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Ep.255: Brendan Kennedy & Adam Bierman

Cannabis Economy Podcast
Ep.255: Brendan Kennedy & Adam Bierman

Ep.255: Brendan Kennedy & Adam Bierman

Brendan Kennedy from Privateer Holdings and Adam Bierman from MedMen join me for a panel discussion at the IMN Institutional Capital and Cannabis Conference. The panel is set up as a debate between the concepts of plant touching investment vs. ancillary here in the US. The US unfortunately, is starting to fall behind the rest of the world in regards to federal regulations. So despite Brendan’s being invested in plant touching opportunities in Canada and other countries, his point of view in the US is that for the time being, the opportunity is investing in brands. Adam’s point of view is that now is the time to invest in the infrastructure of what will be the cannabis economy right here at home. It’s a thought-provoking, lively conversation in front of a group of investors.

Transcript:

Speaker 1: Brendan kennedy and adam bierman. Brendan kennedy from privateer holdings. Now tim beerman for med men join me for a panel discussion at the imn institutional capital and cannabis conference. The panel was set up as a debate between the concepts of plant touching investment versus ancillary here in the us. The us, unfortunately is starting to fall behind the rest of the world in regards to federal regulations, so despite brendan's being invested in plant touching opportunities in Canada and other countries, his point of view in the u, s is that for the time being, the opportunity is investing in brands. Adam's point of view is that now is the time to invest in the infrastructure of what will be the cannabis economy right here at home. Welcome to cannabis academy. I'm your host seth adler. Check us out on social with the hand mechanic economy that's two ends and the word economy. Brenda kennedy had a beer and so I want to make sure that we know who

Speaker 2: talking to I wasn't here yesterday. Forgive me how many folks are active in cannabis by show of hands. So we eventually got to, what? Seventy five percent. Thank you for raising your hand, brendan. You didn't raise your hand, which is interesting. We'll get to that. Um, and how many folks are, uh, operators in cannabis. I know that it's not many. Okay. So it's like 10, 15 percent. And then the rest are investors, is that right? Yes. You're nodding as opposed to raising your hands because I didn't give good instructions. Okay, fair enough. Uh, we are here to talk about kind of opportunities. It's a great space to make money in. It's also a great space to lose money in. So, uh, there's both of those opportunities for us. So I want to just kind of give us the opportunity to understand each a thesis and then we'll dive into specifically what we're here to discuss, which is plant touching versus kind of not in the United States. So adam, since you haven'T really said or done anything yet, you look fantastic. The three piece suit thing, I mean, come on now. Share with folks, you know, med men, obviously I'm very much a part of what we're doing here. Generally, specifically though, when you go to the office every day, what are we thinking? What are we doing at madmen in regards to the thesis we're talking about indeed as far as investment? Sure. So, uh, this too loud now, but they'll figure it out. We're good. Yeah.

Speaker 3: Uh, so that men, capital a is a private equity fund that invests primarily in high barrier to entry supply constrained markets. Uh, what we look at and consider the core core plus of this space. Um, so we invest in real estate and licenses primarily to cultivate manufacturer and retail, legal cannabis, uh, in the markets that we deem, uh, most, uh, have the most upside and the most protection in north America.

Speaker 2: Okay. So we'll get to upside and protection. We're upside versus protection. Uh, brendan, if folks don't know who privateer holdings is a or you are for that matter, they should probably leave because you should know that. Um, wHere are you guys now? Obviously leafly, obviously marley, obviously tilray, you know, when you go to the office everyday, what, where are you as far as investment and investment thinking? So our fundamental thesis is that, uh, this is a mainstream product consumed by mainstream people around the world because of that, at the end of prohibition is inevitable and that brands will shape the future of this industry. So we, uh, we have over 350 employees in southern us states and seven countries focused on building global cannabis brands. That's, that's what I spend my day focused on, finding those next brands or creating those next brands. Excellent. As far as international, uh, tilray is Canada, give us a sense of other international markets that you're in so that we can ignore that until the end.

Speaker 2: Um, so we, um, we told her it was the first company to ever illegally export medical kennedy's from north America. Congratulations. Um, it was, it was hard, um, but it was a huge milestone for us as a company, uh, and, and for the industry. so we've exported to Australia and New Zealand, Chile, Brazil, Croatia, we have orders from Germany, the czech republic, Ireland, cypress. Um, and so in manY ways it feels like a medical canvas around the world is moving more quickly than in the us and it's moving quickly in the us, don't get me wrong, but it is evolving very quickly. Uh, Canada was the first g seven nation to have a national medical cannabis program. Germany will be second in the next 30 days. It's an interesting program. Uh, any doctor can write a prescription to any patient for any illness with insurance company coverage.

Speaker 1: Brendan kennedy and adam bierman. Brendan kennedy from privateer holdings. Now tim beerman for med men join me for a panel discussion at the imn institutional capital and cannabis conference. The panel was set up as a debate between the concepts of plant touching investment versus ancillary here in the us. The us, unfortunately is starting to fall behind the rest of the world in regards to federal regulations, so despite brendan's being invested in plant touching opportunities in Canada and other countries, his point of view in the u, s is that for the time being, the opportunity is investing in brands. Adam's point of view is that now is the time to invest in the infrastructure of what will be the cannabis economy right here at home. Welcome to cannabis academy. I'm your host seth adler. Check us out on social with the hand mechanic economy that's two ends and the word economy. Brenda kennedy had a beer and so I want to make sure that we know who

Speaker 2: talking to I wasn't here yesterday. Forgive me how many folks are active in cannabis by show of hands. So we eventually got to, what? Seventy five percent. Thank you for raising your hand, brendan. You didn't raise your hand, which is interesting. We'll get to that. Um, and how many folks are, uh, operators in cannabis. I know that it's not many. Okay. So it's like 10, 15 percent. And then the rest are investors, is that right? Yes. You're nodding as opposed to raising your hands because I didn't give good instructions. Okay, fair enough. Uh, we are here to talk about kind of opportunities. It's a great space to make money in. It's also a great space to lose money in. So, uh, there's both of those opportunities for us. So I want to just kind of give us the opportunity to understand each a thesis and then we'll dive into specifically what we're here to discuss, which is plant touching versus kind of not in the United States. So adam, since you haven'T really said or done anything yet, you look fantastic. The three piece suit thing, I mean, come on now. Share with folks, you know, med men, obviously I'm very much a part of what we're doing here. Generally, specifically though, when you go to the office every day, what are we thinking? What are we doing at madmen in regards to the thesis we're talking about indeed as far as investment? Sure. So, uh, this too loud now, but they'll figure it out. We're good. Yeah.

Speaker 3: Uh, so that men, capital a is a private equity fund that invests primarily in high barrier to entry supply constrained markets. Uh, what we look at and consider the core core plus of this space. Um, so we invest in real estate and licenses primarily to cultivate manufacturer and retail, legal cannabis, uh, in the markets that we deem, uh, most, uh, have the most upside and the most protection in north America.

Speaker 2: Okay. So we'll get to upside and protection. We're upside versus protection. Uh, brendan, if folks don't know who privateer holdings is a or you are for that matter, they should probably leave because you should know that. Um, wHere are you guys now? Obviously leafly, obviously marley, obviously tilray, you know, when you go to the office everyday, what, where are you as far as investment and investment thinking? So our fundamental thesis is that, uh, this is a mainstream product consumed by mainstream people around the world because of that, at the end of prohibition is inevitable and that brands will shape the future of this industry. So we, uh, we have over 350 employees in southern us states and seven countries focused on building global cannabis brands. That's, that's what I spend my day focused on, finding those next brands or creating those next brands. Excellent. As far as international, uh, tilray is Canada, give us a sense of other international markets that you're in so that we can ignore that until the end.

Speaker 2: Um, so we, um, we told her it was the first company to ever illegally export medical kennedy's from north America. Congratulations. Um, it was, it was hard, um, but it was a huge milestone for us as a company, uh, and, and for the industry. so we've exported to Australia and New Zealand, Chile, Brazil, Croatia, we have orders from Germany, the czech republic, Ireland, cypress. Um, and so in manY ways it feels like a medical canvas around the world is moving more quickly than in the us and it's moving quickly in the us, don't get me wrong, but it is evolving very quickly. Uh, Canada was the first g seven nation to have a national medical cannabis program. Germany will be second in the next 30 days. It's an interesting program. Uh, any doctor can write a prescription to any patient for any illness with insurance company coverage.

Speaker 2: Eighty 8 million germans, it, a wealthy million, $88 million wealthy germans will have access to medical cannabis and the next 30 days, twice the size of California in terms of population. It's a big opportunity. Um, and so we spend our time looking at opportunities like, like Germany, like Germany, the country, but we'll get to that. Let's focus in on the United States because we're all americans and that's all that matters, right? I don't know. I'm kidding. That's a joke. Get sarcasm. I apologize. I'm extremely sarcastic. I live in New York. I like to say I'm based in a plane, which, uh, which makes me cloud based, but I'm adam as far as the United States is concerned. What you know, you are, talk about, you know, these markets that you, you speak of, you know, when you look at a New York, you know, why New York versus Colorado

Speaker 3: in a way that I look at investing, man, at the end of the day, right? We're all placing bets. That's what investing is and you're trying to have the clearest. I'm clearest outlook as to what the possible outcome is to that bet that you're placing your trying to put your money in with as much as possible, right? That's what we do. And ultimately there is no perfect. There's no complete information when you're placing your bets and we're looking to gather as much information in and make the most intelligent decision where we're placing our capital at the end of the day and there are already enough issues. You know, there's, there's enough uncertainty. Um, and so we look to, I mean, it might seem conservative, uh, and maybe in this regard, you know, there's enough, uh, uncertainty that being somewhat conservative is a good idea, but you look at a market like New York and I'm just being conservative and I'm saying New York has five licenses for a very large addressable population, New York, we'll probably end up with 10, 15, 20 licenses.

Speaker 3: And so there's a lot of other factors that are going to factor in as to whether that investment is gonna pay off, but at least I know that one of those factors isn't going to be massive competition. Um, you know, I know that, well, I don't believe at anytime in the future in the state of New York. I mean, when we're looking at licenses in the us, I'm in the markets that we play in, you know, we're gonna very closely. Uh, we're going to look at them in a similar manner as to how we look at casino licenses. That's, that's how I look at the u s and that's how, that's how I look at the end of prohibition, which I do 100 percent agree with brendan is I hate using the word inevitable because later the advocacy groups and the policy shops are going to yell at me, um, but it is inevitable so long as we continue to contribute dollars and contribute resources to ensure that we push it over the finish line.

Speaker 3: BuT that being said, that's the rob kampia caveat. That is. Thank you. So I think that being said, however, there's a clear path to the under prohibition. We just happen to believe that at the end of prohibition, these licenses in a place like New York end up looking like casino licenses, interestingly enough, when New York issue their original five a cannabis licenses that year, I think they issued an additional four casino licenses. So I don't believe in New York ever has a thousand licenses. Uh, so there are a lot of other factors we have to deal with the adoption rates, right? You're taking people's buying habits and transitioning them from the black market to a legitimate market, you know, how do you do that? How do you give them enough value to come over and change the way that they spend their dollars? um, how do you go convert, I call them, you know, the chardonnay moms, how do you convert the people that aren't currently cannabis users to become cannabis users?

Speaker 3: How do you go grow that market? How do you build brand, how do you scale? We can go on and on. These are all the things that we planned for yet, you know, there isn't certainty around. Um, and so, you know, you're just trying to eliminate as much variable as you possibly can. And when we enter a market like New York, you know, that's one variable, that competition that I can eliminate. Colorado has over 2000 licenses and it's the, you know, it's a very, it's very at the 33rd most populous state in the country. So you can go play in the third most populous state in the country, um, that has 2000 licenses or I can go play in the state of New York that has five and I believe will ultimately have 15 or 20 licenses. that just makes more sense for us. So which makes sense, right brendan? That's sounds like cogent thinking we're going to get to brand. So not asking you to speak to brands, but speak to. Okay. Massachusetts, Maryland, Pennsylvania. Why not just grab a few of those licenses? Like why not go after those licenses?

Speaker 4: Well, in Canada we have, we've invested $30,000,000 and a cultivation facility. It's a pharmaceutical grade cultivation facility. Sure. Gmp certified that we can make pharmaceutical drugs in Canada and ship them across Canada. Right? So there's no, uh, restrictions limiting as to a single province. In fact, there's no restriction that women's us to a single country, right? So we're moving cannabis around the world. Uh, and ultimately, uh, I'm not sure Canada is the perfect place for production of cannabis. Uh, it's very likely that a cannabis will be grown. Neither. I would theorize probably not New York either, um, but it's more likely that low cost cultivation facilities or locations for cannabis will be somewhere

Speaker 2: around the equator where you naturally have 12 hours of sun and 12 hours of darkness, which happens to be exactly what you need to flower cannabis. Um, and so in the, in the longterm, 10 years from now, five years from now, a lot of cannabis will be grown in places like Israel or columbia, um, and exported from there to a global markets a worldwide. Sure. And you and I were talking earlier about the fact that medical cannabis is upon us as far as countries around the world really kinda getting in now. We also discussed the fact that adult use worldwide is not here yet. We're Going to wait for the kind of Canada domino to fall and thanks to Canada for pushing the domino. But in the meantime there seems to be a lot of time before we move all production down to the equator, which I feel like is, is adam's point.

Speaker 2: So why not jump in there now even in California? So the point you're getting at is that we don't cultivate cannabis in the United States. We don't cultivate it. We don't retail it for very different reasons. We don't. I don't, I'm not a retail investor. I don't understand the retail. That's not what I invest in. Just like I don't invest in restaurants or art or real estate, I don't know those things. I don't invest. I invest in what I know, I know brands. And so that's our thesis, uh, in California, you know, we can drive up to humboldt county and there are 15,000, 15,000 cultivators of cannabis in humboldt county. Why would, why would we as a company invesT capital a, cultivating cannabis in, in California when there are plenty of small farmers that we can source it from and, and write future contracts with so that they provide us with the products that we want.

Speaker 2: So playing the long game, adam, then we, you know, forget about California, at least on the production side, forget about Colorado on the production side, as you just said, talk about. I didn't forget about you just for the purposes of this conversation. What I'm trying to get us to focus on ease places like Pennsylvania and Maryland and Massachusetts that are coming online here that are investment opportunities to touch the plant. I think California is the biggest single investment opportunity to touch the plant in the world. Do you want to talk about that first? No, I'm just making sure that it wasn't me that agreed with the. Where you were going with your statement. That's what I mean. Then let's do the Pennsylvania, Ohio, Maryland go well, yeah. No talk. Let's talk about kind of the other side of the rockies, right? The other side of the Mississippi river. Um, you know, when, when you see New York, you kind of explained your, your thought process there, but as we make our way down up and down the eastern seaboard, you know, what are you seeing and what are you excited about as far as investment?

Speaker 3: I'm excited generally about the fact that in the us and you know, we can speak to Canada and speak to the rest of the world. Again, I'm trying to eliminate as many variables as are within my control. Um, and so I'm here in the us, which is the largest marijuana market in the world. I'm here in California, which is the largest fraction or fragment of that larger market in the world. It's might as well be, it's, it's be it's own world. We actually look at California very differently in regards to the 15,000 licenses. One hundred percent. That's the number, whether it's 15 or 25,000. I'm 100 percent. There are people up in the emerald triangle and the, you know, tens of thousands that are making their living. How many are, there are a million people in California earning their living off camp. Who knows what those numbers are very high. But california's about to go through real creation of a real regulatory regime. And we look at California as a country and we look at the municipalities, states try. And so to brendan's point, there are, there are plenty of, of, you know, states within California that we have no interest in because they don't fit our supply constraints. High barrier entry model. Um, but you know, our flagship retail stores in west hollywood, there are four licenses in the city of west hollywood and I'll argue that those licenses in that city

Speaker 3: in the foreseeable future. And when I talk about future, we talk about, you said long term, five, 10 years, you said long term, short term. I have my investor hat on. I have my fund manager hat on. I'm, I have 10 years snapshots in my head, right? Because we have 10 year fund life. So then the next 10 years I wouldn't trade you my west hollywood license for a retail license in any of the other states are mentioning because there's one in New York, New York included, because there's one because there's one of four, right. And so west hollywood that can go cater to beverly hills, west hollywood and that whole surrounding area. And there's only four licenses and that area. And over the next 10 years I'll go ahead and I'll make a very big bet that there won't be additional licenses in those, in that area.

Speaker 5: Why?

Speaker 3: Common sense? I'm a, with a deep understanding of who holds those licenses and how politics works. It's the same answer as to why sheldon adelson and steve wynn didn't receive, uh, any of those licenses for casinos that were available in New York the year that they issued the cannabis licenses. And the same reason that sheldon adelson was an issue in any of the gaming licenses in Florida that he is sought after for so long and pushed so hard. What are you getting at there? What I'm getting at the fact that, you know, local politics in my opinion, at least in my snapshot, in my head of being a fund manager the next 10 years, local politics rules that day. And again, I'm looking for clear paths. I think that there's always a curve ball. There's always things that we can expect. But what is the clear path to this being taken out of the hands of local jurisdiction, west hollywood and the federal government.

Speaker 3: Somehow superimposing some type of new regime that allows for somebody to grow cannabis in humble, um, and then you know, distribute that cannabis across the country or you know, uh, or come and open up a store in west hollywood without the consent of west hollywood, which is a small community and there's, you know, lobbying that goes on and there's association that goes on and you know, those four license holders are very connected. How do they get the licenses in the first place? The same thing in New York. The same thing in Nevada. You look at these states that keep falling. Who is receiving, who is receiving these licenses the most politically connected, you know, financially capable people within that state. That's how they received the license in the first place. Getting back to my gaming analogy, so if those are the people getting the license, they're just going to then throw their hands up and say, all right, he just talked about you spent $30,000,000 in Canada, we'd spent $25,000,000 just to acquire New York.

Speaker 3: It'll cost another. God knows how much. Right. Those are things I can't control the other 10 million, 20 million, $30 million just to get through to profitability in New York. You think that people are making those sides of bets and they're not protecting themselves when it comes to lobbying and protecting their interests and closing the door behind themselves. So, you know, I, I, I, you know, again, I don't see a clear path as to five or 10 licenses going to 200 or 500. I gotcha. So I am as excited about my west hollywood retail license as I am about my manhattan retail license.

Speaker 2: You did just thank you for that. You did just share I think why brendan doesn't love the idea of these licenses because you spent 25 and then now you've got to spend. You don't even know how much more. Right? And so brendan, I guess that's what brings us to brands, which is a more clear picture because if the opportunity cost is foggy, even when I do have that Pennsylvania license, if I've got marley natural, it's a much more clear picture. Is that how your mind works or that's a, that's our thesis. Um, you know, I think there's, I think there's tremendous value in a, in retail licenses in the recreational states, in retail licenses, in the medical states, dispensary licenses, uh, until uh, in Canada we're about to see a product sold in pharmacies. So I'm a chain like shoppers drug mart, which has 1800 stores is going to start carrying cannabis. And so that's, that'll be a big change for the industry. And in Canada it's like cvs, you have to. And so the question is when, when our medical cannabis products in the u s sold in pharmacies and when our, uh, I can go buy a bottle of one a at whole foods. And so when our cannabis products sold at a place like whole foods or some retail store that sells alcohol, I don't know. And until that happens, i. Retail is

Speaker 4: extremely profitable and I would actually, I would probably argue that retail continues to be profitable after that, after that happens. On the other hand, uh, in the longterm, uh, all of the wine sold in California, it doesn't have to come from California, right. And all of the wines sold in Illinois doesn't have to be grown in Illinois and all of the penicillins hold in California doesn't have to be produced in California and all the penicillin grown an Illinois doesn't have to be in, in Illinois, uh, it's going to be impossible for states to limit, uh, the products that are sold in that state to be produced in that state. And I would argue that that's going to happen sooner than everyone thinks. This entire industry is evolving faster than everyone thinks and I think the next three to four years, crop products, medical products or crossing state lines, and it will be impossible

Speaker 2: for the states to prevent that from happening. So, uh, the look on adam's face is the look on the inside of my brain, which has to do with you, not him. I think he's highly intelligent. Good looking man. This presenting well, it's more about my assessment of view. I understand what I'm getting at here is that you just said three to four years for interstate trade in the United States of America. Did I hear you wrong? That's what, that's what we believe. How like, yeah. Uh, yeah. How, what do you, what, how would we get to that based on our current attorney general, like thinking that marijuana is part of the opioid crisis. I'm using marijuana because that's the word he uses. I prefer cash once, once. I think we will, I think at the end of prohibition is more likely to happen than a republican president than a democrat then that for share wines. Just share why. Pardon? Just share why? Because the state's rights issue, it's a small federal government issue. It's a, uh, individual civil liberties issue and um, it, it, it in many ways it fits the republican agenda. So the current thing up short, absolutely. But the current kind of noise coming from the attorney general's office would be, that's personal policy, not so that's kind of a death rattle type of thing.

Speaker 4: Uh, I wouldn't describe it as a death threat throttle a rattle. I would say that's, that's a personal, a personal belief that is not the belief of the administration.

Speaker 2: Do we have to have a different attorney general within these next three or four years? I mean, that's just,

Speaker 4: I think you need to have different federal laws. Um, and the attorney general will enforce the federal false. Okay. But that's, that's.

Speaker 2: No, but that's why we've gotten a republican congressman that just introduced the legislation, tom garrett, who wasn't part of the cannabis conversation to begin with. We of course have dana rohrabacher who is, uh, you know, got the world record far and now rohrabacher blumenauer

Speaker 4: amendment. My point is once a federal change happens, estate can't regulate interstate commerce, right? Estate, you can't say you're not allowed to sell products grown in Arizona in, you can't do it.

Speaker 3: And so it's no longer within the state's power. So, so adam, with your plant touching licenses, uh, how much money can you make in the next three or four years? That would be the question. That would be the question. If you agreed with his thesis yet, you were spending the money. I'm spending money. And if you were doing both of those things, you'd probably be out of a job as a professional investor very quickly or not. Right. So take us through your take. So that's why you would never spend money on license if you believe that it's gonna happen the next three years. And if I believed that I wouldn't be spending the money I'm spending the way I've got a 10 year kind of a hat on, which is followed by another tenure had as you described. Right? So what's the question set the question still is, you know, over the next three or four years, these licenses, these extremely valuable licenses that you have, which brendan know certainly sees the value in how much explosive growth from those investments, you know, could you expect or would you expect or I will not allow myself to look at it that way.

Speaker 3: So I won't even entertain the question because again, if you're investing under the thesis that we have, um, but you're actually a real investor investing real dollars. What real investor invest in real dollars looks at things over a 36 month horizon. Like you're not going to go put 30, 40, $50,000,000 in a single project or a couple of hundred million dollars in general the work and say, okay, got to get all my money off the table and 12 months. Again, that's part of the, one of the bigger issues that our industry faces. Right? And I think that it's great that all these folks showed up and it's, it's really great that somebody like brendan would show up and have this discussion openly with, with real investors, you know, because everything else going on with cannabis, you have pe bozos up, you're talking about their thousand percent return in three months because they did some all cash deal and see what are they talking about, right?

Speaker 3: That's, that shit's not real. So you're talking about investing real dollars and look, there's only a couple people that have invested in real dollars in this space and two of them are on the stage and maybe there's two more out there. I mean there's not, you're not talking about a big consortium of group of people. Nobody's looking at this. That's investing real. He would invest his dollar saying, what's my 24 month outlook short? I didn't get all my money off the table, but then explain to the fine folks sitting here who just heard brendan say, hey, this might be over in three or four years. Why I don't see a clear path to it. So that's just going to be a fundamental disagreement that then drives the individual theses that we each have a, you know, again, I'm going to look at this like casinos, I'm not gonna put words in your mouth.

Speaker 3: You mentioned wine and you mentioned the way in which wine is sold in stores and all the rest of it. I'll let you speak for yourself, but for me, basically what he said, right. That's fair. Speak for him. But for me, you know, I hear the arguments about grocery stores and whole foods. Okay. But I can't go into whole foods and pull a slot, right? Um, you know, uh, I live in la. It's actually the card. It's the poker capital of the world. For those that don't know, you have to be kind of a sick degenerate to know that I, yeah, that's why I looked at you. But incidentally, I don't know that. Don't worry brendon. I'm so, so, uh, but there's more, there's more cars, there's more card tables in la right there than anywhere else. Um, so we have gambling right? But I can't walk into whole foods and play blackjack.

Speaker 3: I can't walk into a food and play video poker and then one would say, but in Nevada you can. And I would say, well you can if they have a license. Sure. And then I would say how much are those licenses trading for and how valuable are those licenses? Again, my vision of ending prohibition looks a lot more like casinos because I think at the end of the day, if you look at the attitudes of our, our country, I'm speaking only for the u. S is, I think in large part, you know, americans want to have legal access to cannabis, but I, it's very rare that I would hear an argument that they want to see it on every street corner or they want to have it in their grocery stores are they want their kids to have to see it, you know, when they're buying their cheddar bunnies. Uh, and then they're checking, they're checking out.

Speaker 3: I have a four year old and then they're checking out and they have to say, mommy, daddy, what's that? Oh, that's video poker or that. Oh, that's cannabis, right? So I think that the attitude of our country is we want to legalize cannabis, but we want to do so in a way that it's not thrown in your face, right? It's about access, but it's not about being on every street corner. Right? So I don't see that attitude changing anytime soon. And I think there's already a model through the restricted licenses like those, uh, that, uh, uh, when we're talking about gaming, um, that works for this. I am not gonna disagree with, you know, brendan, uh, if your thesis is right and if that's ultimately what happens, I won't disagree with what the outcome then would be. I just disagree that there's a clear path to that happening.

Speaker 3: I think there's a much clearer path to one that's taking longer than three, four years until you have actual, you know, federal legalization. And the question is, what is federal legalization mean? Cause you talked to rob campi, he says, you know, regulate like alcohol trait. I don't know what you would say to that. You know, what I would say to that is, does anybody understand the gaming laws? I mean gambling actually federally legal or is it some weird gray thing where it's a states rights thing and you know, there's all these different layers to it and complexities. I think that if I was making bets with a 100 year fund life, perhaps I would look at things differently. Um, but you know, making bets with a 10 year fund life, I don't see any clear path. And then back to common sense. Right? And we're going to talk real talk, you know, you don't pick a state.

Speaker 3: We're here in California, in Nevada. We can go all the way across the country to New York. Who received these licenses? What kind of political power do they have? What kind of vested interests do they have in making sure that they're protecting that investment, and then how does that play the whole way up? Because if you really want to get into politics and everybody here is, that's a real investor, knows how the world works is if I lobby to go get a license in a place like las vegas, I'm one of the most connected people in the state of Nevada. I get my government officials elected because I donate to their campaigns. They move up the food chain. They have bigger ambitions which they need me for, and then when they go represent the state of Nevada, when they're in dc, they're making sure that this one issue that's important to me because I have big money in it, is protected.

Speaker 3: I mean, I just don't see a clear path as to the unwinding of that where you start growing cannabis in Oregon and distributing it to New York and, you know, rewriting state constitutions and changing these, you know, programs, uh, in the face of those powerful people that hold these licenses. So again, I just don't see a clear path to it. Um, I see a much clearer path to being able to take these licenses, monetize these licenses, and keep in mind, you know, and this is something chris love you mentioned yesterday and he said it not me and he's way smarter investor than I am. This is the most inefficient. Wherever he is. This is the most inefficient market he's ever seen in his life. This is a guy that's run $250, billion dollars or whatever the number is, wherever chris levy is. And so he's seen every market in the world.

Speaker 3: He said this is the most inefficient market he's ever seen. And when you really start understanding that and we can get into the brand play and concept because we do have some exposure there, right? But when you talk about New York, you talk about the fact that men, men bought one of the five licenses in New York. Who are we bidding against? Right. We would argue that the valuation, the value, the enterprise value assigned to that license is just stupid. Right? Right. Because if there was technical term technical, if there was a real bidding process, if this was any efficient market, there would have been 500 groups bidding on it, right? Was nobody else bidding on it. Who else? Other than brendan and myself really. And maybe you have more insight, but who else other than the two of us actually have the wherewithal to go could make, make that kinda commitment for a license to grow manufacturer and sell pot in the us and who actually has a track record of doing it. So at the end of the day, if you're inefficient, have a market to not take advantage of that. And in my opinion, flow over to ancillary picks and shovels brands, which is a much more efficient market today in cannabis. And I would argue that it's getting to a place of almost efficiency when it comes to the investability of that market. Why would I go over there and fight when I can stay in my inefficient place and just

Speaker 2: no reap all the rewards. Let's go over there and fight in one second. I do want to give you the opportunity to, to answer adam's question of what you consider to be federal legalization. You know, when you say three or four years, do you see what that is? And then we must go to brand. So I think we're in a stage of constant disruption, right? So, so we're moving cannabis around the world at this point. Different, different companies are moving cannabis around the world and finding a efficient places to grow cannabis in Colorado. Three years ago, a lot of, almost all of the cannabis would have been grown in a warehouse in denver that was expensive to build out and sucks up a lot of energy and uses a lot of hvac. And,

Speaker 4: you know, in the past two years, I've walked a 100 acre, 50 acre, a 50 to 50 and 100 acre farms in, uh, you know, outside of pueblo, um, that, that grow cannabis or, or high cbd hemp, that's where cannabis is going to be produced in the future. It's not going to be grown indoor warehouse. And so if you can make the jump on all those things, it's pretty clear to me that this product is going to move across state lines. And it's not, it's not that I'm a, it's not that I'm betting that cannabis is going to move across state lines. It's that I can't predict when that's going to happen or if it's going to happen. And so I just avoided, right? I'll go invest outside the us, right? We've raised $125 million dollars will raise, will have raised over $200, million dollars by the end of the year. And more than 70 percent of that will be invested in opportunities outside of the us where we have a federal license. So that's, that's easy for me to predict. Why invest in unpredictability, so then coming back to the us, because we set this up as a debate and we absolutely have kind of found that debate, I think as far as building brands. Right. Okay, great. You got the bob marley people. Congratulations. Aside from that, how should folks be looking at building brands in the cannabis space?

Speaker 4: It's about a number of things. It's about finding a brand that has a voice. It's about finding a brand that addresses a certain segment of the market. Right? It's. We've been doing this for seven years, seven years ago. All the brands look the same. They were all green with a black font and a and a pot leaf plastered on it. Right, and that was targeting a very specific demographic and there will be brands that target millennials and brands that target females and brands that are aspirational premium brands and value brands and brands at target. Every segment, just like any other product. In fact, we're already seeing those brands in this industry. That's been another transformation that's been happening over the last three or four years. How has it not overplayed? As adam suggests, we're getting close to, I suggested what you suggested that it's maybe kind of getting foggy and never use that word.

Speaker 4: Okay. What did you say as far as. Yeah, there will be more efficient. Okay. Branded retail chains like, you know, like something, something like starbucks, uh, that will, that will dominate a retail or beverages and more or whatever analog you want to use, but they're also be, um, there will be branded products on the shelves just like, I'm just like craft beer or just like beer, right. If I'm on an international flight, I may have one heineken. If I'm a. If I'm in san francisco, I may have an anchor steam and there'll be different brands that are our regional, national and international. Sold on shelves across the spectrum from a cannabis specific retail stores to wholefoods, craft

Speaker 3: beer and craft foods. God-willing. Right. As far as brands in the cannabis space, I mean, you've got to use the microphone. Yeah. Yeah. For, for his bets to pay off. Yes. I mean, god willing. I just am not going to agree with you because that would be contradictory to where we're putting our money and what we believe. So no, not god willing. We're not routing. I mean, I think there's a very high probability that both of us returned crazy returns for our investors and really, you know, both when, right. I'm not, this isn't like one against another. I just, I, I don't. I think that, you know, the question I would have on the brands, right, is if I agree with everything you just said in regards to the, the brands can target different demographics and that they'll be sold across different media. All the rest of it.

Speaker 3: Then the question is what is the differentiation between the opportunity to go invest in a brand in this space versus some traditional space? Right? Because my rhetorical question, but then you know, he wants to panel. It's got to be rhetorical, but my, you know, I guess me answering the question, but the question is I would say if you're going to go make a venture play, which that essentially becomes right. I think, I don't know if you would agree that a brand play in the space as a venture play at this point, right? You don't have anything established enough that you consider like a private equity investment into some kind of company. These are all very early stage, you know, businesses that you're making a venture investment into,

Speaker 4: right? You either have to create the brand yourself or uh, or make an acquisition. The opportunity is if you go into another space, there are entrenched players in this industry. There are no and trends, a brand's a seven day. There are no significant entrenched brands that are available across multiple states. And so you're not, you're not fighting for shelf space at whole foods. The shelves are empty.

Speaker 3: So that, so that would be the response if you have the outlook that you have about the end of prohibition and the opening, um, you know, if you have my outlook, the retort to that response would be that, you know, for brands to work, you need distribution and there is no clear path for, for me to real distribution in north America, uh, outside of contract manufacturing. And licensing deals and if you're going to go execute contract manufacturing or licensing deals because of the fragmented regulatory environment, which I believe will sustain for until most certainly past the lives of the first couple of funds, um, and then you need to go sign a deal with an operator in a state that able to receive that license and hope they can protect the integrity of your brand when they're manufacturing that brand. And so you have a different manufacturer making coke tastes different in seven different states.

Speaker 3: It's kind of hard, right? You know, the purpose of the vowel part of the value of the brand is consistency. One, two, I would say that if you're investing in a brand and even if you hit right, even if it's not just a brand, right, because it's not just brand, let's call it picks and shovels and ancillary. I think that's more fair. He's trying to push us in a brand new category, but it's really picks and shovels versus core. Right? So, you know, if you're talking about picks and shovels, is uh, is isaac dietrich still here? I don't think so. I didn't see them. Okay. Um, so as a teacher was here yesterday for mass roots, I would say that if I am a venture player and if I'm looking at ancillary picks and shovels and I made that, that early and masters, I feel pretty good about myself now.

Speaker 3: That being said, so they would be a winner perhaps. So just like any other venture situation, you're going to place a ton of bets. One of them's going to be a winner, a lot of them are going to be big zeros, but the winter is going to outweigh them. All right, well now my problem is isaac dietrich and mass roots is try to provide liquidity by listening on the nasdaq twice. Sure. And still can't get it done, right? So why am I not better off just putting my dollars to work, driving up to palo alto, finding a bunch of kids, you know, out of stanford and saying, oh, you're starting this company here. You go here, go, here you go. Because if they hit, then they actually hit right? They don't have the extra regulatory hurdles on top of hitting to have to go be successful in despite of.

Speaker 3: Right. So I think if, you know, in the last thing I'll say about picks and shovels because that's what the real argument is as you guys as investors will hear as you get into the spaces, picks and shovels versus plant touching in the us. Um, but I think that people, they go further and they talk about, you know, well this is a gold rush is the green rush and you know, people, you know, levi strauss got rich and you know, all the rest of it. It was like, yeah, but being a, being a 49 or didn't, you didn't need a license to be a 40 niner right? So being a 49 or was a shitty job. I'm right, but to be a 49 are in this industry, you need a license. Right. So that analogy just doesn't play out for me. So I think that the, you know, the concept of, you know, ancillary, non plant touching and maybe you agree or disagree.

Speaker 3: I'd like your opinion on it, but I think it all emanates and starts from, not for somebody and sophisticated yourself, but for new investors, it starts from this fear, right? They're like, oh, well, I can go make an ancillary bet because I'm not breaking the law. That's where people kind of dip their toe in. Um, and it's just silly. It's like if you're going to be in the space, you're in this space and I highly doubt that. That's why you have a real thesis behind it. It's not just that you have fear of some type of governmental intervention, but look, you're breaking the law if you're in the space, um, even if you're just a website, right? You are, you know, participating. Uh, if you look at like, rico, you're part of the whole circle. So you're either in the space or you're not. If you don't like it, you shouldn't put your money to work. If you're going to put your money to work, put it at work, have the highest certainty of return and you want the least, you know, resistance in your path to get there. Are you still taking investors in leafly would be the question afterwards

Speaker 4: talking about mass roots. So we made that bet six years ago, right? And the belief, we have a lot of value to different stakeholders, but one source of value for us is a last month, 11 million people around the world used leafly and we started up $60, million pages of information, uh, and it gives us data on what people in different locations are looking for. So I can tell you what the most popular strains were in California last month, but more importantly, I can tell you what the most searched for strands were in london, which doesn't even have legal cannabis, but I can tell you what people in london are looking for. And that helps. That helps us make better investment decisions.

Speaker 3: That wasn't fair though because now you just teed me up like this homeschool. That's my point, right? Like you made an amazing bed on leafly amazing. Hit it, right? So if I was a traditional vc, I would say grand slam. Now how are you? How are you? What's your, where's your liquidity? How are you monetizing that, right? Like what is your clear path like that was a one in a thousand home run. 11. All this. So two questions. Two comments I would have that you teed me up for. One is, I agree. I think that the investment you made in leafly hands down one of the best ancillary investments in the space today. Kudos, but now what do you do with it? And then the answer is well, as opposed to traditional venture where maybe we'd look to take it public or maybe we'd go through a series of all this stuff because we would have institutional investors come in and later rounds and whatever, whatever.

Speaker 3: You can't do that because we don't have institutional capital yet. We don't have public markets access yet for it. So what do you say? You say, well the data and then my retort to that is that data, that data is important to me, but what are you going to do with it? Because at the end of the day, if I have all the licenses and I'm growing the pot and I'm retelling the potter manufacturing the pot, that's why, you know, our next fund that we'll be launching, we do have an allocation for ancillary plays, but they have to be a creative to our core business. So if I can take that information, so right now I'm going to grow this strain to address this part of the market or I'm going to put this product in my store in a certain way. I think that data is invaluable.

Speaker 3: Right? So then the, there again, part of that retort would be, okay, I don't have near term liquidity options, you know, I can't go take this to the private markets in a big way because there isn't institutional, real institutional investment yet. But I can go use that data right to be a creative to my overall portfolio of assets. But I can. I can do that because we have. The licenses were growing, manufacturing and selling pot. So I do think there is a small, at least for us and within our thesis there is a small allocation to ancillary businesses, but it's because they can the rest of the machine and the. But this gets to that whole argument though because you're, you're talking about data as though it's an immediate play and I feel like you're talking about data as though it's a longterm

Speaker 4: play leaf. We gives us information and it tells us which brands to buy, which brands to build which products to buy, which products build. And it gives us 11 million opportunities to drive consumers to specific retail locations around the world or to specific a specific cannabis brands around the world. If we serve up 60 million pages of information that $60, million monthly opportunities to drive consumers to our brands.

Speaker 3: Let him have the last word. So that's the last word. Okay, fair enough. And then should we do a couple of questions? What do you think?

Speaker 4: Other questions? There's one right there.

Speaker 2: My question is touching on adam's point around a chardonnay moms. I think that's a really good point. And market opportunity specifically. I'm in the Massachusetts market and at the end of the day, how are you to thinking about capturing, capturing the market, not the early adopters that consumed today, but the future of the chardonnay mobs and those that currently perceive cannabis to not be socially acceptable.

Speaker 4: Chardonnay moms and caviar dreams. Brendan.

Speaker 4: Yeah. And that's the challenge, right? You need to create a brand that speaks to them. You need to create a brand that creates an inspires trust and those, that, that second wave of consumers are going to be looking for different, different form factors, right? They're not, they're not going to be looking for a pre rolled product. They're going to be looking for, uh, you know, for, for something that they drop into a, a, a glass of water or, or a mint and microdosing is, it's a, it's not just the brand, it's the product and it's everything. Everything behind that brand new product that will be to a market segment or consumer segment like you just mentioned.

Speaker 3: Yeah, I mean, it's something that's near and dear to our hearts for sure.

Speaker 6: Um,

Speaker 3: I think you have to ask yourself why those people aren't

Speaker 3: using marijuana today, right? To answer the question, um, and it's not because they don't desire the effects because they're doing other things. Uh, vivian gave an amazing presentation yesterday morning showing you all the other stuff they're doing. Cannabis happens to be healthier for you, a than a lot of those things into her point in some regards. It's less expensive. Um, so why is it that they're not participating? And you know, for us it's really crystal clear. It's just because it doesn't feel accepted, safe or illegal. Um, and so you have people that, you know, from a risk perspective are okay with that perception of risk, whatever that means. Reputational risk, um, legal risk, uh, even health risk because you're in a place like California that still is an ab testing standards, right? So you're, you're, you have a group of people that are okay inherently with accepting that risk to the tune of $50, million dollars plus.

Speaker 3: So that group is pretty substantial. But what's the other group, right? What are you missing? And I think what we found as we've rolled out our retail concepts, um, is that just taking the lead and as, as an operator, if you're a Massachusetts and eliminating all those feelings, like you can eliminate those feelings with how you build a store with what products you stock in that store and with the way in which your, um, your staff communicates with customers in the store. And as importantly back to the brand conversation, the way in which you brand and market that store, right? So, you know, our stores doesn't matter where it is and the country. I mean, it's amazing if you sit in a store and you're blown away by who walks in and it's just a clear just across the board reflection of that community, right?

Speaker 3: Where you would think it would just be 25 year old males, you know, middle to lower income may be single without families, right? But it's like if you're in a community where it's x percent, this ethnicity, that ethnicity fail male, female, you know, this socioeconomic, whatever it is. Like you walk into one of our stores, that's who's buying pot, right? But they walk in, they're not feel like they're doing something criminal, I can't stand when these programs roll out and you have to go into one room and you have to do this and then you have to go to a buzzer and a guard has to have a gun. He puts the gun to your head and then you have to say a peep secret password, like who the fuck wants to do that? Right. So I would rather have a dealer drop it off at my house so you know, but then you go in, you have these programs rolling out again in states that I'm not excited about today.

Speaker 3: But again, I have a 10 year fund manager hat on and eventually we will make sure that we affect the change to open it up. Um, but you know, you should be able to walk in and feel like you're at any other retail establishment. Um, and I think once you do that and you brought it up and I'll, I'll shut up in a second. Last week we had, we did this experiment. It worked out really amazingly well for the chardonnay moms. It was a tupperware party, we called it like mary kay for marijuana, right. Um, and it was like gang busters and you had all these really professional working moms that got babysitters and went to the thing and hadn't smoked pot before, but we're open and interested. And when they were presented with the products to brendan's point, right. It's, you know, who wants to smoke a joint other than kellen o'keefe, wherever he is in the back, like who, who or whoever was smoking at lunch yesterday.

Speaker 3: So who wants to smoke a joint? Right? You have a very particular consumer that wants to smoke a joint, but you know, there's bath bombs and there's discrete vape pens that go and purses now they're making purses that have a certain, you know, a lock. There was a really cool person. We're now selling that's a high end designer purse that has like finger code, fingerprint, you know, open and get to your vape pen so your kids don't get in it like those things are coming. Right. And, and how, what does that market worth? Maybe, you know, have a better idea than I do. I don't know, that said this is what we think that markets were. Um, but it, it's a great point. Right? I think that gets back to mainstreaming marijuana. I'll end with that. Right? I think that this being here today, looking at this, you know, the people in this audience seeing what's going on the last two days, like we are at the forefront of mainstreaming marijuana.

Speaker 3: Brendan kennedy could go do whatever he wants in his life and he is in the pot business and he's sitting here telling you I'm in the business, you know, that is mainstreaming pot, right? I can't say the same about seth. Seth probably it's very uniquely qualified to do this one thing and thank god for this thing or what would he have, but nothing. The answer is not, but nothing. I'm going to hug him and brennan out, but it's okay. I can take it to you of course, but we're mainstreaming marijuana. Like how many investors here? Right? If I told you two years ago, you're going to go put seven figures into pot. Yeah. Yeah. That sounds like a great idea. I can't wait to tell my friends and my inlaws like, no, no, we're sitting here today saying we're okay with that. I'm okay going to a dinner party and saying I'm in the pop business as investors or cio is, or family offices. You're okay. Going back and talking, you know, and saying we're going to invest in pot. This is a category we can't miss on. So the more you mainstream pop right through all of this stuff, then the more that you're going to go attract the chardonnay mom. And ultimately that is something I see a clear path. A clear path forward.

Speaker 4: There you go. One last thing because we do now have to make way for nate and uh, andrew and others on the soundtrack of your life. One track, one song that's got to be on there, brendan. And then adam, is this, that's how we end right now by van halen. No, I see three little birds there. You go from bottom marley last weekend. Yeah, sure. Make a snake and saying, well, what would be a, at least one track that would have to be on the soundtrack of adam beerman's life? It's the same answer when you asked me this on your show, like how it read it however long ago it wasn't. Yeah.

Speaker 3: I think, uh, you know, for me it's, it's a, it's an eminem song. You know, you only have one shot. Do not miss your chance, right? They're not mr. Chance to blow this opportunity comes once in a lifetime. Right? So it's like that's the way I look at my life in general, right? It doesn't matter if I'm in the business or not. Um, you know, I have one chance to not screw up the fact that I have an amazing wife and two great kids, right? I have one chance to live on this earth and get the most out of it. And in business like I have one chance to be here at the end of prohibition, you know, forging the way for an amazing new industry that looks probably ends up looking like a combination of what we think is going to look like. And I'm sitting here on stage talking to you and building, you know, hopefully building multigenerational wealth for my family while I'm doing it. Like I have one chance I don't need to sleep. It's okay. I have one chance. I'm not going to screw it up.

Speaker 4: There you go. For me, that's the deal. Adam bierman. Brendan kennedy.

Speaker 7: Thank you so much. Appreciate it.

Speaker 4: And there you have Brenda Kennedy and adam bierman. Very much appreciated a moderating that panel. Thanks. I am in

Speaker 1: bed, ben. Also a, a presenting sponsor for that, uh, investment cannabis conference. Great debate. Um, I think really what that's all about is the fact that the us is falling behind, sadly. Thanks for listening.

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Cannabis Economy is a real-time history of legal cannabis. We chronicle how personal and industry histories have combined to provide our current reality.