SPEAKER_00: all right everybody welcome back to twist today is wednesday january 28th we've got a great show for you today we're going to be talking about the cannabis industry with three experts and specifically around startups the opportunity there and the changing legislation and regulation in the industry but before we get to that very important note i wanted to give a little memorial here to a friend of mine herman kotler herman like me was a kid from brooklyn him from bedsonhurst me from bayridge he was also the father of matt kotler who has been my partner here at launch and this week in startups for many years but herman was a bit of a storyteller also from brooklyn as i mentioned may or may not have been in a foreign uh three-letter agency may have you know worked for the government i'm not saying that those rumors haven't happened around me as well uh but herman and i would get together once in a while and talk about his son matt we love dearly and he'll be

SPEAKER_04: missed so you have okay so let's get back to the show with me today uh my good friend for smith ceo and founder of ultra native vc how are you ford i'm lovely man it's good to see you excited to be

SPEAKER_08: here that was beautiful dude i've always appreciated just your sense of humility so thank you for that

SPEAKER_04: yeah thank you uh and ford is uh the ceo and founder of ultra native vc and uh he has a cannabis company himself doing cannabis oil manufacturing hear about that noble pacific okay he's an advisor to can which makes cannabis beverages and he's been in the business for a while socrates rosenfeld is the ceo and founder of jane which is a cannabis and product marketplace welcome to the program socrates thanks jason not easy having that name is it wow a lot to live up to i fall short

SPEAKER_18: now this was given to you by your parents yes my my mom proudly named me socrates uh

Chamath Palihapitiya: so i'm still living up to it we'll see wasn't a name you chose just to be clear was it wasn't a name

SPEAKER_18: i chose it's the it's the one that was given to me and i'm growing into it as they say what a great name now were you named after the philosopher it's an inside secret with my mom uh the the world thinks i was named after uh the greek philosopher i know you're half greek jason i'm i also have greek blood so she appeased the in-laws with that name but deep down in 1982 uh the world cup was going on while

SPEAKER_21: she was pregnant with me and there was a brazilians uh the captain of the brazilian soccer team who ended up winning the world cup was named socrates and so she was in her so double meaning she appeased

SPEAKER_23: the in-laws and uh yeah she got her passion for the sport also with us in our little quartet here is andrew duffy he's the ceo and founder of spark plug which is uh enterprise software for retailers but when i met uh andrew which was now probably five or six years ago he went through the uh launch accelerator cohort 20 which for those of you who are lps is launch fund 3 so you can get excited and he had a really great idea for incentivizing the clerks the retail workers by educating them on different products in order to increase sales to increase their engagement i said hey this is a great idea he said oh there's only one problem it's cannabis i said well you're an enterprise software company you have cannabis as one of your clients but you have all these other clients so we were in the clear we're invested in an enterprise software company uh that services anything legal but how's the business been going i'll start with you andrew just in terms of looking at how things have changed in

SPEAKER_30: the five or six years since we we got into business together absolutely well business is booming as any of the other folks on the panel can tell you the growth of the industry since covid really has been

SPEAKER_32: astronomical you know in the past 10 years it's gone from about a 3 billion dollar industry to a 30 billion dollar industry so an order of magnitude of growth primarily fueled by more and more new states opening so in the early days washington colorado but now as we've proceeded along and more and more states have liberalized their cannabis rules we have huge population centers like new york and california online as well as now some pending legalization in other states like pennsylvania florida all those places you

SPEAKER_30: see on the election map those are the ones that are starting to legalize and are becoming the big

SPEAKER_23: population centers adding consumers to the business got it and and how's the business itself doing is the business still center around the core premise you shared with me five or six years ago that i fell

SPEAKER_30: in love with yes absolutely so and did i describe it well yes very well very well we've we've grown since then to expand from not just that core premise of accessing the point of sale employee which still is one of our most important products but actually to become a coordination co-pilot for wholesalers to

SPEAKER_32: influence every aspect of the physical retail space so not just that point of sale employee getting commissions to recommend particular products like a real world influencer but also managing promotion schedules managing inventory any way that a you know wholesale operator wants to influence that physical retail space where today 80 plus percent of commerce still happens in the us that's what spark plug can do for them and uh yeah it's been it's been going well and adding that surface area to the product has helped us expand from cannabis into verticals like outdoor gear beauty specialty nutrition anywhere where

SPEAKER_38: you have that influential point of sale employee we you know have a pretty meaningful opportunity and the

SPEAKER_35: retailers like this as well it's a win-win they don't mind a commission or a little spiff going to their

SPEAKER_23: retail employees it's like a nice it's like do they view it as like a tip or like a little bonus that

SPEAKER_40: doesn't interfere maybe even takes a little pressure off of them in terms of salaries yes the the latter

SPEAKER_30: is precisely the outcome that we see so essentially they're able to offer their employees a dollar or

SPEAKER_32: two dollar an hour raise without having to pay for it all fueled by the marketing budgets of these brands so that is great for them for reducing turnover for increasing output from employees for making people happier working for them uh and you know overall is is a win-win-win for all the folks and you know a lot of these employees are really changing their lives through the platform you know we have employees making 20k a year in additional payments from spark plug when they're earning 20k in wages so it's a pretty significant source of income for a lot of these folks which we're you know really happy to be able

SPEAKER_29: to provide this sounds like something that could work well with your uh cannabis beverages because you have to explain the sort of value prop tell me a little bit about when you got into this area and uh how it's going because that's one of the things i haven't been able to get a handle on is it like a great investment opportunity or is it flooded with competition because uh making the flowers is seems to be not like a proprietary or a very difficult thing to do so i've heard these reports that the market's gotten flooded with stuff and i'm sure socrates you'll have some input on this as well but has this been a great

SPEAKER_46: business or is it a good business i'd say it depends on when you got in and then if you kind of maybe had the foresight to pivot or jump into the hemp market out there's some regulatory framework that needs to be

SPEAKER_48: kind of set up to understand this so many states and i couldn't give you the exact exact number but they have these state regulations like california oregon colorado things like that inside of those state regulations you've got to go and apply at a state level get a license and then you get certain types of license types you know types um some of that's cultivation manufacturing distribution product sizing more or less and then retail or like direct to consumer and um what's happened over the past you know in 2018 uh trump passed the farm bill and the farm bill essentially legalized um it didn't essentially it legalized um hemp um hemp is a it's it's not another it's not a separate type of plant other than it's not different from cannabis hemp is a legal definition so um whether you're consuming some product from the hemp plant or from cannabis in a regulated retailer it's still the same um plant species at the end of the day it's just a different form of genetics um hemp uh the legal definition of hemp is less than 0.3 of dry net weight of an actual bud per se and so what happened was because the farm bill legalized hemp and and they defined hemp as less than 0.3 thc they technically still nationally federally legalized thc so there is a weird loophole that would allow these farmers or extractors or brand builders to say hey by the way i grew a whole bunch of hemp you know california let's say you know like on average you're seeing 25 to like 33 percent thc content in cannabis flower in these regulated markets because patients kind of like like to spin or get the biggest bang for their buck so farmers are incentivized to cultivate higher yielding thc crops what's happened since 2018 somewhere along the way people realize oh wow we could actually go make the argument that the you know this 0.3 thc we can extract that out of hemp and we can concentrate it and then infuse that into gummies edibles pre-rolls etc and increase that thc content to the same level of what state regulated operators are producing and selling through retail so um it took a couple years for that to really kind of like catch hold but as soon as kind of the word had gotten out a lot of the original operators like myself that i've been in the california industry for since probably 2014 i set out i raised a whole bunch of money in 2020 to go and enter the cannabis beverage market in california specifically and within about nine months all of a sudden we started hearing about people running into the hemp market to go and launch their cannabis beverage brands because now you're not dealing with the same taxation issues there's no 280 issues which at 280 at you know um just for simplicity is most of the cannabis operators because cannabis is a schedule one narcotic they can't write off their cost of goods which this makes the business extremely cost prohibitive because cannabis is a scheduled drug but hemp is not a scheduled drug it is a federally legal product so when you jump into the federal hemp market and you can start shipping d2c and you can hack your way around you know meta and snapchat to start running you know normal cpg type focused ads um it's a much more efficient business it's true consumer packaged goods at that point and so we decided to not go into that space because we thought it was a little too risky we had a conservative investor base it's a it felt a little gray area at the time in hindsight i wish we had done it because there's been a lot of brands that have done really well and quickly grabbed a lot of market share nationally um to answer your last question uh around just market saturation uh yeah there's an insane amount of these brands on the shelves now there's a lot of fly-by-night operators there's a lot of operators that really truly don't give a shit about the quality of product they're putting in it most of them there's a very well-known lawsuit right now you can go look at online a company for there's a company called vertosa that people are claiming have actually been buying um distillate thc oil from regulated like call it california oregon kind of state operators and then black marketing it into the hemp channel and infusing that and selling that into beverage companies claiming it was coming from hemp and there's really no way if you can't follow the paper trail there's no way to actually know if it came from oh wow so basically giving people

SPEAKER_50: more bang for their buck or backdooring it when they should exactly yeah yeah yeah they're saving

SPEAKER_48: themselves yeah an insane amount of money by doing this i'm not claiming that that i'm not making any

SPEAKER_53: statement around that case other than that's out in the public but these are the things that yeah

SPEAKER_55: five states have complete prohibitions as i'm reading here from producer claude idaho kansas

SPEAKER_57: nebraska wyoming and idaho launch is a fast-growing organization we've got more than a dozen employees working with me here in austin and another dozen spread out all over the world but

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SPEAKER_22: amazing service and a partner great partner socrates explain a little bit about your business and how

SPEAKER_23: long you've been in it and then what is the business outlook here for cannabis going into 2026.

SPEAKER_18: i've been in business i've been doing this full time since i left the military i did a stint with mckenzie and then came over here in 2015-2016 so i've been doing this for a minute and the uh it's been a lot of fun to watch this nascent industry go from an illicit market into more and more of a mainstream market and the truth of this plant is coming out that it helps a lot of people what we do at jane is essentially similar to what andrew you've been doing with your technology is taking cannabis for what it is it's a 30 40 billion dollar market it's fragmented across thousands and thousands of uh supply-side retailers there's no direct-to-consumer capabilities to ford's point where now you can do that through you know hemp you can ship a six pack of can to to a doorstep you can't do that in cannabis and so i was very interested in what the future of e-commerce was going to look like with my founders and this was agnostic to any industry and we we held this thesis 10 years ago and we see it coming true that the future of e-commerce would be in the complete digitization of all commerce it wasn't going to be taking an amazon model and trying to beat amazon at its own game it's been tried multiple times amazon's not going to let that happen shopify another monster in the direct-to-consumer business is doing extremely well it's going to be very hard to displace them and so what we saw was could we take existing retail infrastructure brick and mortar stores the cvs is the walgreens the grocery stores of the world and in some automated fashion take all that offline inventory and push that online so the consumer has an amazon-like experience when shopping except now the value is being pushed into local economies rather than being consolidated at one amazon.com if you will and so we saw this as an opportunity that was once in a generation and we jumped on it it also helped that personally myself cannabis really helped me as a veteran coming out of the army and what i struggled with was i couldn't get the consistent feeling uh from one product from an illicit dealer to another if you think about how you shop on amazon you can have full purchasing power you know exactly what you're getting you get recommendations you get social proof through millions of verified reviews and we want to bring that same level of consistency and transparency to the industry and launch this and so we've developed technology that in real time can take live inventory off of brick and mortar store shelf create a turnkey digital storefront and connect those storefronts so that we're building the amazon for main street applying this here in cannabis and proving this at scale and then one day we'll probably bring this into other retail goods that are

SPEAKER_21: very difficult to ship direct to consumer groceries alcohol etc here's the reality of the framework

SPEAKER_29: changing on a federal basis we talked about states you know the united states of america we get 50

SPEAKER_23: different sets of regulation but here's your polymarket weed weed rescheduled by march 31st nine percent chance looking at this polymarket but you see i guess right around christmas time

SPEAKER_00: it spiked up to well over 60 percent i think that was when donald trump was talking about it so andrew what's

SPEAKER_73: the chances this um gets rescheduled during the trump second term what is the buzz in the industry i

SPEAKER_30: think the chances are extremely strong anyone who's been in the industry for as long as we have knows that the hype cycles of it's going to happen it's not going to happen are are constant but this is the first time that we have seen truly bipartisan support at the executive level so the biden administration tried to reschedule cannabis they were slow ruled by the dea until the transition to the trump administration so the trump administration coming out and saying hey our intention is to reschedule this is the first time that both sides of the aisle at a federal level have said that this is a priority for them previously it has been a small group of republicans in congress and the senate who have said

SPEAKER_32: this isn't a fit with our values this isn't a fit with what our constituents think but broadly at a

SPEAKER_30: population level cannabis is one of the only bipartisan issues right now over 70 of individuals believe that cannabis should be legal in some capacity whether that's medical or recreational and it really is across party lines it's about freedom of access it's about medicine it's about economics it's about personal liberty it's about all these philosophical ideas that aren't owned by one party or the other so i feel quite optimistic that this is something that we can actually generate momentum behind particularly if in advance of the midterms the trump administration is looking to get

SPEAKER_29: a little bit of a populist boost ah very interesting yeah and i think pain reduction is a key there your

SPEAKER_00: thoughts for it on the potential federal approval of this and what impact that would have on the industry because it did many years ago become legal federally in canada yeah and i'm curious what the effect there

SPEAKER_48: was i would agree with andrew i mean i think there's strong tailwinds i think that the maha movement has definitely brought to light um it's funny these we've been bouncing these topics back and forth from the right and the left for forever and somehow it's landed on the right and now the left is i don't know not too thrilled about it but regardless we're here i think that uh i think the reality is at some point in the next three years i don't know if it's gonna happen for the midterms i would hope it does i think that's a great theory um i i would i keep kind of pushing that too um whether that happens or not he has the foresight to think to do that we'll see uh if it happens i think it's it's it's a big boom i mean i think right now you're already starting to see you know whereas traditionally when i was raising funds from investors i've historically had to go to family offices here in texas to go back these companies they're usually like high risk high reward they write a check they that was their bet in cannabis don't ask them for another investment again and let's see how it goes and now you're starting to have the conversations with like traditional consumer packaged goods investors you've got guys like clayton christopher and brian goldberg and you know there's a hand i mean the list goes on of these like really top-notch like you know skinny pop kind of c4 coca-cola kind of type executives that are coming in that really understand capital markets they understand how to raise capital they know they don't take things publicly and how to get things sold and those conversations like i was hoping they were gonna have five years ago but ever since this announcement that's when things have really started to heat up so i think there's some spacks out there that are gonna happen everybody's getting their documents ready sitting them on the shelf and then trying to like read the tea leaves to see when this thing happens and then i know conversations or i'm having conversations actively right now with a bunch of cannabis beverage cannabis hemp beverage companies to try to put a little portfolio together because i think that right now there's this weird it's almost as an investor i think this is interesting there's a weird moment of like almost arbitrage you could play right now because there's there's still uncertainty i mean everybody's like these eternal optimists that it's going to go through and i'm ultimately one of those too but there's a couple of brands out there that unfortunately had burned through a lot of marketing dollars they made you know can's a great example for they're they're like this i'm not going to call them the cockroach but these guys are they're one of the top selling beverage companies in the united states in the thc sector they've been the darling of cannabis for five years now they raised a whole bunch of money to go and focus exclusively on state regulated markets starting out in california two stanford graduates that founded the company raised a whole bunch of venture capital then they saw this opening in the hemp market they pretty much paused all of their developments in like the 10 or 14 different like state regulated markets they were entering they said we can build you know our margins are going to be significantly better in hemp kind of focused over there but now you've kind of got i again i don't i'm an advisor to the company i don't fully understand the cap stack and i know that this isn't just them there's other companies out there like it but you've got companies that raise an insane amount of money to go and fight against strict regulation taxation in these state markets and then they pivoted into these you know this federal market and so now you know there's a lot of dilution that's happened in the business a lot of capital has been raised and um i think there's this weird arbitrage opportunity where you know the the guys that have been sitting on the sidelines watching the cannabis and hemp market for a long time are now coming to play and they're having these conversations and i think there's interesting pricing that can happen right now because there's uncertainty and so you know when somebody swoops in with a check

SPEAKER_86: you know in the next kind of nine months before rescheduling or whatever i think you know you might

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SPEAKER_29: market i'm going to give you 50 off your first project go to zite.com twist to get started that's zite.com twist for 50 off your first project andrew and socrates people thought this would happen during

SPEAKER_00: obama's second term didn't then they thought oh well it's going to clearly happen during trump or

SPEAKER_23: biden's and it hasn't and it went legal in federally i think in 2018 as we discussed in canada so here we

SPEAKER_00: are seven eight years later it still hasn't happened here's a graphic uh from claude thank you producer claude of the uh amount of capital raised and as you can see it was a little bit of a boost here in 2021 i think that was probably uh post-covid people thinking that we would pull this off or biden would pull it off and he hasn't yeah over 70 billion dollars been raised that's a big number but it's declined since and we're in a holding pattern this follows uh what you've seen andrew yeah well

SPEAKER_30: interestingly enough i think actually a huge amount of that investment capital in 2021 was going into ancillary technology startups in particular one called dutchy which is you know one of the

SPEAKER_32: startups that's taken in the most capital in the industry but unfortunately that was pretty much peak zerp and it was also peak cannabis and right after that there were a lot of challenges for capital formation in the industry it wasn't coming online as fast as people expected and ultimately a lot of companies struggled and you know the steve jobs quote holds here success in this industry is spelled survival it's all about continuing to exist and being able to be poised to take advantage of the opportunity when the market becomes that real explosive once in a generation opportunity that it can be because like we saw in canada you know canada was a very different market onset than the u.s in the u.s we've done this patchwork state-by-state thing whereas in canada they just

SPEAKER_30: said all right federally we're just going to do this there wasn't that same lead up of state-by-state infrastructure and what that means from my perspective is that now there is a great deal of pent-up infrastructure that wants to be unleashed in the u.s cannabis industry that has been built

SPEAKER_32: up in all of these states like all of the cultivation built up in california which is getting sent into the illicit market because what it really should be doing is getting sent to all the other states where you probably don't need to be growing cannabis so the ability to have interstate commerce with federal level legalization would totally change the shape of the industry and allow it to progress and mature and grow all at once in the way that all these other industries that we've talked about these

SPEAKER_29: classic cpg industries have been able to yeah and a question from one of our nodi gang those are the people who watch the live stream and have notifications on we call them the nodi gang sam houston sf says having

SPEAKER_00: most of uh the cannabis company shut down under having or have had major layoffs what's the state there socrates is it been a bloodbath in the in the cannabis startup space it's followed the same

SPEAKER_18: trend line as the broader market since 21 right where it's shifted from growth at all costs to you better be profitable and growing to andrew's point it's it's been a challenging road and and to your point too for it um because we've seen it across the board whether that's operating businesses producing manufactured products or ancillary tech companies 21 was peak and now it's a game of endurance rather than speed and this is something that cannabis has faced as an industry and as a plant for decades now jason it hasn't been easy for cannabis at any point in this american history on one hand it's really challenging and can be daunting and frustrating at times when we're not treated similarly to other industries but on on the other side a way to look at this is it's going to force the best companies to

SPEAKER_103: emerge we're going to have to think creatively and resourcefully like this industry has for decades people will find a way to this plant people will find a way to sell this plant whether it's legal or not whether the financial markets are backing it or not because this plan helps millions and millions of people i i think this is the next great american industry period and it's a matter of when not if that our friends in dc are going to realize that obviously there are some closed-door conversations

SPEAKER_104: with the alcohol and pharmaceutical and banking industries that are inevitably happening if you go

SPEAKER_23: through those banking i think would be pretty stoked to be able to have this as a customer base pharmaceutical will not be stoked because there's no patents here so they're bummed out and will fight it and really i think that the the clearest way to get this federally legalized regulated is to just say look think about pain management you want to be at end of life for cancer patients we all know somebody in our lives who's dealing with massive pain had never tried cannabis and then during you know their hospice care or whatever it was was giving cannabis and was like oh my god i should have been doing this for the last 10 years when i was in pain instead of taking oxycontin or other you know

SPEAKER_29: things and so pharmaceuticals know cpg companies hey they need something because alcohol is absolutely in decline between ozempic and young people just not drinking i was reading a statistic the other day ford my lord the alcohol companies are sitting on massive massive caches of premium and just regular liquor uh and spirits so they can't move it wine nobody people stop drinking yeah i've read the other

SPEAKER_48: day gallup uh i think gallup said that alcohol consumption is down to 54 percent 50 of gen z's drinking when previous generations were at like 70 that's insane that's a that's a massive dip a lot of the newest we talked to um total wine the other day and total wine said that most of their new 30 some odd percent of their new consumers are actually coming into the store looking for thc beverages and they're not walking out with alcohol either they're not even like it's not like a lead generation

SPEAKER_08: they're finding alcohol only if they're coming specifically for that and they're leaving with that

SPEAKER_29: so yeah it's it's happening and the taxes are significant yeah andrew um from spark plug it's it's

SPEAKER_00: 15 10 15 20 is what you could expect to pay in taxes as a cannabis company in a retail certainly

SPEAKER_80: well taxes for cannabis companies are extremely onerous on the one hand there's the classic excise

SPEAKER_32: taxes that you're talking about what do you pay at the counter over and above the purchase price but

SPEAKER_30: as ford mentioned tax code 280e prevents these businesses from deducting most of their expenses from their tax bill so they're paying 60 70 percent effective tax rates so if you were to legalize and remove 280e then these businesses would be profitable overnight instead of losing money or just barely getting by so from our perspective when we see our customers under that burden operating successfully with the grit to actually power through that you know imagine if any of these big tech companies were paying 70 effective tax rates that would not be okay we would not like to see that on the pnl well these businesses if they can get over that hump from a legislative perspective it's a game changer and then yes those state level excise taxes which today are putting a really challenging burden on them would be survivable they would be workable and the states would be able to take in that tax revenue without unduly pushing customers into the illicit market like the uh california market has really struggled with getting people to transition from illicit purchasing to legal purchasing because of that difference in taxes the expense is just a lot higher but if you were able to give those businesses a

SPEAKER_38: fighting chance by removing that overarching federal tax burden i think that would change the game and

SPEAKER_29: allow states to take in more revenue that's incredible that this exists but it is a hangover from the war on

SPEAKER_23: drugs you know makes total sense if you were dealing heroin to say like yeah you don't get to take the farming of the poppies out of your profits and you know you just pay your taxes on the profits completely reasonable but in something that's become legalized completely unreasonable when we get back i want to talk about the downsides specifically some of this cannabis psychosis and these incredibly potent

SPEAKER_29: strain shards resins and how we look at those you know compared to the classic cannabis industries if

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SPEAKER_29: socrates your uh jane is in the business of uh retail essentially right delivering uh cannabis to people there's this category you can explain it to the audience it's kind of like a trope now that hey weed today is not like the weed you smoked in high school in the 80s it's like much more potent okay we get it be careful pace yourself you can always take more edibles you can't take less a lot of rules of the road but then there's this new category and i don't know too much about it i have never tried it but there are shards there are resins there are dapping explain to us what all this is and how it compares to taking uh you know a three or four milligram gummy or taking a hit off of a you know join at a party

SPEAKER_127: or hitting a vape you know one or two times full disclosure i've i've been in the cannabis world for

SPEAKER_18: a minute i've never heard of shards so unless andrew or or for if you've heard of it let me know

SPEAKER_129: i have heard of resin and rosin i think people refer to the resins as shards as well like they're like a hard version of it that cracks from my research yeah shatter shatter oh shatter okay

SPEAKER_21: it's not the best marketing because i don't think anybody wants to ingest anything called shatter or

SPEAKER_18: shards so there's there's two things i want to highlight in that question it's a great question jason one is potency and the other is form factor talking about potency first because it's a real one i don't know if anybody's ever tried moonshine but i had a roommate from west point from north north carolina who too like grew up his family grew up distilling moonshine i tried it for the first time

SPEAKER_103: and i'm still getting my eyesight back and the reason i i say that is because moonshine was a result of prohibition from alcohol if you think about it you know you if you're going to go and take the risk of distributing and manufacturing and selling alcohol or if you're going to take the risk of actually going and buying a an illicit product you want to make sure that you get the most i think for you said this bang for your so-called buck and we've seen that now where this was coming about a decade two decades ago people were talking less so about the strain itself and more so about one specific cannabinoid there's over a hundred cannabinoids but the one that everybody talks about is thc which is the psychoactive quote-unquote high feeling and when you're paying eighty dollars or taking the risk to go to the illicit market you want to make sure that you're you get high and so the conversation went away from all these different beautiful terpenes and cannabinoids that go into the whole plant and more so of this specific variable called thc and that's why you saw this out of the ordinary spike in products being genetically modified to get the highest thc percentage what we've come to realize is that's like drinking wine based on alcohol percentage jason i imagine you have

SPEAKER_23: a nice wine collection i'm not i'm not a big wine guy but chamath does and some other friends do vinnie does and so i'll i'll partake in a one ounce but i would certainly not want to drink moonshine which i

SPEAKER_99: think is probably 10 times i don't know five times but no one's basing their wine purchasing decision

SPEAKER_103: based on how much alcohol they have maybe back in prohibition they were doing that so that's that's

SPEAKER_129: what you're seeing this is why legalization needs to happen so tell me about the shards or shattering

SPEAKER_140: and and resins like what is the now we're shifting into form factor form factor is actually a beautiful

SPEAKER_103: thing if you if you think about what alcohol is is you can just consume it as a social like hey i want to you know have a good time at the super bowl i can drink it cannabis comes in hundreds of different form factors beverage you can eat it you can put in gummies chocolates you can have it as lotion you can put bath salts and take a wonderful cbd bath the the products you're talking about shatter rosin live resin is different ways to take the plant extract the medicinal benefits of that plant and and present it to the customer in a way that they consume it dabbing and shatter is a result of prohibition meaning how concentrated can i take this and put it in for it andrew explain how people take

SPEAKER_23: this because i think that's what the audience is missing we understand it's more potent but how do people consume this andrew i'm uh if you could explain it you could probably think of it as quite

SPEAKER_30: similar to the mechanism that's happening inside of a jewel or a nicotine vape you're basically taking a concentrated liquid or in the case of dabs and shatter it's more like a gel which is essentially 80 or 100 thc you've you've compressed the plant and taken out all of the thc content and turned it into this sort of gel and so you take a very small amount and then you superheat it and you

SPEAKER_32: would smoke it similar to a bong or you know the way that you would consume any other crystal flower

David Friedberg: based yeah i mean it sounds like smoking is it a way to say this for it might be this is the crack

SPEAKER_08: version of it is the crack it is the crack of cannabis yes you nailed it yes and people take

SPEAKER_103: this in the round it actually doesn't i i do i in the spirit of not of not putting out misinformation it is highly potent but what is actually extracting is all the plant that medicine from it now people are advertising it as like hey this is going to get you so high but really what it's doing is it's extracting all the plant matter that when you consume it and smoke it it smokes it's not good for your lungs and it's actually pulling all that out so it's a distilled

SPEAKER_23: version of the cannabinoids here's a look at what it looks like here's a here's one of these uh pipes you heat it up i guess that little stick is the hot thing and then the resin is what's in the little bowl there and i've certainly seen this online so this is five ten times more powerful per hit than smoking a jay or hitting a vape pen and this can cause a pretty serious psychosis kids are getting

SPEAKER_91: taken or adults are getting taken to the emergency room because they hit this too hard that's i guess people's concern so i'm not trying to demonize anything but this is this is a really important

SPEAKER_32: part of the conversation because i think what people in the cannabis industry who have a

SPEAKER_30: responsible approach to cannabis don't believe that there are no consequences to widespread high dose cannabis consumption i see those consequences and i believe in them but i think that we should compare them to the things that we accept in our everyday life amongst other substances and how do these things actually work out when it pertains to personal liberty and personal decision making so you know based on the ratios that we've just described this is basically the difference in concentration between having a beer and having some vodka you know that that's a choice that people make when they're consuming and there are a lot of problems that happen in our society as a result of over consumption of vodka death by traffic accidents death by overdosing on alcohol alcoholism all of these consequences that occur based on a substance that ostensibly doesn't have any medical benefit and we accept because it's something that people want to consume and it enhances their life from their perspective so i think that's where thinking about cannabis as something that is part of our trade-offs as a society but also has many benefits there is a ton of great research that you alluded to jason that indicates that when you legalize cannabis in a state opioid consumption and opioid deaths plummet precipitously by in some cases up to 30 percent that is huge if we're trying to handle the fentanyl crisis if we're trying to handle the opiate addiction and deaths of despair crisis

SPEAKER_32: cannabis is one of our best solutions and i think we can probably do the math to show that the risks of cannabis and the consequences when not consumed responsibly are outweighed by the benefits of responsible consumption on personal lives as well as from an economic perspective you know for the

SPEAKER_83: entire country i want to say socrates i i completely agree i appreciate what you said just about like

SPEAKER_48: not putting out misinformation i think again not to touch on the too much thc side or it's like it's just too potent it this is a product of prohibition and it's now a product of over regulation we're being over regulated and so when you're going to the consumer and you're trying to you're still buying on a price per milligram dosage basis and when you're getting the taxed out of you you're going to make sure you're getting the highest potency thc out there so prohibition and gavin newsom i think amongst many others are like the key he does not have a really good record or anything does he i would say that both of those are factors that are influencing this high potency market and this is where you could have

SPEAKER_23: regulation actually federal regulation help sort this out because everclear which is like 190 proof which i guess means it's like 85 alcohol or 200 proof 100 alcohol for industrial use these things are banned there are places where they say hey there's a certain potency where we're just not going to allow you to sell it there might be a reasonable concept here as well as you know maybe don't sell gummies that are what's the highest potency gummy you can buy socrates before legalization actually in the

SPEAKER_18: state of california you could buy like a 400 milligram candy bar that was unregulated you could did you say 400 milligrams 400 milligram and it was actually in the vice the the flip side of that you could buy something that says it's five milligrams and it could actually really be 400 milligrams because there

SPEAKER_23: wasn't testing sure but a 400 milligram just so people know like i think a reasonable dose is five or ten milligrams correct yes so this would be 40 maybe a hundred times more which you don't want laying around that's the issue is like if this stuff is laying around or kids get access to it you know it's always

SPEAKER_124: about protect the kids but the same thing could be said about moonshine right you just don't want the stuff laying around and then somebody taking a shot of it and winding up getting really sick or just

SPEAKER_30: underestimating the potency of it there's also a question here of core cpg principles which is that the businesses in cannabis are responding to the market that they have and because of the stigma around cannabis and the continued prohibition there's a huge slate of the market that is not comfortable entering into it so the the classic unicorn consumer that every cannabis business is always talking about wanting is the soccer mom the soccer mom who's having her vape you know she's watching the soccer game she's having a great time and she's having a low dose high quality branded experience those consumers are a diminish a de minimis percentage of cannabis consumers by volume right now it's heavy consumers that are purchasing based on thc content are driving most of the revenue for cannabis businesses and so yeah they're going to respond to that and make those high dose products but if you expand the network of consumers that feel comfortable entering into the space which is slowly happening over time then more diverse businesses with low dose or differently branded or different form factors can start to provide real reliable products to those people that can actually sustain their businesses

SPEAKER_32: rather than having to lean into some of these products that maybe don't feel as comfortable or or familiar to the typical consumer and to touch on your point around the consumer safety

SPEAKER_48: beats and the psychosis piece because i know that's what you jaco you asked that earlier in california a year and a half ago the le times wrote an expose they pulled pretty much all the top cannabis brands off the shelves in california there's a set of pesticides there were 66 pesticides that the regulators are supposed to be regulating for they tested those products off the shelf against the california regulations and the fda regulations for nicotine or for tobacco there were seven pesticides that the fda regulates for tobacco production that are not regulated by california for cannabis that doesn't make any sense both are heated up with the flame both have the same type of risk profile so we went in we looked at the analysis we looked at the data uh once the report came out about like 70 of all of the brands that there were about 95 of the brands that were tested failed and every single one of those brands got hit 50 70 sales i mean their sales declined after that la times piece came out uh there was a group there's a coalition that came together we set together we put together something called echo certified the environmental and consumer compliance organization we said how could because of this fragmentation regulation the feds aren't talking to the state the state's not talking to the feds so now we've got pesticides that are first off the regulators are not regulating so now you've got all of these pesticide laden products on all these shelves that are being that are you go to the consumer you know you feel like you should trust them at the end of the day there's they're clearly not doing their job the regulators aren't showing up like that we built a set of standards and now there's an auditing process out there we've got 30 of the top 30 brands in california are all on the platform it's a non-profit there's an independent technical advisory committee that's doing the job of the california regulators and the fda when they should have oversight on this and they don't um they're coming up with the standards and then the brands that actually care of the good actors are coming in they're saying look we're gonna we're gonna pay monthly dues we're gonna send out speech uh secret shoppers to do random audits test the products and then they essentially run you know this uh this this pretty cohesive auditing process what we found is and i'm not i'm speculating here and i've talked to a handful of doctors and they think that we're like somewhere on the right track yes you are there's a chance that you're seeing psychosis coming from this high dose thc intoxicating products most of them coming from hemp markets or you know 33 kind of like shatter wax etc what we found was a really interesting correlation the the lab partners that were running these audits were looking through thousands and thousands of certificates of analysis understanding the makeup of these genetics and the pesticides that are using these products heavy metals etc and what they found was the prevalence amongst like 90 of the lab samples came back with neem oil now neem oil specifically is used in a lot of different pesticides and neem there's something called neem oil toxicity neem oil toxicity has the same exact symptoms as what we're seeing in i can't remember the there's it's not it's not causing psychosis it flirts with psychosis but specifically there's a uh this cannabis induced nausea that will happen where

SPEAKER_00: people will continuously vomit so we might have a day's correlation not a causation 100 we might be we might be pointing at the wrong substance here which means even more regulation in fact there was a bunch of hand-wringing not long ago because people were selling caffeine like actual caffeine drops or

SPEAKER_23: powders do you understand how powerful these were i was just asking producer claude people were selling powdered caffeine that was the equivalent one teaspoon not even a tablespoon was 28 cups of coffee

SPEAKER_29: a half a cup of the concentrated liquid was 20 cups of coffee and there were deaths from this it was also for loco if you remember that where you're just putting too much caffeine too much alcohol in a serving can so people will associate a serving or a chocolate bar you know whatever it happens to be or a teaspoon of sugar teaspoon of honey you know with an acceptable dose it's almost like you can make any of these things into a fentanyl equivalent concentration if you were determined to and that's what regulation whether it's industry regulation or the government or some compromise of the two could

SPEAKER_124: really have a dramatic effect on protecting people because there is a you know harm can happen i think andrew you said you know people get some personal freedom but you know young people they see a can of uh soda they're like i drink cans of soda i drink arizona iced tea so it's four loco it's got some alcohol and caffeine and it's just like having an arizona iced tea and they just don't know that it's four arizona it's it's four or eight so they have two and they really having 16 and they just we had jolt cola i think when i was in college and jolt cola was marketed as two times the caffeine so it's like hey if you want to drink one coca-cola instead of two you know but there's some reasonable uh yeah there's some

SPEAKER_18: reasonable compromise here i think socrates yeah yeah i as you were talking it's a great example i don't know how many documented accounts there are but i imagine people

SPEAKER_103: uneducated to the effects of what four loco was was drinking it and could you could call it they went crazy that night i've certainly had some run-ins on four loco where i'm like i think i might be going nuts so i think that's what you're seeing jason is largely kids or uneducated consumers going

SPEAKER_18: probably to the illicit market so you're not buying a 400 milligram candy bar to a dispensary you're going you're you're saying okay i have 50 the person's going to give you the highest potency product and you're going to think that you're going crazy because you have no expectation of what you're supposed to feel like and you assume like obviously i'm not gonna it's not going to send me to the moon and this is why just echoing what you're saying and what this group is saying the way to solve that is let's legalize it let's study it let's research it let's put smart regulations around

SPEAKER_103: the plant so that people aren't put in a position where they could be you know putting themselves in danger like we do with alcohol and sugar etc 100 if you're an operator right now and this is more of

SPEAKER_48: a public service announcement you the high i can't i consume cannabis i have a cannabis beverage we have two milligrams and a five milligrams and a 10 milligram if you're selling anything above 10 milligram you have no regard for like this market existing further than a few more years because you're actually the issue that's that's happening right now to get the regulators up in arms and not really knowing what to do with this there's brands in market right now i can go to the gas station in the corner of south congress i can walk in and i can grab a hundred milligram dose beverage what the a hundred percent yes absolutely that is the issue is that there's these fly-by-knot operators that don't give a they're selling and again this is prohibition this is regulation these are all the issues already talked about but there's you got to have like some backbone out there and just do you know you know this isn't right you know and so i think that look i i i hear the regulations on the hemp side are going to settle between three milligrams and five milligrams per dose per unit of dosing that's a reasonable that's that's totally reasonable yeah i mean if you wanted to

SPEAKER_129: have more you can have a second skittles or breathman or whatever the format is there's some

SPEAKER_23: reasonable here for loco just for background on this banned beverage it was the equivalent of like almost three cups of coffee and a bottle of wine so now you think hey i drink three of these at a party i've now had nine cups of coffee eight nine cups of coffee and three bottles of wine that's not gonna go

SPEAKER_44: that's not going well for you there's no instance where a human being on planet earth has had eight or nine cups of coffee like i love coffee on my worst day i had six cups five or six cups i i have friends who love wine i i think they might have had two bottles like in you know a long night individually maybe but never three but an individual three bottles what would that be 15 glasses of wine

Chamath Palihapitiya: it's insane now put them both together i mean you have to really love what you're having here all right listen gentlemen this has been amazing uh where where can people find you online or just a

SPEAKER_23: little bit of plugs here at the end for what you're working on go ahead uh socrates yeah visit our site

SPEAKER_18: iheartjane.com and reach out to us anytime we love hearing from the the market info at iheartjane.com

SPEAKER_30: and find me on linkedin if you want to connect andrew likewise i'm out there on linkedin andrew duffy and sparkplug.app that's sparkplug.app is where you can find us and uh take a look at my podcast where we talk about some of these uh yes the influence of cannabis and it's really rare combination of

SPEAKER_32: retail traits on the future of retail it's called high touch with jake love it high touch great and

SPEAKER_48: ford smith go ahead uh yeah ford smith uh you find me on linkedin coming on x at ford h smith and then the venture firm is ultra native that's ultranatave.com and then if y'all are interested in the the consumer certification we need a lot of support out there so start looking for it it's showing up on a lot of packages it's uh echo eccocertified.org all right and all of those links will be in the show

SPEAKER_23: notes or in the youtube description and we're going to start doing qr codes today our first qr code is for

SPEAKER_00: spotify go ahead and take a picture of that and it'll be on the screen for about 60 seconds and to the cotler family uh just bookending this we're thinking about you and uh yeah i'm going to miss you herman what a classic he was kid from brooklyn he did great and matt what a son all right we'll see you all next time bye bye