WEBVTT - Five Things The U.S. Can Do To Prepare For Iran: Adm. Stavridis 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m 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 --> 0:00:33.720 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Joining 0:00:33.800 --> 0:00:36.800 us now is Admiral James Stavridis. He is the retired 0:00:36.840 --> 0:00:40.960 former military commander of NATO Diana, the Fletcher's School of 0:00:41.080 --> 0:00:46.600 Diplomacy at Tufts University. Also a Bloomberg opinion columnist, Admiral 0:00:46.600 --> 0:00:49.559 Stefridas a pleasure always to speak with you. What is 0:00:49.600 --> 0:00:53.400 your reaction to the war of words on Twitter between 0:00:53.720 --> 0:00:58.240 the United States and Iran? I think it's worrisome, pim um. 0:00:58.280 --> 0:01:02.760 But let's take it from Pres Trump's perspective. First, he 0:01:02.880 --> 0:01:07.920 sees um kind of an angry but actually fairly stereotypical 0:01:08.840 --> 0:01:11.880 set of rhetoric coming out from Tehran. We've we've seen 0:01:12.080 --> 0:01:16.199 that kind of language from them repeatedly. And then he 0:01:16.840 --> 0:01:21.399 launches this real screed, all in caps um. I can 0:01:21.520 --> 0:01:25.479 understand the emotion of the response, but I'll tell you, 0:01:25.480 --> 0:01:27.320 you know, to put it in a movie context, we 0:01:27.400 --> 0:01:30.320 probably need less fast and furious and a little more 0:01:30.440 --> 0:01:35.480 cool hand Luke, which is to say, slow down, analyze 0:01:36.040 --> 0:01:39.240 and understand. We want to avoid getting in a war, 0:01:39.400 --> 0:01:43.440 but we do want to change Iranian behavior. Um. Finding 0:01:43.480 --> 0:01:45.360 that balance, I think it's going to be the challenge 0:01:45.400 --> 0:01:48.360 going forward. Well, what do you recommend? What would be 0:01:48.480 --> 0:01:53.560 the next thing to do? Given that the president seems 0:01:53.680 --> 0:01:57.560 to well, I mean, if you want to, you don't 0:01:58.120 --> 0:02:03.240 carry the cool hand Luke. Analogy further, Um, it's a 0:02:03.360 --> 0:02:07.320 failure to communicate between the Iron and the United States. 0:02:07.720 --> 0:02:10.600 What a nice point. Um. So I'd do five things, 0:02:10.639 --> 0:02:13.240 I think, and I'll knock them off very quickly. One, 0:02:13.320 --> 0:02:17.560 I would focus the intelligence community more dramatically, particularly in 0:02:17.560 --> 0:02:23.280 the maritime zone. Secondly, I would increase our defensive posture 0:02:23.320 --> 0:02:26.240 in the Middle East, because if this thing is gonna 0:02:26.280 --> 0:02:28.640 go hot, we're gonna need to be ready. So that's 0:02:29.120 --> 0:02:33.280 for example, missile defenses. Thirdly, I'd go out to our allies, 0:02:33.360 --> 0:02:36.840 partners and friends in the region are Sunni partners and 0:02:37.160 --> 0:02:40.600 our Israeli partners. Fourth, I'd go to NATO. I'd go 0:02:40.680 --> 0:02:43.680 to the Europeans and try and work through our current 0:02:43.680 --> 0:02:46.880 set of tensions there to get them on board. And 0:02:47.000 --> 0:02:50.239 fifth and finally, PIM, i'd get the inter agency more connected. 0:02:50.280 --> 0:02:54.000 We need c I, a Department of Justice, Department of 0:02:54.040 --> 0:02:58.200 Treasury working more closely together. UM. We need That's a 0:02:58.240 --> 0:03:01.079 long way of saying we need a strategy g not 0:03:01.360 --> 0:03:05.200 an angry Twitter burst. Do we have any evidence that 0:03:05.280 --> 0:03:09.320 these strategies work? I think we do. UM. If we 0:03:09.400 --> 0:03:13.600 look around the world. UM, our strategy worked very successfully 0:03:13.639 --> 0:03:16.760 in Colombia in defeating an insurgency. It has worked very 0:03:16.760 --> 0:03:20.200 well in the Balkans, bringing peace to a very troubled 0:03:20.240 --> 0:03:25.240 region there. I think, uh. More contemporaneously, our strategy has 0:03:25.280 --> 0:03:29.560 worked fairly well in Asia, keeping our allies working together 0:03:29.600 --> 0:03:32.520 as we put pressure on North Korea. I commend the 0:03:32.560 --> 0:03:35.160 administration for what's happening in North Korea, and I think 0:03:35.160 --> 0:03:38.000 they took a strategic approach there. I hope they do 0:03:38.080 --> 0:03:43.360 the same in Iran. You mentioned the Sunni allies Saudi Arabia. 0:03:43.680 --> 0:03:47.720 What do you believe they want to have happened? They 0:03:47.720 --> 0:03:52.040 have a very belligerent stance towards Iran. Broadly speaking, what 0:03:52.120 --> 0:03:56.360 they want is Iran to withdraw from a variety of 0:03:56.400 --> 0:04:03.320 Arab countries where they are pushing hard at Sunni populations. Iran, 0:04:03.400 --> 0:04:06.000 of course leads the Shia bloc in the region, so 0:04:06.080 --> 0:04:09.600 that is they would like to see Iran back out 0:04:09.640 --> 0:04:12.520 of Syria, back out of Lebanon, back out of Yemen, 0:04:12.960 --> 0:04:16.120 back out of trying to interfere with the kingdom itself. 0:04:16.120 --> 0:04:19.560 The Kingdom of Saudi Arabia reduce its ties with Guitar. 0:04:20.120 --> 0:04:24.520 So they see Iran as an inspansionist imperial power. They 0:04:24.560 --> 0:04:28.880 want to contain it, and under Crown Prince Muhammad bin Salomon, 0:04:29.560 --> 0:04:32.919 they will be very strong in doing so. You mentioned 0:04:32.960 --> 0:04:36.240 the maritime zone, and I of course want to mention 0:04:36.400 --> 0:04:41.279 your latest book entitled Seapower, The History and Geopolitics of 0:04:41.320 --> 0:04:46.599 the World's Oceans. When you mentioned maritime power, don't you 0:04:46.640 --> 0:04:49.520 have to think of what China wants to do. You 0:04:49.600 --> 0:04:53.039 absolutely do. And let's reflect on the fact, Pim that 0:04:53.560 --> 0:04:57.200 this region is parked almost dead center in the One Belt, 0:04:57.320 --> 0:05:01.719 one Road UH strategy that is employing in the movement 0:05:01.800 --> 0:05:05.359 of raw materials from Africa and the Middle East to 0:05:05.600 --> 0:05:09.600 them and the return flow of finished goods. So this 0:05:09.800 --> 0:05:12.480 in my view would be an area in which attempting 0:05:12.720 --> 0:05:16.919 cooperation with China might prove fruitful. China does not have 0:05:17.040 --> 0:05:21.919 preconceived notions about its relationships with Iran, and it is 0:05:21.960 --> 0:05:24.919 in China's interests and in the United States interest to 0:05:25.040 --> 0:05:28.680 keep uh that maritime flow of goods going back and forth, 0:05:28.800 --> 0:05:34.200 especially out of the Arabian Gulf. Who or what entity 0:05:34.279 --> 0:05:39.000 inside of NATO do you believe will respond positively if 0:05:39.040 --> 0:05:42.719 we want to improve that relationship to help in these 0:05:42.760 --> 0:05:45.840 issues regarding the Middle East. You know, at the moment 0:05:46.440 --> 0:05:49.160 relations between the United States and the rest of our 0:05:49.279 --> 0:05:53.920 NATO allies are quite low. Let's be honest, we had 0:05:54.000 --> 0:05:58.960 a bad summit. Um, there was finger pointing both ways. UM. 0:05:59.000 --> 0:06:01.839 I think the President is right to press on the 0:06:01.839 --> 0:06:05.200 European allies to increase their defense spending. But I do 0:06:05.320 --> 0:06:08.840 think that they have a point that Um, if they 0:06:08.880 --> 0:06:11.520 are going to go forth and operate with the United 0:06:11.560 --> 0:06:13.680 States around the world, they want to do that in 0:06:13.680 --> 0:06:16.680 a spirit of cooperation, which didn't feel like it was 0:06:16.760 --> 0:06:19.800 forthcoming at the summit in Brussels. So I think there's 0:06:19.800 --> 0:06:22.480 some fence mending to do on both sides in terms 0:06:22.480 --> 0:06:25.719 of who we're closest to, who can help us the most, 0:06:25.760 --> 0:06:29.280 it would be the United Kingdom within the Alliance UM, 0:06:29.520 --> 0:06:33.880 and we have to hope that we improve our relations, 0:06:33.880 --> 0:06:37.839 particularly with Germany, which is a significant actor both within 0:06:37.920 --> 0:06:41.720 the EU and within NATO, and that relationship is in 0:06:41.880 --> 0:06:46.240 bad shape right now. Well in that vain. The summit 0:06:46.279 --> 0:06:49.640 in Brussels was followed by the summit in Helsinki. What 0:06:49.880 --> 0:06:54.120 is your reaction, what is your analysis? Um, the summit 0:06:54.200 --> 0:06:57.240 in Helsinki was a major misstep by the President of 0:06:57.279 --> 0:07:00.440 the United States, and I think that's pretty well validated 0:07:00.480 --> 0:07:05.800 across the political spectrum. The problem was UM less about 0:07:06.160 --> 0:07:11.160 the fundamental idea of talking to Russia. I believe we should. 0:07:11.280 --> 0:07:13.920 I think we should confront Russia where we must, but 0:07:14.040 --> 0:07:16.560 cooperate wherever we can. We don't want to stumble back 0:07:16.560 --> 0:07:21.160 into a Cold war. But the problem was the atmospherics, 0:07:21.440 --> 0:07:25.080 the sense that our president was taking the side of 0:07:25.120 --> 0:07:29.280 Vladimir Putin over the intelligence community, and I think above 0:07:29.320 --> 0:07:34.080 all a kind of refusal to fully admit Russia's intrusion 0:07:34.160 --> 0:07:38.720 into our election, which is a fundamental UM violation of 0:07:38.760 --> 0:07:43.760 international law by Russia. So atmospherically didn't work, particularly coming 0:07:43.800 --> 0:07:48.280 on the heels of the twelve indictments of Russian intelligence operatives. 0:07:49.600 --> 0:07:52.920 The overall idea of working with Russia does make sense. 0:07:53.160 --> 0:07:55.080 We've got to leave it there, Thank you very much. 0:07:55.320 --> 0:07:58.520 Admiral James Stavridis, Dina the Fletcher School of Law and 0:07:58.560 --> 0:08:02.000 Diplomacy and the author of Power, The History and Geopolitics 0:08:02.000 --> 0:08:21.800 of the World's Oceans. Currency manipulation, the dollar, China, the 0:08:21.840 --> 0:08:26.320 Federal Reserve all come into focus of Vincent Signerella, are 0:08:26.440 --> 0:08:30.400 global macro strategist for Bloomberg News, joins us here in 0:08:30.600 --> 0:08:35.080 studio to figure this all out. All right, Vincent, what 0:08:35.360 --> 0:08:40.120 is going on with US officials talking down the dollar, 0:08:40.480 --> 0:08:44.800 talking up the dollar? Who are we to believe? I 0:08:45.080 --> 0:08:46.960 think you're gonna stick with Minuchin on this one. I 0:08:46.960 --> 0:08:49.480 think Trump's just firing a couple off the off the 0:08:49.480 --> 0:08:52.760 bow basically, just to get everyone a little nervous. He's 0:08:52.920 --> 0:08:56.280 very upset with Germany. So when he says the Europeans, 0:08:56.840 --> 0:09:00.000 he's really speaking about Germany. Uh, in terms of trade 0:09:00.120 --> 0:09:03.160 with Germany, we have a big deficit. So he when 0:09:03.200 --> 0:09:06.680 he's that all automobiles a big part of it as automobiles. 0:09:06.679 --> 0:09:09.080 But at the same time, I mean, it's uh, it's 0:09:09.200 --> 0:09:13.559 very specific machinery. Germany specializes in very high tech machinery, 0:09:13.640 --> 0:09:16.760 especially in the surgical space, so we we do have 0:09:16.840 --> 0:09:19.559 this broad deficit with Germany. He throws the Europeans all 0:09:19.640 --> 0:09:23.480 under the bus with it with the same stroke um, 0:09:23.559 --> 0:09:26.600 but at the same time, the Euros eighteen it's not 0:09:26.640 --> 0:09:31.760 doing anything. So I would look past any criticism of 0:09:31.800 --> 0:09:35.600 Europe and realize that this is specifically aimed at China. 0:09:36.000 --> 0:09:37.760 But is this is wait a second, but before we 0:09:37.800 --> 0:09:40.880 get to China, is this bus going to get more expensive? 0:09:41.400 --> 0:09:43.520 Which what do you mean the bus that if you 0:09:43.640 --> 0:09:47.160 want to import an automobile from Germany, is that going 0:09:47.200 --> 0:09:49.280 to get more expensive? My guess is at the end 0:09:49.280 --> 0:09:52.240 of the day, we'll reach an accord, especially on autos 0:09:52.280 --> 0:09:56.520 with the Europeans. It's a big business and he's getting 0:09:56.520 --> 0:09:59.040 a lot of pressure from the United States manufacturers as well, 0:09:59.080 --> 0:10:00.920 so I think they're gonna come together on that one. 0:10:01.160 --> 0:10:04.079 It's the same kind of squawking we hear about NAFTA. 0:10:04.280 --> 0:10:07.640 Eventually NAFTA will come back around. To believe that will happen. 0:10:07.679 --> 0:10:09.280 I believe it will happen. It's just going to take 0:10:09.280 --> 0:10:10.600 a little bit of time and a little bit and 0:10:10.600 --> 0:10:13.080 we're gonna see these gyrations in the market. Okay, because 0:10:13.080 --> 0:10:17.480 we've got John Claude Junker. I believe he's tending the 0:10:17.480 --> 0:10:21.559 White House. This is going to be really he's kind 0:10:21.559 --> 0:10:23.439 of lost some credibility on the street, to be honest, 0:10:23.480 --> 0:10:25.280 So it would be very interesting to see what he says. 0:10:25.400 --> 0:10:28.439 We'll explain that. Well, he's gone off over the years 0:10:28.440 --> 0:10:32.240 and in really odd, almost Trump like statements, so that 0:10:32.320 --> 0:10:34.880 the markets have like sort of pulled back and and 0:10:34.880 --> 0:10:37.520 and not reacted so much to what he's had to say. 0:10:37.760 --> 0:10:39.360 We're not you know, if you if you look at 0:10:39.360 --> 0:10:41.359 it in the sense it's like who is he really representing? 0:10:42.200 --> 0:10:44.280 He's going to the White House on Wednesday, all right. 0:10:44.600 --> 0:10:48.080 The move to China, China on what I would like 0:10:48.160 --> 0:10:50.520 to really really stress is this is not a currency war. 0:10:50.679 --> 0:10:53.280 This is not China trying to devalue the currency and 0:10:53.360 --> 0:10:56.560 take it back a few steps. When when Bernanke did 0:10:57.240 --> 0:11:00.400 q E and we were accused and he was accused 0:11:00.400 --> 0:11:03.000 of starting a currency war, what he was doing was 0:11:03.080 --> 0:11:06.360 keeping interest rates low, flattening the curve because of worries 0:11:06.360 --> 0:11:10.520 about the economy. China has some substantial worries about the economy, 0:11:10.559 --> 0:11:14.520 They've seen increased corporate defalse. They had a massive liquidity 0:11:14.679 --> 0:11:18.760 issue that they've just again once again did a big 0:11:18.840 --> 0:11:22.760 medium term lending facility to add to this liquidity. Whenever 0:11:22.800 --> 0:11:25.200 a central bank does a big add you see a 0:11:25.200 --> 0:11:29.040 currency weaken, so that the China's you and by default, 0:11:29.120 --> 0:11:31.840 is weakening. But it's not their aim to weaken the 0:11:31.880 --> 0:11:35.080 currency to be a pain to Trump, although he will 0:11:35.120 --> 0:11:38.480 point to that they're really pointing towards trying to to 0:11:38.679 --> 0:11:41.920 STI is a domestic issue for them, purely a domestic issue, 0:11:42.200 --> 0:11:45.240 purely liquidity issue, and it's a worry. I mean, if 0:11:45.280 --> 0:11:48.160 if you're an emerging market investor, this is a big, 0:11:48.200 --> 0:11:51.080 big worry. China's growth has been slowing and for them 0:11:51.120 --> 0:11:54.720 to to put this much money into the system is 0:11:54.760 --> 0:11:57.400 a is a real wake up call for emerging markets. 0:11:57.440 --> 0:12:00.960 It should be UM. We've seen some appreciation and emerging 0:12:00.960 --> 0:12:04.520 market currencies, but to my look, we have a lot 0:12:04.559 --> 0:12:07.360 more to go if this becomes a major economic issue 0:12:07.400 --> 0:12:10.840 for China. What is the Vincent Signarella chart tell you 0:12:11.120 --> 0:12:17.920 about the future of EM currencies such as Brazil, Russia, India. 0:12:18.200 --> 0:12:20.520 I think EM is gonna stay under the gun. I 0:12:20.559 --> 0:12:23.400 think we're going to see Trump continue this pressure through 0:12:23.440 --> 0:12:26.160 the midterm elections in November. This plays well to his 0:12:26.200 --> 0:12:30.400 political base. Even if there's short term pain for US manufacturers, 0:12:30.800 --> 0:12:32.839 which is in this rust belt, in the place he's 0:12:32.880 --> 0:12:35.520 trying to aim at. From a political standpoint, there's a 0:12:35.760 --> 0:12:38.280 there's a great deal of long term support and a 0:12:38.320 --> 0:12:41.560 great deal of play that he gets out of that. Um, 0:12:41.559 --> 0:12:43.560 it doesn't have a lot else to hang his hat on, 0:12:43.960 --> 0:12:45.800 you know, other than I mean he's got tax cuts 0:12:45.800 --> 0:12:48.080 as well, So we may see another round of tax 0:12:48.120 --> 0:12:51.720 cuts hit the US before November. But in and in 0:12:51.760 --> 0:12:54.680 the end, that should keep the dollar a little bit alive. 0:12:54.760 --> 0:12:57.240 It should see pressure in the UM. Do you look 0:12:57.240 --> 0:13:00.680 at the price of copper? I do. What does the 0:13:00.760 --> 0:13:05.400 price of copper which has been yeah, falling, un volatile 0:13:05.480 --> 0:13:08.520 and following yes, what does that tell you about let's 0:13:08.559 --> 0:13:11.840 say the economy of a place like Australia. Well, I 0:13:11.880 --> 0:13:14.600 think what it says again, um, what's going on with 0:13:14.679 --> 0:13:17.600 the China situation and how that impacts Australia and then 0:13:17.600 --> 0:13:22.400 eventually obviously copper. If these are the the the base 0:13:22.480 --> 0:13:25.600 metals that feed into production, and when you have the 0:13:25.600 --> 0:13:29.880 the main buyer of those products stumbling a bit, then 0:13:30.120 --> 0:13:33.160 the input to that main product stumbles, and that's what 0:13:33.200 --> 0:13:34.959 we've been seeing in copper, and we're also seeing any 0:13:34.960 --> 0:13:38.880 Australian dollar. What's the biggest mistake that you see currency 0:13:38.960 --> 0:13:43.840 traders make in an environment like this? Reacting to the 0:13:43.880 --> 0:13:46.679 immediate news, we saw something hit the markets this morning 0:13:46.720 --> 0:13:51.079 about how Mexico's economy minister says we're going to aim 0:13:51.600 --> 0:13:54.040 to get an after done by the end of August. 0:13:55.440 --> 0:13:58.360 Paso strengthened immediately off of that, a couple of big 0:13:58.400 --> 0:14:02.160 figures told news he actually said that yesterday. Um. And 0:14:02.200 --> 0:14:04.520 then the piece of immediately weakens when everybody wakes up, 0:14:04.600 --> 0:14:06.360 or actually I squawked it and said, by the way, 0:14:06.360 --> 0:14:09.720 this is yesterday's news. Uh, and then it immediately turned around. 0:14:10.960 --> 0:14:13.520 The odds of getting NAFTA done by August are really 0:14:13.559 --> 0:14:16.520 really tight. And then the bigger picture is, even if 0:14:16.520 --> 0:14:18.720 we get an agreement of sorts, needs to be ratified 0:14:18.720 --> 0:14:21.640 by Congress, which at this point unlikely to get done 0:14:21.640 --> 0:14:24.520 in two thousand and eighteen. So even if we had 0:14:24.240 --> 0:14:27.400 a agreement at arms length, we still need to go 0:14:27.400 --> 0:14:30.960 through the congressional process. Not happening this year, So reacting 0:14:30.960 --> 0:14:33.400 to news like that is always going to come back 0:14:33.440 --> 0:14:37.040 to buy two ten seconds. Tell people how they can 0:14:37.120 --> 0:14:40.600 follow you on Squawk. If you have a Bloomberg terminal 0:14:40.920 --> 0:14:44.000 and you're just type esquq, you you'll see a launch 0:14:44.000 --> 0:14:46.640 bad come up for a Squawk go and what we'll 0:14:46.640 --> 0:14:49.520 do is we will speak live breaking news. Uh down 0:14:49.520 --> 0:14:53.200 your terminal. Thanks very much, Thank you, Vincent Signarella, Global 0:14:53.280 --> 0:15:14.720 macro strategist for Bloomberg News. Well, one of Colorado's largest 0:15:14.800 --> 0:15:20.160 recreational pot companies is planning to bring Willie Nelson's marijuana 0:15:20.200 --> 0:15:24.360 brand to Canada and then go public in Toronto. Here 0:15:24.400 --> 0:15:27.560 to tell us about raising capital in the cannabis industry 0:15:27.640 --> 0:15:31.880 is Kevin Murphy. He's the chief executive of Acredge Holdings. 0:15:32.200 --> 0:15:34.920 Kevin Murphy, thanks very much for being with us. Tell 0:15:35.000 --> 0:15:39.680 us about Acreage Holdings and your capital raise and what 0:15:39.840 --> 0:15:43.200 that tells you about the appetite that investors have for 0:15:43.200 --> 0:15:47.080 the industry. Bamn and Lisa, thanks so much for having 0:15:47.080 --> 0:15:51.440 me on the show. And uh. Acreage Holdings today is 0:15:51.480 --> 0:15:56.440 the largest US cannabis provider UM now with thirteen states 0:15:56.440 --> 0:16:01.000 and to be fifteen states. UM I'll our footprint covers 0:16:01.040 --> 0:16:04.560 a hundred and fifty million people in this country, and 0:16:05.200 --> 0:16:10.720 our goal is to raise enough capital to be an 0:16:10.800 --> 0:16:13.880 aggregator into space. And this would be the last round 0:16:13.880 --> 0:16:17.240 of financing that we will do before accessing the public 0:16:17.280 --> 0:16:19.800 markets here in the fall. All right, before we get 0:16:19.840 --> 0:16:27.640 to the public markets, Acreage owns cultivation, processing, and dispensary operations. Correct, 0:16:28.040 --> 0:16:31.240 that is correct. We are vertically integrated in every state, 0:16:31.880 --> 0:16:36.200 um or striving to be vertically integrated in in every state. 0:16:36.600 --> 0:16:40.320 But you are absolutely correct. We control the entire um 0:16:40.560 --> 0:16:43.720 the life cycle of the plant from seed to dispensary. 0:16:43.880 --> 0:16:47.720 And on your advisory board you have former Massachusetts Governor 0:16:47.840 --> 0:16:51.280 William Weld as well as former House Speaker John Bayner. 0:16:52.000 --> 0:16:54.520 That is correct. We couldn't be more proud to have 0:16:55.080 --> 0:16:58.680 those two gentlemen standing shoulder to shoulder with us at Acreage. 0:16:59.400 --> 0:17:02.640 Why if you could raise a quarter billion dollars, two 0:17:02.680 --> 0:17:06.000 hundred and fifty million, why did you then just raise 0:17:06.600 --> 0:17:10.680 a hundred nine million. Well, we had initially sit out 0:17:10.720 --> 0:17:13.960 to raise fifty million dollars, but we had so much 0:17:14.040 --> 0:17:18.080 enthusiasm for the raise that we ended up raising as 0:17:18.160 --> 0:17:21.080 much as a hundred and nineteen million dollars, which is 0:17:21.119 --> 0:17:25.560 the largest rays ever done in the United States for cannabis. 0:17:26.560 --> 0:17:31.080 We also anticipate raising additional capital in the fall, and 0:17:31.160 --> 0:17:33.679 so we wanted to leave a little bit room in 0:17:33.800 --> 0:17:39.440 order to do another financing this year. Now you intend 0:17:39.520 --> 0:17:45.600 to launch on the Canadian Securities Exchange. Why in Canada, Well, 0:17:45.600 --> 0:17:49.240 that is correct, and we go where every we are welcome, 0:17:49.440 --> 0:17:52.920 and today the Canadians are with open arms welcoming us 0:17:53.520 --> 0:18:01.080 um to the Canadian Exchange. In Canada, it is federally legal. Unfortunately, 0:18:01.119 --> 0:18:05.520 in the United States, cannabis is still a Schedule one drug, 0:18:05.600 --> 0:18:10.240 which is defined by having no medicinal value. Now that 0:18:10.359 --> 0:18:13.920 would preclude us from being on the New York Stock 0:18:13.960 --> 0:18:17.879 Exchange or the NASDAC, but we do hope soon to 0:18:17.960 --> 0:18:20.840 be able to list on one or the other here 0:18:20.840 --> 0:18:27.280 in the US. What kind of financial gain are let's say, 0:18:27.320 --> 0:18:32.560 taxpayers missing out on by having the federal government still 0:18:32.600 --> 0:18:40.040 regard cannabis as a Schedule one drug. This business, in 0:18:40.160 --> 0:18:43.440 this industry is estimated to be by two thousand and 0:18:43.520 --> 0:18:49.159 twenty five one hundred billion dollars in size. Compared to 0:18:49.240 --> 0:18:55.520 other consumables. It is a very very large marketplace. We 0:18:56.040 --> 0:19:02.159 at acreage, advocate for a banking, we advocate to pay taxes, 0:19:02.400 --> 0:19:05.520 and at the end of the day, I believe that 0:19:05.560 --> 0:19:10.800 it could have a major impact on um this country's 0:19:11.040 --> 0:19:14.240 opay crisis. We'd love to be taxed and have a 0:19:14.320 --> 0:19:17.680 lot of those tax dollars go to reducing opiate use 0:19:17.720 --> 0:19:23.480 in this country. That tax revenue is currently unavailable to 0:19:24.000 --> 0:19:30.080 the federal government. What is holding this up the fact 0:19:30.119 --> 0:19:33.600 that it's a Schedule one drug today again being defined 0:19:33.640 --> 0:19:38.760 as having no additional value. And at the end, we 0:19:38.880 --> 0:19:44.000 believe that this drug needs to be de scheduled. The 0:19:44.000 --> 0:19:47.959 majority of this country believes that cannabis should be legal, 0:19:48.080 --> 0:19:53.240 and we're hopeful that Congress will essentially vote with their 0:19:53.280 --> 0:19:56.399 constituents to make that a reality, and we believe it's 0:19:56.400 --> 0:19:59.639 going to happen sooner than later. Just give you a 0:19:59.720 --> 0:20:04.600 thirty seconds. Does it strike you as ironic that cigarettes 0:20:04.680 --> 0:20:08.520 and alcohol are legally sold in the United States and 0:20:08.640 --> 0:20:14.680 tax but cannabis isn't. Every industry goes through a change, 0:20:14.680 --> 0:20:17.879 and we believe that the change is now for cannabis. 0:20:18.080 --> 0:20:22.320 We've seen prohibition in this country with alcohol, and from 0:20:22.400 --> 0:20:26.840 our vantage point, we are on the cusp of sea change. 0:20:27.320 --> 0:20:32.360 And with Speaker Banker being a naysayer historically and now 0:20:32.440 --> 0:20:35.080 having the courage to change his mind, we believe others 0:20:35.119 --> 0:20:38.080 will as well. And that's why we believe we're well 0:20:38.119 --> 0:20:41.919 positioned to be a dominant force in the cannabis space 0:20:42.600 --> 0:20:47.280 when it is federally illegal to us. It's not an if, 0:20:47.640 --> 0:20:52.440 it's a matter of when. Kevin Murphy, Chief Executive Acreage Holdings. 0:20:52.720 --> 0:20:56.080 They've raised nearly a hundred and twenty million dollars in 0:20:56.119 --> 0:20:59.720 their latest financing round, with plans to go public at 0:20:59.720 --> 0:21:18.160 the of the year in Canada. This is Bloomberg Markets. 0:21:18.200 --> 0:21:22.040 I'm pim Fox. My next guest knows all about the 0:21:22.080 --> 0:21:26.160 modern economy in a world where everything can be copied. 0:21:26.160 --> 0:21:30.000 In other words, control C control V. We all know 0:21:30.080 --> 0:21:32.280 about it, but how do you deal with it? He 0:21:32.400 --> 0:21:35.200 is Howard You. He is the legal Professor of Management 0:21:35.200 --> 0:21:38.320 and Innovation at the I M d School of Business 0:21:38.480 --> 0:21:42.560 in Switzerland, and his new book is called Leap How 0:21:42.600 --> 0:21:46.400 to Thrive in a World where Everything can be Copied? 0:21:46.640 --> 0:21:49.199 How are you? Thank you very much for being with us. 0:21:49.359 --> 0:21:51.359 Maybe you could just start off by telling us a 0:21:51.359 --> 0:21:55.119 little bit about why you decided to write this book. 0:21:55.640 --> 0:21:58.960 In many ways. The book concept really came from my 0:21:59.160 --> 0:22:03.960 conversation of executive and manager home I had run conferences 0:22:04.040 --> 0:22:06.639 and workshop and one of the key topic, or one 0:22:06.680 --> 0:22:09.400 of the biggest complaint they always have. They would say, 0:22:09.480 --> 0:22:13.320 my product is getting commoditized, meaning they find it very, 0:22:13.440 --> 0:22:16.520 very hard to differentiate in marketplace. They subject to all 0:22:16.600 --> 0:22:19.840 kinds of pricing pressure, and whenever they launch or introduce 0:22:19.920 --> 0:22:23.800 a new type of innovation, those product features get copy overnight, 0:22:24.359 --> 0:22:27.679 and so that becomes the crux or the thrust for 0:22:27.800 --> 0:22:32.440 me to dive into this inquiry. Now, as you decided 0:22:32.480 --> 0:22:35.280 that this was a focus of attention, did you notice 0:22:35.320 --> 0:22:37.760 that this is an issue that had been going on 0:22:37.920 --> 0:22:40.080 for a very long time. I mean, we may think 0:22:40.359 --> 0:22:42.919 that this is just something to do with technology, but 0:22:43.040 --> 0:22:45.960 you know, you go back even to let's say the 0:22:46.600 --> 0:22:50.240 founding of the United States and and the industrialization of 0:22:50.280 --> 0:22:53.440 the United States. UH, factories in the U S were 0:22:53.480 --> 0:22:58.720 copying European goods even then. Absolutely, I thought that's pretty 0:22:58.760 --> 0:23:02.639 much a contemper phenomena. But as I died dig into 0:23:02.800 --> 0:23:06.919 the historical past, it turns out things getting copy was 0:23:06.960 --> 0:23:12.440 a repeated complaint across era, across industry, across continent as well. 0:23:12.800 --> 0:23:15.480 In fact, once a point in time in Switzerland there 0:23:15.560 --> 0:23:19.399 is no pattern law for chemistry or chemical product. So 0:23:19.600 --> 0:23:23.320 in the land of counterfeat the Swiss were basically copying 0:23:23.320 --> 0:23:27.600 the German to produce drugs, and that had historically two 0:23:28.080 --> 0:23:32.639 years ago the biggest complained by the German drug manufacturer. Well, 0:23:32.920 --> 0:23:36.640 let's talk about leap and what did you discover? How 0:23:36.800 --> 0:23:41.399 can companies deal with copying in an age where it 0:23:41.520 --> 0:23:45.440 is as simple as a control C movement on the keyboard. Yeah, 0:23:45.440 --> 0:23:49.880 in many ways, executive always dream about building up a 0:23:49.880 --> 0:23:54.719 competitive possessioning that they could stay away from global competition. 0:23:55.200 --> 0:23:58.280 That turned out to be pretty much a mirage. In 0:23:58.320 --> 0:24:03.639 many ways, competition is almost like mountaineering. So the pioneering 0:24:03.680 --> 0:24:06.639 company would try to reach the mountain peak and the 0:24:06.760 --> 0:24:11.000 lake comer would also try to reach the same altitude. Now, 0:24:11.640 --> 0:24:16.080 when the knowledge underpinning the industry stays tgnate, the lake 0:24:16.119 --> 0:24:19.720 comers sooner or later would reach the same height. No 0:24:19.920 --> 0:24:23.800 value proposition can stay unique forever. No blue ocean can 0:24:23.880 --> 0:24:28.159 stay blue forever. Eventually blue ocean turn red. What I 0:24:28.240 --> 0:24:32.560 discover is pioneering company can play a different game. They 0:24:32.560 --> 0:24:35.840 can leap from one knowledge discipline to the next and 0:24:35.920 --> 0:24:39.239 then the next. And when the underlying knowledge of an 0:24:39.280 --> 0:24:44.520 industry continued continue to leap forward. Then climbing the mountain 0:24:44.880 --> 0:24:48.440 is as if there's constant mudslide pushing everyone down. In 0:24:48.480 --> 0:24:51.840 that scenario, it turns out it's the most experience, the 0:24:51.920 --> 0:24:55.720 most pioneering company stand a better chance to stay on 0:24:55.800 --> 0:24:58.840 top of competition. Can you give us some examples of 0:24:58.960 --> 0:25:02.480 companies that are able to do this? Sure? Um. One 0:25:02.520 --> 0:25:04.479 of the prime examples I use in the book is 0:25:04.520 --> 0:25:08.919 the pharmaceutical industry I briefly mentioned earlier. So it turns 0:25:08.920 --> 0:25:12.800 out in the beginning of the pharmaceutical industry two years ago, 0:25:13.400 --> 0:25:17.000 everyone come up with new drugs based on organic chemistry. 0:25:17.400 --> 0:25:19.960 The first blockbuster in the world is in fact called 0:25:20.000 --> 0:25:23.280 ant hip hiring is a fever reducing drugs, and it 0:25:23.359 --> 0:25:27.160 is this chemist making chemical die for the textile industry 0:25:27.359 --> 0:25:32.280 discovered this municipal medicinal benefit to to solve human issues. 0:25:32.840 --> 0:25:37.240 Now you might remember after people talk about Alexander Flaming 0:25:37.440 --> 0:25:42.080 who discover peninsillin the first an hipolytics roughly around the 0:25:42.119 --> 0:25:44.600 Second World War. So after the Second World War, all 0:25:44.640 --> 0:25:49.440 the pharmaceutical industry moved from the study of chemistry to microbiology. 0:25:49.720 --> 0:25:52.919 They want to find out the more potent fungus, to 0:25:53.119 --> 0:25:55.320 find out the next pay dirt, to find out the 0:25:55.359 --> 0:25:59.119 more potent ant hibiotics. So the knowledge discipline really moved 0:25:59.119 --> 0:26:02.880 from organic cam street to the study of microbiology. Today 0:26:03.119 --> 0:26:06.600 it's all about genomics and DNA and genetics. So looking 0:26:06.720 --> 0:26:10.600 back to the long history of pharmaceutical industry, the salient 0:26:10.760 --> 0:26:14.320