WEBVTT - Florida Nuclear Plants Say They're Not at Risk From Irma 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg P and L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Abramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg P M L 0:00:20.840 --> 0:00:32.239 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Let 0:00:32.360 --> 0:00:36.560 us turn our attentions to really damage that the hurricane 0:00:36.680 --> 0:00:41.880 could cause. Brian Sullivan covers energy and commodities for Bloomberg 0:00:41.920 --> 0:00:46.400 and all things weather related. Jack Caskey, Chemical Companies reporter 0:00:46.479 --> 0:00:50.120 for US based in Houston. Let's start with with you. Brian. 0:00:50.240 --> 0:00:54.680 I'm watching a minute by minute the latest forecasts for 0:00:54.760 --> 0:00:59.400 the hurricane, and much will depend on exactly when it 0:00:59.440 --> 0:01:04.399 turns north. The low pressure over the Mississippi Valley may 0:01:04.600 --> 0:01:08.399 will pull it north, but the current forecast track is 0:01:08.440 --> 0:01:12.640 about as bad a scenario as you could come up with. Yeah, 0:01:12.680 --> 0:01:15.360 one analyst this morning told me it was the nightmare 0:01:15.400 --> 0:01:20.360 scenario for insurance companies. UM. So, the current thinking is 0:01:20.400 --> 0:01:22.480 it's going to go straight up the Florida Peninsula, whether 0:01:22.520 --> 0:01:23.840 it goes up a little to the west or a 0:01:23.840 --> 0:01:25.600 little to the East. I think at this point doesn't 0:01:25.640 --> 0:01:30.720 matter just simply because um Irma is getting large. I mean, 0:01:30.880 --> 0:01:34.320 it underwent what they call it eyewall replacement UM this 0:01:34.360 --> 0:01:36.760 morning and that actually makes the physical size of the 0:01:36.800 --> 0:01:39.560 storm get larger than the physical windfield of the most 0:01:39.640 --> 0:01:42.800 damaging winds get larger. And this is this is where 0:01:42.800 --> 0:01:45.320 the damage is going to happen UM, and it's going 0:01:45.360 --> 0:01:47.400 to be different from Harvey. With Harvey, you had a 0:01:47.440 --> 0:01:50.120 lot of flooding, which insurance companies aren't necessarily on the 0:01:50.160 --> 0:01:55.520 hook for. But with um IRMA, you may see every 0:01:55.600 --> 0:01:58.400 county in Florida having some kind of damage and these 0:01:58.440 --> 0:02:00.480 are gonna this is gonna be roof damage and trees 0:02:00.520 --> 0:02:03.720 through windows and houses and on cars, and UM the 0:02:03.760 --> 0:02:06.320 insurance companies around the hook for this. So this UM 0:02:07.040 --> 0:02:09.240 you're talking about a price tag maybe in a hundred 0:02:09.240 --> 0:02:12.959 and thirty billion dollar range, and then with secondary economic 0:02:13.000 --> 0:02:15.519 impact spreading that out to about two and of course 0:02:15.520 --> 0:02:20.440 that's the worst case scenario. The latest forecast also suggesting 0:02:20.480 --> 0:02:23.400 that the eyewall replacement cycle nearly complete, which means it 0:02:23.440 --> 0:02:26.280 could go back up to a five uh as as 0:02:26.320 --> 0:02:29.160 its strengthens. Jack Caskey, one of the stories that caught 0:02:29.160 --> 0:02:33.440 everybody's attention obviously was uh the chemical plants in Houston 0:02:33.520 --> 0:02:37.200 and the toxic stew that went into the floodwaters, and 0:02:37.200 --> 0:02:40.760 of course the one plant that had the chemicals explode. 0:02:41.639 --> 0:02:44.640 And the bad news from you is that this could 0:02:44.720 --> 0:02:48.520 it could be worse in Florida. UM. Well, I mean 0:02:48.520 --> 0:02:51.920 there's potentially, Yeah, there's Um there's not the heavy uh 0:02:52.080 --> 0:02:55.959 petrochemical industry in Florida that there isn't in Texas and Louisiana. 0:02:56.600 --> 0:02:59.520 But there is a nuclear plant that's from the seventh 0:02:59.520 --> 0:03:01.560 early seven and the use that's right in the path 0:03:02.320 --> 0:03:06.960 um at the tip of Florida. Um. Uh. Now there 0:03:06.960 --> 0:03:09.680 the plant is, you know, twenty ft above sea level. 0:03:09.680 --> 0:03:12.440 They tell me, so storms it should be stayed safe 0:03:12.480 --> 0:03:18.240 from storm surge. Um. There's facilities. Um, there's a large 0:03:18.720 --> 0:03:24.560 fast state mining facilities with slightly radioactive waste piles that 0:03:24.600 --> 0:03:28.720 need to be protected from wind and and water uh 0:03:29.000 --> 0:03:32.680 owned by the company mosaic Um that that polluted water 0:03:32.760 --> 0:03:37.320 and killed marine mammals in the past. Um. And there's 0:03:37.440 --> 0:03:39.720 you know, there's a whole in every state has got 0:03:39.800 --> 0:03:45.600 its uh chemical uh distribution Uh facilities that need to 0:03:45.640 --> 0:03:47.760 be protected from storm search. I mean one of the 0:03:47.800 --> 0:03:53.400 lessons from UH UH from a party was that uh 0:03:53.640 --> 0:03:56.560 some chemical operators just didn't expect the amount of water 0:03:56.920 --> 0:03:59.680 that they were deluged with. So the case of Crosby 0:03:59.760 --> 0:04:03.320 text is the company Arkhama out of France UH had 0:04:03.320 --> 0:04:06.920 its generators fail, causing UM a fire of of the 0:04:07.280 --> 0:04:10.920 organic peroxides that were stored there. Um. There was no 0:04:11.120 --> 0:04:15.240 serious injuries, although actually the first responders are now suing 0:04:15.720 --> 0:04:19.919 the company over their exposure to the smoke at the fire. 0:04:20.360 --> 0:04:23.480 Let me, um, let let me ask you something here, UM, 0:04:23.680 --> 0:04:27.720 nuclear plants shut down as the storm approaches. We're going 0:04:27.760 --> 0:04:31.760 to have, according to all the meteorologists, storm search, big 0:04:31.800 --> 0:04:35.320 storm search from this hurricane. And that's what happened hurts 0:04:35.680 --> 0:04:38.440 the nuclear plants in Japan after the earthquake. So how 0:04:38.520 --> 0:04:41.839 much danger is there from that? They say, it's not 0:04:41.920 --> 0:04:47.080 a fair comparison that they that the that Fukushima. Um, 0:04:47.680 --> 0:04:51.880 you know that meltdown was caused by a tsunami which 0:04:52.000 --> 0:04:55.000 hit the plant rather quickly. They have a lot more 0:04:55.000 --> 0:04:57.520 warning here to shut down this plant. Um, they've learned 0:04:57.520 --> 0:05:02.279 from Fukushima. They have more flooding anti flooding mechanisms in place. 0:05:02.320 --> 0:05:05.880 They've got backup systems upon backup systems to keep The 0:05:05.960 --> 0:05:09.200 issue is keeping the cooling waters around the nuclear rods 0:05:09.400 --> 0:05:13.040 UH from from getting too hot and molding down. They 0:05:13.040 --> 0:05:15.920 say that's not going to happen. That plant is elevated 0:05:16.440 --> 0:05:19.560 well above sea level, so you know we'll see the 0:05:19.960 --> 0:05:23.200 Like I said, the lesson from from UH the Arkhama 0:05:23.200 --> 0:05:26.240 plant explosion is that they just didn't expect that much 0:05:26.279 --> 0:05:29.520 water and that's why the plant burned up. Brian Sullivan, 0:05:29.560 --> 0:05:34.120 I got thirty seconds left. What's the best damage estimate 0:05:34.240 --> 0:05:37.200 you're hearing right now from the companies you talked to 0:05:38.520 --> 0:05:44.120 in the thirty five billion dollar range um, and that 0:05:44.320 --> 0:05:47.640 isn't counting what happened in the Caribbean. There's already some 0:05:47.680 --> 0:05:49.560 early estimates coming out of the Caribbean that you have 0:05:49.680 --> 0:05:52.440 five billion dollars damage there, and that's certainly going to 0:05:52.520 --> 0:05:56.120 go up, all right. Brian Sullivan coming to us from 0:05:56.120 --> 0:05:59.680 our Boston bureau. He is the weather guy for US 0:05:59.800 --> 0:06:03.680 and covers energy and commodities. Jack Caskey in Houston Chemical 0:06:03.720 --> 0:06:10.240 Companies reporter, Obviously, this is UH a potentially catastrophic storm. 0:06:10.480 --> 0:06:14.119 We don't have a lot of good information about uh, 0:06:14.160 --> 0:06:16.680 exactly what's gonna happen. But we have some guesses and 0:06:16.720 --> 0:06:19.680 they are not good. So stay tuned to Bluemberg RADI 0:06:19.720 --> 0:06:22.239 all weekend. We'll keep you on top of the latest 0:06:22.320 --> 0:06:38.640 from Hurricane Ran. Here's an idea. Uh. You want to 0:06:38.720 --> 0:06:40.719 get a car, but you don't want to have a car. 0:06:41.480 --> 0:06:43.960 You just want to use it when you want it, Uh, 0:06:44.200 --> 0:06:46.680 for as long as you want, but and drive the 0:06:46.680 --> 0:06:51.279 car you want. Uh. Scott Painter is the former CEO 0:06:51.360 --> 0:06:54.640 and founder of True Car. He's got a new startup 0:06:55.000 --> 0:06:59.000 car as a service. Uh. It's called Fair. Uh tell 0:06:59.080 --> 0:07:02.160 us about how this works. I mean, I'm a guy 0:07:02.200 --> 0:07:03.920 who lives in New York City. I don't own a car, 0:07:04.520 --> 0:07:07.279 but I go skiing in the winter, or I go 0:07:07.440 --> 0:07:09.320 out to the beach in the summer, and so maybe 0:07:09.360 --> 0:07:12.120 for a while I want a car. Well. Fair is 0:07:12.120 --> 0:07:16.440 a pretty simple concept. It really is an app that 0:07:16.520 --> 0:07:18.800 represents a totally new way to get a car. So 0:07:18.920 --> 0:07:22.320 you simply download the app, scan your driver's license, it 0:07:22.360 --> 0:07:25.000 shows you all the cars you can afford, and then 0:07:27.120 --> 0:07:30.360 and it gives you a single all in, low cost 0:07:30.440 --> 0:07:33.080 of ownership that's designed to be sort of an iTunes 0:07:33.080 --> 0:07:37.080 account for your car. But this isn't like renting, though 0:07:37.720 --> 0:07:39.640 you know, it's all the benefits of renting. So one 0:07:39.640 --> 0:07:41.240 of the great parts about renting a car is that 0:07:41.240 --> 0:07:42.440 you can turn it in and be done with it 0:07:42.520 --> 0:07:45.760 anytime you want. The problem is it's quite expensive. So 0:07:45.800 --> 0:07:47.880 this is about half the cost of a rental, which 0:07:47.920 --> 0:07:51.000 is important. But at the savings of a lease. We 0:07:51.080 --> 0:07:53.400 are actually the owner of the car and we actually 0:07:53.480 --> 0:07:56.280 leased the vehicle to you, all simultaneously inside the app. 0:07:56.320 --> 0:08:00.160 But more importantly, you're not picking a car all of 0:08:00.160 --> 0:08:03.640 a rental lot. You're picking the car you want that's 0:08:03.680 --> 0:08:08.360 for sale at any dealer. What's the minimum and maximum 0:08:08.360 --> 0:08:11.400 times for your what do you call? You? Don do 0:08:11.440 --> 0:08:14.800 you call it at least what? It's effectively a used 0:08:14.880 --> 0:08:18.400 vehicle lease, but we're not calling it at lease. Um. Actually, 0:08:18.480 --> 0:08:21.600 the fair contract has no term in it, which is 0:08:21.640 --> 0:08:24.800 really one of the things we found that young buyers, millennials, 0:08:24.840 --> 0:08:27.960 the modern sort of car buyer really doesn't want a 0:08:27.960 --> 0:08:30.600 long contract or a long commitment. A car represents a 0:08:30.640 --> 0:08:33.800 big commitment. So the fair contract gives you the ability 0:08:33.840 --> 0:08:35.959 to walk away or turn in the car at any 0:08:36.000 --> 0:08:38.319 time without penalty. You can keep it for six days, 0:08:38.720 --> 0:08:42.080 six months, six years. Where do you get the cars? 0:08:42.679 --> 0:08:45.760 So you pick the car using the app, But those 0:08:45.760 --> 0:08:49.400 cars are at at local dealers all around you, and 0:08:49.440 --> 0:08:51.760 those are the cars that are traditionally for sales. Fair 0:08:51.840 --> 0:08:54.600 is simply a different way to get that car. So 0:08:54.679 --> 0:08:56.679 you look at their inventory and you can say I 0:08:57.520 --> 0:09:01.360 want a Ford X whatever. Um, you go to a 0:09:01.400 --> 0:09:04.640 local Ford dealer and what they have an inventory is 0:09:04.640 --> 0:09:07.120 what you can get that's correct. And instead of the 0:09:07.160 --> 0:09:09.960 prices of the car being what you're shopping on, you're 0:09:09.960 --> 0:09:12.840 looking at monthly payments. So everything in the inventory that 0:09:12.880 --> 0:09:16.000 you see is giving to you with a monthly payment 0:09:16.080 --> 0:09:22.280 that includes maintenance, warranty and roadside assistance standard. That that 0:09:22.320 --> 0:09:23.760 brings up the question. You said you could get it 0:09:23.800 --> 0:09:27.280 as long as six days. You know six days? Do 0:09:27.280 --> 0:09:30.960 you pro rent the monthly payment debt? We don't, So 0:09:31.000 --> 0:09:32.800 it is a month to month pay as you go. 0:09:33.280 --> 0:09:34.719 So if I have it for six days, I'm still 0:09:34.720 --> 0:09:37.520 gonna pay for a month. You are, Okay, that sounds 0:09:37.520 --> 0:09:41.560 sound too bad though, Um, and uh, who you I 0:09:41.559 --> 0:09:44.239 assume with this you've got to carry your own insurance 0:09:44.600 --> 0:09:46.600 for the car in order to drive a car on 0:09:46.640 --> 0:09:48.679 the road, you do need to have insurance, but Fair 0:09:48.760 --> 0:09:51.880 also offers a month to month insurance for collision and liability, 0:09:51.960 --> 0:09:54.200 and you can also buy excess wear and tear insurance 0:09:54.240 --> 0:09:57.080 if you feel you need it. Um, and what do 0:09:57.120 --> 0:09:58.680 you do with cars when you When I give it 0:09:58.679 --> 0:10:01.280 back to you, those cars go back to the dealership. 0:10:01.559 --> 0:10:04.679 So the lifeblood of the modern car dealership is a 0:10:04.760 --> 0:10:07.040 late model used car. So that car coming back into 0:10:07.080 --> 0:10:09.560 their inventory and being sold to another customer is really 0:10:09.559 --> 0:10:14.200 the goal. Now I've been reading that, Um, there is 0:10:14.240 --> 0:10:17.439 a glut of late model used cars coming out of 0:10:17.440 --> 0:10:20.960 the markets these days, but we've been at peak production 0:10:21.160 --> 0:10:24.600 in terms of manufacturing. We're approaching eighteen million cars being 0:10:24.600 --> 0:10:27.680 produced in this country, which creates an over supply of 0:10:27.840 --> 0:10:30.760 used cars to three years down the road. And we've 0:10:30.800 --> 0:10:32.800 been at peak production for a couple of years now. 0:10:32.840 --> 0:10:36.320 So you've got five or six million late model used 0:10:36.320 --> 0:10:38.480 cars that are one, two and three years old coming 0:10:38.559 --> 0:10:41.000 back to the market in the next year to eighteen months. 0:10:41.760 --> 0:10:44.640 That represents a huge opportunity for the consumer to not 0:10:44.679 --> 0:10:46.520 only save money, but get a great value in a 0:10:46.520 --> 0:10:50.640 great vehicle. So you're are you are you selling renting 0:10:50.760 --> 0:10:53.400 to me UH used cars or new cars. These are 0:10:53.400 --> 0:10:56.920 pre owned cars. And all of the vehicles that you're 0:10:56.920 --> 0:10:59.600 going to see on fair represent a vehicle that has 0:10:59.600 --> 0:11:02.880 gone through our inspection process, that has a warranty, roadside 0:11:02.880 --> 0:11:05.280 assistance and standard maintenance, so you can actually get the 0:11:05.280 --> 0:11:07.079 car with peace of mind. So these are going to 0:11:07.200 --> 0:11:10.440 be UH. This is gonna be useful for the dealer 0:11:10.440 --> 0:11:13.320 who can make some money off a vehicle rather than 0:11:13.320 --> 0:11:16.160 have it just sitting inventory. That's correct for the dealer. 0:11:16.200 --> 0:11:19.560 This is a transaction. They're selling the car, you're buying it, 0:11:19.640 --> 0:11:22.960 so they don't care who's buying right fair Fair operates 0:11:23.000 --> 0:11:26.280 under all the necessary licenses and depending on the jurisdiction, 0:11:26.320 --> 0:11:29.319 we are a dealer and we actually buy the car, 0:11:29.720 --> 0:11:32.319 put it on our balance sheet, and simultaneously give you 0:11:32.360 --> 0:11:34.920 a contract to use that vehicle. What's the difference between 0:11:34.920 --> 0:11:38.120 you and and Tesla in in your sales model? In 0:11:38.200 --> 0:11:41.040 that UH dealers have gone to court saying if you 0:11:41.040 --> 0:11:43.160 don't have a lot and you don't have cars on 0:11:43.200 --> 0:11:45.320 that lot, you're not a dealer and you can't be 0:11:45.400 --> 0:11:48.199 selling this stuff. We're not actually selling the car, We're 0:11:48.240 --> 0:11:50.280 just giving you access to the vehicle to use it 0:11:50.320 --> 0:11:52.360 as you want, when you want, but we take all 0:11:52.360 --> 0:11:55.839 of the risk around depreciation and managing and owning that vehicle. 0:11:55.880 --> 0:11:58.680 So it's our capital that's being used to buy the car. 0:11:59.000 --> 0:12:02.040 You're not borrowing money when you get a car from Fair, 0:12:02.280 --> 0:12:04.760 You're paying for access to that vehicle. And so this 0:12:04.800 --> 0:12:07.360 notion that the car is becoming a service is really 0:12:07.400 --> 0:12:10.040 a subscription. That you have the car you want at 0:12:10.120 --> 0:12:12.760 any dealership as long as you want it, when you 0:12:12.800 --> 0:12:15.160 want it, and then you can leave it and be 0:12:15.240 --> 0:12:17.240 done with it. So I don't take title to it. 0:12:17.440 --> 0:12:21.720 You don't. Uh. If I have an app and I 0:12:21.800 --> 0:12:25.520 decide I want to get a ferrari Um, how do 0:12:25.559 --> 0:12:29.840 you know I am? I am credit worthy for a 0:12:29.880 --> 0:12:31.920 car like that? How do you how do you know 0:12:32.760 --> 0:12:36.480 whether you can trust somebody to make their payments? The 0:12:36.520 --> 0:12:38.600 goal of the app is to really understand what you 0:12:38.640 --> 0:12:42.520 can afford. The average American today spends about four of 0:12:42.559 --> 0:12:48.160 their gross income on mobility, which breaks down to the car, insurance, maintenance, repair, fuel, 0:12:48.520 --> 0:12:51.760 and in many cases accessories. We're actually beginning there, and 0:12:51.880 --> 0:12:54.440 the first thing that the app does by scanning your 0:12:54.480 --> 0:12:57.720 driver's license, we're looking for your income and your disposable income, 0:12:57.760 --> 0:13:00.760 so we can understand what you can genuinely afford. But 0:13:00.840 --> 0:13:03.680 the two things we need the driver's license and a 0:13:03.760 --> 0:13:05.959 form of digital payment, and in most cases that's the 0:13:06.000 --> 0:13:09.160 bank account or a credit card. So, uh, do you 0:13:09.240 --> 0:13:12.160 care about whether my credit is good? I mean, do 0:13:12.200 --> 0:13:16.240 you run a credit check on me through say an Equifax? 0:13:16.600 --> 0:13:19.120 Maybe you don't want to do that, right right, Well, 0:13:19.160 --> 0:13:21.120 we do do a soft credit bull but it does 0:13:21.160 --> 0:13:24.200 not affect your credit, and we're not underwriting you in 0:13:24.200 --> 0:13:25.720 the same way that a bank would have for a 0:13:25.720 --> 0:13:29.800 car loan. So you can have actually bad credit. You can, 0:13:29.800 --> 0:13:32.120 in fit many cases, have no credit. What we're we're 0:13:32.160 --> 0:13:35.560 looking really looking for is ability to pay. However, if 0:13:35.600 --> 0:13:37.720 for whatever reason, you go through a change in work 0:13:37.760 --> 0:13:40.840 where you don't have a consistent source of income, you 0:13:40.920 --> 0:13:44.520 simply return the car. Where does this? Uh? When do 0:13:44.559 --> 0:13:46.640 we see this? When? When can I start downloading the 0:13:46.640 --> 0:13:48.920 app and getting the car? So the app is live 0:13:48.960 --> 0:13:50.720 today in the app Store if you go to fair 0:13:50.760 --> 0:13:55.840 and type in either auto or financial financial. So Fair 0:13:56.480 --> 0:13:58.400 is an app that you can download today. But it 0:13:58.480 --> 0:14:01.520 is currently live and working in southern California. We've got 0:14:01.520 --> 0:14:04.599 seventy three franchise dealers over a thousand cars in inventory 0:14:04.800 --> 0:14:08.280 because nobody drives in southern California. It's the car capital. Well, 0:14:08.880 --> 0:14:11.800 I mean yeah, but I'm kidding. But people they're like 0:14:11.880 --> 0:14:14.520 to have cars. What about in a place when does 0:14:14.559 --> 0:14:17.120 it come to New York City or Boston, places where 0:14:17.120 --> 0:14:20.200 people don't necessarily want a to wear house a car, 0:14:20.320 --> 0:14:22.440 but you know, want cars on a regular basis. Sure, 0:14:22.520 --> 0:14:25.240 So it's going to be throughout the state of California 0:14:25.280 --> 0:14:26.840 before the end of the year, and we'll roll out 0:14:26.920 --> 0:14:29.680 nationally in about a dozen cities in two thousand and eighteen. 0:14:30.480 --> 0:14:32.880 But from an ownership point of view, the benefits of 0:14:32.880 --> 0:14:37.960 ownership are really focused on security. Well, we'll talk about that, 0:14:38.120 --> 0:14:40.520 but fair is the is the app. Thank you very 0:14:40.600 --> 0:14:43.800 much for joining us. We're time, unfortunately, but it sounds 0:14:43.800 --> 0:14:59.760 like a great idea Scott paid fair Well. News out 0:14:59.760 --> 0:15:04.200 of Dada today Canadian marijuana producers shares are rising. Reports 0:15:04.280 --> 0:15:07.840 Ontario is going to open government controlled storefronts for legalized 0:15:07.960 --> 0:15:13.320 recreational sales. Uh. That should make it a lot easier 0:15:13.440 --> 0:15:18.080 for people once Canada legalizes marijuana next year to purchase 0:15:18.800 --> 0:15:23.600 the product. Because the Canadian government probably recognizing it needs 0:15:23.640 --> 0:15:29.800 a way to safely handle the financial transactions. Created may 0:15:30.040 --> 0:15:33.800 make it easier for people in Canada to um use 0:15:33.840 --> 0:15:36.440 banks and the banking system to pay for their pot. 0:15:36.800 --> 0:15:40.120 That is not the case in the United States, especially 0:15:40.120 --> 0:15:43.680 in the states where we have seen legalization, like in Colorado, 0:15:44.080 --> 0:15:49.000 banks don't really want to deal with people who do business, 0:15:49.000 --> 0:15:52.480 even though those businesses can take in an awful lot 0:15:52.480 --> 0:15:58.440 of cash. Banks worry about money laundering bills, UH, legislation rather, 0:15:58.720 --> 0:16:02.480 and they also it sounds silly, but it's true. UM, 0:16:02.800 --> 0:16:05.400 they don't want a lot of cash coming into the 0:16:05.400 --> 0:16:10.120 bank that smells like marijuana. Company that has been founded 0:16:10.120 --> 0:16:13.520 to try to deal with that is called Token and 0:16:13.960 --> 0:16:16.280 the CEO and founder is Lea means Aarad and he 0:16:16.400 --> 0:16:21.080 joins us now from Denver. Uh. Basically, what you're doing 0:16:21.360 --> 0:16:26.280 is using the concept of a cryptocurrency to become the 0:16:26.320 --> 0:16:32.400 middleman between the cash and the pot shop. Correct. Well, 0:16:32.400 --> 0:16:35.200 thanks for having me, Mike. UM. To clarify, we use 0:16:35.240 --> 0:16:40.480 the blockchain that's divorced from its cryptocurrency. The blockchain the 0:16:40.480 --> 0:16:44.240 way we employ it is a secondary redundancy ledger for us, 0:16:44.440 --> 0:16:47.320 and it ensures indelibility of all data in our system 0:16:47.720 --> 0:16:50.680 and as a consequence, makes far financial institution partners and 0:16:50.960 --> 0:16:54.280 by extension, the regulators feel comfortable with extending services to 0:16:54.360 --> 0:16:58.200 the industry. How does it work? Yeah? Absolutely. Before I 0:16:58.240 --> 0:17:00.360 tell you how it works, uh, I think it's important 0:17:00.360 --> 0:17:02.560 for me to explain the context and UH in kind 0:17:02.560 --> 0:17:05.240 of my own personal background in the genesis of Token, 0:17:05.560 --> 0:17:08.040 I'm an immigrant came to the United States from former 0:17:08.160 --> 0:17:12.280 USS are and where my family spent uh potentially approximately 0:17:12.320 --> 0:17:15.399 six years as refugees, which impacted my view on banking 0:17:15.480 --> 0:17:18.480 and unbanked. So that's very personal to me. Expending services 0:17:18.520 --> 0:17:21.440 to what to those who who deserve it? Uh. I 0:17:21.560 --> 0:17:23.760 later spend time in the military and intelligence community in 0:17:23.760 --> 0:17:26.200 the United States, and then Wall Street will Mary Will 0:17:26.200 --> 0:17:28.920 Mary Lynch, and later with US Treasuries off to the 0:17:28.960 --> 0:17:32.520 control occurrency as a bank regulator. So I I you know, 0:17:32.600 --> 0:17:35.280 Token is an amalgam of all those experiences, and what 0:17:35.400 --> 0:17:39.600 Token is essentially is as an intelligence platform. It creates 0:17:39.600 --> 0:17:43.200 accountability transparency. Uh. The way it works, consumers download the 0:17:43.200 --> 0:17:46.760 application to create an account. Under a second we identify 0:17:46.880 --> 0:17:48.600 who they are, so if it's John Smith, we know 0:17:48.640 --> 0:17:50.640 that it's John Smith before they tie a payment. Source 0:17:50.640 --> 0:17:53.840 to that application, the mobile app, but the experience is 0:17:53.920 --> 0:17:57.560 somewhats your Apple Pay for instance, they're walking a participating retailer, 0:17:57.640 --> 0:18:00.560 press pay and walk away with the product. It's as simple. 0:18:00.920 --> 0:18:04.040 On the other hand, retailers have access to their portal 0:18:04.080 --> 0:18:06.239 that looks just like an online banking portal. They can 0:18:06.240 --> 0:18:09.600 see a transaction as it happens. They can also move 0:18:09.640 --> 0:18:11.480 the funds now they can move the funds token to 0:18:11.560 --> 0:18:14.920 token thinks PayPal, or they can move the funds using 0:18:14.920 --> 0:18:17.919 a cate or traditional payments rails that sort of provided 0:18:17.920 --> 0:18:21.119 to them through our partner institutions. So that solves both 0:18:21.200 --> 0:18:24.080 the banking problem and the payments problem on both ends. 0:18:24.600 --> 0:18:27.080 And then of course there are regulators and law enforcement 0:18:27.320 --> 0:18:29.639 UH and UH and as you mentioned, in the United States, 0:18:29.800 --> 0:18:33.359 we have a very interesting, if not convoluted system where 0:18:33.520 --> 0:18:37.199 cannabis is illegal federally and legal and certain jurisdictions. So 0:18:37.240 --> 0:18:40.359 as a consequence of federal government took a unique stance 0:18:40.480 --> 0:18:44.560 that took an agnostic stance through issuing several guidances. There 0:18:44.560 --> 0:18:48.080 are three memorandums from Department of Justice. There's a guidance 0:18:48.080 --> 0:18:51.359 from a Financial Crimes Enforcement network part of yours Treasury 0:18:51.400 --> 0:18:54.040 and and essentially there's a legal framework called the Bank 0:18:54.160 --> 0:18:57.240 Secrecy Act and the federal governments. If you took a 0:18:57.240 --> 0:19:00.119 position by stating that we are agnostic as long as 0:19:00.119 --> 0:19:02.920 you follow the rules and comply with these items and 0:19:02.960 --> 0:19:06.520 these regulatory guidance, UH, there was there was issue. And 0:19:06.600 --> 0:19:09.760 what what happens that it creates uh an incredible burden 0:19:09.800 --> 0:19:12.840 on small financial institutions. They're willing to provide services to 0:19:12.840 --> 0:19:15.280 cannabis industry, and that's what we help them with. We 0:19:15.440 --> 0:19:20.040 help them with creating transparency, tracking every transaction and and 0:19:20.200 --> 0:19:23.679 ensuring that everything that happens in that system is indelible. 0:19:23.880 --> 0:19:26.440 And that's where blockchain FETs and blockchain is the first 0:19:26.520 --> 0:19:29.879 ledger UH known to UH humanity so to speak. But 0:19:29.960 --> 0:19:33.280 it's cryptographically and mathematically indelible. What's your kind of this? 0:19:33.359 --> 0:19:36.840 How do you make money? Right now? It's very simple. 0:19:36.840 --> 0:19:39.560 We charge per transaction fees to merchants the same way 0:19:39.720 --> 0:19:44.720 UH say First Data would or Navisa master cards. And 0:19:44.760 --> 0:19:47.159 how has it been accepted so far? What's what's your 0:19:47.200 --> 0:19:51.080 growth rate? Yeah? So we we had a control pilot 0:19:51.119 --> 0:19:54.080 in Denver and it was done on purpose with with 0:19:54.160 --> 0:19:57.200 cannabis and non cannabis relationships, to to establish a control 0:19:57.240 --> 0:20:01.359 group and to really observe behaviors and the industry. Uh. 0:20:01.440 --> 0:20:05.840 In that pilot, Uh, surprisingly, our wallet had incredible adoption. 0:20:05.920 --> 0:20:09.320 Thirty five percent of old transactions at each locations were 0:20:09.359 --> 0:20:13.520 converted without any marketing. That's uh, that's some precedented because 0:20:13.800 --> 0:20:16.879 Apple failed and Google failed with their wallets. But I 0:20:16.920 --> 0:20:20.199 think it's demonstrative to the need in the industry and 0:20:20.200 --> 0:20:22.720 to the fact that consumers don't want to pay in cash. Uh. 0:20:22.720 --> 0:20:25.800 There's some really interesting statistics. For instance, over over six 0:20:26.280 --> 0:20:29.880 of our users in our system made three or more purchases, 0:20:29.920 --> 0:20:33.200 So it's sticky and pun intended here and uh, and 0:20:33.240 --> 0:20:36.280 we've increased average ticket sized by eighteen percent. I mean, 0:20:36.280 --> 0:20:39.199 it's it's incredible value add to a business. What do 0:20:39.240 --> 0:20:43.719 you think the growth possibilities for you are? You know, 0:20:43.840 --> 0:20:47.520 you've got states that are doing medical marijuana, but the 0:20:47.560 --> 0:20:51.119 states have just totally legalized it. Uh, there aren't that many, 0:20:51.359 --> 0:20:54.560 Um do you have? Do you do you need to 0:20:54.640 --> 0:20:58.400 grow or can you maintain a successful business with just 0:20:58.960 --> 0:21:04.359 a smaller operation that focuses on those states. Now, we 0:21:04.400 --> 0:21:06.840 absolutely not only want to grow, but need to grow. 0:21:07.240 --> 0:21:10.959 And the reason is the bigger our ecosystem. More visibility 0:21:10.960 --> 0:21:14.280 we have into the familio of the transaction world. Right, 0:21:14.600 --> 0:21:17.360 so we know, for instance, if you engage in what's 0:21:17.359 --> 0:21:19.360 called dispensary hopping. If you're a consumer and you want 0:21:19.359 --> 0:21:23.080 to make a purchase and multiple dispensaries that an exceeding 0:21:23.119 --> 0:21:25.160 your daily amounts, that's a lot of to you. By 0:21:25.200 --> 0:21:28.280 stay called out a law. For us to have that visibility, 0:21:28.280 --> 0:21:31.879 we need to have a multiple dispensaries, a multiple retail locations. 0:21:32.200 --> 0:21:34.480 We also need to have access to the entire vertical 0:21:34.520 --> 0:21:37.560 to streamline and experience. So if you are a retail 0:21:37.600 --> 0:21:39.840 facility and you want to purchase from a cultivator or 0:21:40.000 --> 0:21:43.200 a manufacturer, if there are on a system, then onboarded. 0:21:43.440 --> 0:21:45.560 Not only do they have access to banking at this point, 0:21:45.600 --> 0:21:48.520 but they're also you can also transact and incredibly low 0:21:48.680 --> 0:21:51.480 rates in our system token to token so to speak. 0:21:51.800 --> 0:21:54.840 So yes, we are growing. We're going to be growing nationally, 0:21:56.040 --> 0:21:58.280 so you know, keep an eye on it out. That 0:21:58.359 --> 0:22:00.320 means thank you very much to see you know of 0:22:00.880 --> 0:22:05.840 token an interesting new business, uh combining the marijuana industry 0:22:05.960 --> 0:22:22.320 and technology. Well, a big story in financial world that 0:22:23.040 --> 0:22:26.240 is getting a lot of attention, even with the hurricane coming. 0:22:26.359 --> 0:22:30.000 Is this security breach at Equifax? A lot of people 0:22:30.080 --> 0:22:34.560 wondering how the heck this could have happened. Am and 0:22:34.600 --> 0:22:37.800 Barlav is the president of Checkpoints Software. He's based in 0:22:37.840 --> 0:22:42.320 Tel Aviv. Michael Riley is Bloomberg News cybersecurity reporter in Washington, 0:22:42.400 --> 0:22:47.640 d C. They're joining us now and uh, Michael, Uh, 0:22:47.800 --> 0:22:52.680 is there anything new that we that hasn't been reported yet? 0:22:52.680 --> 0:22:55.120 And I asked that question sort of not and it's 0:22:55.160 --> 0:22:58.280 not really tongue in cheek, But they sat on this 0:22:58.400 --> 0:23:01.520 information as many companies do for a while, and there's 0:23:01.560 --> 0:23:04.520 this story about the executive selling stock in between and everything. 0:23:04.560 --> 0:23:06.879 But um, do we know everything we need to know 0:23:06.920 --> 0:23:09.160