001: A 30,000-foot View of the Cannabis Industry with Sean Everett


001: A 30,000-foot View Of The Cannabis Industry With Sean Everett

Welcome to the very first episode of The Green Repeal: the story of legal cannabis through the lens of marketers who know the unique challenges of working in highly regulated industries. 

Today, our guest is Sean Everett. Sean is an operating advisor to high growth companies in the consumer product space. He has 20 years of experience building high tech products, consulting to the boards of Fortune 50 companies, and growing the North American cannabis ecosystem, where he is helping a number of brands as they find their way through this very nascent and crowded industry.

Today, Sean joins our podcast to give us a 30,000-foot view of this fast-moving, rapidly-growing industry and the astounding returns that some are seeing. Sean then walks us through what the seed-to-sale process looks like and the opportunities (and vulnerabilities) that exist at each stage. Lastly, we talk at length about regulation and the marketing challenges unique to emerging players in the cannabis industry – and how they may be overcome in the future.


  • Why Sean and so many others with a background in emerging technology see cannabis as a massive, fast-growing opportunity.
  • Who to follow and where to go to get up-to-date, accurate data about the business around marijuana.
  • How people are working to legitimize and destigmatize cannabis across the United States – and why federal regulation is keeping it much harder to work in than emerging tech or alcohol.
  • What Sean believes is holding back federal decriminalization – and why it’s still simply a matter of time. 


Everyone’s talking about AR, VR, AI, Blockchain, Crypto, SpaceX, self-driving cars – but you have to ask ‘where’s the revenue?’ To put it into perspective, Amazon Web Services (the AI market leader) did $11 Million in AI revenue in 2018. California legal cannabis sales in 2018 were approximately $2.5B. So just California, just cannabis last year, beat AI (by Amazon Web Services) by a 100x order of magnitude.” – @SeanMEverett




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Read the Transcript


Welcome to The Green Repeal, the podcast that helps marketing and advertising experts navigate the business world of cannabis as it marches towards federal legalization. Join me, Rick Kiley, and my co-host Jeff Boedges, as we interview economists, historians, entrepreneurs, legal experts, and more. Each episode will take you behind the green and help you and the companies you serve successfully overcome the challenges of marketing a product in a heavily restricted industry. This is your guide to cannabis marketing and advertising. This is The Green Repeal.

Rick: Hello, everyone, and welcome to our very first episode of The Green Repeal. To set the stage for you, our plan with this podcast is to tell the story of legal cannabis through the lens of marketers we’re accustomed to working in heavily regulated industries. Our plan is to produce a slate of episodes that tell the story of how we’ve arrived at this moment in the legal cannabis industry that is late 2019. And once we’ve completed that leg of our journey, we’ll shift gears to provide ongoing updates on the path towards legalization, as well as discuss the marketing challenges in the industry. Today we’re starting with a 30,000-foot view of the industry through our interview with Sean Everett who’s an operating advisor to high growth companies in the consumer product space. Sean has 20 years of experience building high tech products, consulting to the boards of Fortune 50 companies and growing the North American cannabis ecosystem. His depth of knowledge in the industry is mind-blowing, which is great because ours isn’t. If you think he’s as smart as we do, you can learn more about him at EverettAdvisors.com. Here’s the interview. We hope you enjoy. 


Jeff: Hello and Greetings. Welcome to The Green Repeal. Today we are on the air with our first guest, Sean Everett. This is Jeff Boedges and I’m with my partner here, Rick Kiley. 

Rick: What’s up everyone? 

Sean: Hello. 

Jeff: Thank you, Sean. So, Sean and I have known each other now about a year I would guess. I met Sean through his wife, Mia, who is a lovely and extremely talented Executive Creative Director and she introduced me to Sean when I was looking for some intelligence and somebody to escort me into the world of legal cannabis. Sean currently lives in Los Angeles and is an active consulting relationship with a number of brands who are trying to find their way through this very nascent and crowded industry.

Rick: And he knows a lot about weed. 

Jeff: He knows a lot about weed. 

Rick: That’s why he’s here. 

Jeff: He knows a lot. 

Rick: Sean, welcome. 

Jeff: Yes, he knows a lot more than we do which is why we’re here today. 

Sean: All right. Thanks for having me, fellas. Yeah. Glad to be here. And I’m in sunny California. You’re on the other coast. 

Rick: Yes, sir. 

Sean: Hopefully, it’s sunny in Manhattan today. 

Jeff: It is and humid.

Rick: Oh, yeah. There you go. So, give us 10 seconds, 15 seconds just on who you are and what your role is in relation to the cannabis industry if you wouldn’t mind? 

Sean: Yeah, sure. So, let’s do about 10 seconds. Here we go. Moment of truth. Let’s do it this way. I’ve got about 20 years of experience, five in management and board consulting, about 15 in tech, and startups building products and companies all across the pre-seed to B and private equity turnarounds, and public companies. And then I’ve got about a year in cannabis. And cannabis kind of pulled me in once I moved from Manhattan to LA about a year ago. And it’s been very interesting. Since then, I’ve worked with, gosh, maybe six companies now, six cannabis companies. And so, I think if you want to be involved in cannabis, California is one of the biggest economies in the United States from a state perspective and it’s one of the first states to legalize both medical and recreational cannabis. So, I guess it’s kind of a perfect storm. I’m used to being early, I’m used to startups, and over the last year have gotten pretty deep into the world of cannabis. And then that brings us to today.

Rick: Well, that’s awesome.

Sean: So, happy to be here and yeah, I’ll share with you everything I know. And if I don’t, I’m sure we can wait a couple of weeks and the market’s moving so quickly that we’ll all get up to speed as it moves along. 

Rick: Yeah, that’s the thing. I mean, I think the purpose of why we’re trying to do this is this industry feels a bit like the Wild West, that it’s taking off in ways that is hard to predict, hard to measure, and really hard for people to get educated upon. And what I try to educate myself and we read articles, it’s just really hard to keep up. So, that’s really our goal here with this is hopefully we can talk to folks like yourself that can keep everyone informed in an informative, yet hopefully fun-loving kind of way. You touched on something that really was my first question to you. And I don’t think a lot of people know this and I don’t really know. As of today, and we’re speaking in the summer of 2019, how big is the legal cannabis business? So, in terms of like revenue, and then I guess, that split between medical versus adult use if you know it, and I know you said California is the biggest market, I think you just said that but correct me if I’m wrong, how big of an industry we’re looking at right now? 

Sean: So, you know, this number, depending on the way you look at market size numbers, people can add different things to it. So, you know, in terms of total market size, I’ve seen numbers like this market could be as big as $150 billion. I’ve seen other people say the entire market globally could be $800 billion. And it’s if you start including things like medical use, right, like anxiety, cancer treatment, and then you move into wellness, which is like a $4.2 trillion market size, that’s about half the size of the global food market of $9 trillion. So, and because of the hemp plant, and we’ll break this down a little bit better later on in the conversation I’m sure, but the hemp market is used for more than just CBD. It’s hemp-based plastics, it’s clothing, it’s food, it’s bags. So, it depends on how you look at this market. It could be almost a trillion dollars, it could be 150 billion, but let’s talk about like the market size that we know of actual sales. So, right now I think in 2018, the United States legal cannabis market, that’s where we’re located, let’s talk about that, was about $12 billion in 2018. 

Rick: Okay. 

Sean: So, to put that into perspective, that means somebody purchased and spent $12 billion on cannabis-related products. 

Rick: That is a lot more than I thought it was going to be, I’ll be honest. I mean, I think I read because we work in the alcohol beverage industry a lot, I think I read the other day that the beer industry I think it’s around like 40 billion for all the beers added up. So, to see that we’re like, 25%, of what beer is all already and it’s not even legal in a lot of places. 

Jeff: It’s illegal in more places than it’s legal still, at least on a recreation level. So, it has nowhere near the reach of beer or adult beverage. 

Rick: So, I’m surprised by that figure, I’ll be really honest with you. 

Sean: Yeah. This is what’s interesting. So, actually, the chap who brought me into this industry, and this might be a good guest for you guys in a later episode. I can make a connection later. But he’s a former investment banker and lead a healthcare practice for like 20 odd years. And so, obviously, the healthcare thing he sort of saw cannabis coming in. One thing he often says to me is a billion-dollar market doesn’t just like snap your fingers and like come out of thin air every day like this is a rarity. In all the stats that you see, the caters of the growth year-over-year is like 15% to 25% a year growth, which means like if you look at this from an investor perspective, I put in $100, next year that $100 is going to be worth $125. To get a 25% return year-over-year on your money when inflation right now the two-year treasury is like at 1.6% return and the standard S&P 500 return over the last 30, 60 years is like maybe 6% to 8%, you’re like tripling, quadrupling that. Like, It’s unheard of, which is why you’ve seen a lot of early investment and a lot of early IPOs in the Canada market because it’s legal federally there happen but there’s still a lot of volatility, because that has really inflated expectations, which means your sales and your revenue needs to match that. So, if you look at like a new cannabis venture and follow their tracking metric, you’ll see that stock price kind of look like a sawtooth and it’s like up, down, up, down, but…

Jeff: Yeah, I’ve bought a few. 

Sean: But the revenues are growing and we have real-world data like 502Data.com I believe is the URL, which is real sales data from farmers in the state of Washington. You can see the actual growth. You see excise tax reporting from the states that are legal that are required to report excise taxes on sales of cannabis. So, this is real. This is if you – and I compare this all to the technology industry and early-stage startups, so everyone’s talking about AR, VR, AI, blockchain crypto, new space with Blue Origin and SpaceX, self-driving cars. But you have to go where’s the revenue? And to put this into perspective, all the AI conversation, AWS, Amazon Web Services did $11 million in artificial intelligence revenue in 2018. Their Amazon Web Services revenue was about $28 billion. 

Rick: Yeah. 

Sean: So, you’re talking about $11 million from the market leader on AI-based sales. So, California, legal cannabis sales in 2018 was something like $2.5 billion. So, just California, just cannabis last year beat artificial intelligence by Amazon Web Services by 100X order of magnitude.

Rick: By a lot. Yeah.

Sean: So, if I’m like an investor and I’m thinking about this, I’m thinking, heck, where do I want to put my money right now? But there’s the stigma, which we’ll get into later. 

Rick: Yeah, I mean, I think that’s the big thing. 

Jeff: You know, there’s a little bit of risk. But, I mean, the rates of return are that’s amazing. So, 15% to 20% for those of you like know the rules of 72, when you talk about this thing. You’re doubling your money in like four to five years. That is an insane return on investment. That’s Madoff level, Ponzi scheme level. That would make him proud. 

Rick: Yeah. 

Jeff: But it’s real. 

Sean: It’s real Madoff money. 

Jeff: That’s the name of my new cannabis brand.

Rick: Yeah, I think that might be the name of this episode. It’s real Madoff money.

Jeff: We Madoff with your money.

Sean: Yeah. 

Rick: So, you mean, you’ve talked about this sort of like landscape go one level down. I mean, how many different companies are out there right now, in this world? And I think, you know, it’s probably going to be too much to talk about investors and all the individuals there, but we’re talking about, I guess, grower, producers, or people who are bringing products to market, like, how big is that? I mean, are we talking about hundreds of companies, thousands of companies like…? 

Jeff: Tens of thousands? 

Rick: Where are we in that sort of, you know, landscape? 

Sean: Yeah. So, I actually did some research on this because I was curious as well. If you just go by gut feel, and you walk into a dispensary, your gut feel reaction, I’m going to give you the actual stat at the end of this. I’m not going to bury the lead I promise. If you walk into a dispensary, here’s your experience as a consumer. First, you’re a little kind of wary, like, what is this? This feels a little dirty like is this normal? Am I going to get arrested? Like no, it’s totally legal. But on the wall, you see a ton of products. So, it’s like walking into CVS, right? I see a lot of pegs, a lot of skews. And my first reaction is, “I’ve never seen any one of these brands ever before in my life.” 

Rick: Sure. 

Sean: You don’t see Coca-Cola. You don’t see Procter and Gamble. You don’t see Cheerios. You don’t see Kleenex. So, you’re going, “I have no idea,” right? But you see a bunch of them so you’re like, “Okay, there’s a ton of people already producing products.” If you’re in the business side of cannabis, you can see like there’s a lot of law firms and lawyers that are starting to get into this. You see the consultant side and advisory side kind of coming up. 

Jeff: The investment side is huge too. 

Sean: Yup. I see farmers. I was born and raised in Iowa so I see farmers and some of my friends that I grew up with moving to Colorado actually creating hemp farms they’ve invested and stopped their own business and started a hemp farm. Farmers are shifting from tobacco to hemp and cannabis, because that’s where the revenue drivers is. And our corn production is down, which is very, very interesting. So, when I looked at this, the entire number of cannabis businesses in the United States in 2017, this is going to shock you, anywhere between 20,000 and 30,000. 

Rick: Wow. 

Sean: That includes like 3,000 to 4,000 dispensaries and includes a couple of thousand manufacturers. You’ve got about a couple thousand wholesalers. You’ve got a few hundred testing labs. You’ve got, tech advisory product, other services, harvesting growers. You’ve got tens of thousands of those. So, you’re looking today still very early in this market. You have tens of thousands of companies and more sprouting up every day. 

Rick: Sure. So, are we late to the game then?

Sean: Nah. I mean, I look at – I’ve been in emerging tech my entire career and the answer to the question is not timing necessarily. It’s is your product better? Are you the best? And I can give you some things that I’ve sort of thought about and figured out from my, you know, I guess, depending on how you look at it, long time or limited time in this very early but fast-moving market. I mean, there’s been some people that have been in the cannabis space, hemp space for 10, 20 years. Growers, it’s on the legal side like hemp growers, you know, doing it by the book. This isn’t the black-market stuff. So, it is not too early by no means. We only have like 13 or so states in the United States. This is a global sort of situation. It’s still very, very early. You know, I would place this in the same place as blockchain, AI, crypto, VR, AR. It’s very early, but there’s lots of revenue happening, which is a good sign. 

Rick: No, that’s great. 

Jeff: And you think that the revenue is absolutely, well, not absolutely, but fairly unique to this industry versus some of these other nascent places? 

Sean: Yeah. I just come back to people who were buying the product, and it’s the consumers buying the product and that pulls through everybody, right? It pulls through the full seed to sale operation. Everybody we just listed off the entire ecosystem. And especially, if we’re heading towards a recession, if you follow the global macroeconomic news, you have to look at this kind of product as one that will do well in a recessionary environment especially if it’s known as an anxiety reduction. 

Rick: We work in alcohol beverage and we survived the 2008 recession. Well, that was 10 years ago so we can say that now, but we survived that. But you know, having alcohol beverage clients, people consider these anxiety or releasers these industries that help destress, maintain. And cannabis, marijuana, whatever you want to say, it fits actually a little bit more into the wellness side of things so I imagine it would do very well in a downturn recession, 

Jeff: I’d be interested to find out too like, is the United States at the forefront of the legalization movement? I mean, obviously, places like Amsterdam have been, these tests have been legal for a long time, but I feel like the idea of legalized cannabis is not just necessarily a US phenomenon. It seems to be growing globally as well. 

Sean: Yeah. And obviously, places like Amsterdam have been doing the cafes, where you can walk in like a coffee shop and purchase cannabis, just like you would in a bar-restaurant, right? Anywhere else, you’d grab alcohol. But from a business, if I look at this from a business perspective, I think the most evolved country right now is Canada. And that’s where you’ve seen a lot of activity because at the beginning of this year, 2019, it became federally legal. And the stock exchanges in Canada allow you to list. So, right now in the United States, you can’t list a publicly-traded cannabis company on the New York Stock Exchange because it’s not federally legal and that requires, you know, there’s the banking laws and regulations on interstate commerce. But Canada is federally legal. They allow you to list which is why you see your Tilrays, your Canopy Growth, your Auroras, your MedMens, and your Charlotte’s Web listing in the Canada Stock Exchange but I believe… 

Rick: I’m writing all these down right now. Hold on. 

Sean: Yeah, those are the big boys. So, a shortcut would be like NewCannabisVentures.com. They actually do a really good job. Alan started the site. He’s a CFA. He’s been tracking this over four or five years. And so, he actually has a list on there for investors that shows quarterly revenue in descending order by the biggest companies. And everybody’s trying to do the full seed-to-sale operation, basically, vertically integrated. But from the financial analysis, I’ve done and all the financial modeling of each part of that value chain, where is it most profitable? Is it the farmer and the grow operation? Is it the extraction? And we can break this stuff down where you’re transitioning it from a plant into like an oil or an isolated powder if you will. Or is it the manufacturing where you put it into a package? Good product? Is it the dispensary like the retail store? Is it the consumer side? And I think just like anything else, and you’re probably aware of this, you guys tell me on the alcohol side, I’m very curious, but from what I’ve seen from my modeling and also looking at comps on these public companies who list out their details and their management discussion and analysis and 10Ks is it’s the consumer side. And the game is all about distribution. 

So, my goal as a vertically integrated company is just to get my product on a shelf outside of a dispensary where consumers already are where they’re already purchasing. So, that’s why you’ve seen Tilray purchase a hemp food company for like $300 million, which was almost as, which was like double their revenue, which is crazy like I’m a minnow and I’m going to go acquire, you know, a bigger fish, because I have more money than them. But I’m acquiring them because their product is on the shelf in Whole Foods already. So, all I have to do is wait for federal legalization to happen and then, bam, I’ve got my product right there in place of it and I don’t have to do anything else and then I get the sales as a result of that. 

Rick: So, I think I want to move on but I do think there’s a whole like episode that we could talk about the vertical integration, because actually, it’s a very big difference between alcohol beverage industry where there is actually laws are written in each of these states, where a vertical integration is actually impossible. So, the laws are written that there’s a three-tier distribution system. So, the alcohol beverage companies, the suppliers or importers, they have to sell to a separate entity that’s a distributor and that distributor has to sell to the retailers before it can go to consumers. So, the idea of vertical integration is impossible in alcohol beverage, and if…

Jeff: Mostly impossible. 

Rick: Mostly impossible. I think there’s a lot of silent partners in different companies. 

Jeff: There are. A lot of board of directors out there. 

Rick: But it seems like as adult-use becomes legal in more and more states, the governing entity is probably going to be very similar and may, in fact, be the same organization that governs alcohol beverage, which case we might find ourselves with new laws, which make vertical integration more challenging for the cannabis industry. 

Jeff: It’ll be interesting to see them start to break up companies that are like, you know, 40 people. And we’re going to break you guys into three different divisions. 

Rick: So, but I think we can come back to that and keep an eye on it. But this is our first episode so we’re trying to move and cover a lot of topics in a little bit of time. One thing that I’ve noticed and I just want to get your input on is like, since we’ve been starting to research and talk to people about legal cannabis, I’ve noticed that none of the terms that I grew up with or have relationship with, to describe what cannabis is: weed, green, marijuana, La Gumbo, ganja, sweet sensimilla. 

Rick: What are you smoking over there, guys? La Gumbo. 

Jeff: That’s how we roll in the east coast. 

Rick: But I’m curious as you’re close to this industry, it feels very, very purposeful. Is there a conscious effort for those who are participating in the legal cannabis industry? Are they using this term and avoiding the other terms to help remove the stigma and kind of legitimize what’s going on? 

Sean: Yeah. And one final point on the last question, so California actually has a law where you have to sell through a distributor to get to the retailer. So, that actually exists in California. So, I think it’s probably going to be much the same. But in terms of the cannabis name, cannabis now is kind of used as the, let’s just call it the non-colloquial way to call it but it actually stems from the Latin root of the word. So, it’s cannabaceae, I believe, is the Latin root. So, it actually comes from just the medical scientific community and cannabis is the shorthand for that. And then like Mary Jane, marijuana, green, weed, all of that stuff has just come from just people being people, you know. And then cannabis, so this is the key point, cannabis actually refers to everything so that’s the hemp and the marijuana. So, cannabis is like the parent and underneath that would be the children, which would be like your THC and your CBD and your hemp. 

Rick: Yeah, but no one’s saying weed, and no one’s saying bud. I guess there are budtenders but when I go when you talk to somebody that is referred to as leaf now, like, like, very flower, flower leaf and there’s very specific terms. So, I’m just wondering, is this an industry-wide phenomenon? Is this an unwritten rule? Is this something that’s being legislated? Like, are we using these specific terms in certain ways when we’re talking about the sort of the legal cannabis? 

Jeff: I feel like there are some things really that are specific. So, intakes are specific. So, when you’re talking about THC, there’s a lot of different intakes and those seem to be industry-recognized. 

Rick: I think we should define what an intake is. 

Jeff: Sorry. Sean, you want to talk about what an intake means? 

Sean: Yeah. So, yeah, how do you refer to it? So, cannabis would be overall. I think that’s just to add some legitimacy but it’s really just how people talk in the business, when conversing with one another. And then MedMen has billboards and signage and advertising, talking about cannabis everywhere. So, it’s kind of one of those things where I think it developed ground roots or grassroots and just kind of floated up that way. And it’s also probably to get away from the stigma because remember, ultimately, we’re trying to make a business and sell products here. So, what can I do? How do I describe this in a way that says this is legal, this is medicine, this is not poison, this isn’t like a schedule one heroin, right? I mean, this is used for medical purposes. It makes people feel better. So, then, on the intake side, there’s really like four major products that you would buy and these are categories. So, one would be flower and that would be just the plant that’s been dried in, for example, a jar that you buy, and then you can do whatever you want with that. So, that’s flower. That would be right off the plant. 

The next piece is a vape pen. And this isn’t like those huge vape clouds that maybe you’ve seen online or see people in the streets like doing that. These are a little bit more subtle probably the size of a pencil. 

Rick: What street are you hanging out on?

Sean: You see him every once in a while when you’re walking around Manhattan. Not everybody, right? So, you see it’s not as prevalent as it used to be, I think, but those people carrying around those boxes the size of their palm. Yeah, I’ve seen a little bit of it on TikTok. There are some people that do these crazy rings and, I don’t know. It’s weird. 

Jeff: I thought that was a trumpet. 

Sean: So, there’s the flower, there’s the vape pen, and that can be a disposable one or reusable. I’m very bullish on the disposable. I can talk about that later. You have concentrates, which essentially means I take the plant, and I get rid of all the plant stuff, and I keep only the THC. And then it’s in almost like a little gel or oil or even like crystals. And then there’s a way to do things with that. And then you have your edibles, which would be like any type of food. I’ve seen like Campbell’s Soup style containers, I mean, you name it. It’s in trying to get put in alcohol like brownies, cookies, sugar treats. I mean, you name it, there’s something for edibles. So, those are the four. 

Rick: Got it. Got it. 

Jeff: Yeah. 

Rick: Cool. So, if I were someone who wanted to understand how the legal cannabis business works, like how a product comes to life, comes to market, versus the illicit business, which where some random guy just shows up when you call, how is the industry structured right now? So, if someone wants to get a just a 30,000-foot view of how this industry is working right now, how do we go from, as you said, like, seed to the person? 

Sean: Seed-to-sale? 

Rick: Yes. Seed-to-sale. I like how that flows. 

Jeff: Yeah. That literate is a lot better than seed-to-person. 

Sean: Maybe plant-to-person. 

Rick: Plant-to-person, that’s okay. 

Sean: Plant-to-person. There you go. You could use that in experiential activation in the future. 

Rick: Yeah. Trademark, so experiential.

Sean: Yeah. There you go. 

Rick: Plant-to-person, makes you feel good. 

Sean: Yeah, I can walk you through the process at a high level, because ultimately, this is a process and then if you want to get into the business of this, it’s where along that process you want to play, essentially. And that process is from seed to sale. That’s why it’s called that. So, in the beginning, there’s a farmer. And so, it’s just like any other crop, the farmer needs seeds and there’s also something called clones, which means I clip a female mother plant, and I clip the leaf off of that, and then I can plant that leaf, and that stem if you will in the ground and it will grow. 

Rick: Female mother plant. 

Sean: So, it’s a way to like actually get free product. It’s pretty amazing truthfully. So, there’s a whole industry just around like mother plants and seeds and that sort of thing because, obviously, the quality of the seed determines the quality of the plant, determines the strain, determines the quality of the end resulting product that a consumer would buy. 

Rick: I’d like to name my college band, Female Mother Plant. I think it’s a good band name of some kind. 

Sean: And there’s another activation for you guys. Just find the right company. Yeah, so do you want to be a farmer? Do you want to be a supplier to a farm? Okay, you farm, you grow, you water the plants, then you have to harvest. You get the plant out of the ground and then you have to dry or curate. And then that’s where the industry starts to break a little bit. So, do you want to sell pure flower? So, at that point, you’d like package it up and jar it and then you could sell it? Or do you want to turn it into a different kind of product? If you want to turn it into a different kind of product, that means you need to take it to an extractor and a lab. And meanwhile, by the way, there’s software that’s required by a number of states called Metric. They’ve just raised some additional capital, but they actually have just call it a bar code that tracks a plant from the moment it’s in the ground, understand its provenance, essentially, where it came from to understand whether or not this is legal or not legal. And so, there’s very, very stringent requirements. 

Jeff: If your weed comes in without the proper barcode, it’ll be rejected.

Sean: Yes, you will go to jail. 

Rick: Like the plant, like you’re tagging it like you would like an animal? 

Sean: Yes. 

Rick: Okay. 

Sean: And there are raids like this is very serious business, which is why it’s still young and early is because I know a couple founders and businesses where they’re like, Sean, this is the hardest business I’ve ever operated. And they’ve been in tech before. Because it’s regulated, the banking isn’t there, they can have perfect credit and the credit card won’t swipe because they’re a cannabis-related business and they touched the plant. So, a lot of people will say, “Okay, I want to touch the plant. I don’t want to touch the plant,” and it’s really because of regulation and risk. So, have some fun, but, oh, if I messed up even a little bit, I could go to jail like it’s real like this stuff’s not messing around with. 

Rick: Right. 

Sean: Yeah. So, the DEA is involved. So, anyways, so then it goes to an extractor and this is where they would do an isolation process. So, out of the extractor, they could pull out the oil and there’s a process that they can do this. If you google that process online, you can watch some YouTube videos, and it’s really quite fascinating. And what’s been happening recently in the market, and I’m in a couple of groups where there’s brokerage and people are trying to buy and sell this commodity, and the commodity here could be the flower. It could be the isolate, which would be CBD isolate. You could get like CBG isolate. There’s a bunch of different cannabinoids and THC is one cannabinoid. CBD is another cannabinoid, but there’s like 13 or 14 majors, which is THC, THCA, CBD, CBDA, CBN, CBG, CBC. So, what you’re going to start seeing is there’s going to be a bunch of products on the shelves at Sephora talking about, “Oh, we’ve got infused with CBG, which helps fight this and gives you this benefit.” We’ve already started seeing that. 

Rick: Right. Hold on. Hold on. Hold on one second. 

Sean: Yeah. 

Rick: That was a lot of letters. So, I’ve heard THC. I’ve heard CBD. Cannabinoid, can we just define that for people? I’ve heard that term used quite a bit, but I think it’s worth explaining. 

Sean: So, a cannabinoid, if you go to Wikipedia, you can read up on this Canna, and then it’s just B-I-N-O-I-D. And that’s essentially just the constituent element of the plant. So, you might hear this term, if you started getting into this industry called the entourage effect. And what they mean by that is if I just take the plant, the natural plant, I do nothing to it, the idea or the thought is that gives me the highest benefit, because I’m not, it’s like eating broccoli, versus having synthetic broccoli, right, or like isolating just the juice of broccoli. 

Jeff: Or vitamin D or vitamin A. 

Sean: You’re missing some aspect of it. So, when you isolate just THC, or when you isolate just CBD, there are receptors in the human body that attached to these compounds, which is what provides either the hallucinatory effect of THC or some of the medical benefits of CBD. And so, when you just get an isolated CBD capsule, like from Charlotte’s Web, for instance, and consumers will get really smart about this in the future and they’ll start to say, they’ll look on the label and go, “What added chemicals have you put into my product that I’m about to ingest into my body?” Just like food, right? “Like, is there a bunch of coloring like preservatives, other chemicals that scare the heck out of me? Or is it completely natural?” So, you’ll start to see the wellness community go, “This is an organic plant. I know an organic farmer in Washington, certified organic from a different plant.” I don’t think there’s an organic designation for THC-based cannabis yet. 

Jeff: Yeah, I don’t think there can because it’s a nationally or federally-run registration. So, right now they won’t offer it because it’s not federally legal. 

Sean: So, people are already starting to produce in that way and I believe that all of these cannabinoids put together without added compounds will be the end result game. There’s one more term here that you guys should be familiar with, which I’m seeing actually is going to become the main buying mechanic of the Fortune 500 companies when they start putting this in their food and beverage and supplement products. And that’s CPMG certified. So, it stands for basically good manufacturing process. That is an FDA term. And what it means is your facility is basically FDA approved and pharmaceutical grade. 

Rick: Got it. 

Sean: Which means Coca-Cola, Johnson and Johnson, when they go to buy 100,000 liters of oil, of this extracted compound, they’re going to buy from a pharmaceutical grade company that has that full seed-to-sale tracking on it so they are compliant with federal state and pharmaceutical and FDA regulations. 

Rick: Right. So, you think we’re going to have like Coke CBD like they’re just going to have a version of it? 

Sean: For sure. 

Rick: It’s just got CBD right in there. Just going to throw it right on the shelf next to Coca-Cola classic? 

Sean: I mean, I’m Coca-Cola, you know. 

Rick: It’s new Coke. 

Jeff: New Coke again. New Coke 2. 

Rick: Yeah. Do you know that Warren Buffett owns two-and-a-half times more Apple stock than Coca-Cola stock? And Warren Buffett has traditionally never invested in technology and has been on Coke’s bandwagon for 60 odd years. 

Sean: He drinks Cherry Coke every day. He believes Coca-Cola has one of the best moats ever, and Coke is looking for growth. And where are you going to get growth in new products? What’s going to be in a new product when I don’t want sugar, but I want wellness? I’m going to buy seltzer water, which the new CEO of Pepsi is very excited about and I’m probably going to have some supplement called CBD or potentially CBG and it’s going to come from a CPMG-certified facility. So, I don’t know how you guys feel about this onslaught of initials today. 

Rick: No, it’s an acronym-palooza right now.

Jeff: So, use ABC, man. I’m digging it. 

Rick: Yeah, now I know my CBD. Next time THC with me. So, we should put like a whole list of these together, but I don’t think we can go into it right now. But I did. I saw an invitation to a dinner recently that is like a cannabis dinner. It was happening in San Francisco and it was said like light appetizers with THC and then it said, it’s the first time I’ve seen it, THCA food sauces and CBD like they had all these other terms in there. And I was like, “What is this stuff?” I want to add just say one thing and make sure I get it on the record. THC itself without anything else next to it, this is the only thing derived from the cannabis plant that is psychoactive, correct? 

Sean: Don’t quote me on this because I’m not a scientist but, yes, THC is the psychoactive compound. It’s the psychoactive cannabinoids within the cannabis plant. So, how they separate cannabis or marijuana from hemp is one has THC and one doesn’t. And that’s really the difference there. 

Rick: Sure. 

Jeff: And hemp is basically used for, as you said earlier, for bags and clothes and things like that. It’s like a replacement for cotton and it’s a replacement for… 

Rick: So, you can make paper. 

Jeff: Yeah. Paper with it, right? 

Sean: Yeah. You know, I today am buying products off of the store shelves of Whole Foods that have hemp in it like there’s this Navitas Organics. It’s a superfood and they have organic power snacks. I’ve got one it’s blueberry hemp on my desk and I mean that is already in food products FDA approved, USDA Organic, non-GMO on our store shelves. 

Rick: Is hemp like a dietary value? Is it like a fiber in your diet like why are you eating food with hemp in it?

Jeff: Better than grain.

Rick: Yeah. I mean, is it a super grain? What are we calling hemp these days when we’re ingesting it? Is it the seeds? I’ve seen things with hemp seeds. 

Sean: Yeah. So, hemp, so if you look at Sephora, you see hemp seed oil. Hemp seed oil is legally allowed to be included as a food additive and that’s the only one. CBD is not legally allowed to be added as a food additive, which is what you saw in New York when people were pulling items off store shelves. But I believe that hemp is considered a superfood because you’re getting all of these cannabinoid, extra cannabinoid elements in there without the psychoactive nature of it. Obviously, I’m no dietitian, so I can’t speak in detail about that. But if you look at superfoods like banana, broccoli, hemp, I think a lot of people consider the plant. The plant is very powerful because it can be used for so much. And I think people are just very bullish on the plant by itself. 

Jeff: But if you’re a hemp farmer, right, so I got 400 acres under till here of hemp. There’s no chance at all that there’s going to be one that starts producing buds. What happens when the next tilling, it grows weed? 

Sean: Well, that it has to go to a testing lab, and the testing lab has to produce a certificate of analysis, the COA, and on that COA it’s like a one-page lab report and it gives you the percentage of THC so it has to be less than like 0.3% THC to be basically considered hemp an additive. So, otherwise, it’s considered hot, H-O-T, right? And you can’t do anything with it, which means your crop would be would go bye-bye. So, the farmers obviously are very careful about what they’re doing because of the regulation risk but even more so the risk on just sales out the other side. 

Jeff: Does the government order you to burn it? Because you’d be like, “I’m just burning it really slow, small, like decadent.” 

Sean: I’m not sure what they say but I have to imagine that some farmers if it is hot, they need to dispose of it properly. And if you’re out in the middle of nowhere then you could probably burn it pretty safely, but I don’t actually know specifically the details of if there is hot, how they dispose of it properly by regulation. 

Jeff: So, the hemp part, the visual that everybody has in their mind when they think of cannabis is the five-leaf plant. Is that the hemp part? Because obviously, that’s not a bud. That’s just the leaf. Is that what hemp is, the leaves? 

Sean: No. They actually look very similar. They look exactly the same. You wouldn’t be able to tell the difference just by looking at it because, remember, it’s just cannabis plant and then one has a chemical compound in it and another one doesn’t so it’s a strain. 

Jeff: So, even hemp has buds? 

Sean: Yeah, they do. Yeah. So, you could get CBD. So, hemp-based CBD vape pen, you would be essentially ingesting CBD via an aerated diffuser, or you could do like CBD edibles or a pill. Yeah. That bud is what you end up doing the extraction on. 

Jeff: Okay. All right.  

Sean: Yeah, it’s just one has THC and another one doesn’t. 

Rick: Right. So, one thing I want to come back to that I feel like, I’m not sure if we missed but what’s the split between the cannabis business side medical versus recreational right now? Like, just percentage-wise, how much is medical versus the record? 

Jeff: I think the medical costs a lot more than the rec from what I’ve heard. 

Rick: Well, maybe you could talk about that as well. 

Sean: So, I don’t have a lot of good numbers on this one. There’s some companies like Aurora who are really heavily leaning into the medical aspect. MedMen is more a retail location, almost like an Apple Stores what they get compared to, so each company has kind of a different lens. So, but the medical marijuana market globally, in 2017, the stat I had was about $12 billion. So, that was a couple years ago, and it’s expected to be about 40 billion in 2024, growing about the same amount 20%. 

Rick: So, the 12 billion that you said in the US was all cannabis in 2018. Like, do we think that medical is more than half of that?

Sean: So, because medical was legal in – and medical is legal in a lot more states. I think it’s like 35 versus 13 for recreational. So, if you look at it, just did a snapshot last year or this year, medical sales, by definition, would be more. But as you look out to the future, and it becomes legal in more states, and then globally, I believe most people will think that the recreational use will far outweigh medical because the recreation use will give them some wellness benefits, which, you know, then it’s almost like over the counter versus prescription. So, it makes me feel good. It reduces anxiety. Instead of grabbing a beer at the end of the day or a glass of wine, maybe I grab an edible or something. 

Rick: Right. 

Jeff: I think a lot of people will self-medicate right now with spirits and with the adult beverage. And I think a lot of those people will later move to self-medicate with cannabis-related product. 

Rick: Sure. Yeah. 

Sean: Yeah. And even cigarettes and tobacco too, right? It’s the stress factor, stress relief that helps me. What do I use? And I think, you know, depending on your perspective, a consumer will choose the one that feels right for them over time. 

Rick: So, given that cannabis is federally illegal, and as you said, legal medically in 35 states, legal for recreational use in 13 states. There’s probably some, I mean, I know there are. There are some challenges to these businesses. What are like, I don’t think we need to go into it too deeply, but you mentioned banking. What are the challenges that are unique to the folks that are operating in these businesses right now, given that weird, gray area that they’re operating in? 

Sean: So, obviously, the regulatory risk, we don’t know what the laws are going to, where they’re going to go, how they’re going to turn, what’s going to happen. You’ve got criminal risk depending on which part of the market you’re in. You have risk on shelf life if you’re dealing with flower or a crop. You have risk on FDA sort of approvals and things like that. From an entrepreneurial perspective, you have the risk of setting up a bank account and getting office space. Like I don’t even think we work, if you’re a cannabis business, will let you grab office space. So, it’s things that you take for granted doing any other kind of business become very difficult. 

Rick: New business opportunity, weed work. 

Sean: Yeah. 

Rick: Done. Right there. Take it. 

Sean: There is one. There’s a gal who has started one in LA. I forget the name, but it looks pretty cool and that is her target market is that exact example.

Rick: Right. 

Jeff: Is it in a van?

Sean: No, it’s not a van. It actually looks like a pretty cool space. 

Jeff: Moving around the city as the day goes by.

Rick: That’s a greenhouse that’s on the back of a boat.

Sean: But what’s really interesting, and I’m really excited about this, there’s a place called Local Cafe that’s opening in September 2019 in West Hollywood, and it’s an open-air, like no roof kind of cafe where it’s food and they’ve got a Michelin star chef. Its former owners of TAL Group is doing this and you can buy cannabis there, you can order alcohol, you can get food, and they want to eventually infuse the food, but they can’t obviously do it quite yet. So, I think that sort of lifestyle will help kind of bring the whole thing together. And I think things like that will start to occur more often and will become just an aspect of a menu just like you get your wine list at a restaurant. 

Rick: Right. 

Jeff: Do you think that this place will allow people to smoke and basically participate or partake with cannabis products in the open? 

Sean: Yeah. That’s what it’s for. 

Jeff: Okay. So, it is an on-premise consumption very similar to a bar then. 

Sean: Yeah. And of course, you have to be 21 so you have to give an ID when you go to a dispensary. You have to pay with cash. So, a lot of them have ATMs there just due to the banking rules. So, there’s dealing with a lot of cash, obviously, the tax issues, excise taxes. So, operationally, you have to be very sophisticated. So, you’ll see some of the bigger companies, hiring executives from heavily regulated industries to do this. So, the fact that you guys have such a long-storied career in alcohol, I think you’re very well positioned to execute. Because as we’ve talked about before, I think there’s many, many similarities in the way this thing works, how it’s going to be sold, how it’s going to be distributed, and how the branding. And then obviously, you’ve got big alcohol companies already placing big investments into the tune of billions of dollars into cannabis companies, because they want to infuse beer and spirits with cannabis. 

Jeff: Yeah, I think there’s, at least from what I’m reading, there are some products that are going to come out that the alcohol will be removed and the THC will be infused. So, you know, drink a beer, but you won’t get drunk. You will get high. 

Rick: Well, Diageo just acquired that Seedlip spirits company. I mean, and I think the reason they did it is because there is a healthier drinking movement, that there are people who want to actually be consuming less alcohol but do like the alcohol cocktail scene, but it seems like someone who’s making spirits developing a process to remove the alcohol from it is setting themselves very well to infuse THC or CBD or whatever into that type of product. So, like a gin and tonic, that’s a THC and tonic, you know, that type of thing is probably – we’re not too far removed from it probably. 

Sean: No. And this surprised me. So, when I went through and read the public disclosures, the SEC disclosures from a lot of the biggest companies, so the maker of Corona, their parent, you guys know this, the listeners might not. So, Constellation invested $4 billion with a B into Canopy Growth, which is a publicly-traded company. And if you read their management discussion and analysis section, you’ll see the executives, their senior vice presidents of strategy, of innovation are on the board of Canopy Growth. So, essentially, they are treating this as their R&D innovation arm, because they’re going to use the same distribution channels, the same probably alcohol stores, the bars, the restaurants, I mean, imagine Corona now with CBD. Corona now with THC. I mean, you just put a new ingredient in there. The issue with that, and the challenge is you’re basically mixing oil and water. And so, one drink could have a high amount of THC content, and another drink could have zero and that’s what everyone’s dealing with now, plus taste. 

Rick: I’ve also heard that there are people working on water-soluble versions of the THC, so it doesn’t have to mix with oil as well. I’m sure that that barrier you’re mentioning is shortly going to be gone.

Sean: Yeah, they’re going to figure that out.

Rick: Yeah. Okay, cool. I’m curious, because I think we had a conversation once a while ago that there still is an illegal side of the weed business. I want to say weed to differentiate from cannabis. But since there are a lot of places where cannabis is still not legal for anything, and some not legal for anything other than medical use, like, is there, I mean, there’s still a black market? There’s still people that are calling the guy and the guy is bringing it to them? I’m wondering how do these worlds intersect or diverge? Does the legal market try to isolate and steer clear of, you know, the illicit market? Is the illicit market, like pushing back in some way? Like, I’m curious if you know anything about how that is working together or apart. 

Sean: Yeah. So, anytime I hear black market, I go back to my business school days at Chicago Booth, which was a finance e-comm school. And so, really, the definition of black market is, anytime a consumer or a buyer can’t find a way to get what they want, they’re going to go get it and someone’s going to give them that. So, the reason there was a black market for cannabis and for some reason, the term black market has been colloquially aligned with illegal, but usually black market means entrepreneur. Right? So, you guys are doing experiential. You’re the only ones I know that are doing experiential for cannabis and that’s because there’s an opportunity there. They need to market products and you’ve got a really great tool in order to do that. And you’ve actually done it. So, I looked at it as an opportunity. But now back to your major question, which is what’s going to happen? So, I’ve actually been on phone calls with, I believe, people that were working in the illicit market and trying to move from a legal into the legal market. And I’ve heard things about, “Oh, we’ve got a Cessna. I’ll pull up. You can put it in a Cessna,” and then I have a duffel bag of cash. And I’m like, “All right, I’m off the phone here. Yeah, I’m not getting anywhere near that stuff.” 

So, I believe there is a trend where you’ll see that happening. And so, this is part of the big, I think, issue in this space versus other like emerging tech or emerging businesses space, which is how do I know that you’re real? How do I know that you’re sophisticated? How do I know that I can trust you? How do I know that you’re going to do what you say you’re going to do? And so, this is why this metric system, the seed-to-sale tracking, why the Fortune 500s are buying from known labs, known brokers, known growers, why they want to do the full seed-to-sale is because they can control that and understand where it’s coming from. They can, you know, align with FDA approval processes, these regulations. And I think it’s going to be hard for other people to do that and start to play in the largest sort of arenas. Because if you think about a Fortune 500 buyer, they’re not going anywhere near anything that’s even close to, let’s just call it, the black-market stigma. 

So, I need to know, number one, can you supply on this time schedule, right? If Walmart’s going to buy from a supplier, they need to know, show me your lowest amount that you’ve produced over the last three years, and then that’s exactly what I’m going to buy from you. Because I want no disruption to my supply chain. And then on top of that, you have to prove that you have all your Ts crossed and your Is dotted. So, I think there’s two or three tiers in this market right now. There’s the sophisticated operators, the big public companies, the Fortune 500s. That’s where they’re going to get the lion’s share and that’s where a lot of these sophisticated people are operating. There’s a middle tier, which is I’ve been in this a long time on a smaller operation. I know what I’m doing, I abide by the laws and rules. And I’m good, and I’m taking my share, and it’s fine. And then there’s the lower level, which is you can usually tell on the phone call pretty quickly whether they know what they’re doing. 

Rick: The Cessna owners.

Sean: Yeah. And you understand the way they talk. So, it’s like, is there a COA? Is there proof of life? Is there proof of funds? There’s just all this conversation about do you have what you have? Like, is there escrow? You know, what’s the going price for this? It’s a wild west down at tier three. 

Rick: Got it. 

Sean: So, it becomes difficult. So, it’s basically like work with tier ones, work with reputable operations, and you’re good to go. 

Rick: Okay. Let me understand this for one second. Like, from the consumer perspective, this is in the beverage business we call a gray market like, are people still buying illegal weed because it might be cheaper or easier for them they actually get than through whatever either the legal hurdles are, or what the costs are? Is there a barrier there? I’ve read that in some markets, especially ones where it’s like medical only, like, getting it illegally is actually still cheaper than getting it from the medical dispensary? So, I’m curious if that’s happening out there. If there’s like a price disparity, and then consumers are still making that choice. 

Sean: Yeah. And there is, 100%. And I’ll give you a real-world example. So, I was doing the test, right? I want to see how all these things operate and come together. So, I went on Eaze, Eaze.com, which does delivery for cannabis. It’s like a Grub Hub or a Postmates or whatever, right? And I went online, and I bought two vape pens. And with delivery, it ended up coming in five minutes. It was the fastest delivery I’ve ever had in my life. 

Rick: Wow. 

Sean: Yeah. That’s because the guy was like right around the corner or something.

Rick: Sure. 

Jeff: It’s the sup in your building.

Sean: It was $100 for two vape pens, plus the excise tax plus the delivery fee. So, if you go to MedMen, and you get like a vape pen, I mean, you’re probably talking anywhere from $30 to $50 on the high end. And yeah, so I mean, the prices are higher because you’re paying excise tax, you’re paying for the seed-to-sale tracking, you’re paying for all the regulatory headaches, the banking headaches. So, if you were just to go to get it illegally, you’re, I mean by definition, probably going to get it cheaper. But that’s why the whole industry is trying to move towards obviously saving money. And then you have to pay a distributor which needs a markup in California, then it has to go through a dispensary, which is a markup. So, you’re just dealing with markups and markups and markups. So, as it gets more pervasive, though, I mean, the price will start to come back down and obviously, that will reduce the gray or black market. 

Rick: But it seems that no one has a problem paying the premium. I feel like that peace of mind of I’m getting…

Jeff: Good products. 

Rick: Yeah. One, I definitely am getting something that I know that it is and I’m not going to get something that…

Jeff: Floors you. 

Rick: Yeah or, oops, ruins me or is laced with something else or is oregano, like, whatever you call it. But also, I think there are people that probably take great peace of mind from knowing that they aren’t doing something illegal, that they feel like that they’re operating within the letter of the law, and they’re probably willing to pay that premium for it. 

Sean: Oh, for sure. Yeah, I think most normal people are like, you know, I just want to get up have my coffee, go to work, spend time with my family. I don’t want that worry. So, yeah, I think it’s all going to work itself out over the coming years. 

Rick: Right. 

Jeff: So, what about the other direction, though? So, people going into a legal market going to Colorado, stocking up and driving to Kansas and selling their product and where the stuff they bought legally in Colorado and selling it quasi-illegally in other markets? That’s really where I see the gray market right now. 

Rick: Yeah, you’re going to go to jail. 

Sean: No, seriously. I mean, if you cross state lines, I mean, if you buy a vape pen in New York or buy an edible in New York, and you put it in your bag and go through airport security and TSA and they catch you, there’s been stories of grandmothers with CBD, that was legal, getting restrained, and, you know, having bad stuff happen and having to get lawyers. So, it’s a real deal, like crossing state lines. I’m sure people are doing it, but I wouldn’t recommend it. It’s not worth it. 

Jeff: Sure. I just didn’t know if the states were struggling with trying to control that and keep that from happening. Certainly, these states like did have legal cannabis laws. They probably aren’t necessarily crazy about seeing the product that was bought legally, shipped illegally across state lines so I just was wondering if they’re self-policing, or if they’re even aware of that as a problem. I haven’t heard a lot of people talking about it. 

Rick: Yeah, and the DEA is all over it, right? So, they are the hammer. 

Sean: There’s probably a limit what people can go buy at a dispensary, right? Yeah. You can’t like walk out with like a dealer’s amount of product. Yes? 

Rick: Yeah, that’s true. You can only get so much. I mean, you’re talking maybe a couple hundred bucks worth total. That’s like three or four things, maybe and that’s your limit and they’ll stop you and it’s like, “No, you can’t do anymore.” 

Jeff: Sure. But when I went to Colorado, there was no, they don’t take your driver’s license at the information bill. They’re not tracking any information. 

Rick: Really? 

Jeff: Well, again, that was one, two experiences in Colorado, but they check your ID when you come in to make sure you’re 21 and that’s it. And then you get what you get, and you walk out. So, there’s nothing to stop me. It doesn’t appear to be. I could be wrong. We can estate tracking thing. It says, “Oh, this guy was down the street an hour ago and now he’s here buying another $200 worth.” 

Sean: Yeah. No, I’m sure you can do that. You can just hit each one of the dispensaries because they’re not like putting your name into a system. They just look at your ID to make sure you’re 21. 

Jeff: Yeah, that’s it. 

Rick: I think we just wrote a script for an independent movie. 

Jeff: Yeah. One that I don’t want to be in. 

Rick: All right. We got a couple of things left and we’re going to have to finish up, I think. So, since we are marketers here and you are consulting with a lot of these companies and we know that the compliance restrictions make it really hard for these brands, these cannabis brands to talk to their end-users and consumers outside of the dispensary experience itself. What are the limitations they have? And what are they trying to do in order to overcome them? 

Sean: So, I’ll give you the biggest one. Right now, pretty much all of Silicon Valley has one playbook for consumer products. I build my product. Either it’s an app or it’s some food or e-commerce play. And then I get a bunch of investment from VCs or friends and family and angels, and I go to Facebook and Google and I buy a bunch of ads and that’s how I get customers. You can’t do that in the cannabis space. You can’t put a Facebook ad, a Google ad for THC cannabis, even CBD. They won’t let you. So, there’s a huge customer acquisition problem in the marketplace. So, then what can you do? You can do the experiential activations. People used to give giveaways of like the THC products. That’s a no-no anymore. You’ll get stopped pretty quickly. If you’re in the LA area, you’ll see MedMen, which has a red branding. You’ll see their billboards all over the place. And they’ve done a really good job with trying to bring this down to normal consumer plays and how they do their advertising. So, if any listeners want to check that out, I think they’ve done a really good job. 

Radio, I’m not too sure. I know talking to some friends that are in the TV advertising industry and like programmatic ads for video and TV. The big companies, they don’t allow the cannabis for obvious reasons because, remember, if you blast something out, you could potentially go across state lines. As an advertising company or a technology company doing ads, you have to maintain that the product was bought, sold, and consumed in Oregon, bought, and sold consumed in Washington, bought, sold, and consumed in California. Your advertising needs to be only shown in that market from that company. So, they’re just staying away from it. I’m starting to see a little black market develop with some growth hackers who have found little holes in the Facebook-Google ecosystem where they can find a way to get something up, and then it’ll get taken down, and then you’ll have to do it again. 

So, that’s why I’m so bullish on what you guys are doing from the experiential side because yeah, it’s legal. It’s the letter of the law. You’re getting people in person. You’re educating them in person. You’re getting them an exposure to your brand. And then the other side is with the extreme competition in the dispensary with, you know, a couple hundred brands on a shelf. You’re just going to the budtender and going, “I don’t know. What should I get?” And they’re like, “I don’t know, what do you like? Who are you?” And also, I think it’s one of the best ways plus with like the returns that big companies are having with experiential these days. I think it is the number one way that this should be marketed in the states where it’s legal, like California, for instance, soon New York. 

Rick: Well, that’s good to hear.

Jeff: Yeah. That’s an extra $5 for your appearance fee. 

Sean: Well, yeah. I mean, you know, I tell the truth and that’s the way I feel. 

Rick: Yeah, I mean, the reason that we worked in alcohol beverage and, frankly, the biggest innovator and experiential in America was the tobacco industry, because there were so many constraints on how they could advertise to people. And the only way they could do it was to get in front of people who are now already say that they’re smokers, you have to claim that you’re a smoker first, before they can even have a conversation with you, and all has to be done live and face-to-face. And in alcohol beverage, it’s very similar. You have to show that people are 21 and the advertising is very limited as well. So, imagine some of the advertising restrictions will ease up eventually. But what I find most interesting, we’re not going to solve this today, because we’ve been talking for more than an hour already but with alcohol beverage, a person can try a product that they’ve never tried before very easily in a small amount, and it doesn’t sort of impact their life. And you had mentioned you can’t give out samples, but even the idea of like trying one of these products, you can’t like sit down and try 10 products in a row and find the one that you like, like that’s not going to happen. 

Jeff: Smoke a flight of joints.

Rick: You can try. I wouldn’t recommend it.

Jeff: I do it back in college. 

Rick: Yeah. So, we’re going to have to keep innovating about how to like communicate and educate in a way. And I think, you know, continuing or like a relationship marketing approach to this as well. Once you establish that relationship, being able to go back to that consumer, find out how they felt, find out how it worked for them, keep finding a way to help them on their journey towards finding I think the right sort of product, the right blend, the right intake, all that stuff like that’s going to be the challenge that we need to figure that out. 

Jeff: I think our experiences are going to be a lot more metaphorical. It’s going to be like, whatever that type of experience that that product will deliver, we need to figure out a way to create that same type of experience that is not the actual experience. And I think that’s honestly, it’s pretty exciting, I think, for us as far as like, creative territory, that it’s new, and we’re going to have fun with it. 

Rick: Absolutely. So, let’s just get one last question in then we’re going to call it a day but, looking in your crystal ball, what do you think will be the thing that that happens that no one expects like in the next three years or so from the industry? Like, is it Coca-Cola, THC being everywhere? 

Jeff: Is it federal decriminalization? 

Rick: Yeah. Do you think we’re going to be federally legal in all 50 states? Like this podcast is called The Green Repeal for a reason because we believe that we’re on that path that we’re following very similar path, actually, right now, that alcohol beverage did when prohibition was repealed, that state by state, it started to happen, and you got to the 33rd state, and then all of a sudden, the momentum was there. Where do you think we’re going?

Sean: Yeah, I mean, it’s so blindingly obvious. I mean, it’s going to be federally legal. It’s only a matter of time. And I spent a long time studying incentives in my career, but think about the incentive, right? It’s excise tax, it’s tax revenue, it makes people feel good, it has medicinal qualities, like that’s a triple threat right there so it’s only a matter of time. And I think, really what it comes down to is bridges. What are the bridges that make normal consumers feel comfortable where it doesn’t have this stigma? Like nobody has a stigma about alcohol, right? It’s the same thing and may actually be better for you than alcohol. Right? So, if anything, the stigma should be more on alcohol than on cannabis because alcohol, there’s no medical benefit I’m aware of for alcohol and no medical benefit I’m aware of for smoking, right, like tobacco. 

Jeff: I would agree on the tobacco. I think there are in alcohol and small amounts actually should be good for stress and for heart and things like that, and circulation, but again in very moderate amounts. 

Rick: And this is why I’m kind of I’m bullish on the vape pen, because it allows you to, and Dosist has done this, it allows you to basically control the amount that you take versus like an edible, you don’t quite know what’s going to happen and it’s not instantaneous. It can take an hour or two and the concentrate is just like, you know, that’s like superpower users. And then I think everybody kind of initially gravitate towards the flower or the pre-roll because that’s kind of what they’re used to from the 70s or something or their childhood. It’s like what they grew up with. But I think as the normal market evolves, I think it’s a discrete disposable vape pen. I pull it out, it’s a microdose, and then I’m on with my day. And there’s nothing else and that could be CBD. It could be a cannabinoid profile without THC. It could be a small amount of THC. And it’s just, you know, in terms of popping an anxiety pill, or having a sip of alcohol, or just a small drag on a CBD vape pen, I just feel like, ultimately, that’s where it’s going to go. 

And then the beverage and food piece, you’re going to have the big brands within and it’s like, oh, I see Coke now with CBD. All right, it must be good. Like it’s fine and then I see CBD on other packages. It’s on all the beauty products. Oh, this is good for me. It’s like organic and gluten-free. It just becomes one of those things. 

Jeff: Do you think McDonald’s is going to have like a hamburger that makes you want another hamburger? That’s what I want. 

Sean: Yeah. Impossible Foods. 

Rick: I really hope not.

Sean: Beyond Meat with CBD.

Jeff: I’ve been going to McDonald’s for a week-and-a-half. 

Rick: Well, cool. Anyway, Sean, thank you so much for talking to us today. This is all super great info. I am sure if we keep having these conversations, we’ll find that one that we need to have you back and go really deep on one of these issues that you know a lot about. So, we really appreciate you joining us. Thank you so much. 

Sean: Yeah, thank you guys for having me. It’s been a pleasure. It’s been fun. We’ll do it again and see how the markets change since then. 

Jeff: We’re going to come back and we’re going to check the tape of this and see what we predicted correct. 

Rick: Okay, sounds good. 

Sean: Yeah. When you guys are famous. All right. 

Jeff: I’ll be phoning in from federal prison.

Rick: All right. Bye, everybody. Thank you.


Rick: Thanks for listening. If you enjoy today’s episode of The Green Repeal, hit the subscribe button so future episodes are automatically downloaded directly to your device. And if you want access to today’s show notes, including links to all the resources mentioned, visit SOHOExp.com/GreenRepeal.