[00:00:00] Tommy: There's a lot happening in the cannabis industry today. We have so many states at the cusp of legalization. It's an election year with rescheduling on our doorsteps. Hirsh from AnandaStrategy, joins us today to talk about the cannabis legal landscape. Hirsh has been helping entrepreneurs get licensed, expand, raise capital as well as mergers and acquisitions. If you're interested in what's happening in our industry today, this pods for you.
[00:00:26] Intro: Welcome to the KayaCast, the podcast for cannabis businesses looking to launch, grow, and scale their operations.
[00:00:38] Tommy: Hirsh, thank you so much for joining us today.
[00:00:40] Hirsh Jain: It's so great to be here with you, Tommy. Thanks.
[00:00:43] Tommy: What is happening right now in the emerging markets? What's going on in Ohio, Florida, Pennsylvania,
[00:00:49] Hirsh Jain: Yeah, you know, I think we're at a really exciting moment, just at the macro level, Tommy, with 24 adult use states. You know, we're about to hit that tipping point where most of the states in this country and most of the people in this country will live in an adult use state. And so over the past four or five years, we've just seen an enormous progression of states coming online.
But to your question, I think Ohio, Pennsylvania, and Florida represent three of the biggest potential state catalysts. Um, at least over the next year, and they all might hit at different times, and the circumstances are different in each of them. But I think there's a tremendous reason to be excited, uh, about all of them, and we can start with Ohio, um, if you want.
Um, yeah, you know, Ohio is the next state that's going to start adult use sales. You know, Ohio will start adult use sales in early August. And that's very exciting. And, you know, I think one of the exciting things about Ohio is that it's the first big red Republican state that has opted into adult use sales, you know, for most of the first decade of the cannabis legalization movement in this country, it's been primarily blue states, right, that have opted in, particularly on the coasts.
And there have been some exceptions, you know, Alaska. which is kind of remote, or Montana, which is a small state. And then we saw Missouri, right, about a decade into this, a state of a decent size. But what is so exciting about Ohio is that it is the quintessential Republican state. You know, it is the quintessential Midwestern state.
If we just think about it in a political lens, no Republican has ever won the White House without winning Ohio. And so, Ohio occupies a really unique place in the national consciousness. So that's part of the reason it's exciting. Symbolically, it's showing how bipartisan this is. But I think the other reason that it's exciting is that it's a really big state.
You know, Ohio is a state of 12 million people. And so it's equivalent kind of to two or three normal states coming online. You know, we would get excited about Connecticut and get excited about Rhode Island, but this is a state of a much bigger size. So that's another reason to be excited from a pure sales perspective.
And then, you know, I'll just mention a couple more because I actually think there's, there's a lot that we could get into, but maybe. The main ones, in addition to it being a state of great size, it also borders four prohibition states. And we have seen how that is a big driver of sales and a big driver of cannabis normalization.
You know, going back to what I was saying about Missouri, the reason Missouri has been such an impactful state over the past year and a half is that it borders seven states that don't have cannabis. And so people are driving in from Kansas and from Nebraska and from Iowa. And so it's changing the culture in those states.
So, that's all a way of saying Ohio is quite similar to Missouri in that it borders, uh, four prohibition states. And, if you just kind of get out a U. S. map and you look at the really big metro areas that are on those borders, you can see, it's very easy to see the amount of traffic that will be flowing in.
So, just to give you a few examples, Tommy, if you think about Cincinnati, right, the city of Cincinnati in Ohio, it's right on the border with Kentucky and with Indiana. So there's hundreds of thousands of people that live in those suburbs that actually live in different states that will be coming in. Or, if you think about, uh, you know, where Pittsburgh is, right, in western Pennsylvania, if you drive, you know, about an hour west, you know, you're in Youngstown, Ohio, which is basically the same place, but just, uh, across the state.
And you know, there's a bunch of different examples, like Indianapolis, how easy it is to get to Ohio, Charleston, West Virginia. And so, in addition to the 12 million people in that state, Uh, you know, there are millions, you know, probably five, six million other Americans that live a two, three hour drive away.
And I mention that because we have seen how willing people are in this country to access legal cannabis, even if it's a long drive. So, I think that's another reason to be excited. And, and again, I think there are many more, so I'll just maybe quickly list two, and then I'll pause. I also think Ohio relates to Florida, which we'll talk about later.
You know, you know, Ohio legalized by ballot initiative. It's a red state, but that, you know, um, illustrated that even conservative voters were willing to vote on behalf of cannabis, and so we'll have a vote in Florida in a few months, and so, um, You know, Ohio coming online I think will have a huge impact on how other Republican voters and Republican states think about cannabis.
And, um, finally, the current vice presidential nominee of the Republican party, J. D. Vance, is from Ohio. And, you know, if you just think about it, right, no one really knows who's gonna win the election, and I'm certainly not gonna make a prediction. But, like, if Donald Trump and J. D. Vance were the next occupants of the White House, Donald Trump is from Florida and J.
D. Vance is from Ohio. And so If you are, you know, concerned about, about Republicans and what they might do on cannabis reform, the best thing you can do is to get some of these Republican states to come online because that changes, um, how things, uh, sort of go on in D. C. So that's why Ohio, I think, is such a monumental event, uh, really in the history of the U.
S. cannabis industry.
[00:05:47] Tommy: I waS going to ask you, how does Ohio influence Florida?
[00:05:51] Hirsh Jain: Yes, you know, I think, obviously, they're not next to one another. We were just talking about, hey, if you border a bunch of prohibition states, then you can influence them. And that kind of makes sense, right? Because you can go across the border and it's like, It's, it's normalized. But how does Ohio influence Florida?
I would say along with Florida, you know, Ohio is one of those, you know, deep red quintessentially red states. You know, if you think about anyone who has followed politics over the past five, six years in this country knows that Florida is sort of the epicenter of Republican politics, right? And, and red energy. And the analogs between the two states are actually quite similar. Again, going back to Ohio in November of 2023, right? So about nine months ago now. They had an election and two things were on the ballot, abortion rights and cannabis legalization. And to everyone's, you know, surprise, in this very quintessential Republican state that, you know, Donald Trump carried by a wide margin, 57 percent of people, right?
And so that's a 15 point win. Voted for abortion rights and for cannabis. And so I think that woke people up to the idea that these two issues that used to be viewed as sins, right, as cultural sins, were now viewed as freedom issues by, you know, the Republican Party. And so I think we'll see something quite similar in Florida.
In Florida this November, there are two issues on the ballot. That's cannabis legalization and abortion rights, in addition to a bunch of other issues. And, um, you know, I believe that the immense success of the Ohio program will in turn influence how voters in Florida think about, um, that vote. And for a bunch of other reasons, I think the Florida vote will be successful.
And maybe to sort of, you know, distill it really easily, when Republican politicians in these other states, Opposed cannabis legalization. They are fond of citing San Francisco. They're fond of citing Portland. They're, you know, fond of citing Denver. The way that, you know, conservative politicians in this country have opposed cannabis reform is saying, that's a blue state phenomenon.
We don't want to become like those blue state cities we don't like. It's much more difficult to demonize Ohio, for example, right? It's much more difficult to say, we don't want to be like Columbus. We don't want to be like Cincinnati. And so You know, Ohio sort of occupies, you know, it's the quintessential midwestern state and cannabis can't be so scary, um, if it is, if it is thriving, particularly in Ohio.
[00:08:08] Tommy-1: Yeah, you know when Mississippi opened up, that for me was an eye opener. If Mississippi can do it, everybody else can.
[00:08:16] Hirsh Jain: Totally. I mean, Tommy, I think, I'm really glad you brought up Mississippi and very few people pay attention to Mississippi, so it's awesome that That, you know, maybe you and I are two of the people who are excited about Mississippi, but I think you have it exactly right. If we go back to when Mississippi voted on their medical cannabis ballot measure, um, it got about 70 percent of the vote.
Now Donald Trump got about 57 percent of the vote. That was in the November 2020 election. So consider that. That shows you how much more popular cannabis is than Trump in a, in what is a very conservative state. So I think that illustrates exactly what we're talking about, that this is an increasingly bipartisan issue.
And I will also say the way that Mississippi has set up their program, again, it's off most people's radar because they're focused on these bigger states. But if you compare Mississippi to much of the rest of the Deep South, say in Alabama or Georgia that has had real trouble getting their programs off the ground, Mississippi opted for a much more open structure and now has more than 150 dispensaries.
And, you know, as of today, around 50, 000 patients are registered in Mississippi. You know, just, just do some quick math. It's a small state of three million people. The program has only been, you can only have bought, you know, goods for about a year and a half, and already two percent of the population, or near two percent, is a medical cannabis patient.
So, I think you're right to highlight, Um, why Mississippi is quite interesting, despite the fact that it's a remote state. And again, I think this has national implications, right? If, if conservative people in Mississippi adopt cannabis culturally, then it's much more difficult for, you know, federal progress to remain stalled, in my opinion.
[00:09:51] Tommy-1: So what can we expect out of Florida? What's happening?
[00:09:55] Hirsh Jain: Yeah, you know, Florida, along with Ohio, I think these are two, again, of the most exciting things that are happening. So. To set the table in Florida, we will have a vote in November, um, on, you know, in Florida. So it'll be a state ballot measure. So in the same way that people will vote for president, um, they will also vote on whether, you know, we will legalize adult use cannabis in the state.
And they will also vote on a bunch of other measures. And I mentioned abortion rights. Um, just because that tends to, to draw a lot of turnout. So, the vote will be in November. And there are kind of two ways of looking at this, right? There are some people who will point out, Look, Florida is a really red state.
It might be hard to secure victory in Florida. There are people that make the very good point that Florida is unique. And that it requires a 60 percent vote, right? And so in most other states, only a simple majority is required. But in Florida, the threshold to pass an initiative is much higher at 60%. And so someone might say, Ooh, I don't know if it's going to hit 60%.
Um, because there's only been, you know, a few states, only about three of them that have cleared that hurdle. So why do we think Florida will do it? So I think there are decent reasons for folks to be concerned and, you know, maybe one other, you know, sort of argument that I'll put out there is that the governor of Florida, Ron DeSantis, has very vocally opposed this measure.
So those are some of the reasons that people are concerned. But I will just share my take that I'm very optimistic that we'll clear 60 percent in Florida And again, there's many reasons I could list here, but I'll just sort of list them quickly. One, if you just look at the polling that's being done in Florida, um, especially the polls that are from the best pollsters in the country, they have support at 64, 65, 66 percent.
And so, obviously, like in many things, polling is an inexact science. There are many polls that are out there, but really the best polls, you know, like the UNF, the University of North Florida poll, or the Fox News polls, polls that are objectively understood to be better metrics for polling have been doing very well.
So that's one reason. Uh, the second reason is, you know, when Florida passed its medical ballot measure back in 2016, that actually got 71 percent of the vote, and that's more You know, that's the highest, you know, threshold by which a ballot measure has passed in history. And so that just kind of confirms what many of us intuitively understand about Florida.
It's a conservative state, but it's also a freedom oriented state. You know, it's a, it's, I would say, much more oriented around the idea of freedom than a place like Ohio. So that's the second thing. We've seen a medical vote before and it passed with 71. Again, that has never been done on any other issue.
A few more reasons I'm optimistic. This is a presidential election year, and cannabis ballot initiatives tend to be very successful in those years. They have a mixed record off cycle, and that's because the electorate is much different. And so, there have been 11 adult use measures in history in a presidential cycle, and 10 of them have passed.
Only one has failed, that's Arizona in 2016. And so, I know we're kind of getting into the minutiae here, but those are the kind of things that really matter. Another way of putting this is if this were 2022 or 2026, I would be more nervous about hitting that 60 percent threshold. But in presidential years, because they attract a more progressive, a more diverse turnout, these initiatives tend to do better.
So I think that is very encouraging. And, you know, maybe just one or two more things that I'll say, you know, the legalization campaign has massively outraised, um, the folks that are on, uh, the other side. So, uh, you know, the legalization campaign, as of the time we're speaking, has raised more than 60 million, whereas the other, you know, the opponents have raised less than 1 million.
Now, I'm sure that number will change, but that's an immense, uh, fundraising, you know, advantage. And, you know, finally There are 900, 000 medical cannabis patients in Florida. It is one of the most robust markets out there. And we can talk in a second about why I think it'll be the best cannabis market in, in the country, um, quickly after turning on, but it's one of the best medical markets in the country.
It's already a two and a half billion dollar market with 900, 000 patients, uh, registered. And so it has really normalized cannabis in, in Florida. And, you know, if you just look at the data, there's about 12 million people that will vote in a presidential election in Florida. There's 900, 000 medical cannabis patients.
Now, I'm not saying every single one of them will vote, but that shows you how much of the electorate is either a medical cannabis patient or has a family member that is a medical cannabis patient or has a friend. So, um, Yeah, I'll pause there. But for those reasons, I actually expect, and you know, I think I'm more optimistic than most, but I actually expect a, a pretty resounding victory in Florida on the order of 65 66 percent, um, and for, for the reasons I mentioned.
And the reason that is so encouraging is I think that sends a message to the rest of the country. If in this deep red state, Despite vocal opposition from a Republican governor, uh, if they're able to, to command that resounding victory, that will just be the clearest illustration of where even right leaning America is on this issue, and that in turn impacts how the Florida Senators behave, uh, once they get to D.
C.
[00:14:51] Tommy-1: Knock on wood, November comes, we get over 60 percent. What happens next? When can you buy cannabis recreationally?
[00:15:01] Hirsh Jain: Yes, uh, so one of the great things about the Florida initiative is that a very clear timeline was written into the initiative that hasn't been the case for a lot of these initiatives, which is why these processes have dragged on the way that this, uh, initiative is written. Uh, uh, there are 6 months from when the vote is for adult use sales to start.
So if you just do some quick math, November 5th to May 5th, so Cinco de Mayo will actually be the day on which adult use sales will start. Uh, starts in Florida, uh, in, in 2025, so that'll be very exciting. And, you know, what I think is so exciting about Florida is As we were just talking about, there is already a very robust medical infrastructure in Florida.
There are 650 dispensaries already across the state of Florida. So, unlike other states that have legalized, like New York, that have then had to do the work to build up that infrastructure, uh, there are 650 dispensaries across Florida. It's already a 2. 5 billion market, and so most analysts believe it has the potential to be a 6 billion market.
And to reach that figure quite quickly, Because you will have all 650 of those dispensaries turning on, right, um, on day one, unlike in other markets. And, and they're all well spaced out across the state, so that's very encouraging. Florida also has an instinct for low taxes. Some people don't realize that there is no medical cannabis tax in Florida right now, uh, which is part of the reason their program has been so successful.
All you have to do is pay the regular sales tax, and it's against the Florida Constitution to tax medicine, so there'll be a huge incentive to remain in the medical market. And so that, um, instinct for low taxes, we have seen, uh, that low taxes generate successful business outcomes. We saw that in Missouri.
The same is true in, um, in Ohio. And, you know, maybe one other thing that I'll point out is Florida, the other thing that it has in common with Ohio, and again, I think the other reason that these are two watershed moments in the cannabis industry after five, six years of states coming online, is these two states, you know, we were talking about Ohio, but Florida's also situated in a deeply conservative region of the country where it borders several states that do not have cannabis access, that have very limited medical programs at best, and there are big metro centers.
That lie on those borders, and so Florida's already the beneficiary of a huge amount of tourist traffic. But literally, if you look at a map, and you look at how close Jacksonville is to Georgia, or how close Tallahassee, right, another big metro area, is to Georgia, right? Or if you look at, you know, Pensacola, Florida, on the west, you know, people forget how far that Florida panhandle extends out.
Um, and how close that is to places like New Orleans and Mobile, Alabama. What is exciting about Florida is that in the same way Ohio will unlock Appalachia and much of the Midwest, Florida will help unlock the Deep South. And so in addition to the 23 million people that live there, there are five, six, seven, eight million people that live a three hour drive away in Mississippi and Alabama and Georgia and even South Carolina.
And so, That's all a way of saying, I think, you know, many of us in the cannabis space over the past, let's say two to three years, we've become accustomed to new states coming online and we get excited about them and we have seen the number of states really start to grow. But I do think that these two states are really seismic, um, when it comes, you know, not only because they take us over that tipping point in terms of most of the states, not only because of their size, but also because of their neighbors and also because of what they represent in American politics.
And so that's a way in which these state catalysts Catalysts can flow very naturally, I think, to the federal catalyst that again, many of us have been waiting on for so long.
[00:18:33] Tommy-1: It's quite expensive to get a license in Florida today. Will that change after November? Uh, this year.
[00:18:41] Hirsh Jain: I think the best critique of the Florida program, uh, the most reasonable and honest critique of it, um, is that it's a very monopolistic program. And so when Florida legalized cannabis in 2016, the licensing structure they set up was the most limited licensing structure in the country. They issued 22 licenses, and again, if you consider this as a state of 23 million people, that is extremely restrictive.
Also, those licenses were required to be strictly vertically integrated. Not only did you have to do everything seed to sale, but there was no wholesale market. You could not, you know, you would only be able to sell what you yourself, yourself were able to grow. And so as you're pointing out, Tommy, um, that meant de facto that you could only obtain one of those licenses if you had 50, a hundred million dollars behind you.
So I think it's a totally valid criticism to say that the way that this program was rolled out, was rolled out in a very restrictive way that was monopolistic and benefited a few players. Now, as we stand in 2024, we've seen that kind of bear out, right? There are three or four companies that out of those 22 that, um, you know, occupy more than half of the market.
And so again, some people oppose Florida legalization on the grounds that it'll enshrine a monopoly. One, I think, interesting legal tidbit to note is that the way the Florida Constitution works is that a ballot initiative can only touch on a single subject, by which it means You know, an initiative that said, Hey, let's legalize weed and let's issue a hundred more licenses.
That actually, you know, the Supreme Court of Florida would have deemed that invalid because they say that it's confusing and that touches on multiple subjects. And so, uh, you know, that's why the Florida initiative was written in a very narrow way. And so it will, strictly speaking, only allow those medical operators to participate in adult use.
Two caveats that I will, I will offer to that. There has been another licensing process that happened about a year ago, whose results we're still waiting on. So there are, you know, the couple dozen incumbent licensees that have operations in Florida. Then there are another couple dozen licenses that are yet to be awarded.
But there has been really valid criticism that, hey, we've applied for these licenses over a year ago. We're still waiting. And so that's my one minor caveat that the market will open up to some extent when those licenses are issued. But Florida, um, is not being great about issuing those efficiently. And the other caveat that I will offer, um, is that, you know, I think, you know, in the initiative, it says, Licenses are not granted de facto, but the state legislature can decide to do it if they want to do it, right?
And so it sort of contemplates the idea that more licenses can be issued. And so I'll kind of conclude by saying at this point and for the foreseeable future, I think it'll be a pretty tight market, but I do think over time that structure will start to be critiqued and will be opened up. It might not be faster, as fast as a lot of people want, and I think that's a really fair criticism, but I don't think that that is the state of things forever.
[00:21:31] Tommy-1: And let's turn our attention to Pennsylvania. How far are we?
[00:21:35] Hirsh Jain: Yeah, you know, Pennsylvania, I think, was one of these other three really big catalysts that people were excited about coming into 2024. And as we were just discussing, I think Ohio is about to hit in a major way, which is exciting. As we were just discussing, I think Florida will really show us, you know, uh, that it'll do well.
I think Pennsylvania is the one we're gonna have to wait on for a little while. And so, the challenge that Pennsylvania faces is that Pennsylvania doesn't have a ballot initiative process. And because it doesn't have a ballot initiative process, even though 65 percent of people in Pennsylvania want cannabis to be legalized, it has to be passed via the legislature, right?
And the other challenge that Pennsylvania has is it actually epitomizes a lot of the divisions that exist in American politics. You know, the divisions between people who are urban and people who are rural. The, the famous thing that is said about Pennsylvania is that it's Pittsburgh in the west, uh, Philadelphia in the east, and then Alabama in between.
You know, that's like a famous political quote. And what that is sort of meant to say is that in these urban centers, excuse me, you have really progressive voters and, you know, uh, big minority communities. And then in the center, Um, of Pennsylvania. It's much more rural and much more white. And so because of that, Pennsylvania has a divided government.
And it's often hard for them to get to agreement on issues. And so there was a lot of optimism that Pennsylvania would pass something, uh, in 2024. There was a budget process by which they could, um, pass legalization. And, you know, there's also a fall 2024 legislative session later this year. And so a lot of people got their hopes up because there were two opportunities to, to pass this.
And the governor, Josh Shapiro, Someone who, by the way, is being considered for Vice President by Kamala Harris, so that'll be quite interesting. The Governor, Josh Shapiro, was a vocal advocate for legalization, and so People were encouraged by that prospect, but it didn't end up making it into the budget.
And, um, also because this is a presidential election year, that kind of dampens a lot of possibility for bipartisan, uh, cooperation, uh, on this issue. So, you know, there is a legislative session that will go on for another few months, literally right during the presidential election. In theory, it's technically possible for, uh, you know, for them to pass a legalization initiative, but I think it's unlikely, uh, given the election.
So, that's where we stand, but to kind of, uh, conclude things on a more optimistic note, I think any fair minded observer would say we are closer to, um, legalization in Pennsylvania than we've ever been before. I know that's somewhat of an ambiguous statement, but I do think that is true. People will also point out that Ohio is about to go online, and so you're gonna see a huge influx of sales from Pennsylvania into Ohio, and, uh, you know, Pennsylvania will literally be surrounded.
And people will point out that in 2025 that, you know, the election will be over and, you know, presumably there's an opportunity for, for bipartisan cooperation. So, it's technically possible that Pennsylvania could legalize later this year. I think it's quite unlikely given the sort of political season we're operating in.
But I do think this will be a priority in 2025. And I also think, again, just going back to how all of these pieces are intertwined, if Ohio is the robust market that we think it is, and if, let's say, Florida in November, by resounding margins. Votes to legalize cannabis. I think that sends a message across the country and causes people in Pennsylvania to say to themselves, We are way more liberal on this and most issues than Ohio and Florida.
Why have we not gotten this together? And that in conjunction with the fact that they will have data about how much money they're losing to New Jersey, how much money they're losing to New York, how much money they're losing to Ohio. That softens, I think, the ideological opposition and makes people be like, Okay, we have to find a compromise because this is obviously not the sustainable way to move forward.
[00:25:12] Tommy-1: Let's talk a little bit about a state that has legalized. Minnesota. What's happening there?
[00:25:17] Hirsh Jain: Minnesota is exciting, I think, for, for different reasons. You know, we were just talking about those other huge states, some of them Republican states. Minnesota is exciting for different reasons. A different reason, and I think what is, what is, what is so fascinating about Minnesota is it illustrates how all of these states are laboratories of democracy, how all of these states engage in their own experiments about what cannabis should look like.
And some of those experiments don't turn out well, but some of those experiments sometimes illustrate that. Lessons for us, or, or, or, you know, provide basic truths, and ideally we'll be able to copy those lessons for other states. And so, what lessons has Minnesota provided, uh, in my opinion? I think the first is on, is on beverages.
I think most people know that, um, hemp derived beverages really took root in, in Minnesota. That was the first place that established a real framework in, in which they were allowed. And, look, I will just say personally, as someone who has long, you know, been a cannabis consumer, I long dismissed beverages, right?
Uh, I didn't think that consumers would be interested in them because I wasn't that interested in them. I recognize the challenges that they faced in the dispensary sales channel, um, given the consumers that were going to those dispensaries. But what we have seen in Minnesota is that they have made these hemp beverages widely available in places, you know, where alcohol is served, such as breweries, such as restaurants.
Um, I went to Minnesota recently and went to a pizza restaurant and had the opportunity to consume a beverage as opposed to a beer. And, look, I know there's a debate going on in this industry about hemp and about marijuana and where they should be available. I recognize that's a complex debate, but if we can just focus on this one subcategory for a moment.
You know, the adoption of hemp beverages in Minnesota over the past couple years has really been fascinating. You know, I've read data that says, you know, sometimes 10 15 percent of liquor store sales can be attributable to hemp beverages, this brand new category, and that, you know, up to 15 percent of brewers in Minnesota are either selling or manufacturing these beverages, and that has been a lifeline to that industry.
And what is so fascinating about this, And, you know, I think there's many reasons, but, you know, first, it's fascinating to see the alcohol and the cannabis industries playing nice together on some level and for the alcohol industry to believe that they have some stake in cannabis products, that is fascinating.
Number two, to state the obvious, beverages are such a obvious form factor. Every human being I would venture that has ever existed has loved some kind of beverage, right? It's a very universal form factor that we all know of and we all are all used to consuming socially. And so that in concert with the fact that they are available in more widespread channels means the adoption has been remarkable.
And, and again, you know, it took me a long time to realize, I think beverages is what helped me realize that, you know, dispensaries serve a critical purpose, but a really restrictive sales model will only allow you to capture some universe of consumers. This allows you to capture the much wider universe of consumers that will not go to a dispensary.
And I'm a, I'm a believer, this is sort of anecdotal, I'm a believer that if we can introduce people to this category and form factors that are approachable for them, then it is more likely that they will, you know, consume THC in the future. And so I believe in this TAM expansion thesis. And then there's the immense, I think the public health argument for the consumption of these beverages over alcohol is really hard to contest.
So that's just a really long winded way of saying Minnesota, you know, being the quirky Midwestern state that it is. And again, I think this illustrates. Almost the beauty of American democracy and our Federalist system. Minnesota, having its own set of values, decided to opt in to these beverages. I think they taught all of us in the cannabis industry how much demand there is for this product.
I would venture to say it surprised almost all of us and turned on a light bulb. And so like, do I know the perfect regulatory framework? No. And I think, you know, there needs to be appropriate safeguards and testing for sure. But I think Minnesota has at least shown the rest of the states something that they can adopt or they ought to think about as they're developing their own programs.
So that's what's exciting about Minnesota. And then, you know, perhaps the other thing that is very exciting about Minnesota is that they have a very open licensing system. And so I think they will also be very impactful. You know, their law says that if you're a town of more than 12, 500 people, which is quite a small town, um, you have to have at least one dispensary.
And so I envision a world in which you have 600, 700, 800 dispensaries kind of, um, flung across Minnesota, including in these very small towns on, on the borders. And again, you know, what's so convenient and exciting about Minnesota and, and why I really believe these next one to two years are just monumental catalysts, is if you look at it on a map, you know, Minneapolis is practically in, in Wisconsin.
The influx of drivers there is going to be immense. North Dakota and South Dakota. Two states, by the way, who are also voting on their own cannabis measures this November also border, um, Minnesota. It's not a long drive up from Iowa. And so we're starting to see the, you know, these puzzle pieces that are, are in the right place.
And, um, you know, obviously Minnesota, what we just discussed, Tommy, is so different than the structures in Ohio, so different than Florida and arguably much more democratic. And so I think you can make a strong argument there. And so, yeah, that's why it's exciting. Why I think it'll have a huge impact on those neighboring states.
That robust retail access will really normalize things. And so I just envision a world in which two years from now in Minnesota there are hemp beverages in every corner store and there are 700 dispensaries across the state. That's pretty optimistic I think, um, if you think about where cannabis is going.
[00:30:38] Tommy-1: I am with you. I had no idea about the beverages. What was your experience like?
[00:30:43] Hirsh Jain: It was awesome. I mean, it was awesome. Uh, you know, I, uh, it, it was great. I think those beverages are delicious. I'm someone that enjoys cannabis and, you know, beverages are a newer form factor, but you know, I've, I've come to enjoy them and find them delicious. I'm someone who likes to be out and about. And I think I, like many people have just been habituated and socialized to feel natural and comfortable when I have a drink in my hand in a social setting.
In other words, you know, uh, it is, it is more fun, you know, it's much more fun for me to drink a hemp beverage than it is for me to drink a LaCroix or, or a water. You know, um, that, that just makes me feel much more like I'm participating in the ritual. And I would venture to say there are a lot of people like me, right, that want to make, you know, healthier choices but are in contexts where they only find a narrow set of things available.
You know, speaking to you from California, it frustrates me that I will be at concerts in L. A., which has some of the best concert venues in the world, and these beverages are, are unavailable. So, uh, you know, I think my, my experience has, has been great. Um, and it provides, you know, to state the obvious, a really healthy alternative.
[00:31:46] Tommy-1: Tell us a little bit about the other states that are not legalized that may be in the coming years.
[00:31:55] Hirsh Jain: I think there are some states that are worth, uh, really paying attention to, uh, in, in the coming years. And some of them are states where legalization has recently narrowly failed, um, and we have a better chance next year. And some of them are kind of off the radar. So quickly on, on the places where it has, um, recently failed, I think Pennsylvania, we talked about that.
That's a good example of one to be paying attention to next year. New Hampshire is another good example. What is so fascinating about New Hampshire is that, you know, New Hampshire's Republican governor was long opposed to cannabis legalization. But then every state surrounding New Hampshire legalized cannabis, and then he changed his opinion.
He recognized the practical reality that cannabis was inevitable there. And so I think it really goes back to our conversation about Pennsylvania being surrounded and neighboring states. And so, uh, the governor, the current governor, recently came out in favor of cannabis legalization. It narrowly failed, uh, last year.
Um, but, you know, advocates are going to take another shot next year. And so, that's an, you know, it's a small state, but it's another state worth paying attention to. And I should say, you know, as we're talking about those small states, you know, someone might be saying to themselves, why should I care about New Hampshire?
You know, it's a small state. But I really believe that the number of states matters in addition to their size. You know, now that we have 24 adult use states, you know, it is a common element of cannabis policy discourse for people to say half the states have legalized cannabis. You hear that in every news article.
That was not the case, you know, two years ago when only 17 States had done so. And so I think if we can get to a place where 27, 28, 29 states have legalized cannabis, I think that really changes the conversation. And so, that's just a quick aside on why these small states matter. So, New Hampshire, another state that's worth paying attention to is Hawaii.
Hawaii is another one of these states that for the past three or four years has tried to put together a legalization bill. It has died for the last, you know, at the last minute because they haven't found a right compromise. But I do believe, as frustrating as it might be, that we get a little bit closer each time.
I really do believe that. And so I think we have a good chance in 2025. And so those are the states that are maybe on people's radar because they've been reading about them for a year or two and we haven't got them done. Those are some of the, you know, exciting ones. Um, but I think a couple that haven't been on people's radar are Indiana and Wisconsin.
And so, you know, Wisconsin again, we were just talking about Minnesota. Once Minnesota comes online, then, uh, Wisconsin will literally be surrounded by adult use states. And there's already, you know, incredible data about how half of the population of Wisconsin lives, you know, an hour and fifteen minute drive away from a dispensary.
As more, you know, as more and more options pop up on that Minnesota border, then Wisconsin, uh, will, will sort of come under more pressure. And not to geek out too much on politics here, but one of the reasons Wisconsin has not had an adult use program so far is that they have a Republican legislature.
Now, one of the ways, the reasons they have a Republican legislature is because it's a very gerrymandered state. The way that the state is drawn is drawn in a way to advantage Republicans. That's why, you know, Wisconsin's, you know, can win the governor's office, but not the legislature. But recently, the Supreme Court of Wisconsin said, Hey, you're going to have to draw those maps in a more fair way.
So obviously that's getting a little bit into the weeds there. But imagine a world in which Minnesota is thriving and in which you have a much more favorable legislature in Wisconsin along with a governor who already wants it done. That, you know, you can go from no medical program to an adult use program really quickly.
So, Wisconsin's exciting. And again, right, that will just make the Midwest a solid green wall, right, of cannabis. We already have, you know, huge states like Illinois and Michigan and Ohio, you know, um, and, and that will solidify the Midwest as a power center in cannabis. And, you know, perhaps one more that is also in the Midwest that I'll mention is Indiana.
Uh, so again, Indiana's off people's radar right now. It does not even have a medical program. Um, so why should we think it's on the cusp of change? Well, once Ohio goes online. Um, Indiana will be surrounded by three states that have legal cannabis. And, you know, every person in Indiana, no matter where in that state they live, will be in a two hour drive of cannabis, um, of legal cannabis in one of those three neighboring states.
And, you know, the, the guy, uh, who is running for governor in Indiana, who's a Republican, has also expressed that he's pro cannabis. So, you I think just the common theme there is that, you know, oftentimes it would take years. You know, you would have to spend years passing a medical program. And then, you know, it would take four, five, six, seven, eight years to normalize that medical program.
And then you would get to adult use. But I believe the dominoes are falling more quickly, right? Because they're falling in the right places. Impacting neighboring states and, you know, um, many of these states are finding themselves surrounded and that, in conjunction with the fact that cannabis is much more normalized than it was three, four years ago, in conjunction with the fact that you kind of feel like you are an outlier when most of the states have legalized, that speeds up the domino process that was started 12 years ago, right when Colorado and Washington legalized, and now I think is really starting to pick up speed.
[00:36:50] Tommy-1: Since we're talking about legalization, how will this election impact rescheduling, or will it impact rescheduling at all?
[00:37:00] Hirsh Jain: You know, I'm pretty optimistic about where we stand in the rescheduling process and what might happen over the next few months. You know, as, as you know, Tommy, this process was kicked off in October of 2022. So what? That's almost two years now. When Joe Biden announced, you know, he was going to have his HHS look into it.
It took them nine months to make a recommendation. Right, then it had to go to the DEA. So there's some people in cannabis who are like, come on, let's get to it, right? Let's get to it already. But in my opinion, um, this process has been rolled out in a very thoughtful way, in a way that can withstand judicial challenges and the scrutiny of opponents who are opposed to it.
And so I am enormously pleased about where we are. As many people listening may know, uh, the comment period has, uh, concluded, uh, on, on rescheduling. And so now we're waiting to hear whether there will be what is called an ALJ hearing, you know, whether an administrative law judge, uh, will sort of question this Schedule 3 recommendation and whether they deem anyone has standing to question that kind of a recommendation.
You'll hear different perspectives on, you know, whether we'll get a hearing or whether we won't. Um, I really think it's, it's anyone's guess, but you know, um, it's been almost a couple weeks since that comment period, um, concluded and, and, and most people believe most comments have been reviewed. And so, uh, there's a good chance we don't get an administrative law judge hearing and that this rule is finalized in advance of the election.
So I'm of the belief, obviously no one knows, and there are so many different legal scholars that will give you different opinions on this unprecedented process. But I'm of the belief that this has been rolled out in a really legally sound way to withstand different judicial challenges that are out there, that there will be some people that will seek to obtain a hearing, there will be some people that will seek to file a lawsuit, to issue an injunction, and will hope, kind of, you know, kind of to your point, that a Trump, you know, White House might come in and block this.
There will be, you know, noise around this process. But I actually believe that this rule will ultimately be sustained in advance of the election and that it'll be used as a talking point, um, by Kamala Harris, who's the presumed Democratic nominee. And again, I say that not because there aren't some opponents of this, um, but because I think this was rolled out in a very procedurally sound way.
In other words, if Joe Biden six months ago was like, Oh, I'm losing in the polls. Let's reschedule cannabis. Then I think this would be a different story. So that's why I'm optimistic about it being finalized. And the other thing I should say is even in a world where the Republicans would win the White House, I believe that the progress being made at the state level will make Schedule 3, I want to say bulletproof, right?
So if Ohio becomes the robust market within days that we think it will be, if Ohio, if Florida does what we think it will be, it'll be very difficult for Two people from Ohio and Florida to, uh, to, to oppose this. And so, um, that's why I'm optimistic, even under a Republican administration. And this goes back to the idea of why I think these red states are so crucial to come online.
And finally, I'll say about Schedule 3. I mean, Tommy, I'm sure you've heard for the past couple of years, all the back and forth about whether, whether it goes far enough and how de scheduling is better, right? We're all familiar with those debates. Um, and I think there's good arguments on both sides. But one thing you can say is, politically, it's in some ways kind of a masterstroke.
By which I mean, you know, Schedule 3 is not legalization, right? All Schedule 3 is saying is like, hey, we believe cannabis has some medical value, right? I mean, we think more research should go on. It's a huge win for the industry, but it's not a radical position. And that's a pretty mainstream position in America right now, that cannabis has some medical value.
Polls suggest that 90 percent of people support medical cannabis, and close to 70 percent support adult use. So it's really hard to demonize this, this, this kind of a position and I think you have seen so many, um, Republican voices in recent weeks and months, um, that have said, yeah, like, Schedule 3 is reasonable and just to tick off a few of these people who presumably would have a lot of power, right, let's say if the Republicans won Congress and under a Trump administration, People like David Joyce of Ohio.
People like Nancy Mace, right, of South Carolina. People like Brian Mast of Florida, who by the way, was in Trump's box during the RNC, right? So this dude who was close enough with him to be sitting with him. So, um, I'm, you know, I'm an optimist both about the fact that Schedule 3 will be finalized before the election and about the fact that the long term trends are so strong that, um, that, that this will not be able to be quashed.
[00:41:20] Tommy-1: How will, how will this impact the industry?
[00:41:24] Hirsh Jain: Uh, I think it'll impact the industry in, uh, robust, short, medium, and long term ways. And so what I mean by that is, in the short term, uh, it will, as, you know, we've all heard millions of times before, eliminate 280E, which is just, you know, uh, crushing on most operators. And so, it'll Increase the cash flow of these operators, right?
If you think about public companies, it'll increase their cash flow, spur investor interest into them, you know, send their prices higher. If you think about, you know, smaller companies, it'll also increase their cash flow. So it'll allow these businesses to be much more financially healthy and increase the number of business models that are feasible.
So that is very exciting. I guess the way to think about that is it'll be a financial lifeline to an industry that has been battered for five, six years. So that's huge. But then I also think there are medium and long term impacts of this as well. Uh, I think Schedule 3 is of enormous symbolic significance.
And so even though that may not pay immediate dividends, I do think that changes, you know, the posture of a lot of institutions in American life towards cannabis. By which I mean, medical schools don't teach you anything about the endocannabinoid system right now. But I think in a world in which this is declared to have medical value, That will start to open up, um, a lot of these financial institutions.
Sure, cannabis will still be illegal, but I actually believe a lot of these insurance companies, a lot of these banks, right, um, even stock exchanges, they make these discretionary decisions, right, about like how illegal this is, right? And so, you know, we all know that the number of banks and insurance companies that work with cannabis businesses is quite low.
If Schedule 3 happens, I think that will start to, like, slowly increase. That means cannabis businesses have access to more competitive banking and insurance products at much more reasonable prices, so that benefit flows, uh, through the system. So, those are, I think, some of the medium term impacts, which is that it'll make a lot of these institutions in American life more cannabis friendly from an ideological or even a practical financial perspective, which I think is huge.
And I also really believe that, you know, this has potential global reverberations. I think that the United States health authority carries a lot of significance around the world. And, you know, for better or worse, the U. S. sets the global agenda on drug policy. It was the U. S. war on drugs that, you know, quashed cannabis across the world.
And so I believe that a formal recognition from the United States government that cannabis has medical value You know, in concert with all of the other organic things that are happening in Germany and Canada, that, um, sends shockwaves around the world and, you know, I really believe, I mean, this can be a form of soft power, right, for the United States.
I mean, not to get into geopolitics, but I think there is immense economic and health utility to be obtained via cannabis and if the United States can position itself well there, as opposed to a lot of these other major countries. Global powers who continue to punish cannabis. I think that actually benefits the U.
S. in a soft power geopolitical sense. We might not realize it yet, but I really do believe that it can be a part of U. S. diplomacy around the world.
[00:44:22] Tommy-1: You mentioned banking. Any update on the Safer Banking Act?
[00:44:26] Hirsh Jain: Yeah, I think, you know, safe banking kind of crystallizes the frustration that people in cannabis have had for five, six, seven years, right? That's kind of the issue that epitomizes it all. So, um, here's what I'll say. Uh, there is some optimism that safe banking could pass in a lame duck session, so that's the session, um, that happens after November and happens after, uh, happens after the election, but before January.
So that's, That's a way of saying, we shouldn't count on anything to pass before the election. There's some optimism it might happen there. I think no one really knows whether it will happen or not. What I would just say is, again, You know, going back to this theme that we've been exploring, the, the, the more Republican red states we can get online when it comes to cannabis, the better safe banking's prospects are.
To give you a few specific examples of that, you know, one of the biggest advocates for cannabis over the past year and a half on safe banking has been this guy, Steve Daines, who's a Republican Senator from Montana. This is a guy who didn't like cannabis as of four years ago, but then Montana voted to legalize cannabis.
And now Montana, even though it's a small state, actually has the highest. Per capita sales of any state in the country at about 325 per person. It's a state of 1 million people and it's a 325 million market. Anyways, that is just to say Steve Daines has been the big, anyone in D. C. will tell you he's been the biggest champion for safe banking.
He hasn't gotten it done yet, but he's been motivated by the fact that he represents Montana. Um, another, you know, good example of this is that Missouri, another big red state, um, that legalized cannabis. You know, um, they, uh, had a senator, Josh Hawley, that used to be opposed, uh, to cannabis, but now that Missouri has such a, a robust, uh, economy, um, he's been silent on the subject.
And so, that's some of the momentum that we've been building, and, you know, I think two of these states, like Ohio and Florida, coming online, will increase the prospects for safe banking, even under, uh, a Republican administration. And one other note is that, you know, Steve Daines, the guy from Montana, he could very well be the Senate majority leader, um, if the Republicans take back the Senate.
And so that would be really helpful for cannabis.
[00:46:28] Tommy-1: Hirsh you've, on top of helping entrepreneurs get licensed, you've also really helped, uh, people in this industry get financing. What can license holders expect in today's climate when they're raising capital?
[00:46:42] Hirsh Jain: Yeah, I mean, this has been one of the most challenging things, right? That, that there has been to do, uh, in, in cannabis. I think anyone listening to this knows how incredibly difficult, right, it is to raise capital in this space. My advice is going to be kind of, um, Um, kind of basic and obvious, right? Which is make sure that you have a demonstrated business plan that does not merely consist of projections, but have some track record of operational success.
That will be key, right? Um, in, in order to raise capital and then also make an effort to network with investors that are interested in your subcategory, right? So just going back to hemp beverages, for example, right? Like hemp beverages has been a category that has really galvanized investor interest, um, over the past 12.
Uh, to, to 18 months, uh, for example, right? And so there is a universe of investors that are thought leaders on that subject that proclaim their interest in this subcategory. And in some instances are raising funds devoted to that subcategory. And so, um, one of the critical things is to build relationships, uh, through your existing relationships with those people who are kind of, uh, playing, uh, in that space.
And, you know, perhaps the other thing I'll note is, uh, You know, it's important to be realistic about what the cost of capital is in cannabis. You know, so many of these conversations that I see between investors and, uh, you know, potential operators break down because of the perceptions. That the investors are being predatory.
And look, I can't speak for every one of those interactions, or I'm sure there are some instances of that, but I think it's important for anyone who is aspiring, um, to have a business in this space to do their research about what the cost of capital is and the, the returns that these, uh, you know, investors need to generate in order to even get authorization, um, to sort of invest in your business.
And again, just tying this back to some of our earlier conversations, that's why I think so many of these reforms, whether it's rescheduling or safe banking or critical is that it'll increase, you know the capital available to the space and ensure that the capital can be available at less intense prices which will, which will benefit operators and Maybe just circling back to the first point again, you know, so much about of this is being thoughtful about which states and you know, what lines of business you're going to approach, right?
So, um, you know, if you were going to operate a business in the California cannabis market, it's important to be realistic about how challenged, you know, that market has been historically and how investors might react to that.
[00:49:12] Tommy-1: Before I let you go, you've helped so many entrepreneurs get licensed.
Which states are you active today?
[00:49:20] Hirsh Jain: You know, I've probably worked in about a dozen states over the past few years. Um, so, I've done a tremendous amount of work in California. Out of, you know, the 1, 300 dispensaries in California, I've helped entitle about 50 of them. And, you know, just to maybe shout out a few that have opened recently that I think are really exciting.
Um, recently helped The Artistry, which is a leading retail chain in California, open up a store in Laguna Woods. Which is in a part of Orange County that, um, is, uh, has very limited retail cannabis access. So tremendously excited, uh, about that store. Uh, recently helped a client, Wheelhouse, open up one of the first dispensaries in Ventura.
Uh, that was actually the designated dispensary for the Hall of Flowers that was recently in Ventura. That's, uh, really exciting. And, um, you know, helped a company like Airfield, uh, open up in Redwood City, um, which is in the Bay Area and we think that'll be an exciting store. So, uh, that's, that's, you know, some of the work that I really enjoy, opening up, uh, sort of new retail businesses in different jurisdictions.
Um, but have done work in Nevada, have done work in Arizona, Illinois, Massachusetts. And what I would say is all of them just have their own kind of bespoke regulatory environment and, you know, the people that I work with, they're incredibly talented, right? They're incredibly talented at running retail cannabis businesses, which, quite frankly, when I'm in those stores and I see their operations, I would never be able to run a dispensary.
It's an enormously complicated task that has all of these best practices. It's a skill that I don't have. But because they're so focused on optimizing their operations, um, they don't have the appetite or the, or the, you know, or the time really to understand how each of these unique state experiments are unfolding.
And so, you know, it's, it's really, the knowledge that I have really isn't anything that special. It's just paying attention to the way the puzzle is unfolding in these states. And it's a real pleasure to help people, uh, think about, um, how to approach different states. And You know, I'll also say this is true from the brand perspective, right?
So if you're a brand that has built a great business in states and are thinking about new states, there are strategic ways to attack those states, right? So again, just to give you an example, uh, one of my clients who I love, uh, Level Pro Tabs, um, which is a really fascinating pro tab product. It's like a pharmaceutical product.
Um, they're about to move into Ohio, you know, sales start quite soon. Um, we're really excited because this is an alternative to a lot of other, you know, uh, stronger medications out there. Anyways, you know, just knowing Ohio, knowing the geography of Ohio, knowing, you know, of the 134 licenses that exist today, you know, who, um, has what footprint and in the future licensing scheme, who is likely to grow their retail footprint and, you know, who has the most enduring competitive advantage.
Understanding how different potential partners are situated in a state, um, is crucial to knowing how you want to tackle, uh, that state. And so it's, it's actually a tremendous amount of fun to spend a lot of time in this puzzle, in this regulatory maze, and to help people achieve their desired outcome by uncovering what that, what that particular maze looks like.
[00:52:19] Tommy-1: Hirsh, you dropped so much knowledge today. How can our listeners get a hold of you?
[00:52:24] Hirsh Jain: Uh, I'm on Twitter, uh, and post a lot of cannabis policy stuff there. Uh, so you can find me at AnandaStrategy. com. A-N-A-N-D-A strategy. Uh, you can send me an email anytime at Hirsh@anandastrategy.com. So that's H-I-R-S-H at, uh, A-N-A-N-D strategy.com. That's also the name of my website, um, anandastrategy.com.
And, uh, that's also my Instagram @anandastrategy. So you can reach me there.
[00:52:52] Tommy-1: Thank you so much for joining us today.
[00:52:54] Hirsh Jain: Thank you so much for having me, Tommy. Uh, I really do appreciate it.
[00:52:57] Tommy: Thank you so much for listening today. I hope you guys enjoyed this pod. As always, please like, and subscribe wherever you're listening. It helps the channel a lot until next time guys take care.
[00:53:07] Outro: Thanks for listening to the KayaCast podcast. We hope you enjoyed the show. Don't forget to subscribe to our podcast in your favorite podcast app, or visit our website to access the full archive of episodes from the show.
