420 Investor tells you how to understand the universe of cannabis stocks. Alan shows us how to navigate away from 90% of marijuana stocks you don’t want. He also highlights his favorites stocks and how to get started investing.
Hi, I'm Matthew Kind. Each week I'll take you behind the scenes interview of the insiders that are shipping the rapidly evolving legal marijuana industry. Learn more at Cannainsider.com. That's C-A-N-N-A insider.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 cannainsider.com/trends. That's C-A-N-N-A insider.com/trends.
Now, here's your program. Today we're going to hear the story of Alan Brochstein in his business 420 Investor. Allen is going to educate us on how to sidestep the pitfalls that most marijuana investors fall into. We'll also learn how to navigate the turbulent waters in the marijuana height machine to find a few perils that most investors will never find.
Matthew: Welcome, Alan.
Alan: Hey, Matt. Thanks for having me.
Matthew: Great. Well, thanks for being on the show. Can you give our listeners a little bit of background about yourself and how you got started in the investment world and particularly in cannabis?
Alan: Sure. I've been in the investment industry since graduating college in 1986. I've spent the first 14 years or so in bonds, spent half that time in New York city, came back to my hometown in Houston where I reside now. I worked in equities until 2007. I've been a portfolio manager and analyst in principle at a firm that manage about half a billion dollars investing in mid cap growth. So very fortunate to have been able to transition away from bonds and into stocks much more of my alley. In 2007 I went off on my own. I started providing independent research to several different hedge funds and institutional money managers. I stumbled upon the cannabis market in early 2013 and was totally fascinated. I'm a lifelong libertarian so I believed in cannabis legalization just purely for the simple reason that it should be legal, keep the government out of the bedroom-type argument.
What I didn't know was about the medicinal benefit, but before I go there, as a professional analyst, I looked at this market and was just blown away. The companies were shoddy, evaluations were off the charts. I happen to find this right after the Colorado and Washington elections and things were kind of crazy but I spent the next six months or so really diving into the sector, learning about the medicinal benefits and when Sanjay Gupta, the Chief Medical correspondent in CNN, did this 180 in August of 2013, it really captured my attention and made me kind of commit myself to spending more time. I launched a service 420 Investor which has grown to be one of the largest online communities on the internet right now focused on the cannabis space. I went full time in March of this year, so that's how I spend all my time right now.
Matthew: Okay, and to really talk about cannabis stocks, we really need to educate listeners about what the OTC market is. Can you tell us a little bit about what OTC means and is there any particular gotchas or bigger buyer beware signs that investors should consider when investing in OTC stocks?
Alan: Yeah, this is a great way to start the conversation. This is how actually I start, when we get new subscribers it's the first thing I make sure people see. OTC is over the counter, maybe not everybody is familiar with that term but penny stocks, that's what the vast, vast majority of the sector is. In fact, I tracked over 200 companies, I don't follow them all closely, but I'd say 98% of them are penny stocks. This is very important because the level of disclosure is not nearly as high. A lot of them do file with the SEC, but even in those circumstances these stocks are highly speculative. They need to continue to access capital or they won't be able to stay in business. That's what the investors need to be aware of, these are very speculative. I can't say that loudly enough. This is not my background. My background was in more traditional stocks - SMP, 500 stocks, Russell 2000, small cap stocks, which obviously are risky as well. The risks with OTC stocks or penny stocks are exponentially higher in the market in general.
Matthew: Sure. Has the SEC gotten involved lately kind of putting some of these companies in time out? I forget what the actual term is for that but...
Alan: Yeah, they have. Suspension is the word. This has been one of the interesting things. For your listeners that aren't familiar, just to back up a little bit, after the Colorado and Washington voted to legalize in November of 2012, there were just a handful of, "marijuana stocks." None of them actually had much to do with marijuana but they were perceived to be placed. Kind of like what were going through with the Ebola right now. Nobody really knows these companies necessarily but if they think they might be on to something it gets the speculative juices flowing for traders and maybe even investors. The SEC is interesting. They work hand-in-hand with the FINRA, which is a self-regulatory organization that oversees the market and supposed to protect the investors. FINRA came out in August of 2013 after that massive rally following the Colorado-Washington elections in late 2012 in which the market had doubled basically, early in the year and then sold off, it was actually down year-to-date, and FINRA comes out and they waived their standard warning. They've been doing these things at least since 2001 since 911, because there's one thing constant about penny stocks, the scammers are always there.
It's always like right now it's going to be Ebola but most recently it was marijuana, 3D printing might have been one, anthrax was one back in 2001. FINRA is always coming up with something to, and rightfully, to warn investors about, and marijuana's turn came up. I think their timing was really poor. The market actually pretty much bottomed right about the same time as FINRA warned that first time in August of 2013. And then as the year began 2014, the stocks in general went up seven-fold. Hard to believe, I've never seen anything like it in my life. So when that happened FINRA... I sure say to myself, "We really better warn them now." And they put out another warning, and I, 100%, support what they were doing even though their timing wasn't so great the first time, but it didn't matter after their warning... well, they weren't up seven-fold yet as they were climbing, but it didn't matter, after that warning stocks kept climbing.
It wasn't until the SEC came in, it was early March, and the first time they suspended the company, I'll explain that in just a minute, but it wasn't really one that people followed too much and same with the second one. I believe it was the third one which was about March 25th, if I recall, was a really solid company in a kind of... that happened right after the market had peaked. And then the fourth one was one of the... I'll say it again, it was one of my favorite companies. Nobody that I'm aware of can fully explain what happened, but that company was called Grow Life, or it still is called Grow Life, simple PHOT, and that really set the tone.
In over the next few months the SEC suspended a bunch of companies. Most of them probably deserved to be suspended. I'd still say that the two that I just mentioned, one of them was a very technical thing, it had nothing to do with the company and then Grow Life very unclear why that happened. So a suspension doesn't sound like the worst thing in the world. What it entails is two weeks of not being able to trade. The problem is when you come back, you go to what's called the gray market, which is basically purgatory. Very few stocks emerged from the gray market.
Remember earlier in this conversation, your prior question, you asked about the OTC and the risks and all that. Well, the gray market is worse even than the penny stocks, the pink sheets and the other OTC levels because the liquidity dries up. You can't get a quotation, you have to trade old school. You got to call up your broker, give him a phone order, there's no electronic trading, there's no money market makers making bids and offers so it gets very difficult to trade. And as I said when I answered your question, these companies required capital. So it's very difficult for company trading on the gray sheets to get people to lend them money or to buy their stock through private market.
So long story short, the SEC... there were some people... I might have been one of them, I'm not going to say, who thought that they were trying to cool the market, it make sense that they were quite frankly. I think that there are a lot of bad actors in the space. The SEC ended up suspending, I think, 14 if I'm not mistaken, it's been so long I kind of haven't been focused on them recently. The last one was a obscure company based in Canada but incorporated in Nevada, and then before that some really bad companies, that everybody knew that were bad, that goes back to June 6. So truly been awhile since this has been a hot issue but it certainly one of the big issues of the year and one of the reasons why the market finally broke after going up seven-fold.
Matthew: So you kind of the antithesis of the pump-and-dump shops in Wall Street, so for people who aren't familiar this is how it works, I think and correct me if I'm wrong, is that these pump-and-dump shops get everybody all excited over these penny stocks that maybe they bought at a super low price, and then once everybody's nice and excited as very frothy they dump it. And if you bought those stocks you're left holding the bag and they're generally not good stocks.
Alan: That's very accurate.
Alan: Yeah, my business model is very different. My full source of income is... well, okay, I'm a blogger in Seeking Alpha, I've been blogging there for almost eight years. That's a small part of my income, very, very small now, The vast, vast, vast majority of my income is exclusively from my subscribers. I don't invest in any of these stocks. Sometimes I get some criticism for that like... because I understand the point. People say they like the chef to eat his own cooking. I do get that point but I've really tried to structure myself, my business I should say, to be as transparent and conflict-free as possible. Like you said I'm the opposite of a pump-and-dump. I have no vested interest in any company, I don't get paid by any company. I don't get paid if their stock goes up or goes down. I only get paid if my subscribers continue to subscribe.
Matthew: Sure that makes sense, good motivation there. Switching gears to GW Pharma which has been on the news recently, can you tell us a little bit about that company and also a little bit about synthetics in general?
Alan: Sure. GW Pharma stands out, as I mentioned, almost all the companies in the cannabis space are penny stocks, but GW Pharma is not a penny stock. They trade on the NASDAQ. Their primary listing is in the U.K. The company's been added since 1998 and it has been public since 2001. They did something very smart, I'll tell you more about the company in a second, but just so your listeners understand, they listed on the NASDAQ in May of 2013. It was without fanfare quite frankly. The stock didn't do anything for months but then it took off. That NASDAQ IPO it was... they actually sold shares in IPO and I believe it was a little bit under $9. It peaked earlier this year at 111.46 on July 1st, and today it traded below 60, it's the lowest it's traded for quite some time. To answer your question, GW Pharma is 100% focused on cannabinoids science. They work with the plant, not synthetic, which we'll talk about in a second. Their lead drug is Sativex, that was their first drug approved on, I believe, 27 different markets but the main market would be the United States and they're in clinical trials here.
Two different indications the first one it's going for is against cancer pain and the second one would be for treating one of the side effects of multiple sclerosis called spasticity. That's what they got the approval for in those other countries, but advance cancer pain they decided would be an easier approval in the United States. Of course, to get approval in the United States they have one issue that has to be resolved which would be right now, cannabis is Schedule One, which means the government thinks it provides no medicinal value whatsoever. So that has to be resolved. Their main drug is called Epidiolex and this is a game-changer.
I like the story a lot before and I'm not going to mention any other things but they also have candidates for schizophrenia, ulcerative colitis - I don't want to miss some big one - glioma which is a brain cancer, and I think there's one other one that they're working on but the main one is the drug they call Epidiolex which is for rare childhood epilepsy. That's a very large market and it's not treated very well. The drugs are highly toxic, terrible side effects, and these children... that's a very easy identified target market. I mean, these kids need help, they're having these uncontrolled seizures, so very, very poor quality of life as it happens. Epidiolex actually has little to no THC in it. It's mainly cannabidiol which kind of gets to your next question.
Before I talk about cannabidiol and synthetic, I just want to say that GW Pharma is a great company, it's a biotech. One of the things I look for in a biotech would be, you want to make sure they're not a one-trick pony. While the company is a hundred percent focused on cannabis, they have multiple drug development programs, lots of intellectual property, like I said, they've been active since 1998, clearly a great company. But who knows what the value is? If Epidiolex succeeds, the value is a lot higher. If it fails I don't if the rest of the pipeline will justify the current valuation which is sixty or so dollars, works out to be about 1.2 billion, a little bit over $1.2 billion.
So very interesting and one last point before I go to the synthetics, is they have partnerships with leading pharmaceutical companies around the world for Sativex. I mean, so very interesting story. Now I think what's been going on with the stock recently, I've been talking about this for quite some time but there's a risk that the FDA will not approve their drug or the DOLE approves an alternative. One of the alternatives would be synthetic cannabidiol or CBD. That's the primary ingredient that's in Epidiolex. So synthetic just means it's manufactured and it's not coming from cannabises, it's chemically-derived.
There are no clinical trials even underway yet, but there's a company that was able to get what's called orphan designation from the FDA. Even though GW is ahead in the lab there's always a chance that this company INSY, I-N-S-Y, is able to leapfrog them and there's always this underlying risk because, let's face it, the FDA would much rather approve a synthetic drug that's standardized, the same vile would always be the same no matter what, and not have to reschedule even if [inaudible 17:39:00]. This is definitely a risk. I think that may be weighing on the company, it's been a real momentum stock and it's hard to tell what's going on. It could just be, just in general, market softness and the fact that stocks had such a run up and people are now locking on one-year long-term capital gains on the stocks as well.
Alan: That makes sense. What stocks are you most excited about, your maybe top two or three that you're sure.
Matthew: Sure. Well, I have to tell you so the market has given up almost 100% of the year-to-date gains. The low last year I've an index, my partners and I have an index that we monitor just to put things into context, that index began at 100 at the end of 2012, 12/31/12. It traded as high as I think 240 last February 2013, bottomed at about 70, ended the year at 159, had a little run up at the end of the year. So right now it's in the 170, so we're still up a little bit year-to-date. I just want to... I like to lay that out because first of all, things are very volatile.
Second of all, the ups and downs we're kind of in a down cycle right now but it's hard to tell. Like I said it bottomed at 70 last year. We bought it from 10/10 it was a high this year to about 175 or so as we're speaking right now. So I do like GW. I think that's one of my favorite names. There are no companies in the world like it. Now that doesn't mean we're going to make money with it. I like it at lower prices as well, but now with the pull back, almost at 50% pull from the peak, I think it's interesting again. We spent a lot of time talking about that but that would be one of the ones that I find most interesting.
Another company that I like is called the mCig, they're based in Bellevue, Washington. They started off doing a $10 vape pen. For a traditional marijuana consumers, the vape pen is a head scratcher because it's like, "What's the point?" but there's actually the whole trend towards vaping in general has a lot of support behind it, health reasons one of them. Another just being it's less wasteful. If you buy cannabis and you smoke it, you're burning a lot that you're not using. So it's a lot more efficient to vape. mCig started off as a $10 vape pen, very simple almost a disposable if you think about it.
Since then they've done a lot and I'm not going to go in all the details but they have a separate subsidiary called Vitasic. They've raised the price but the $5 disposable vitamin-enriched vape pens, they have nothing to do with cannibis. There's actually a lot of signs out there that smoking on a vape pen, or smoking's not the right word, inhaling on a vape pen can help you quit smoking, with no nicotine neither. So that's one of the interesting place, plus people think they're cool, I don't know, I'm 50 years old, it's not cool to me but I see the Leo's out there using them so it's obviously cool.
Matthew: Right, right. Yeah, the movie star, right?
Alan: Yeah, exactly, but then the third thing that they have they bought a tabletop. They didn't pay very much for it either but they bought a tabletop, vaporizer and so the whole trend towards vaporization, I'd say the negative is it's a little bit commoditized. But I like mCig for a lot of reasons. On the product front I feel like they have the low-end covered very well. Nobody has been as successful as them at penetrating the low-end, creating a brand with the mCig. And then they also have the high-end covered and I think that overtime they'll continue to fill in their products. Second of all, the company is debt-free, very unheard of among these penny stocks. The guy, the CEO, the guy behind it has shown himself to be very shareholder friendly.
Now the knock against the company continues to be it's expensive. At the current price of about twenty cents per share, which is way down from the peak at 90 or so since, it still has the way I calculate it, about a hundred million market cap. This is a huge multiple to the revenue. So that's kind of the... I don't think it's unique in the space unfortunately. Most of these companies... most companies on the OTC for that matter, valuations usually quite challenging to say the least. I'd like to think this company can grow into this valuation but I'd say that's the biggest risk. I throw out one more and that is, I want to talk more about the topic of Canadian medical marijuana but...
Alan: ... there are now five publicly traded companies there. The one that I like the best is called Bedrocan. Bedrocan has been the monopoly supplier. I need to be careful, it's called Bedrocan cannibis. They're affiliate, I guess it's the right way to say it, Bedrocan NV which does own a stake and has a supply agreement, is also transferring IP, things like that. They are the monopoly provider in the Netherlands. The company has been around for quite some time. They know how to grow cannabis, they know how to deal with government antitheism. We can talk more about Canada later but the point I want to make about Bedrocan is their strategy, I think, is brilliant but it kind of looks... I guess the short-term investors they don't quite understand it and that is they started off in this Canadian legal system importing. They are importing so that their profits aren't going to be very high at first because they have to pay to import it.
At any rate, there's only 13 licensed producers in Canada so far. Five of them are publicly trading and Bedrocan has among the highest in terms of patients and reported revenue. But things are just getting started in Canada. Long story short, I think the valuation on Bedrocan is the best among the Canadian license producers and I think of all the companies I've looked at that's the easiest one for me to get my hands around the valuation. Depending on how you look at it, but fully diluted, assuming all the warrants that are right now above the current price were to get exercisers 90 million shares, Canadian stock trading at 66, so that's 16 million Canadian market cap in the United States, obviously a little bit lower than that because 88 and a half percent right now about so...
Matthew: Is there a ticker symbol for that you could share?
Alan: Yeah, so in Canada, that's were trades are very liquidly, it's B-E-D. There's a convenience ticker in the United States B-N-R-D-F. It's not actually a listed ticker.
Matthew: And for mCig, is there a ticker M-C-I-G or...?
Alan: That's correct.
Matthew: Okay, very good. Where do you see institutions coming into play? I mean, generally they have a fiduciary relationship with the pensioners and they might view OTC stocks as too risky. Is that accurate?
Alan: Oh, yeah. The institutions are nowhere to be found in the United States. I spoke at the socionomics conference in April, it was in Atlanta, that's where their headquartered, and the very thoughtful group mainly high network individuals and institutions were in attending tonight. I addressed this topic and I can tell you I got excited not because I thought that they were about to buy these stocks, that's for sure they're not. But the fact that they're interested. So, Matt, you raised the right point. They're not going to buy OTC stocks right now. They're not going to pay these crazy valuations but they're very interested. I think that they would invest before cannabis becomes legal in the United States that's kind of a question.
So where are the institutional investors who do want to play in the market? Well, they're certainly in GW Pharma, that's very heavily institutionally owned. That's one of the things I like about the Canadian market. Canadian medical marijuana is federally legal there. Tweed was the first company, there's some others, TWD on the TSX Venture. I mentioned that there's five companies now that are trading publicly in Canada. Tweed was the first, they all trade on a TSX Venture. The regulatory requirements there are much higher than our penny stock markets. They don't have the primary listings there but the kind of junior listings are well above the pink sheets in the United States for instance.
And institutions in Canada are definitely investing. I don't have really strong evidence of major positions by companies, institutional investors in the United States, but I've identified several institutions that do have holdings in these Canadian license producers.
Matthew: Sure, makes sense. Let's talk a little bit about Warren Buffett, the most famous investor in history maybe, arguably. He talks about how when he's evaluating companies or stocks, he looks for durable competitive advantage or he often calls it a moat, and that is a barrier to entry for competitors to come in and steal the profit margin by just duplicating what this company or that company is doing. You could see it with one of his favorite investments - Coca Cola, and they have a trade secret in their formula and their brand. He also recently bought Heinz ketchup, which their trade secret or their formula. So they have these durable competitive advantages. What companies out there in the cannabis space do you see that have a true durable competitive advantage or at least the beginning as one?
Alan: It's funny you mentioned Warren Buffett because there was something going around the internet, it's true actually, not everything on the internet is true. Warren Buffett-owned company actually is a cannabis play. It's neither we're talking about. I doubt Warren Buffett even knows about this but...
Matthew: Is this Cubic? Cubic...
Alan: Yeah, yeah, yeah, yeah you got it. I don't know if that triggered your question or not, that's not. That does not have a moat in it. It's interesting because I'm actually... one of the companies... one of my patent portfolios they... I don't know if I should say that, but let's say their product would work with the Warren Buffett companies' product. This company that I'm talking about sells, no moat around this, Matt, but they sell reconditioned cargo containers. They're retrofitted to service like miniature growth facilities, self-contained growth facilities. And that the Warren Buffett company Cubic or whatever it is,, basically makes scaffolding that goes around it so that you can stack these things. But to answer your question, this is obviously important. Investors on the space need to understand it's federally illegal right now, okay, federally illegal.
So what this means is there is not going to be a Coca Cola or a Heinz right now. In general, the market is going to be fragmented. It's going to be populated by smaller companies that operate regionally for the most part. When it comes to brands, there are several that are attempting to be a national brand, none of them are in a public market yet. I think that investors will like that and you could get some sort of moat but the moat is probably not going to be a secret ingredient, quite frankly. It'll just going to be in the brand. There are some things that take place in the industry. Again, for the most part, these are not in publicly traded companies, but there's certain types of software that enable regulatory compliance. You can imagine that being... if you built the best mouse trap and becoming industry standard, that would give you a thing, but then again that's not in a public domain right now.
There are companies with proprietary growth technology, some of those are in the public space but I don't think they're proof enough and I don't want anyone to share this symbol. I think that's everybody's goal. We have a huge industry right now that already exists. It's not like this is a brand new industry. Size of markets in the many, many billions, low-end I hear 60 billion, high-end 150 billion. The growth opportunity is what happens is this illegal industry transitions to legal. And I think big picture one of the things investors need to be aware of is you need to have regulatory compliance. And so I mentioned already the software that helps you do that when it obviously be important. Quality of product has never really been... or cost of production, neither of those things have ever really been the key determinants to success in the marijuana space. It's really avoiding getting caught for the most part. So you've had... your suppliers haven't needed to focus on lowering their cost of production so much.
Any sort of process that can improve quality, lower cost of production, this has the potential to create that moat that you're talking about, I don't really see it. Now, if I really answer your question the best I can, I would will tell you that GW Pharma has as close to a moat as you can. It's very interesting, they have a huge patent portfolio. We can't patent a cannabis, you can't even patent strains but they have some patents on technology around it. I think that, on top of the huge investment that they've made in R&D over the last... what is it now, 17 years, 16 years, that in an essence creates a moat. There'll be a lot of companies, I'd like to say, were the next GW Pharma and I would say, "Yeah, right. No." So I would say that's one. And then what else makes a moat? A moat can be created by the government, quite frankly. If you hear it in the... well, all across the country.
I know we have deregulated power now, but the utilities, they are protected by the government in the same way in certain states, at least for now, licenses are being limited. Now, there are no public company ways to take advantage of this but if you're private investor you might consider trying to get a license in Massachusetts, it could be very lucrative. They're limiting the number of licensees. Now, Canada, which I think is one of the most interesting opportunities for cannabis investors right now, has an unlimited number of producers theoretically. So far 13 have been approved, it's been a long time since they've made a new approval. In fact, they took one away. There were 14 now there's 13. On the one hand, the moat is not there because the government theoretically has unlimited number of licenses available, but on the other hand, the barriers to entry are so big. Even if you get that license to actually successfully offering that system is going to be huge. So I think overtime the Canadian market may fall into that type of moot type of opportunity.
Matthew: That makes sense. Now talking a little bit about Schedule One, and that's a great point to keep on emphasizing this, cannabis is still federally illegal which is a huge impetus to a lot of the stocks in the industry moving forward till that gets changed. We've got some big elections coming up here in November. Oregon, Washington DC, Florida has a medical marijuana on the ballot. I mean, obviously there's a trend in play here. Does the trend have enough momentum you think to get a change at the federal level from moving cannabis from Schedule One to something else less severe?
Alan: So this election season is interesting, it's a midterm election and not the four-year national election. You mentioned all of them. On the legalization front, I think DC is the least interesting to me because if they're not talking about a ROPE program there. They're really... it's what I would call extended decriminalization. I'm for decriminalization but what you really want to see is legal production as well as legal consumption. That's the case in Alaska and Oregon. And I would just point Alaska is a small country and it's not contiguous, so probably not as relevant. But Oregon is contiguous to California. We already have Washington and Oregon, you look on the map you see Colorado. All things point to California. That is the hugest market in the country. I do think that that election in Oregon could be pretty interesting.
On the other side of the country, Florida at the Burroughs High, they need 60% of the voters to pass, but if they do so, they'll have medical marijuana creating the first program in the South. The South is not known for being progressive so I'm really rooting for this. I think it's a game changer for the national perspective, let's call it. I'm here in Texas by the way, your listeners may not know that, we're thought to be one of the least likely to get medical marijuana but I'm kind of encouraged. I'm aware of what's going on here on the ground. I think a victory by the voters in Florida would help here in Texas where the voters have no say, it's really the legislature but that's a different story. But all this doesn't really change the big picture which is, like you said, cannabis remains federally illegal and that's not necessarily a bad thing for investors, by the way.
It allows opportunity for the next several years until federal legality is established. My own estimate, and it's consistent with many others in the industry, would be that, maybe at the end of the next President's election it could happen. That's... you know, we're talking about 2020 basically, 2019 maybe. But I'm not so sure that it will. Government has been fighting a losing battle for a long time. It's not like when you get the majority the states of medical marijuana, the states are going to have some sort of States Right issue and make it federally national, that's not the way it's going to work. The stigma needs to be eroded and proof of success needs to be shown. I think Colorado has been a great example on the legal front. Washington the switch just turned in July so it's really too early to tell, but hopefully that one works out as well as Colorado or close. To answer your question, I don't think that the tide is turned yet.
Matthew: Okay. Looking out at the landscape of cannabis executives out there and all the different companies, are there any that stand out, that really have the Midas touch or seem to be able to execute in the way that others can't?
Alan: Yeah, you know that's a funny question because one of the things about the OTC, it's not the A-Team or even the B-Team typically. You got a temper that responds with the bars of very low. I've been doing this now for almost two years and two people have really stood out to me. The first I kind of talked about him earlier, I'll name him by name now but the CEO of mCig, his name is Paul Rosenberg. He has done a very good job, I think, of being shareholder friendly. Like I said, the company has no debt which is rare for the OTC space in general, and certainly for the marijuana stocks it inhabited. Second, he has shown a lack of willingness. Lack of willingness? I'm not saying that right. He has shown a resolved, that's the way I want to say it. A resolved not to dilute his shareholders. Since day one there's not a single share beyond what was outstanding that day.
So this is a great start. He's kept it simple, he's kept his messages very focused, he's done a good job of updating shareholders. Yes, he has his surprises but they're usually positive not negative. He's done some interesting deals and he's been willing to dilute himself. So rather than charge the shareholders for that vapolution acquisition that I mentioned, the tabletop vaporizer, he just used his own shares. I think that's a smart strategy because, let's face it, as I said earlier, the stock's expensive. So how do you create value? You take your expensive stock and you turn it in to something that can produce value overtime. That's kind of his philosophy, and the good thing for shareholders is he's been willing to do that out of his own pocket at least for now.
The second person that's really impressing me is a guy by the name of Derek Peterson, he's a CEO of a company called Terra Tech, T-R-T-C. I talked to a lot of people in the industry and Derek's name is always highly regarded. I asked people for feedback on him, I've introduced him to people, deals sometimes follow these introductions, I always get positive feedback. He has unique experience, he has kind of a Wall Street type of background, but also cannabis, he's separate from Terra Tech. He is one of the principals in the Bloom dispensary in Oakland, California. What I look for in these companies are executives who understand Wall Street and common modern business practices, let's call it, and also people who have some roots in the cannabis space. He seems to offer a lot of balance there. So those are two that have stood out for me.
Matthew: That's great. I'd love to get them on the show some time. You speak really highly of them.
Alan: You won't get Paul Rosenberg, he's very averse to publicity. Derek, on the other hand, has been featured all sorts of places. I can set that up for you probably pretty easily.
Matthew: Oh, great.
Alan: Two polar opposites when it comes to media.
Matthew: Okay. Now a technical question, there's a lot of listeners that won't be familiar with what technical analysis is. Can you give a little background on what that is and if you use it, how you use it?
Alan: Sure. I think one of my philosophies in life is... well, I think you can borrow from a lot of different things, there's no single path. There are people in the investment industry that can tell you everything about a company. They can tell you the birthday of the CEO, what date all the filings have come up the last year, whatever. But they know the company like at the back of their hand, but they couldn't tell you the stock price if their life depended on it. Then you have other people... and that by the way is a fundamental analyst. They're paid to look at the company and do research on the facts about the company and their operations and their valuation too.
Then on the other side you have technical analysis, that's basically looking at charts and volume and prices things like this, sentiment indicators, whatever the tools are, but if you were to ask the successful ones there what they do, and then you said, "Well, what does this company actually do?" They would like, "I don't know, I don't care." So these are two kind of extremes. I think in the middle strategy that uses both fundamental and technical analysis overtime is going to serve people well. So I think in the OTC space, which is where the vast majority of these marijuana stocks are, technicals are very important. You have a lot of volatility, so that's a tool that I find helpful. Now these are just tools. They're not magic eight balls that work. Magic eight ball doesn't work obviously but...
Matthew: It does for me.
Alan: Yeah, I tried to use both of them actually and I do think... you get these people say, "No, fundamental analysis is the only way." Or, "Technical analysis tastes great less filling." I don't think so and I think on the OTC space specially it's very important to pay attention to technicals. There's a lot of shenanigans going in, these things can be faded out with technicals in my view.
Matthew: Now there's no derivatives for OTC stocks, is that correct?
Alan: That is correct.
Matthew: So if an investor wanted to buy a pall color or puture, engage in some sort of options strategy like a color butterfly, all these things don't exist for OTC market...
Alan: Correct. In our space, like on our site, actually I have a gentleman who works with me and one of the things he focuses on is sharing his ideas on GW Pharma options but that's not OTC.
Alan: And that's a very volatile stocks so selling... puts some calls can be a liquid strategy.
Matthew: Sure. Supposed there's a lister out there that wants to start, to put his or her toe in the water with marijuana stocks. I mean, my key takeaway today is that this is very risky and there's so many charlatans out there, it really takes somebody that's spending a lot of time on it like you to navigate this choppy waters and find the few that are worth looking at. That being said, someone that's maybe got some background with stocks and bonds and some real estates, where does marijuana stocks fit in to the portfolio?
Alan: Sure. There's a nice way and a not so nice way to describe it. Irked some of my subscribers by using a term, so I'm going to use the nice one first. Think of it as like venture capital. These are very speculative startup companies, development stage for the most part, not the cream-of-the-crop quite frankly, unfortunately. The marijuana industry is pretty big. Even the legal marijuana industry is gaining size, but most of the industry is not represented by this public companies. You can invest privately in companies, and I actually have a service that hopes with that, Comfort 20 Funders, but you know there's risk on investing privately, liquidity being the huge one.
But if you're looking into public market, think of it as like investing in a public venture capital type of endeavor. The Pejorda [SP] term I use is lottery ticket, and I don't mean it as badly as it sounds. But in a lot of ways that's what this market is. I mentioned there's over 200 names of report to be cannabis companies. I have a focus list much lower than that about 32 names, but even on that list I don't think a lot of those companies are going to make it. I always tell when people ask me, I say 90% of the companies aren't going to make it and a lot of those because they're just crooks quite frankly. So, yeah, I've hired private detectives to help me, that's usually not in the resources of individual investor so...
Matthew: I like it.
Alan: Yeah, so what do you do? So to answer your question, if you're going to participate in the industry, try to find a few companies that you actually think are legitimate. Like I said, I found maybe a dozen or so, that's the first. And second, realize that your chances of playing that are not great. We're very early. So what does that mean to you as an investor? Don't put all your eggs into this basket and diversify within the basket. Pretty common type of stuff, but these are very important lessons in this space because they're very volatile, and my favorite company, I told you one of my favorite is mCig, started the year at nine cents went to 90 cents and it's back to 20 cents. It's having a good year, it's up a hundred percent. But it's not having a good year for anybody that bought it after the year began, quite frankly. Even me I thought it looked okay and say it's 30 cents a couple of weeks ago and now it's a 20. So don't put all your eggs in the basket so that you can afford these draw downs because they happen.
Matthew: Sure, and when you do get a winner it sounds like it could be a hundred percent multiplication on the value so I mean...
Alan: Sometimes in two days. Thanks, Matt, because I wanted to make the point also, don't be an investor in the space. It's ironic because I call them service optimistically 420 Investors, maybe 420 Trader would've been better. It's just not a buy and hold market and I think people are kicking themselves for not selling after these big runs. I have these mono portfolios and sometimes the stock will go up a lot and I sell some. And people are like, "Why? Why are you doing that? You're crushing it. Why are you...? You're a rally killer." You just have to get interested with volatility. If you want to be able to buy one when it's getting crushed you've got to sell when it's going up and I guess that's the second piece I would say. Treat them like lottery tickets but cash them in when you win.
Matthew: Makes a lot of sense. Alan, as we close, can you let people know how they find you online?
Alan: Sure. So I love social media now. It was never my thing but what a great way to connect. I have several different ways. First of all, my website is the easiest to remember, it's 420investor.com. And if you go there and you've never been there before you'll have to... well, I don't think you have to register but if you do register then you'll be able to go further into it. So 420investor.com, but I can be found on Facebook, it's Facebook.com/420investor. And I have... I post things there very regularly. If you don't want to be a subscriber to community that's a good way to stay on top of big things that are going on because I do post there. I'm on Twitter, my handle there is @invest420. I'm also on LinkedIn, I run a group there called Cannabis Investors and Entrepreneurs. You can connect with me directly or go straight to that group. And, finally, each trading day, I publish something called TheDailyDab.com. I will email it to you if you register on my website, but if you just want to go to that website, it's free and you can get an update every single day.
Matthew: Great. Well, thanks so much again, Alan. This is a great interview. I really appreciate your time.
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 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 cannainsider.com/trends. That's C-A-N-N-A insider.com/trends. Have a suggestion for an awesome guest on cannainsider.com? Email us at firstname.lastname@example.org. We'd love to hear from you.
Dr. Lester Grinspoon is Associate Professor Emeritus of Psychiatry at Harvard Medical School. He has been featured in several marijuana documentaries including: The Union and The Culture High. Dr. Grinspoon talks about his personal friendship with Carl Sagan and how his son used cannabis to overcome nausea from Chemotherapy. Dr. Grinspoon believes we are brainwashed by the government to the think marijuana is harmful.
Matthew: Hi, I'm Matthew Kind. Each week I'll take you behind the scenes and interview the insiders that are shaping the rapidly involving legal marijuana industry. Learn more at cannainsider.com. That's C-A-N-N-A insider.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 cannainsider.com/trends. That's C-A-N-N-A insider.com/trends. Now here's your program.
How does a professor of psychiatry at Harvard Medical School overcome tremendous cultural bias against marijuana to become one of the plant's most outspoken advocates? We're going to find out the answer to that question today in our discussion with Dr. Lester Grinspoon, Associate Professor Emeritus of Psychiatry at Harvard Medical School. Dr. Grinspoon is the author of two books, "Marihuana Reconsidered" and "Marihuana: The Forbidden Medicine." We are very fortunate to have Dr. Grinspoon here today. Welcome, Dr. Grinspoon.
Dr. Grinspoon: Thank you. Delighted to be here.
Matthew: So glad to have you on the show. For people that aren't familiar with you, can you provide a little background on your career and how you got started as a cannabis advocate?
Dr. Grinspoon: Yes. In 1966, as I was at that time a young faculty member of the Harvard Medical School. I guess at that time I was an instructor, and I was very interested in opposing the Vietnam War. One of the people I met who shared that interest, this was a very early in and the growing interest in trying to stop that war, I met the man who was to become my closest friend, Carl Sagan.
Matthew: Wow, that's a great friend to have.
Dr. Grinspoon: Yeah, it was. We were very close. I was best man at his last two weddings. We shared an awful lot. And at first, the one issue that existed between us was marijuana. He smoked marijuana and I did not. Furthermore, as we met more of his friends and started to get together with them we discovered they all smoked marijuana and these were not unsophisticated people. I would say, "Hey, you shouldn't be doing that, Carl." His friends, to his friends, "It's a very harmful drug and you're harming yourself."
Dr. Grinspoon: Carl would say, he'd put a joint to his lips, take a puff and then say, "Lester, try it. It's perfectly safe." Well, I objected to that. Finally, in 1967, I asked myself what the basis for my objection was. Well, really it was what the government, the drug-free America wasn't around at that time. It was just the government. I went into the Countway Library, it's the library at Harvard Medical School, with the intention of writing a short paper, which would be accessible to young people in which I would provide the medical and scientific data which provided the basis for this prohibition. What happened was, and I had an epiphany, I very shortly discovered that I had been 180 degrees off course.
That I, like just about every other American, had been brainwashed into believing that this is a very dangerous drug. I came away from that first experience in the library with, to sum it up, the notion that the most harmful thing about marijuana was not any inherent psychopharmacological property of the drug but rather the way we, as a society, were dealing with it at that time. Mind you, this was '67. Arresting about 300,000 people per year, and as everybody knows it's grown to, over the last few years, an average of about 750,000 per year.
Dr. Grinspoon: In 2011, it almost reached 900,000.
Dr. Grinspoon: And, of course, now we've accumulated somewhere between 24 and 27 million people who have been arrested. Not to speak of the rest of us who have been criminalized by this absurd prohibition.
Dr. Grinspoon: So that's how, that short paper was published as the lead article in the Scientific American.
Dr. Grinspoon: Let's see, November 1969. Now after that came out, there was a lot of people paid attention to that. Several book publishers came to my office and asked me to write a book. I had no intention of doing that. I was involved in other things but finally I agreed to do it with Harvard University Press. I did that for several reasons. One, I found learning about, if marijuana isn't addicting learning about it is. I found it fascinating. Everything from how I had been, like everybody else had been, so deceived about this for so long.
Matthew: How do you think they do deceive? How do you think people do get deceived and brainwashed, as you say, by this? What's the methodology? I mean, I have my own theories but I'd like to get your take on that.
Dr. Grinspoon: Well, the only authority at that time was the government and the government insisted that it was a very dangerous drug. Now that was codified in the 1977 Marijuana Tax Act, which did not prevent it from being used as a medicine at that time but it was so clumsy to use it and you had to pay a tax and so forth. Doctors, not just for that reason, I can go into other reasons why medicine just left marijuana in the dust and has allowed itself by this allopathic medicine, the kind of modern western medicine, the kind of medicine I practice and most people do. It just eschewed having anything to do with medical marijuana. As a consequence, doctors became increasingly ignorant. On the other hand, the government went further than the Marijuana Tax Act. There was the Comprehensive Drug Abuse Act of 1970, which put marijuana in Schedule I, the first of five Schedules, the first being the most limiting of all.
That is, the drugs in it were heroin, LSD, and marijuana. This prevented doctors from doing any research. You can't even do research on Schedule I drugs whereas, for example, cocaine and cytidines at that time were in Schedule II drugs, which are much more difficult than marijuana. All of the drugs, for example, you take any benzodiazepine, they are scheduled and one can get into real trouble with any one of them including becoming really addicted and so forth. The government kept raising the ante of this prohibition until it's become so severe that, as I say, we were arresting almost 800,000 people per year.
Now if you think of the cost of that prohibition and those arrests. When somebody is arrested from that, if they've got a rich daddy who can afford an expensive lawyer, these young kids they didn't go to jail but the people who did and of people who were caught pushing and selling it, many of them went to jail. For anybody who has an arrest record, that now a lot of these people from the '60s and '70s are adults but that arrest record still haunts them and compromises some aspects of their lives. It was a very serious problem.
Dr. Grinspoon: I put it as though it's in the past tense. As though the prohibition is completely undone but, in fact, I do think that the cat is out of the bag and it's never going to be put in. With 23 states now allowing medical marijuana to a greater or lesser extent and two states where the prohibition has been completely dismantled, I think it's fair to say that the prohibition is well on its way, that is the destruction of this prohibition is well on its way. It seems to me that we are now a bit of a culture looking desperately for a way of dealing with this new kid on the block. But marijuana is really here to stay. It's just a question of defining the rules by which it will be regulated.
Matthew: Sure. It's pervasive though, the medical community, there's still a lot of lingering misunderstanding about the plant. I was watching a video yesterday and this doctor said, "I never felt the need to prescribe my patients dope nor do I feel like that will help them in any way to smoke dope." He's kind of taking this strange view of it like it's still 20, 30 years ago.
Dr. Grinspoon: He doesn't know enough about it.
Dr. Grinspoon: There was recent, small poll that you can't take it too seriously but it was interesting to me. It was taken at the Beth-Israel Hospital, which is one of the major Harvard teaching hospitals that were about 70 people have an appointment on that staff. A questionnaire was given to them and about 50% replied, "Well, I don't want to go into all the data on that." It was very interesting that only 7.2% would agree with, say, that I would document a letter that's required by a patient. In this state marijuana now has medical, is a medical marijuana state but it is not a market yet. Only 7.2% said they would sign. You've got to get a document for a letter. That's the only connection with what I call canabinopathic medicine...
Dr. Grinspoon: ... to allopathic medicine, the modern western medicine. The results also indicated that a vast majority of the citizens consider themselves quite ignorant about marijuana, which doesn't surprise anybody that hasn't been around for a lot of decades now.
Dr. Grinspoon: The way doctors get their drug education is through the pharmaceutical industry. When we go to medical school we learn all about the theory of pharmacology and we learn about a few drugs but mostly we collect the drugs that we use, information about the drugs that are used every day from the pharmaceutical companies, journals, advertisements, and as you read in the newspaper recently various ways in which the drug companies seduce some physicians to be virtual spokespersons for their products.
Dr. Grinspoon: It's not surprising, the ignorance of doctors where cannabis is concerned.
Dr. Grinspoon: What is amazing is in the... somewhere down the line is going to be seen as a wonder drug just like penicillin was in the early 1940s. You will remember that 1941 we began the Second World War and knowing that most people who die in battle died from infections up until that time. We were going to enter this war with only one antibiotic, sulfonamide, and it wasn't a very good one at that. Two investigators took penicillin down from the shelves where it had been placed after it was discovered in 1928 to see if it had any medicinal uses. To make a long story short, in about five patients to whom were given this, were given penicillin, they had various kinds of gram positive infections. All were cured. This very rapidly, needless to say, was developed so that before long it was three things about penicillin were clear.
One, once it was produced on the Carnegie Scale it was very inexpensive. Two, it was remarkably non-toxic, and three, it was very versatile. It could cure many gram-positive infections. It could cure spirochetal infections, etc. When we look at cannabis now, the same three things hold true. One, once it's free of the prohibition tariff it will be remarkably inexpensive. It will certainly be less expensive than the pharmaceutical products it will replace. Two, it is also very non-toxic. Contrary to what we've all been mis-taught it's not a very harmful drug. It's a remarkably... it's a drug remarkably free of toxicity providing it's used intelligently. And then three, it is very versatile. I won't go into all the things that it's for. When I wrote the book "Marihuana: The Forbidden Medicine" Mr. Bakalar and I had anecdotal data that allowed us to describe about a dozen or so symptoms or disorders for which it was useful. Now, if you look at the list of things for which it appears to be useful it's quite large.
Dr. Grinspoon: So it is a very versatile medicine and becomes more versatile as we learn more about CBD and I suspect some of the other cannabinoids besides are tetrahydrocannabinol.
Matthew: What do you feel? How do you feel about a pharmaceutical drug that's meant to replicate certain properties of the plant like Marinol? Where do you see that? How would you compare Marinol to actually consuming the plant directly?
Dr. Grinspoon: Well, that was a problem for me because I had heard when I was... just when I was starting my... just before I started the book I heard of a little pharmaceutical company called Uniden that was developing a synthetic tetrahydrocannabinol and they did. They synthesized THC. It's the same 21-carbon molecule as nature makes. But I was so excited about it I decided I should sell the stock I bought in them because I thought I would be praising it in this book. I did not want to have a conflict of interest. Well, as it turns out Marinol is not very good but now we know the reason. It is THC, but THC alone doesn't work nearly as well as a combination of CBD, THC, and there has to be terpenoids in it. I call that the ensemble effect. You have to have those three to get most medical, to soothe most medical problems that cannabis can touch.
I was going to say something else about that. What was your question?
Matthew: Do you think that the pharmaceutical companies are going to try to hijack this because it's--
Dr. Grinspoon: Yeah. Well, they can't hijack the whole plant. The plant can't be patented. Pharmaceutical companies make money on a patent, if they can get a patent. It's a 20-year and while it takes up to three years to do all the kinds of studies that are demanded by the FDA before it can come on the market, they then have about 17 years to exploit that. So, for example, when Prozac first got on the market it was sold at a pretty high price and made a huge amount of money until the patent went out. They make a huge still does make money but not at the same order. I believe that the pharmaceutical companies are looking for ways to simulate what cannabis can do and good luck to them. If they can and they can compete price-wise, terrific. I don't think they can do that, but what they might be able to do is, for example, marijuana leads to the munchies. Anybody who uses it knows that. Ordinary dish will seem as a culinary experience...
Matthew: That's right.
Dr. Grinspoon: ... when one is high. Now, if a pharmaceutical company could invent an inverse agonist to this munchies effect. In other words, one which would do just the opposite, make whatever you taste not very interesting, they might have the first really safe appetite suppressant. On that they could make a lot of money. I don't rule out the fact that the pharmaceutical companies as they explore, and they are desperately exploring now the various cannabinoids and combinations, they may come up with some things that are more useful. The things they have come up with now, for example, GW Pharmaceuticals, a British firm.
Dr. Grinspoon: What they've done is provided liquid marijuana. It's THC and CBD. It's expensive and you have to take it, they say you take it, they say it's absorbed under the tongue. To the extent that some of it stays under the tongue and then is absorbed by the buccal mucosa, that effect will come on in about 15 to 20 minutes but most of it probably runs down into the esophagus and gets swallowed. If you've got to keep something under your tongue very long you find that it seeps out of there and you swallow it. Now, when it's swallowed it's like any other oral marijuana. The effects don't start for an hour and a half or two. On the other hand, the stuff that goes through the buccal membrane, because of the different circulatory route, it doesn't have to go through the liver and become 11-Hydroxy THC. It goes directly up to the brain and without modification and it is much faster but that's only...
With Sativex it's a bicameral effect. The other ones like Cesamet, the other ones like Marinol, the synthetic THC, in my experience with people who have tried both ones of these synthetics and smoked or ingested whole marijuana bud, every one of them agrees that the latter is a much more effective way. Now, there are people who use Marinol or Cesamet or Sativex, the British one I mentioned, but they do it because they're afraid of the illegality.
Dr. Grinspoon: They don't want to do anything that's illegal and so this is their choice. Once it becomes not illegal, I mean it's not illegal as far as the state is concerned in 23 states and that's going to increase in this country, but that's state law, federal law, it's still a dangerous drug, to quote the government, and it has no medical use. Once we get to the point where the feds have finally bowed out of this thing or enacted legislation which frees people of that, I think these synthetic drugs are not going to be very profitable for the manufacturers because they're just not as good as using cannabis either smoked or orally. Nowadays, as you know, there are many different ways of taking cannabis bud itself or its products so there is a choice of ways of ingestion.
Matthew: Sure. Now, can you tell us a little bit about your son, Danny, his diagnosis and how you integrated cannabis into his treatment plan?
Dr. Grinspoon: Well, it goes like this. In 1967, which happened to be, as I mentioned before, the year I went into the library to find the basis for this prohibition, my son in July of that year was diagnosed. He became sick, he was diagnosed as having acute lymphocytic leukemia. I asked my Professor of Oncology at the Harvard Medical School when I was a student, was Sidney Farber. I asked Sidney to take care of him, which he did. Danny, at least early in his treatment, was not too uncomfortable, but when he started to get the chemotherapeutics, which can cause nausea. Some of them it's a nausea that goes right down to the toes. That was a problem and he just hated it. One day, after Dr. Farber had left, had retired, his committee organized to find a replacement. Chose a man by the name of Emil Frei who became the head of oncology at the Children's Hospital and shortly after he arrived Betsy, my wife, and I were invited to a dinner party to meet him.
At the dinner party he had read "Marihuana Reconsidered" or at least the chapter on 19th century use of marijuana. I think he was interested in this. His patient Jimmy [inaudible 00:7:58]. I'll get to that. He asked me the question. He said, "Now, cancer chemotherapeutics can cause very bad nausea. Do you suppose this could be used in the treatment of that?" And I said, "Well, it was certainly used for nausea in the 19th century but, of course, cancer chemotherapeutics were not around at that time." The conversation was left at that point. On the way home, Betsy asked me, "Given what you said about that shouldn't we get..." Betsy and I did not smoke it at that. She said, "Shouldn't we get a small amount of marijuana for Danny to see if it will be useful for him in the same way it was useful for Jimmy?"
Oh, I neglected to mention that the reason Dr. Frei - to go back to that conversation at the dinner table. The reason he asked the question, Dr. Frei said was because in Houston, where he'd come from, he had a 17 year old boy who was putting a lot of struggle against taking cancer chemotherapeutics because of the nausea and vomiting which follows. He'd really make it difficult for them getting on the gurney to get the shots and so forth. One day, as Dr. Frei related, Jimmy just came in and hopped up on the gurney, he got his shot, and sort of saluted the people in the treatment team and said, "See you in two weeks." He was due for another one in two weeks. No bitching or complaining or anything. He came in the second time and had, again, just got up on the gurney no problem.
Afterwards, Dr. Frei asked him, "Jimmy, this is so different from the way you've treated previous injections. Can you help us understand that?" Jimmy said, "Sure. It's as simple as this. In the parking lot, I smoke just part of a joint." He had to explain to some of them what a joint was. "I do that 20 minutes before I come in." Dr. Frei, that's when he asked me, "Do you think this would have any... this 19th century experience would have any bearing on this?" That's when I said, "Well, it certainly might. I don't know cancer chemotherapeutics but it certainly is a great anti-nausea." So Betsy said, "Shouldn't we get that?" I said, "I don't like the sound of that." I say this, but it's true. I said, "No, we can't because it's illegal and, two, we don't want to offend the people at the Jimmy Fund building who have taken such great care of Danny." That was the end of the conversation.
Well, two weeks later, when I went into the... my office was right near the Children's Hospital and I could just walk over there and meet them in the treatment room. They came in, oh, when I came in they were already there waiting and whereas usually it was very... it was clear that something uncomfortable was coming up. You could read it on their faces. This day they were joking and seemed to be having a good time. Finally, I insisted on being let in on the joke. I was told Betsy had gone up to the high school, the Wellesley High School, and asked his friend Mark in the parking lot, right from the car when Mark there, if she could get him a small amount of marijuana.
She didn't say what for. Mark, once he got over his amazement that Mrs. Grinspoon would ask that, ran off and he was the one who provided Danny with a small amount of marijuana in a pipe. Danny had a few puffs of it in the parking lot, just like Jimmy had done in Houston. When he came in this time I could see he was much more relaxed and secondly, and most importantly, when he got off the table he said, "Hey, Mom. I know there's a Submarine sandwich on Brooklyn Avenue. Could we stop and get one on the way home?" When they got towards Wellesley where we lived he said, "No, no, no. I don't want to go to bed after that. I feel great. I want to go back to school." So she took him back up to the school.
From that time on, the next day I called the people who were on as head of his treatment team and told them I wasn't going to get in the way of his doing this in the future. I was told by the Chief there, "Don't, and have him smoke it in here. I want it in the treatment room. I want to see this for myself." I said, "What about the nurses?" He said, "Don't worry. I'll take care of that." Well, the same thing happened the second time and then he and I went up to see Dr. Frei in his office, he was the head of the department, to tell him that we thought there ought to be some research on this, some modern research. That led to the first paper published in the New England Journal of Medicine, I think it was in 1975, on the use. The government wouldn't let it be used on children. It had to be adult men. But at any rate, it certainly worked and it was published in the New England Journal of Medicine, which was the first time anything about its therapeutic use and all this had been published in a journal, a medical journal.
Matthew: What a story that is. So he continued to use, Danny continued to use the marijuana to treat the nausea ongoing and it wasn't a problem at all after that.
Dr. Grinspoon: It was no longer... he had many episodes of chemotherapy treatment. He lived for about another year and a half or so. He never, never again had that kind of problem. It was great for the family because we all... he used to seek to take him right home. He would be set up. There'd be a bucket on a towel on the floor and that's where he would be. It wasn't just that he vomited but afterwards the dry heaves and the whole thing would go on for about eight hours. It was a great relief to everybody in the family.
Matthew: That's so good to hear that. What do you think the most promising applications for marijuana are now? I mean, obviously nausea is a big one. Helping people eat who can't eat or don't have a hunger. What are some other applications you see on the horizon that get you excited?
Dr. Grinspoon: Well, there are so many it's hard to mention any one. We don't have the kind of data that we need to say it's clear, it's helpful in Parkinson's Disease, for example. Something I didn't even go into when I first wrote about it as a medicine. We don't know how many people [inaudible 00:36:20]. What about multiple sclerosis? Does it help all of them? Certainly. I've had contact with so many of the people it does help but it doesn't mean I can say, "Hey, marijuana is the best approach for multiple sclerosis." I think it is but we need the kinds of studies to tell how helpful. Now I say that on the one hand but on the other hand it's such a remarkably free drug in terms of toxicity that if it's you [inaudible 00:37:05] you have very little... I will say that many patients who, let's say, some of these patients, for example, the first one I saw with Tourette's Syndrome, which is a people have movements in other words that they can't control.
I didn't know anything about it until a man came up. I think he came from Ohio. He wanted to persuade me. He couldn't over the phone. He came into my office with a friend and he took out a joint and I could describe his symptom but it was very crippling for him. He couldn't, it would be hard for him to do much in life with the head shaking and stuff that he had to do. He lit up a joint and within 30 seconds to a minute he stopped doing that. Then I looked at other people and I have no question about it. There are so many and for many of them I will say the first time, for example, the first time an ulcerative colitis patient came to me for this and I said, "Well, I have no experience with this but it's a drug that isn't going to hurt you. You have to have someone teach you how to use it if you don't know yourself but you can try it and see if it works. If it does, terrific. If it doesn't, you've lost nothing. You won't be harmed by it at all."
Dr. Grinspoon: And sure enough now that's regularly thought of as a treatment for this as it is for other gastrointestinal diseases. It's hard to say what's the most... like Crohn's Disease, which is a disease of the small intestine. Inflammation and cramping and pain and it used to be solved surgically. A surgeon would go in and take a segment of the inflamed segment of the small intestine out because you have a lot of it, but that was pretty unpleasant and it would recur in another part of it. Well, now people will use cannabis, they start to get cramps and diarrhea or whatever those symptoms are. They start to use cannabis and they can go to work. If you look at the book "Marihuana: The Forbidden Medicine" these are patients who are talking about their experience with it. It's pretty convincing but can I say, "This is the treatment." I think it's the best treatment but does it affect... is it useful for every patient who suffers from this?
The answer is we don't know. There are lots of people with Crohn's Disease out there and many more of them are discovering how useful it is, but their doctors should be saying to them, "Well, try it." You know?
Dr. Grinspoon: "It's not going to hurt. I'm going to tell you how to use it or I'm going to insist that you get somebody who knows how to use it to help you to learn to use it and let's see." My bet is if you used it, it will help but it's not going to hurt you to try and prove that.
Matthew: We talk about the medicinal benefits of cannabis and the scientific objective benefits to nausea or maybe seizures but do you think there is a spiritual component to cannabis? Does it enhance your spiritual life?
Dr. Grinspoon: No question. You see, just to go back a bit. When I first was disabused of my notion that this was a harmful substance part of the reason I became interested in it is because it was such an interesting drug. Now, one of the... and now, years later, I believe there are three large somewhat conflated categories of cannabis use. The first one as a recreational drug. It's so far better than any other drug. I mean human creatures innately have a desire to alter consciousness, and I'm not going to go into that. It's a long story but there's no question about that. Alcohol is used recreationally. It provides an altered state of consciousness, in my view, with a lot of bad possibility side effects. Cannabis provides a different kind of altered state of consciousness and one which is pretty free of untoward consequences and there's no hangover in the morning and so forth.
The second category of usefulness is medicine and that's, we've been describing that. There's no question now. There's 23 states and a couple more are going to come on board this November and a couple more are going to get free of the prohibition of the other this November, I mean, election day. It's going to be a very big medicine. In fact, I've just written a paper on cannabinal with cannabinopathic medicine. A paper on where is it going to go because it's outside of allopathic medicine but what we won't get into that now. At any rate, there's medical use.
Then, thirdly, there is what I call the enhancement capacity of marijuana. Now, some of the things it enhances are sort of free completely. I mean, anybody who's taken, I've mentioned the munchies effect, and it really enhances the enjoyment of a meal. There's no question about it. It also... and another one that's sort of free, it comes with a [inaudible 00:44:13] for anybody who's gone to bed with a person he loves stoned knows what it does for the sexual experience. But the enhancement is something that it goes beyond that. Lots of people believe that it helps them in achieving states that they can't do as easily when they're not stoned. For example, a spiritual state. Listen to the St. John Passion without cannabis and listen to it with it. It's a different experience [inaudible [00:44:57].
People who are creative use it. Carl Sagan, who was very creative and very successfully creative in a number of directions, he found it very useful.
Matthew: Did you and Carl ever partake in cannabis together?
Dr. Grinspoon: Oh, many times.
Matthew: That had to be some interesting conversations. I mean, for everybody out there that watched Cosmos way back when and now the remade version of Cosmos that's out is just incredible. I know his family is involved in producing that. What were some of the things that you two talked about? Did you get into outer space or extraterrestrial?
Dr. Grinspoon: I could... we used to talk about some things. I couldn't possibly replicate the things we talked about. One thing about Carl was, people used to say, you don't hear it so much now. "People who use marijuana just don't work as hard."
Dr. Grinspoon: Well, let me tell you. Carl Sagan was the hardest working man I've ever met. I mean, even in casual conversation if an idea or thought came or something he wants to spend more, he'd pull out an envelope from his pocket and write it down. When we got into the modern age he'd have a little tape recorder or write it down. He was always working, so to speak. But who knows how many topics we've talked about - many.
Matthew: I bet. Gosh, I'd like to be a fly on the wall for those. Well, as we close Dr. Grinspoon, is there any way you'd like for people to reach out to you or how can they read your books?
Dr. Grinspoon: Well, they can read my books if they can read because they're available. I think "Marihuana: The Forbidden Medicine" is still available on Amazon. It was published in '93 but it still sells quite well.
Dr. Grinspoon: "Marihuana Reconsidered" was republished by several companies, Bantam Books and a company in California whose name I can't remember at the moment, but the point is those books are available and if I were advising someone about "Marihuana Reconsidered" I'd say, "Skip the chemistry chapter. It's all old."
Dr. Grinspoon: But the history up to where it goes is accurate and the descriptions of its use for going from the members of the [inaudible 00:47:59] like Godiet [SP] and Volere [SP] and so forth, they are... these guys had extravagant imaginations and the combination of hashish and they're an interesting experience to read them. But I also provide essays by people, modern people like the essay "Mr. X." I asked Carl to write an essay for this book, for "Marihuana Reconsidered" and he did. It's "Mr. X". It's now up on my website marijuana-uses, which the website marijuana-uses.com, which is one of my websites. The one that is devoted to the idea that marijuana is useful in more than... it's useful as an enhancer of various kinds of experiences. That book can be read and the website, the medical marijuana website rxmarijuana.com for people who are interested in it as a medicine and getting some idea of what people who have used it have said. There are a lot of accounts on that or if they're more interested in the enhancement characteristics they might want to read marijuana-uses.com.
Matthew: Weren't you also in some documentaries as well?
Dr. Grinspoon: Yes. I've been included in a few. If they go to... what's it called? YouTube. There are a number of documentaries but the one that's just going to be screened in November "The Culture High."
Matthew: Sure, Adam Scorgie. That's a really... how about "The Union"? Were you in a vid for "The Union"?
Dr. Grinspoon: Yes. I was.
Dr. Grinspoon: I'm in the other one, the new one as well.
Matthew: "The Culture High." So "The Union" and "The Culture High." Okay.
Dr. Grinspoon: "The Culture High" I don't have as big a part in it but I frankly think it's probably about the best documentary on cannabis. My daughter-in-law who knows nothing about cannabis is going to see it because she wants to learn something about it. I think anybody would be rewarded by seeing that. There's some excellent people who are quite articulate who talk about it.
Matthew: Great. Great. I look forward to seeing that. I really liked "The Union" so I'll look forward to seeing "The Culture High" and hearing you in that.
Dr. Grinspoon: "The Union" was also, I thought, a superb film.
Matthew: Yeah. Well, thanks so much, Dr. Grinspoon. Really appreciate you taking the time to speak with us and help further our understanding of the plant. Thanks again.
Dr. Grinspoon: My pleasure.
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 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 cannainsider.com/trends. That's C-A-N-N-A insider.com/trends. Have a suggestion for an awesome guest on cannainsider.com? Email us at email@example.com. We'd love to hear from you.
Interview with Greg Wilson, Chairman and CEO of VidaCannabis.com. Greg talks about: R&D, their new 315,000 Sq Ft growing facility, and more. Listen to the interview below or find the interview on iTunes
Interviewer: Today we're going to be hearing the story of Vida Cannabis, headquartered in Canada's capital of Ottawa. Vida has its sights set on becoming one of the largest and most advanced cannabis growers in Canada. Vida recently broke ground on construction of a state of the art 315,000 square foot production facility in Nova Scotia. We are fortunate to have Greg Wilson, the Chairman and CEO of Vida Cannabis with us today. Welcome Greg.
Greg: Thank you very much.
Interviewer: Glad you could be on the show. For people that are not familiar with Vida, can you give us a little background on what Vida is?
Greg: Yes, absolutely. Vida Cannabis was conceived from inception to build a leadership position in the medical marijuana market in Canada. We have assembled what I believe is the top management team in the country in the key areas of security, research, quality assurance and cultivation. We're in the process of obtaining a commercial production license from Health Canada under the MMPR, which stands for Marijuana for Medical Purposes Regulations, which came into effect on April first of this year. And as you mentioned, we purchased a 315,000 square foot building in the town of Stellarton in the Province of Nova Scotia, and we're nearing completion of a phase one build out that will include a 600 light, state of the art hydroponic grow facility.
Interviewer: God, that's absolutely massive, 315,000 square feet.
Greg: It's big, it's actually seven acres under roof and so it certainly gives us the size and scalability to expand in what we see as a market with significant growth over the coming years.
Interviewer: Okay. How did you get into the medical marijuana industry, I mean did you wake up one day and say I must be in this industry and build the biggest grow facility in Canada? Is it the biggest grow facility? It sounds like it might be.
Greg: Well, it's the biggest that we know of.
Greg: At the present time. And I hadn't really thought too much to be honest about the industry itself, but after watching this CNN documentary hosted by Dr. Sanjay Gupta...
Interviewer: Oh sure.
Greg: ...in August of 2013, I really started to think about the medicinal power of marijuana, and I was intrigued by the opportunity to create a business in a market that is in the early stages of significant growth and at the same time, be in a position to help patients who rely on marijuana for a variety of ailments.
Interviewer: Good timing. Are you looking to sell cannabis at the retail or wholesale level?
Greg: Our plans are to provide medical marijuana directly to patients, so at the retail level.
Interviewer: Okay. When do you estimate you'll have your first harvest and how big do you estimate that will be?
Greg: Well as I mentioned at the outset, we're in the process of applying for a license, and at present we are in the security clearance stage.
Greg: So our next milestone is the granting of what's called a ready to build letter, which is analogous to conditional approval.
Greg: Now we've already started construction in anticipation of that letter, and we hope to be ready you know early in January for an on-site inspection by Health Canada and at that inspection there will be a focus on security protocol and quality assurance standards, and if we pass that inspection, we'll at that point be granted the right to start growing which would put us in position to ship to patients in the Spring of next year.
Interviewer: Okay. You know as you're in the midst of it right now, what do you feel like Health Canada, Government officials, and regulators are doing right, what are they doing wrong, do you feel like it's too onerous in any way or do you think that what they're, the proper controls are in place, how do you feel about it overall?
Greg: You know, I think the MMPR is a step in the right direction. Again it was put into effect April first of this year and it really focuses on large scale commercial producers. And so I like the program, I think it's bringing needed regulation to the market. There's very strict quality control and quality assurance standards, which are good for patients looking for marijuana as medicine, and so I think there's a lot they're doing right. It is in the early stages of new legislations so I do think there will be change. One change we'd like to see is a different delivery method. Right now, according to Health Canada's guidelines, we ship by wither mail or courier directly to the patient.
Greg: And given the amount of money that spend to secure our facility, we're not sure that's the most secure or safe form of delivery. So we're hoping over time that that gets addressed.
Interviewer: So you're hoping to be able to have patients come into maybe a retail location and purchase real time instead of having to wait for a courier or mail, is that what you're hopeful for?
Greg: We do see some form of dispensary model evolving.
Greg: That will take some time but if they're properly secured and if they're you know professionally run and very patient centric, then we do you know, think that that would be a more viable model you know to work with patients longer term.
Interviewer: Now I just want to stop and talk about the facility in Stellarton Nova Scotia, the grow facility. I mean this is so outrageously huge I just got to get some more details. Is there any greenhouse aspect to this grow facility or is it entirely enclosed like a building and what's the security like there? You touched a little bit on the security but can you give us a little more detail?
Greg: Yeah, absolutely. It's an old warehouse facility. With 18 high walls, very secure, you know very few windows, and so you know it's a true indoor fully secure facility. We're actually implementing a level ten security standard, which is the highest level available and includes three meter high perimeter fence with barbed wire on top dug down two feet below surface, there's 24 hour surveillance, night vision cameras, thermal imaging on the roof, and biometrics inside to control access and I believe our facility will be the most secure medical marijuana facility in Canada and will set the standard for those that follow. Interestingly our head of security is Derek Ogden, who spent 27 years with the RCMP, the Royal Canadian Mounted Police.
Greg: And for the last seven of his 27 years of service he rose to the rank of Director General and Chief Superintendent in charge of the drug enforcement department across Canada and had 1300 investigators reporting to him. So Derek has tremendous experience working with Health Canada, working with security forces and you know is a huge sort of part of our team and that really resonates with Health Canada in terms of what they're looking for in terms of security.
Interviewer: That's great. I know you can't speak for Derek but that's a big turn about to go from you know RCMP or Government Enforcement to then security on your end, I mean has his attitude toward the plant changed or was he always in support of legalization?
Greg: You know if you ask Derek, he'll say in effect he's sort of working for the Government because he's going to be working for a licensed producer that is subject to very strict standards set out by the Government for the safe delivery of the product, you know, for delivering a quality product that again is medicine to patients. So in a way, Derek still feels he's working you know with the Government to enforce very high standards in this nascent industry.
Interviewer: Cool. How much has been invested in Vida so far?
Greg: Well, we raised a total of just under $10 million to date, and we'll be spending a total of about $12 million on the facility itself by the time we're done. And we expect to you know be finished construction sort of in the December time frame of this year. And we're currently raising additional funds to finish the building.
Interviewer: Is there still opportunities for investors to participate in Vida's growth and how can they do that if so?
Greg: Yeah, it's a private route of financing that we're doing right now. It's only available to accredited investors.
Greg: In Canada, the U.S., or foreign. And if anyone is interested, they could you know just go to our website or contact me through our website for more information.
Interviewer: Okay. So a little more detail circling back to Stellarton, you can tell I have a fascination with the size of this grow facility. Will that be broken down into like sub rooms, smaller rooms, how will that look from the actual grow perspective?
Greg: Right, so we're starting with an initial phase one build out of 93,000 square feet which will include about 35,000 square feet of actual grow space. And the rest of the areas will be you know employee areas, employees will have locker rooms, there will be shower facilities where they'll shower and they'll put on pharmaceutical sort of grade gowns, they'll go through a negative ionizer before they reach the cultivation area to ensure that there's no pests or pathogens introduced to the cultivation area.
Greg: There's also you know, shipping, receiving, there's a security area, and we're also going to have an onsite laboratory, which is quite unique to Vida. And so there's a lot of infrastructure bring built into the initial phase and again the grow facility itself will be broken down into four different grow rooms so as the plants advance to different stages of the growing cycle, they'll move through these different grow rooms.
Interviewer: Okay. And you mentioned a little bit about a lab on site, can you tell us what Vida's goals are in terms of research and development?
Greg: Yes, absolutely. We're very fortunate to have as our Chief Research Scientist Dr. Pritesh Kumar who earned his PhD in Cannabinoid Pharmacology and for the past six years has managed the cannabinoid research and testing lab at the University of Louisville in Kentucky. And Pritesh is a published expert and a featured speaker at medical marijuana conferences. And one of the objectives at the lab will be to develop proprietary genetics that can then be tested in clinical environments with research collaborations that we're creating. And one of those research collaborations that we're very excited about is with AltMed, a medical marijuana company based in Florida that shares our research focused, science based approach to producing pharmaceutical grade marijuana.
Interestingly again AltMed is setting up a lab of their own in Florida and we plan to work together to again develop proprietary genetics and then collaborate to really advance research in this area and provide clinical evidence and efficacy to the medical community which and the doctors we've talked to are open to prescribing medical marijuana but are clearly looking for more clinical evidence on the effectiveness to support this as a medicine.
Interviewer: Okay. Is there any specific ailments that you're interested in developing treatments or applications for right now, or that's still a little vague?
Greg: You know, one of the key areas that we see is for pain management and chronic pain.
Greg: We've done significant profiling of a patient population that our 5-person grow team has been supplying for over five years in British Columbia. And this group of 5600 patients which, by the way is very loyal to our grow team and has committed to moving over to Vida once we get a license. We've profiled 600 of these 5600 people and 70% are using medical marijuana for some form of pain management or pain relief. So our initial strains will be geared towards you know those ailments and that patient population.
Interviewer: Okay, interesting. I know that cannabis firms can't advertise in Canada, correct?
Greg: That's right. We cannot advertise, however, there are a number of things we can do to create awareness for patients and for the medical community. And you know we're going to be partaking in a number of health care conferences with a focus on ones that Pritesh will be a speaker at. We've also got a medical outreach program where we'll be educating doctors and working with physicians across Canada to again, provide clinical evidence and research to back up you know the effectiveness of medical marijuana. And then of course there's public relations opportunities...
Greg: ... that we'll be able to advantage of too to create awareness about Vida as a company and our approach to the business.
Interviewer: Now what's your general feeling about where doctors are as far as the understanding how cannabis can help their patients? Not just doctors but you know the health care community in general in Canada, do you feel like there's a huge disconnect and there's a massive opportunity for education or do you feel like that gap is being bridged pretty rapidly?
Greg: I think there's work to be done. I think there is an openness from the medical community, certainly the people we've talked to, to prescribe medical marijuana, but they're looking for more information and as I mentioned, one of the reasons that we're going to take an active role in advancing the research and doing clinical studies is so that we can share the results of that with the medical community and really work with them on a peer to peer basis to create credibility for Vida and to educate them you know over the sort of shorter to medium term. So it's not going to happen overnight but again we've talked to a lot of doctors that we feel are open to it. We've talked to a number of pain management specialists in Atlantic Canada where our plant will be based, and there's a real openness and willingness to be educated and work with us on an ongoing basis.
Interviewer: Now you'll have to forgive me because I'm a little bit ignorant about some of the laws in Canada, can only the flower or the bud be sold, or can the oil be sold as well?
Greg: No you're right. Only the dry product at present is allowable to be produced and sold in Canada as per Health Canada's guidelines.
Greg: And so the oil we actually have to dispose of as waste.
Interviewer: Oh no.
Greg: Yeah. It's tough to do and it's actually not in the best interest of patients because of course the oil in a concentrated form is very therapeutic and patients are demanding edibles and infused products because for some of them it's a more therapeutic form of taking the medicine and also some you know don't want to smoke or use a vaporizer. So we do see those laws changing, hopefully soon, and when they do change, there's going to be a product development opportunity to bring in other forms of ingestion be it trans dermal patches, or sprays, or creams, or edibles and infused products so that product development area is another sort of area that we're working with AltMed on and that we've got plans to co develop products in that area so that when Health Canada does allow other forms of ingestion we'll be in you know a leadership position to take advantage and lead the way in providing that to patients.
Interviewer: Very cool. I get sad, I think about all that orphan oil out there I hope at least they can, you can find a way to store it maybe or something until that law changes because that's so valuable, hope that changes soon.
Greg: Yeah, it's pretty clear. We actually have to dispose of it, we have to pay to dispose of it and there's very strict guidelines on how we dispose of it so at present we're not able to store it.
Interviewer: Okay. Where do you see the cannabis industry in 5 to 10 years, I know it's a very tough question and you're not an oracle but I mean it is just changing everyday and every time I think that hey I think I have a handle on this, this seems like it's growing exponentially, what do you think we'll see in 5 to 10 years?
Greg: Well, you're right. One constant will be change. And we see a number of changes coming. Higher levels of quality assurance and quality control, we do see the medical community over time becoming more comfortable as they become more educated with prescribing medical marijuana, we see a national dispensary system to replace the current system of delivery through mail or courier.
Greg: We see product development with other forms of ingestion. And we also see the emergence of a few dominant brands emerging certainly in Canada. We feel it's a huge opportunity for Vida to create a dominant national brand that's synonymous with quality and professionalism.
Interviewer: Gosh I agree with you, I mean right now even just looking at the dosage problem, people come here to Colorado and they eat a whole candy bar and then they have a strange afternoon, there's just no consistency, there needs to be maybe a Coca Cola of the cannabis industry or something where people have a consistent feel and experience over and over so I wish you well with that. I know you have a background in the precious metals industry and finance, and I think there might be some similarities in that precious metals there's definitely a big supply and demand dynamic, in precious metals there's mining and in cannabis there's growing. Do you see a relationship at all between the two?
Greg: You know certainly there are some parallels that you pointed out. The more I learn and work in the medical marijuana market, the more I prefer that market especially in Canada given that it's a federally approved program.
Greg: In an industry where I see just tremendous opportunity for growth and development and the ability to help people. So it offers rewards in many different ways.
Interviewer: I agree. Well Greg as we close, can you tell listeners how they can learn more about Vida cannabis?
Greg: Yes certainly. Our website is vidacannabis.com and I encourage your listeners to visit us regularly because we are in the process of a major revamping of the website and so if you keep sort of looking regularly hopefully you'll see the development of that revamp and the results of the repositioning.
Interviewer: Well, thanks so much for the interview Greg, we really appreciate it.
Interview with David Wright, President and CEO of Altmed.co, Altmed has invested over two million dollars on its mission to earn one of Florida’s five medical marijuana licenses. Altmed uses the tag-line “the science of medical cannabis.”
Matthew: Hi, I'm Matthew Kind. Each week, I'll take you behind the scenes and interview the insiders that are shaping the rapidly evolving legal marijuana industry. Learn more at cannaInsider.com. That's C-A-N-N-AInsider.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 CannaInsider.com/trends. That's C-A-N-N-AInsider.com/trends. Now here's your program.
Today, we're going to hear the story of AltMed, of Sarasota, Florida. One of AltMed's cofounders was inspired by his daughter who suffered from epileptic seizures, to start seeking safe and helpful cannabis-related treatments for families in need. AltMed has invested over $2 million on it's mission to earn one of Florida's five medical marijuana licenses. AltMed uses the tag line, "The science of medical cannabis" and is run by former pharmaceutical executives. We are fortunate to have David Wright, President and CEO of AltMed, with us today. Welcome, David.
David: Thank you, it's a pleasure to be here.
Matthew: For our listeners that may not be familiar with AltMed, can you give us a brief overview of who AltMed is and where you're at in the license process?
David: I'd be happy to. AltMed is a fully integrated medical cannabis company and by that, we plan on growing, processing, testing and distributing the highest-quality medical cannabis in a consistent and quality manner. There are two governmental actions going on right now. First of all, Senate Bill 1030 has been passed and it is in the rule-making process. Additionally, on November 4, there is, on the ballot in Florida, a constitutional amendment, which is much broader than 1030. The difference between the two initiatives, 1030 is a high-CBD/low-THC-only bill that requires the product not be swallowed or smoked, so it's limited to oils, vape pens, sprays, gums, anything like that, but if you chew it and swallow it, it's not allowed.
David: The amendment is a much broader amendment. It has a different definition of cannabis and it allows much broader usage than is allowed under the 1030 bill.
Matthew: Okay. Has it been a lot of paperwork and regulations to meet the requirements for the license?
David: Yeah, the requirements for 1030 are quite unique, in that the law requires you to have a nursery license for 30 years and have been growing over 400,000 plants a year for that time.
David: It also requires a $5 million performance bond and the license fee the first year is $150 and then every two years after that it's $300,000.
David: They are limiting the number of licenses in the state of Florida under this legislation to five.
Matthew: Right, okay. In talking with anybody, politicians or the word on the street, is there any prospect of recreational use down the road or is that not even on the radar?
David: I think it's on the radar as it is in every state. If you talk with people in the industry, they say it's three to five years away.
Matthew: Okay, okay. What applications or medications do you think look the most promising for AltMed down the road, once the license is in hand?
David: Well, I think, once the license is in hand and Amendment 2 passes, the conditions are pretty similar to all the other areas. It's pain, you get a nervous disorder, Parkinson's disease, epilepsy, Lou Gehrig's disease, multiple sclerosis and cancer are the main ones. I think one of interest has become of greater conversation and is included in the amendment, is post-traumatic stress syndrome. I think the applications, from the standpoint of administration, I think the edibles, oils, the patches, lotions and creams are going to become more and more important as the medical cannabis industry develops.
David: Even if you're using bud or the vaporizers, the volcanos, are going to become in use more and more for medical uses.
Matthew: Okay. I read that you're building out a partner network. Can you tell us a little bit about that?
David: Yeah. It is part of our business plan. We're looking to partner in three specific areas. One, we're looking at national brands. I think our belief is that one day this will be reclassified and no longer be a Schedule One substance, which will open up borders and will allow people to expand. In those states where there are brands and those brands that are out there, we think it makes sense to partner with these companies and bring these brands to Florida to begin to create national brands.
David: The second area is in the scientific area. We have partnered with Vita in Canada because we believe that they have a very strong scientific base up there, are doing a lot of the same type of work that we want to do. The third area that we want to partner with is in philanthropic enterprises. We truly believe that there's a reason to give back, that there's a reason to support these foundations that are trying to help patients and we believe we have a responsibility, a strong responsibility to the community and to the state, to make sure that we are good partners and that we work with these organizations to ensure patients get the treatments they need.
Matthew: Okay. Can you tell us a little bit about some of the proprietary genetics you're developing?
David: Well, it's really early in the stage. What we're looking at is, we believe in the entourage effect of the plant. Typically, in a pharmaceutical biotech company, you need a single isomer, a single chemical. For example, the drug Marinol, which is on the market, is a high-THC product, but it's THC only and it's only one THC. The physicians I've talked to who have prescribed this say patients come back and say it doesn't work. Actually, smoking of the product or taking it in an edible or an oil does work. One of the things we're looking at from a genetic perspective is to separate out different levels of THC and CBD, different CBD, CBN, what's the relationship between CBD and CBN and THC and the effects it has on specific conditions.
David: Is a high-THC product with a low CBD maybe better for a cancer patient, rather than a high CBD and a low THC? The same goes for the other conditions. I believe, as this becomes more accepted, the pharmaceutical industries will try and step into this arena, but with my background in the pharmaceutical industries and my knowledge of the way medicines work, it's very unlikely that any drug product made from the plant will ever be as effective as the whole plant.
Matthew: Okay. It's not a matter of replacing the plant with some alternative, it's a matter of dialling in exactly what the solution is for each problem, like cancer or epilepsy, things like that.
David: You're exactly right. You hit it right on the head, and we believe that there is something about this plant and this is not just AltMed saying this. The people that I've talked to at the University of South Florida, the people I've talked to in Canada and the science and the way the industry is looking at this, this is a very complex plant and produces a very complex medicine. There are over 86 cannabinoid receptors in the human body and we have no concept today of what parts of the plant and what is the relationship between these cannabinoids that has on the body. This is important research to be done as we take this medicine to the next step.
Matthew: Okay. You mentioned a little bit about your background in the pharmaceutical and biotech industry. Most of the people I interview in the cannabis industry don't have that background. How would you say that's going to help AltMed or how are you going to approach things differently right out of the gate?
David: Cannabis and the cannabis industry is coming out of the closet, so to speak. It started in California and it has progressed through the other states that have approved this. As it starts to come out of the closet, we will get more sophisticated. I believe that with the background in manufacturing and clinical trials and animal studies and processing and chemistry, that we will be able to provide a more consistent product and a higher-quality product and that are two of our goals. There are a lot of things that we should know about our products that we don't know and aren't paid attention to and this starts with labelling. We will probably create a package insert for our products, just like they do in the pharmaceutical industry, that tells a patient what they should know and reminds them that you shouldn't drive or operate dangerous machinery after taking your medicine.
David: This should be looked at as a way of providing education to patients and physicians. Physicians need to know what they should look out for, what the signs of abuse might be, what the other drugs that they might not want to prescribe if they have a patient that is taking medical cannabis. I believe that the background that we bring from the pharmaceutical and biotech industry can propel us many steps ahead of our competition.
Matthew: Now, will you be doing any kind of clinical trials on your own or do you partner with other companies for that or is that too premature to talk about right now?
David: We will partner with other companies who have partnerships with other institutions. For example, we're building a relationship with the University of South Florida, Vita in Canada has a relationship with Kentucky, University of Kentucky and one of the foundations that we're working with has a relationship with Cleveland Clinic. Through these relationships, we will look to these institutions for help in setting up these trials, finding the patients for these trials and they're not all going to be initially double-blind, placebo-controlled pharmaceutical studies with thousands of patients. You start off with small demonstration trials and then you work up from there. One of the trials I'm interested in doing is a trial using Marinol in a group of patients, in a trial using the same, similar subject of patients, using the whole plant extract and let's see what the difference is.
David: I believe there's going to be a tremendous difference. There's a tremendous amount to be done. This industry is in it's infancy.
Matthew: I agree, I agree. Best days are ahead. How large of a growing operation do you plan on building? How many pounds per year do you estimate you'll be able to yield?
David: Initially, our initial grow is 25,000 square feet of indoor grow and we look at 25,000 square feet of greenhouse grow and the green house grow will be produced mainly for making oils and extracts.
David: Over a five year period, our business plan takes us to almost 10,000 pounds a year, production.
Matthew: Okay, that's great. Looking forward, where you do you see the cannabis industry in five to ten years? I know that's kind of a tricky question because it's moving so quickly, but do you have any insights on where you think it's going?
David: I do. I believe that there's going to be a lot more controls, there's going to be a lot more attention to quality and consistency, there's going to be a greater number of products on the market and ways to administer it, but you're not going to have someone sitting in their kitchen making up a brownie mix and throwing some cannabis in it and wrapping it up, putting a label on it and selling it in a dispensary. I think dispensaries are going to get much more sophisticated. I think that you will see dispensaries that have private areas for consulting with patients. I believe you'll see the medical industry getting much more involved in the training of the patient specialists or bud-tenders, if you will. I see the medical side moving to a much more sophisticated place.
Matthew: Okay, that's good.
David: I think there'll be a separate recreation side.
David: I think the recreational information and marketing will be different than the medical and I think you will have separate dispensaries in the future, where one will be recreational and the other will be medical.
Matthew: Okay, good. Do the politicians and people in government that you've interacted with, do they seem receptive to moving forward in this direction or is there still a stigma?
David: There's no doubt there's still a stigma. One of the decisions we made as a company was to go public, tell people what we're doing, open up and show who we are and what we're doing and how we're doing it because we don't believe we're doing anything wrong. We don't believe we have anything to be ashamed of. It's just quite the opposite. We've very proud of where we're going and the ability to help patients. I've spent 40 years of my career working to help patients with pharmaceuticals. I believe in neutraceuticals, I believe in oriental medicine and I believe that cannabis has a huge role here. Once you sit down and talk with these people and show them some of the data and talk about the, really, atrocities have been done to this plant and to it's reputation over the years, than they listen. Having said that, we still have people out there that, no matter how much you educate them, what you tell them, they will be against this forever and think it's a horrible thing. Prejudice is a hard thing to overcome.
Matthew: That's true. Are there any areas in the cannabis industry that you feel investors should be looking at or excited about,\ or that you're excited about?
David: I'm particularly excited about extractions and what we can do. While there probably is, in my mind, no greater feeling than having grown a plant that has a big, beautiful bud, that's full of tri-tones and is gorgeous. I am looking forward to the extractions, to being able to manipulate the extractions and provide a really high-quality consistent product to patients. I'm looking forward to seeing children not suffer from epilepsy. I'm looking forward to seeing children not running around in a dazed manner with a look because they are so highly-medicated on really, really strong drugs that effect - not only do they prevent their seizures, but they also prevent them from living a normal life. I think that OxyContin is one of the worst drugs the pharmaceutical industry has ever produced. While it's very effective, it is also very debilitating. I look forward to medical cannabis virtually replacing that to its own great extent.
Matthew: Great, great, I do too. David, as we close, what's the best way for people to learn more about AltMed?
David: We have a website that is up, it's AltMed.co. Www.AltMed.co and then we have a Tweet site, which is @AltmedFL. Our Twitter site.
Matthew: Great. Then, assuming you get a license, how soon would patients be able to reach out to AltMed?
David: We are taking a great deal of risk in that, we are moving forward to construct our first growth facility. We should be pouring concrete in November, after the announcement. Depending on how long the rule-making takes, we will be prepared probably six months after the rules are issued, be able to provide treatment for patients.
Matthew: Okay, great, so springish 2015. Excellent.
David: That will be the earliest and that depends a lot on the government and the rule-makers.
Matthew: Sure, sure. Well, thanks so much for the interview, David. I really appreciate it. Again, the website is altmed.co for people that want to learn more.
If you enjoyed the show today, please consider leaving us a review on iTunes. Every five-star review helps us bring the best guests to you. Learn more at 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 cannaInsider.com/trends. Have a suggestion for an awesome guest on cannaInsider.com? Email us at feedback@CannaInsider.com. We'd love to hear from you.