The truth ain’t pretty. Today, Brett Puffenbarger, and I are bringing the truth, in all its ugliness. Brett tolerates no bullshit, he speaks his mind, he challenges opinions, and he knows Cannabis. We talked about a ton of stuff that’s going to blow your mind regarding MSO’s, federal legalization, and how it might not be a good thing for small business owners like myself and cryptocurrency.
[00:01 – 05:16] Update on The Texas 87th Legislative Session
[05:17 – 12:04] Introducing Brett Puffenbarger and Why Snakes Should Beware of Project Mongoose
[12:03 – 27:07] No One Is Talking About How Shady MSOs Are Monopolizing Cannabis
[27:08 – 43:25] How Should Small Business Respond to Federal Legalization
[43:26 – 55:44] Cryptocurrency and Utilizing It for Cannabis Business Transactions
[55:45 – 57:18] Closing Segment
Brett Puffenbarger is a cannabis professional with experience across a broad range of the “green rush.” He’s currently serving as Co-founder and CEO of a bespoke advisory and consulting firm called Good Highdeas where they mainly focus on investor relations, due diligence, and vetting services for investors and entrepreneurs in the cannabis ecosystem. He’s also currently serving as VP of Corporate Initiatives for Multichain Ventures, a blockchain and crypto company focused on fintech solutions for cannabis and hemp companies.
Shayda Torabi has been called one of the most influential Women in WordPress and now she’s one of the women leading the cannabis reformation conversation building one of Texas’ premier CBD brands. She’s currently the CEO and Co-Founder of RESTART CBD, a female-run education first CBD wellness brand. And has formerly held marketing positions at WP Engine and WebDevStudios. Shayda is the host of a podcast for cannabis marketers called To Be Blunt, where she interviews top cannabis brands on their most successful marketing initiatives. When Shayda’s not building her cannabiz in Texas, you can find her on the road exploring the best hikes and spots for vegan ice cream. Follow Shayda at @theshaydatorabi
“What we’re seeing is that most of these people are so obsessed with profit. And they’re so obsessed with gaining a footprint and affecting change to the regulations in a way that only benefits them, that they’ve left all of the culture, legitimacy, authenticity, and all of the love behind. To me, it’s almost like a situation of how we are now run by sellouts, and they’re pushing other people out.” – Brett Puffenbarger
“So if you look at any MSO most of them are forced vertical integration, meaning that they have to do everything from growing the plant to selling the plant and all of the steps in between in one silo. And what this is, is entirely counterintuitive to the way any other market works in the world.” – Brett Puffenbarger
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Brett Puffenbarger 0:00
We’re kind of starting to enter this age in the industry where we’re in the consolidation phase right where all the companies start gobbling each other up and they’re all using what I consider to be a false pretense. So they’re saying, oh, we’re doing this so that we can get bought out later because eventually federal legalization is coming. Eventually the big players the Procter and Gamble’s the Johnson and Johnson’s the whoever the Coca Cola is of the world, they’re going to buy us and I’m over here thinking, Well, why would they your business model is not sustainable. Once federal legalization happens, you’re now able to cross state lines, we’re gonna see traditional unit economics takeover with producer and consumer states, we’re going to see the ability for quality products to grow because right now let’s say you go to the same company in three different states and by the same strain. How is that possible? I can’t cross state lines with flour. So either you’re admitting to doing something illegal as a company or you’re just lying to consumers and you’re putting on a name and a thing and you’re giving it some branding and we’re calling that a new company.
You’re listening to To Be Blunt podcast for cannabis marketers. Where your host Shayda Torabi and her guests are trailblazing the path to marketing educating and professionalizing cannabis light one up and listen up. Here’s your host Shayda Torabi.
Shayda Torabi 1:32
Buckle up y’all. This is a juicy episode. Before I introduce who Today’s guest is I wanted to give you a little bit of an update on how the Texas legislative session wrapped up. I know last week’s episode I predicted might happen. However, things were not final said and done. And actually we had some interesting turns of events. So the gist of it was there are three cannabis bills that were in this last 87th Texas ledge session. One in particular was addressing the compassionate use program, which is Texas’s medical marijuana program. And that bill we were hoping was going to up the percentage of delta nine THC from point 5% to 5%. We were also hoping that conditions would be evolved from epilepsy and incurable diseases to include PTSD, cancer and chronic pain. Unfortunately, that bill did get passed but it was a little bit watered down. Okay, a lot bit watered down, we ended up passing 1%. So it moved from point five to 1%. And we did include PTSD and cancer but we did not get chronic pain. So still a lot to be done when it comes to medical marijuana here in Texas. But that bill did actually pass now the other two bills did not pass. So the kind of point about those two bills are there were two amendments, one in each that specifically addressed banning Delta eight THC, which if you are paying attention at a national level, it’s a controversial cannabinoid. So there were two bills one bill was specifically going to decriminalize concentrates right now in Texas, it is a felony. And because this bill didn’t pass, it is still a felony to have any concentration of delta nine THC. So a vape cart or kind of concentration of edibles. So that is kind of frustrating, because I know that there’s a lot of people who are dealing with that penalty who shouldn’t be. And unfortunately, because of delta eight, I believe that bill got tied up in some of the bureaucracy that goes on with politics. And when it came down to the wire, the bill just it ran out of time it expired. And so unfortunately, that bill did not get passed. But with that the ban on Delta eight did not get passed. Now the other bill was a hemp bill, it was going to legalize hemp for animal feed, it was also going to increase the time farmers had to test their products from 20 to 30 days and a few other attributes. But it also had that amendment for delta eight and very similar to the concentrates bill, it ran out of time. And so the bill did not get passed. And so we did not get the legalization of animal feed, the farmers did not get the additional time extension and delta eight did not officially get banned in this Texas legislative session. So kind of in a weird roundabout way some small wins in the sense that we did see medical marijuana advance a little bit here. And Delta eight DID NOT get BANNED outright. Now unfortunate that those two bills that had those amendments, we lost them because there was a lot of back and forth around Delta eight in particular, I know that that tied up a lot of the sentiment around the bills and the other good attributes of the bills. But in addition to that there’s a Department of State Health Services, which is the regulatory body here for hemp in the state of Texas. And they actually are coming out now and saying that based on the federal rulings by the DEA on Delta eight it is in fact a synthetic and therefore is illegal in Texas. Now I don’t know what the timeframe is for them to enact that I don’t know if there’s a chance for us to dispute it. I don’t know we are literally in real time navigating this. But all I know is delta eight is available for retail purchase and still for manufacturing here in Texas. So that’s kind of a wrap up of our most recent Texas ledge session. But now to the fun stuff. My guest today is Brett Puffenbarger. And he’s quickly becoming one of my favorite personalities in the cannabis industry. Because he tolerates no bullshit, he speaks his mind. He challenges opinions. He’s very educated and knowledgeable and shares a very similar approach to myself of just like being a steward of the plant and constantly trying to open the discussion for conversation. You know, I don’t think that what he says is always taken Well, unfortunately, that’s kind of the price you pay when you start to speak truth and start to poke holes at things. But I find it extremely refreshing and exactly the kind of conversations that I want to be having on my podcast. So naturally, I had to extend an invitation and pick his brain and we talked about a ton of stuff that’s going to blow your mind and probably frustrate you because it certainly frustrated me a little bit. But it’s the reality and it’s a good perspective again, to reflect upon as we are all navigating this industry forward trying to make sense of it, especially as federal legalization is on the horizon. And you’re starting to see some of it play out with these multi state operators. They’re kind of using their money and their authority to bypass independent state laws. And especially here in Texas, we’re seeing the beginning of that as we have a new MSO entering the space and yes, a lot to unpack in this episode. So I’m gonna introduce Brett, and we’re gonna dive right in.
Brett Puffenbarger 6:41
My name is Brett Puffenbarger. I wear two different hats. Currently, I am the co founder and CEO of a company called good ideas. And most people probably know that because of project mongoose, and I’m sure we’ll dig into that a little bit. But let’s just say we’re acting as an industry watchdog and transparency organization that digs and then I also wear a second hat is the Vice President of corporate initiatives for a company called multi chain ventures. We’re a blockchain based company that aims specifically at cannabis for payment processing, track and trace the whole nine yards that blockchain is kind of about but aimed specifically at our industry. And I think the two of them play together because my whole thing is radical transparency at all times and always period. Hey, you kind of have a personality for yourself. I mean, we connected originally on LinkedIn, you’re definitely not afraid to speak your mind I find it very refreshing because as we were just kind of talking before we started recording, sometimes I find information out and I’m like, holy shit, this is crazy. I can’t believe this is fucking happening in our industry. And I rely on you know, people like yourselves to help kind of uncover some of that information. And so I’m excited to get on you know, the podcasts and just kind of hash out some of the things that you’ve come across and so I’d love to kind of start with Project mongoose. I was perusing your profiles your websites before recording and and I love that you often refer to you know, grass and snakes and grass attracts snakes, and I love it because it couldn’t be more accurate and onpoint with this industry, I think that people just are so I don’t know if they just don’t want to be confronted with the truth. I think for myself my perspective, I often you know, kind of share I was a consumer first and I just like I love weed. I love cannabis. I love the high I love now being able to explore other cannabinoids, I got into the industry, kind of by way of a personal accident that introduced me to CBD. So the plant is very powerful for me in my life. But now transitioning into the business side. It’s like holy shit, to make change to move the industry forward. You’re constantly confronted with regulation. Sometimes the regulation doesn’t make sense. There’s just shady players in the industry. I mean, some of these states, I know you’re from Florida. So Florida requires vertical integration. I’d love to kind of dive into that. But let’s kind of kick off with what is project mongoose? And where does that kind of sit from your perspective in the industry. So project mongoose, at its heart is an attempt at being a journalistic endeavor in a sea of media endeavors. And it’s something that I make a very clear distinction. And I think media is things that poses journalism, but they’re more hype than they are facts. And I think journalism is kind of the hard hitting things that have been lost in recent years across society, you know, with the rise of fake news or all of these other terms. So our big thing that we’re doing right now is we’re collecting stories. We’re collecting stories that have the bad, the terrible, the awful, the unbelievable that we’ve seen people deal with across the industry. And I think what it’s really led us in on is it doesn’t matter what state you’re in, the regulations matter to some degree, but even that is that we have a culture problem. We have a major major cultural problem across cannabis and we have a lot of shady characters and the whole idea from like the hashtag for grass attract snakes was to make it a simple, easy. Understand thing that talks about a much larger problem. So I think what you see in any emerging industry is a combination of two things. You see the holdover from the people who pushed for that industry, right? It doesn’t matter if it’s cannabis or tech, or any of these, you have the early adopters, you have this thing where it’s built on advocacy and activism. And especially in cannabis, there was a culture here 50 100 years more before any of us could ever put this shit on our resume. So it’s not like there wasn’t something already here. But what we end up having is this second wave of adoption comes in cannabis, it’s specifically kind of this thing that I refer to as Chad, they’re your boring white dudes in both shoes and a blazer, who think that they’re special because they have an MBA, and that they’ve ran a spirits company, or they worked in pharmaceuticals, or I was an agency marketer, whatever thing you have. And what we’re seeing is, is that most of these people are so obsessed with profit. And they’re so obsessed with gaining a footprint and affecting change to the regulations in a way that only benefits them, that they’ve left all of the culture, all of the legitimacy, all of the authenticity and all of the love behind. And so to me, it’s almost like a situation of we are now run by sellouts, and they’re pushing other people out. I think there’s a key differentiation between being a sellout and buying in. I think those are definitely different things. But I think we’re definitely on the side of the Chad’s are trying to run things and they’re failing at every turn. And they might not look like it, it might not seem obvious to the average listener, or the average reader, because there is a very large chunk of the industry that is very much predicated on this smoke and mirrors thing, whether it’s the data companies, the media companies, the operators themselves, they’re all kind of in it together. I know it kind of makes me sound like the alex jones of weed. But the sad part is that if you actually dig a little farther, it’s all true. It’s all terribly alarming. In so many ways. I know that you don’t mind pushing the boundaries and having these conversations. So I’m going to push you a little bit, give us some examples to your best, you know, knowledge like help us actually map out for the listeners, because I know you and I pay attention to these things we’re you know, aware of some of these MSO operators all kind of call it out parallel parallel is about to move into Texas, and they’re from Florida, they’re also operating in Nevada. And I think the word MSO is maybe foreign to a lot of my listeners as well, because they may be just exist in Texas cannabis, and they’re, you know, good old guys and gals who just want to see this plant survive. But we are being confronted now, especially here in Texas, where the market is shifting the markets opening up, we don’t have a full on medical program and I see parallel, this MSO operator moving in, and I’m a little scared, I don’t really know if that’s going to help the industry at large here in Texas, or if it’s just going to continue to float parallels bottom line and allow them to survive and succeed. And as an MSO, who’s so clearly already involved in so many other states, it just doesn’t make me feel very good or excited about adult use. And I think that everybody should have access to cannabis. And so I’m curious, from your perspective, maybe picking on parallel, maybe someone else comes to mind. Again, how do you map that out for someone to understand really how deeply layered This is actually in our industry. So I think we could pick on pretty much any MSO, which is multi state operator, meaning they’re larger companies that exist across multiple states. And I think the funny part is, is that they’ve all kind of followed the exact same business model. So if you look at any MSO most of them are forced vertical integration, meaning that they have to do everything from growing the plant to selling the plant and all of the steps in between in one silo. And what this is, is actually entirely counterintuitive to the way any other market works in the world. You know, everybody kind of says cannabis industry, but really we have what 3736 38 however many different legal states there are, is their own industry, you know, you’re not seeing true cross border pollination. And if you are, that’s its own question. So if you see a company that exists in two or three or four states, really what they’ve done is stacked the deck in their favor in that very specific state. And then they flooded the market with their subpar stuff. And they’re actually still failing. No MSO that I know of, outside of maybe true leave is profitable. They’re not in the black, they’re operating in the red day in and day out, and they’re basically blowing through other people’s money at an alarming rate. They’re really good at one thing, pumping up hype and ignoring the potential problem. And you can see it in any state. You could literally point at any state any group. A good example would be med men, the guys from med men’s comm have their executives got caught for saying the N word in meetings and they got blasted for being racist. Well guess what? They’re back to being executives at another cannabis company. Because they got so smart. They took some of their lower level executives had them go found a new company and build it in the shadows for six months until they get up ship to another one as they got ran out, or we can even look at parallel themselves boat really their head guy. I think he’s the chairman of the board. He came out and said it in a recent Forbes article. He said, we only want to play in markets that have like a cornered market, we only want to play where it is stacked in our favor. And they’re still not doing anything because none of them are following basic business tenants. And I think it’s really interesting because we’re kind of starting to enter this age in the industry where we’re in the consolidation phase, right where all the companies start gobbling each other up, and they’re all using what I consider to be a false pretense. So they’re saying, oh, we’re doing this so that we can get bought out later because eventually federal legalization is coming. Eventually the big players the Procter and Gamble’s the Johnson and Johnson’s the whoever the Coca Cola is of the world, they’re going to buy us and I’m over here thinking, Well, why would they your business models not sustainable once federal legalization happens? you’re now able to cross state lines, we’re gonna see traditional unit economics takeover with producer and consumer states, we’re gonna see the ability for quality products to grow. Because right now let’s say you go to the same company in three different states, and by the same strain, how is that possible? I can’t cross state lines with flour. So either you’re admitting to doing something illegal as a company, or you’re just lying to consumers, and you’re putting on a name and a thing and you’re giving it some branding, and we’re calling that a new company. It’s really alarming to me the amount of shakiness that is being touted as great things, you know what I mean? Like if we really want to dive into it, let’s talk about truly have just bought harvest. Right? Those are huge major companies 2.1 $2.2 billion for the weekend, before that happened. I’ve been seeing reports that truly have had a mass grow walkout. How is that possible? Here’s my favorite one. And I’ll get off my high horse for a second. But I encourage anybody to find any name of any multi state operator, I don’t care what they are going to Google right now, as they’re listening and type in after the name lawsuit scandal lobbying, any of those, most of these companies are so arrogant with the way that they’re doing it, that they’re open to the fact that they’re suing minority licensures. They’re suing the state to prevent equity licensure, they’re lobbying for something if we want to go back to Florida. So right now, here’s the situation in Florida, there are 22 licenses for like 500,000 patients the lift to achieve that is so hard that I think only 13 of them are actually producing products right. And that’s an a medical market parallel med men do you have the examples of already use they dropped like a million dollars a piece or a million dollars collectively to a ballot initiative called make it legal Florida, which effectively only allowed those 22 licenses to play in the adult use market. And then they went so far as to get a local celebrity lawyers name’s john Morgan, for the people. Everybody’s heard of him. He’s pot daddy. That’s what he calls himself. He even went so far as to make a tweet about how it’s okay that it doesn’t have home grow, because you could still grow at home and the cops won’t be looking for it. It does not get more shady and questionable than stuff like that. It’s so fascinating to me, though. I mean, thank you for sharing all of that. I think I’m reeling from that conversation. I’m sure the listeners are like, wait, what the hell is going on? And I think this is good for them. I think we all need this little bit of a wake up call to realize what industry we’re playing in where my follow up question goes to is a little bit to pick apart, you know, so you have these MSO operators, they obviously have all these different tiers of people lobbying advocating to try to establish some sort of legal market. So like, would Florida have legalized medical marijuana had this, you know, negotiation of limited licensure, this requirement of vertical integration? Like obviously, it benefits these players with deep pockets and these political ties, but like, would Florida have seen medical marijuana legalized otherwise? Like I’m kind of wondering? I think so. Yeah, parallel sucks, maybe perhaps, but like, Is that going to ultimately push Texas into better access to the plan, even though it’s only run by you know, an MSO? Here? Are there maybe a few companies it’s I think each state’s its own thing. I think each state carries its own culture by using Florida for specifics. I would assume the average person who passed it the 70.3% of Floridians who voted into law, not through legislation, but through a constitutional amendment had no idea that that was going to be how it rolled out because it wasn’t spelled out in the amendment. It was a choice by the rule makers to set it up that way afterwards. right but that’s what I’m trying to wonder is like when the people are voting for it they’re obviously not anticipating and again kind of reflecting on myself I want to be legal so you’re voting yes legalize weed. I want to be able to go to a dispensary and have access to this plant not realizing Holy shit. legalization doesn’t mean everybody who wants to be in the industry has access to right i mean contrasting Florida Oklahoma is a free for all they have the most amount of licenses available for their market and so it’s not that one is necessarily probably better or worse maybe it’s you know what’s worse or worse, sir. Yeah, but again Yeah, I’m like okay, so if anybody can have a license that’s really also scary because that’s oversaturation in the market and so I do think there needs to be some sort of regulation absolute but it is very overwhelming when you look at like man Florida you kind of pulled the wool over my eyes you only gave your buddies licenses and now it’s you know, a monopoly and you kind of highlighted the quality isn’t necessarily even there because these people are more so in it for the money not so much the integrity or the culture of cannabis or the plants and now I think you’re seeing states getting into capping THC percentages. I saw Florida even has you know, a 10% THC shot down Okay, sweet good. Texas is fighting right now to increase from point 5% to 5%. And so we’re also limited with our medical you can’t even have smoke bubbles and they all have to be cushioned with CBD. So it’s to me a very far road to get to full medicalization here in Texas. Here’s my thought on this. I am not a fan of using alcohol is a parallel to cannabis in very many ways. But I think that’s something that is worth noting is that we had a legal alcohol industry from the end of alcohol prohibition until the mid 2000s. So like 84 years, where it was exactly what everybody didn’t want. It was a forced vertical market with very few players and no legalized homebrew, right. And now what can you see in every American city over the last 10 years or less the second they allowed homebrew, you saw a rash of innovation which led to a rush of entrepreneurship, which of course has its obvious problems in the market, kind of like you highlight with Oklahoma, there’s going to be a bloodbath. But what ends up happening at the end of that is you end up with a much broader chunk. So I don’t think it would be bad to say or ignorant to say that all of these home brewing things that have turned into craft breweries have taken a huge dent out of the Anheuser Busch world, right. Like those players. I personally see a similar aspect to the cannabis industry in that regard. I don’t know that any MSO has ever put in money or work in a way to ensure legalization in any other way other than to stack their deck. So I can’t think of a single state that’s already legal in any manner, where they came in and altruistically fought for legalization in some middle ground between the chaos of Oklahoma and the Uber restriction of Florida. I think what we kind of see and if we look at it in a timeline fashion is Florida became the test case for this right because we had the Canadian LPs Canadian license processors are identical to American msos. except they’re 18 months to two years ahead. And they’re a much smaller thing. So I think what we saw is the explosion of the Canadian LPs, and now we’re seeing the implosion. And I think we’re kind of in that phase where we’re about to see that same tip over in the American msos. So what they ended up doing is Florida passed the law after they passed legalization, they lobbied the hell out of the state to get the rules the way they wanted them since then, they’ve gotten a little smarter, and they started suing the state at the onset. So if you look at Maryland, Pennsylvania, some of these other East Coast states, it’s almost like they found the way that works for them, because they know they have an unsustainable long term business model that they can pump and dump the whole damn thing off the rip. So let’s go ahead and start the pump and dump in the right way. Because they know they know in a few years when federal legalization happens, that they’re done, they’re done in every way, shape, or form, and they’re not going to continue and they’re going to fall apart. So for me, I look at my favorite person on LinkedIn right now is a guy named Rob MacPherson. He’s the former president of Bacardi Canada. So if anything, he is the other guy. So when we look at all of this, and oh, are they going to do this? Are they going to do that? Are they going to get bought out? What’s the end goal? To me? He’s the perfect example of the guy across the table from them when they’re meeting with these consumer packaged goods companies, right? Because he’s been there and lived that none of them are profitable, and none of them are worthwhile. And he talks about it all the time. And I see the same thing coming for the American industry, or they’re all going to go away in the next five years. And here’s my favorite question. I asked people who is the first dispensary in Colorado? That’s a good question. Native roots. I don’t know the answer. I don’t know anybody that knows the answer. I’ve never once had anybody go Yeah, it was this guy and they’re still operational. No, they’re a long forgotten thing because those markets were in that middle ground well enough that they allowed true brand growth and true quality to shine through and they found that middle ground between the two and I’ve said this a bazillion times on other podcasts but I think we have an opportunity here. Where is a half measure enough to kind of get back to the point you brought up, or we’d be better off waiting a year or two and getting a true chance at something good because if you look at Florida, they’re stuck. It would take another constitutional amendment to fix what they have going on. The last thing I want is to us to be stuck in the same problem that the small alcohol producers faced post prohibition, I don’t want to see that I’d much rather sit back, wait for a couple weeks, a couple years, you know, whatever, and get the good thing. And I know that’s not the easiest thing. And it’s kind of a gut check for people who just want it legal. But there’s a huge difference and going to a cure a leaf or a madman and going to a local kick ass brand, like Tacoma wellness in Washington, DC, or, you know, some of these other places that I’ve had the opportunity to electric lettuce in Portland, like these small operators that have focused on quality and kick ass stuff. And I just see that as a much longer play for all of us. And I mean that as a overall all of us, like industry, community, all of it. And I think what it’s going to take is a middle ground. I oftentimes talk shit on the Chad’s right, like you guys are sucking, you’re ruining the industry. But the other side of that equation is starting to get equally as bad. You know, the oh geez, the guys who look like me with an upturn hat and sleeve tattoos, and they’re like, Well, you didn’t slug water for 50 years to the grill house to earn your spot in the industry? No, I didn’t. I’m a transplant like 95% of the industry. But you know what, I have the same love for the planet you guys do. And I think finding that middle ground, that small group of people that are going to survive this next couple years of chaos, because I think what we’re gonna see is an up shoot in the msos. And then they’re all going to come crashing down. I think the small group that can grow out of that, like a phoenix or whatever, is really that’s the truth. And my buddy Greg weld said it a long time ago. All of this is just preparation for 2028 when the LA Olympics happened and the international community comes to the home of weed and everything’s different. That’s a very interesting thought to put in the back of our minds you paint a really sad but heartwarming picture of kind of the current status of cannabis in America. I’m curious kind of a two fold question. You know, we touched on legalization at a national level. I certainly have opinions on federal legalization but it sounds like a little bit you know, we’re gonna go through some shit to have everything kind of settle out in the wash. So one part of the question is, you know, what are your thoughts on national legalization but the second part is I’m a small business owner I own a singular dispensary here in Austin, Texas. weed is not legal in my state. We’re just selling hemp derived products. We are currently fighting through different legislature because we unfortunately do not get the right to vote US citizens in Texas, we have to leave it up to due process and it’s painful. It’s painful to watch certain cannabinoids for better or worse be pulled from the shelves. It’s painful to watch my industry here in Austin grow, you know, we don’t have msos necessarily yet but you certainly saw I mean, we launched in 2018. The amount of dispensaries that opened is certainly not the same amount because partially due to COVID partially due to the market settling out and so I’m kind of you know, wondering crap. I don’t personally think national legalization is good immediately and maybe in the long run because you’re right, maybe eventually it’ll settle out and we’ll have the ability to have these craft brands really thrive and survive my gut reaction is how no national legalization because national legalization invites the brands like Coca Cola here in Texas, you know, we got a really great grocery store chain called ACB. And it’s public knowledge you look at who owns retail licenses and have well he went and got all the retail licenses and then I observed what’s happening in Florida with vertical integration, unlimited licensure and I think well shit if Texas decides to legalize, they’re going to potentially allow vertical integration or require I should say vertical integration who’s set up for that I certainly don’t have a billion dollars in a bank account. I cannot grow and manufacture extract process and retail sell and so it’s just very daunting and sad again thinking what am I fighting for? Am I really fighting for legalization and legalization for who is ultimately to benefit these msos is ultimately to benefit these corporations.
Unknown Speaker 29:26
quick break to say thank you to restart CBD for sponsoring this podcast. Restart CBD is a brand my sisters and I founded in our hometown in Austin, Texas. We operate a retail location as well as an e commerce store and you can browse our wide range of CBD products at restart CBD calm again, thank you to restart for allowing me the time and resources to put on to be blunt. I hope you’ll check them out for your CBD needs. Let’s go back to the episode.
Shayda Torabi 29:56
I like you You know I’m not someone who’s been growing for Decades I don’t have family who has been in the cannabis industry. I’m just you know, a gal in Texas who grew up loving this plant. And thank the Lord that, you know, he put it in my passion and my power to be able to sit here and have conversations that hopefully can help move the needle. But I know that was a big question. But that’s kind of the sentiment of like, I want to succeed. I want to see small businesses like myself succeed, but I’m very overwhelmed and confined with all this information that I’m absorbing and hearing and then people come into my dispensary and they’re like, are you going to be a weed shop when it legalizes and I’m like, I don’t fucking know if I’ll have that opportunity. I just don’t even know if that’s gonna be on the table. I just, alas, kind of thought I just was picking through Arizona, they open suburban licenses, they issued 13 licenses, it was a lottery listeners, I’m using air quotes, because I don’t know if it was a true lottery system or if it was a pay to play lottery system. Nonetheless, the state, nobody knows. Well, somebody does. somebody knows, nonetheless, the state absorbed $9 million to apply was $25,000. So they had I did the math over like 360 people applied 13 licenses, 360 people applied non refundable. $25,000 I don’t know what small business owner wants to just gamble, obviously 300 of them did, but who wants to gamble to maybe get the license to maybe transitioned to be, you know, a legit legal business in your state, like I can work as hard as I can to build my brand. But I don’t know what the government is going to actually do and potentially pull the rug out from under me in Texas, let alone at a federal level. And so that’s my question to you. How do you federal legalization is a double edged sword, amen. So I think if federal legalization happens in a manner similar to other regulated industries, so something like alcohol or milk, I’m a big proponent that I think the milk model of regional groupings of people that all have an overarching goal of the milk industry, so if nobody’s ever looked into it, think about it. Everywhere you go, regionally, you have tg Li, or Shenandoah is pride or whatever your local state or regional milk producer is, but they all work together as like a larger entity. You know what I mean? If we have a federal legalization that looks like that, I think we build a long term sustainable industry that allows both because any healthy industry has both look at alcohol, it’s finally becoming what I consider to be a healthy industry, you can be a small time craft brewers, small time distillery owner, you can just own the bar, you could own the fucking supply chain, who knows? I think that should federal legalization happen in that manner. It’s a good thing, because it’s going to allow a little bit of everything else, the question then becomes a timing, and B modality. So with the modality of that it becomes each state’s ability to regulate. And I think that’s where the big fear for me comes in. If they don’t set it in a way that allows or forces all states to allow some level of minor competition and things like that. It spells disaster all day, because what does it really do? Well, it opens up banking, and that’s about it. And who benefits from banking will the same people who are already benefiting because they had enough money to not give a shit about banking as it is right. The other side of that comes timing though. So let’s say they legalize nationally tomorrow, that speeds up to me, the fall down, it speeds up all of these msos falling apart, it speeds up all of that because their business model is cracked tomorrow. And yeah, they own the supply chain in a way. But right now they’re fragmented. And it’s a lot harder to bring a fragmented supply chain together than it is to build a brand new supply chain. And I think that at this point, there are enough good players across the country that we could I use this silly punk rock song all the time and a vast network of sharks and minnows, why is it that the minnows have yet to converge and rise up when you know what I mean? I think that there’s that ability. I mean, the fact that we’re having this conversation, like the whole podcast with Kristen, and we’re 3000 miles away all of these different pieces, pretty sure all of us, and it’s a much larger group than the three of us. But all of us that are kind of sitting here wondering have a lot better chance of fixing and creating a new supply chain, should that timing happen sooner rather than later than the msos do. And it’s a little counterintuitive, but I think it’s true, because that’s where you start doing it. I mean, 87%, or something of cannabis currently grown in the legal market is sold on the gray or black markets already. So it’s not like there’s not already a supply chain there. So I think there’s the issue of timing becomes that. So the longer we wait, the more preparation, these companies have to be able to make that transition. And I think that’s a problem. So I think if we have federal legalization in the next two years, now we get a free for all, and I think it’ll be a good thing, assuming it works out in our favor. I think no matter what the timing is if they allow very strict states within it like they do alcohol, so like I think a lot of people especially if like you’re in Texas, do you guys have ABC stores, or can you go buy liquor at the grocery store. You can
Unknown Speaker 35:00
Buy like with a grocery store now. So you can’t do that. And actually, I lied. You can’t buy liquor at the grocery, you can buy wine and beer, but you can’t buy hard liquor, right? So a lot of states are like that, Virginia, you have to buy all that from an Alcohol Beverage Control Center and ABC store. Oh, their states are like that, too. And I think that’s what we’re gonna see. To me. That’s the most obvious move for federal legalization. I think that will be bad. And I think that it will be bad no matter when it happens. But should we get a little bit more open and encouraging market The sooner the better? So I think that’s a little bit of future projection and a little bit of it’s a double edged sword no matter how we fall, but I generally kind of stand with you. What are we fighting for? If legalization just means this, like I kind of feel duped about Florida, I voted for legalization. And here’s the thing, I just talked to a lawyer here in Virginia the other day about this right? In most legal setups, if it’s not written, it’s not illegal, it’s totally legal. Right. So like, if it doesn’t say, don’t do this, you’re good to do it until they come up with a reason you can. Oftentimes cannabis is exactly opposite of that. If it doesn’t say it’s legal, it’s illegal. And I think that’s my big fear here with all of that kind of loaded question. It’s gonna depend on whether we get normal people’s interpretation of that, because I think that’s what most people vote for. They vote for these kind of ethereal open measures of legalization, under the assumption that it will be a very loose constraint. And we end up with the very opposite of that. So I think it’s going to be well, where do we find that middle ground? as an advocate, let’s take off our industry hats. Let’s forget we’re small business owners, or forget that we’re producers of some level of this supply chain, and just put on our advocacy hat will if we’re looking at it that way, then the only possible answer is to wait and hold the line and hope for the best. You know what I mean? No, I appreciated it. Because I never asked these questions expecting to get an explicit answer. I know that that’s very foolish of me to like you kind of even highlighted, I don’t look at other states to think Ooh, how did it play out in Florida, that’s explicitly what’s going to happen in Texas. But I pay attention to what’s happening these other states to kind of craft and draft up some sort of awareness so it doesn’t catch me off guard. So it’s not Oh, I didn’t see this coming. It’s Oh, this other state has gone through it like Texas, we’re going through a few things right now we are fighting Delta eight presently, and delta 10. And it’s now bleeding into other cannabinoids that we haven’t even discovered which for better or worse, it just to me kind of stifles the research aspect of it. We’re also in the middle of a smokeable ban. So to me smoking is maybe not the most medicinal but it is the most popular and the most effective way to absorb cannabinoids and terpenes in your body. And so with that kind of being up in the air, I’m constantly being jerked around, you know, what can I sell what Can’t I sell my consumers are concerned like you know, when his product and impute pulled off the shelf they I think are a little bit more you know, Star I’d have Oh, I just want to have access to this product and I want more access to this product and I want more products and I want more dispensaries and it’s like, yeah, we’re not really moving in that direction because we’re still in a holding pattern. Then you have the federal bullshit that’s happening where pact act just kind of slid in this USPS vape mail ban. I get it you want to save the kids from buying smokeable vapes online but to me it’s just continuing to impact the small business who I want to hang on and hold the line and you know, wait it out. My personal observation is Texas will not go wreck until we have proper medical like you can’t really go through Well, let’s I will argue that okay, argue it for me because it just happened in Virginia. Uh huh. I’m a native Virginia we are old south as Old South can get like we bullied Confederate flags and sweet tea that is the culture here not mean necessarily, but that’s where we are. A lot of people kind of have this idea that Virginia is not part of the south by DC and stuff. But there are portions of Virginia that are very much still light Afghanistan. They’re not that different than rural Texas. Right. So Never did I think that we would have what we have going on in Virginia right now. So Virginia passed incredibly strict medical, they took the Florida model and made it one step worse by saying each singular have the five licenses can only operate in this little chunk. So they broke the state into five pieces and gave five licenses to five pieces. Currently, only four of them exist because one of them went to med men and they did what med men does, and now they’re suing the state whatever, but basically they pass the most stringent of medical walls. Less than 18 months later, well shit I can start growing my own and 3041 days I can have a grotesque record.
Unknown Speaker 40:00
I can possess a couple ounces. So we went from incredibly stringent medical that never got off the ground, only one company is actually producing medical products right now. That’s it. None of the rest of them are up and running. We went from that to full blown wreck. Interesting, overnight by political term. So I think it’s at the Old South, I think that the traditionally red states, the states like we come from, right, because I’m a born and bred Virginia, and you’re born and bred Texan, like that’s how it works. I think that even the right leaning world is starting to wake up to the idea that this can be a good thing. And I think what we’re seeing is a almost like the top of the bell curve moment where we started like this, and we saw it going and now the cats out of a bag. I would not be surprised if Texas does similar to what Virginia does, or what Alabama just did yesterday, you know what Mississippi and Louisiana are talking about? Like the tides are changing, and it’s now no longer How do I want to put this, I threw a rally A few years ago, right? We had everyone from the left support, like most of the left wing blue dyed in the wool democrats and Roger frickin stone at the same event. And you know what they did, they held hands, and they said, this is a green issue, not red, not blue, not purple, it’s green. And I’m not saying I agree with either side. I’m a diehard libertarian by nature, I don’t trust any governmental official. But to me, that was the signal in my world, that it has nothing to do with what side we’re on. It has nothing to do with the culture, I think it’s all coming a lot quicker and a lot more rapidly than we realize. And I know that the idea that hold the line a little longer, when you don’t know the end is a really scary prospect. But I think that the end is a lot closer than most people want you to believe. And I think it’s intentional. I think it’s partially misinformation from the msos. And from some of these politicians who have something to gain from it staying illegal. But I think at this point, we’re at a place culturally across the country, where we dokay now doesn’t matter where you go, Oklahoma went as open and crazy as they are, you can smoke weed and get your toes done. That’s the thing, I saw it on the news, like you can go to a bar and light up a joint in the back smoking area, I don’t see how Oklahoma is not a more acceptable model for Texas to be considering your next door neighbors.
Unknown Speaker 42:26
We’re playing that game, we’re kind of looking at everybody around us shifting their cannabis laws and trying to be as patient trying to be as respectful of the process as possible. I agree with you, I see this as both parties, I see this as a green issue. I love that way of framing it. And I do think it’s just a matter of time, I just Unfortunately, sometimes personally get spooked by all the information out there trying to digest it trying to, you know, incorporate it into my business with like, at the end of the day, I have a business to run, I don’t want to go out of business, you know, and so it’s not like something that I take very lightly. But at the same time, I really do love this plant. And so I liked what you said to taking the hat off of the business owner of the process or of whatever and just realizing like as an advocate, how can you make an impact? What are the conversations that need to be happening, and just also like expressing that patience, and that due diligence of the process. And so I think that’s certainly what I’m trying to do here in Texas, but it is a little bit of a jerk around, you’re getting pulled in different directions. But we’re almost at time I wanted to pick your brain a little bit. I know crypto is something that you love. And I’m bringing it up because banking is difficult in this industry. As you know, I’m sure my listeners have had their fair share of trying to find the right payment merchant payment processor, right bank, my kind of tee up to this is from my own experience and understanding, you know, depending on how long you’ve been in business, depending on what products you’re selling, so it’s much different if you’re a one month old company trying to sell topicals than a one month old company trying to sell flour, kind of extrapolate that out depending on if your e commerce and you know retail there’s different integrations. So these are all things that I’ve learned to navigate based on what my business model is. And I still run into challenges. And a friend of mine recently suggested I look into cryptocurrency as a payment solution, but it scares the shit out of me. I don’t know if I have the awareness or understanding to navigate it. But I know that it’s a passion of yours. And so I just be curious to hear your perspective on it in relationship to cannabis payment merchants, for sure. So I think we can go one step further than that. So I think it starts with blockchain as a technology. I think most people don’t realize this, but blockchain was the piece that allowed cryptocurrency to exist. So it’s like the developers of Bitcoin. The original cryptocurrency actually created blockchain to create crypto and then a whole bunch of people looked back and went, wait a minute, that’s its own standalone technology. And so I think the first thing I should do is kind of
Unknown Speaker 45:00
Give a very elementary explanation of what blockchain is to make it makes sense. So traditional computing of all sorts is kind of like your brain. It’s nodes with strings that talk to each other, right. And it’s kind of disjointed. And you can skip nodes. And you can jump around, I use the thought of block Lego block, right? So when you take a Lego, it’s a chunk of plastic that has a very specific plugin that only fits another chunk of like plastic. So blockchain is like a Lego in that it’s a chunk of information that creates a block, right, and at the end of both sides of that block is something called a hash. And the hash is basically a date and timestamp and a location understanding between other blocks, right? So for that blockchain could replace standardized track and trace systems like metric immediately, because it creates something called decentralized ledger technology, meaning nobody’s in charge of it. And it’s all based on cryptographic understanding. So a block only exists once it is verified by a consensus amount of shareholders in that block. And it takes computing power to do that, right. So blockchain, to me, allows the ability to track and trace immutably, all of these products, which is something we’re going to be required to do, it doesn’t matter what state you’re in. So I think the first thing is implementing a blockchain system so that all of the things are communicating together, right. And then that brings us to, to kind of specific things that break off of that you have smart contracts. So we brought up CEOs earlier certificates of analysis earlier in the conversation, imagine what would happen in any scenario, if I didn’t have to ask for that. If that existed, and it was viable. If I could send the money immediately to somebody and the entire process of escrow acth, transfers, validation, all of that happened instantaneously, because you can follow their little block that we just built, because we built a stack of Legos. Well, I can go all the way back to the beginning. And I can watch every chunk of that right, so then that brings up cryptocurrency. So what is occurring right at the very core of what a currency is, it is an exchange or a rate or good services and labor, right? So in regular money, there is a control mechanism in the united states that the Federal Reserve who decides how much money is made and how much we spend on it and what it’s worth in cryptocurrency, that’s all controlled by the very blockchain that exist on so there’s a set amount with a set amount of work to create the damn thing, right. So you have to solve a certain amount of cryptographic puzzles to build the bot. And when you finish the block creates this currency, that doesn’t really matter for us using payment processing. But that’s how it works. So basically, a cryptocurrency is the exact same thing as the dollar bill in your pocket. Now, if you pulled $1 bill out right now, anybody could do it, it doesn’t matter what denomination it is 2510, whatever. If there’s that little green number at the top right, you don’t know where that’s been, you don’t know how many times it’s been cashed out, you don’t know who’s had it, you don’t know how many times you’ve put 10 of those together to make a $10 bill in cryptocurrency, you can do that. I know from the very moment it was minted from the very moment, it was mined and created, every iteration, every wallet it’s been in and it doesn’t have to be like super sketchy spy shit. So I don’t know, like details, but I can see the entire life of that currency and the way it’s been used, right? So when we start thinking about that, that’s an immediate replacement for business to business transactions when paired with smart contract, because now I don’t have to put anything into escrow. I don’t have to worry about money holding and validating the things. Well, the block itself automatically does that through a smart contract, and they automatically have the asset. And think about it like this. We’re at the beginning of cryptocurrencies. So there’s a set value to the labor, the reason you see the prices of cryptocurrencies go up and down is because of the amount of people interacting in that currency. So the value of it is predisposed on the amount of people more using it than the amount of available stuff there is. Right? So it increases the value of each token. So when you’re looking at it from a financial standpoint, like to get back full circle, I know I went off on a little bit of a tangent. That kind of was helpful. Yeah, I didn’t know any of that. I was like, whoa. Yeah. I mean, that’s the very basic breakdown. I think there’s a book for anybody that wants to understand blockchain at a very basic level. It’s called blockchain by the Harvard Business Review. It’s like 118 pages. And it starts at the very inception of like, what is technology and it goes all the way through like, what is the end state? It’s very short, very sweet putting very normal people word so you don’t have to just like we do in cannabis. There’s lots of weird slang and interesting terms that make it sound more complicated than it is but the way I just kind of broke it down is using normal people terms, right? So when you think about it, from your perspective, let’s put our business owner hat on again, right. every dollar that you have in the bank right now is losing buying power every second because inflation is outpacing value.
Unknown Speaker 50:00
Why wouldn’t you want to be able to hold that asset that money that currency in something that is more or less guaranteed to raise? Why wouldn’t you want to be able to intake and increase buying power from that thing? Right? So for you looking at it, you can take payments safely, just like we do from a debit card, you know, the whole funny idea of if I spent cash for dinner, it was free dinner, because it didn’t come out of my bank account. Well, that removes that entirely. Now you have a trace, from the moment it came in, to the moment it leaves, you know, where you spent it, you know, how you spent it, you can hold it and an amount that continuously grows, it’s a really unique thing. And for a very specific use, what does it really cost you other than an extra terminal at your thing, or an extra button on your ecommerce site that says I’m allowed to use this other currency, it would be no different in my mind than saying, alright, I accept euros, or I accept Swedish francs, or I accept whatever Iraqi dinar, it’s just an increase of buying power on that specific set. And then for you, as a business owner, it’s an ability to put it into a place where it’s going to gain value, not lose value, and yeah, might lose value and gain value as it does this, because we’re not at the mass adoption stage. But it’s a way to stake your claim in that in a way that will continue to forever grow as mass adoption continues to happen. I hope all of that made sense. It did make sense. My last little follow up because from my observation with it, because it’s not mass adopted. I’m sure there are but because I don’t play in it. Do you see cannabis businesses who are currently using cryptocurrency? And kind of twofold? are they holding that money? Or are they quickly converting it? are they holding that currency? Are they quickly converting it? Because yes, I understand that it will ebb and flow in value. But I think my tenacity is not so comfortable with like stock market exchange. And it’s like you want to buy low sell high. So if someone buys or transacts with me, and the domination is reasonable, I might want to cash that out before I hold it in potentially lose on it so volatile, that’s just my observation with incorporating it right now. I’m like, I don’t know if I would lose in the end. So I think that’s a personal choice, you know what I mean? It kind of comes down to their risk tolerance or your risk tolerance or an individual’s, I would say that, from what I’m seeing a majority of people buying it now, or exchanging it or taking it or doing so with the intention of holding it. I think at this point, it is by and large holding it or actually starting to interact with it. So like something we haven’t multi chain ventures is the pilot program in Nevada for Assembly Bill 466, which calls for a closed loop tokenized financial ecosystem, meaning that we created our own cryptocurrency our own special version of money, right, that can only be used by cannabis companies or companies interacting with cannabis companies in that ecosystem. So the idea there is is one it removes the hard cash burden, because most cannabis companies like true cannabis companies are cash only. So now they can convert all of that cash into a currency that can then be exchanged with their peers to buy it. And it all puts it into that ecosystem of smart contracts, instant validation. So we’re kind of running it through the pilot program in Nevada to allow the Nevada operators to bounce the things back and forth and use it as eventually with the advent of the safe Banking Act. And when that gets passed, we’ll be able to do it more. And I think we’ll see a much larger adoption because I think if any industry is primed for a need for any of it, I don’t care whether it’s smart contracts, blockchain or cryptocurrency we fit the bill of the perfect use case scenario for all of those things, because we have in excess, the three things those things prevent a lack of transparency is fixed by blockchain, a lack of honesty and validity and interactions is replaced by smart contracts and the lack of the requirement to do heavy money moves in these escrow accounts and all of these things is instantly replaced by cryptocurrency. So the way we’re looking at it is this closed loop financial ecosystem in Nevada is a proof of validity, a test case for mass adoption and other cannabis companies and other things. So what we’re seeing right now is very few true cannabis companies are interacting in cryptocurrencies because it kind of crosses the state line money thing, but what we are seeing is a lot of CBD companies are investing into it for two reasons. One, they’re staking their money for later and to its immediate increased buying power, whether that’s from a consumer or in your business to business interactions. super fascinating. I appreciated that very deep but brief dive in it’s just good food for thought. I think as you highlighted, it will continue to become more and more popular and more people will adopt it and so I hope that the listeners whether they are familiar with blockchain and cryptocurrency or not like myself will at least have a little bit more information to navigate.
Unknown Speaker 55:00
Get it as the industry continues to unfold, but thank you for the time this was an incredible episode. I feel very, very impacted by the conversation that we had. I just like appreciate being able to talk to someone who has a good wealth of knowledge like yourself and just has a genuine heart and appreciation and passion for the plant. So thanks for taking the time to talk to us today. Thanks for having me. I appreciate it. Absolutely anything final words final parting thoughts. If you’re an affected person in the industry that wants to tell a story, go to grass, track snakes calm and submit a story or you can be anonymous, so we’re not diamond dimes and you can say anything you want. And we will more than likely call you and verify some of the information and eventually publish it. And if you want more information about blockchain and cryptocurrency and how it plays in cannabis, you can find a ton of that at multi chain dot ventures. So much juicy goodness from that episode. Holy shit, man, Brad, you for sure made me uncomfortable. In some points. I think there is just so much to unpack depending on where you live, depending on how your business is operating depending on obviously the laws, the legalities, trying to navigate as these MSO operators are coming into the industry as cannabis does go more mainstream, there’s going to be more bullshit that we have to deal with and navigate. And so I really appreciate your transparency, your authenticity and just for what you’re doing in the industry to help, you know, stir the conversation up. I think it’s a conversation that needs to have, you know, more perspectives than some of the one sided conversations that you’re seeing pop up so much and so consistently in the industry. But with that said, we’re wrapping up, we’re done. You can go check out other episodes if you’d like Otherwise, I will see you next Monday for a brand new to be blunt. Thanks for tuning into this one and catch you guys later. Bye y’all.
Unknown Speaker 56:51
Love this episode of To be blunt. Be sure to visit the Shayda torabi.com slash to be loved for more ways to connect new episodes come out on Mondays. And for more behind the scenes follow along on Instagram at V Shayda Torabi