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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots Podcast.

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Speaker 2: I'm Joe Wisenthal.

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Speaker 3: And I'm Tracy Alloway.

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Speaker 2: Tracy, have you tried a zin yet?

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Speaker 3: No, I've resisted. Multiple people, including you, have offered me

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Speaker 3: zin's before, and I have so far resisted the temptation.

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Speaker 3: But I don't know how long I'm going to be

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Speaker 3: able to hold out.

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Speaker 2: For those who don't, I guess there are some There

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Speaker 2: might be some people who don't know what a zin is. Actually,

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Speaker 2: it occurs to me. It's a little pouch that people

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Speaker 2: put under their lip on their gum, and it's filled

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Speaker 2: with tobacco free nicotine salt. So it's sort of a

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Speaker 2: smoking alternate or even a vaping alternative, And so people

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Speaker 2: like who want nicotine can get it that way. But

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Speaker 2: there's also like this big culture of it, like zen

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Speaker 2: memes are everywhere now.

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Speaker 3: Yes, and there have been times where it's been really

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Speaker 3: hard to find them. Right, So, first of all, they're

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Speaker 3: made by Philip Morris, is my understanding. But then secondly,

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Speaker 3: sales have jumped like I can't remember the exact timeframe,

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Speaker 3: hundreds and yeah, and so there have been shortages of

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Speaker 3: this product, and if you go, you know, online, on

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Speaker 3: certain subreddits in places like that, you can see people

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Speaker 3: actively trying to find where they can get Zen's. There's

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Speaker 3: also a lot of other nicotine delivery products nowadays too.

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Speaker 3: There's obviously the vapes and elf bars. I had a

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Speaker 3: this is a slight aside, I had a green tea

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Speaker 3: flavored vape type thing.

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Speaker 2: Yeah, it was.

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Speaker 3: Great, and it made me feel so healthy. It's the

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Speaker 3: only nicotine product that actually made me feel healthy.

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Speaker 2: Do you remember, you know, speaking of nicotine and I'm

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Speaker 2: fascy by nicotine. It always sort of goes in waves.

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Speaker 2: I see cigarettes once again. I go to parties sometimes

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Speaker 2: a lot of people are smoking. Do you remember the

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Speaker 2: episode we did with Larry Hamptil years ago about Yeah,

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Speaker 2: so he made an observation about the history of nicotine

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Speaker 2: that like there was some Russian czar and like the

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Speaker 2: fifteen hundreds or something like that, ye who threatened to

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Speaker 2: cut off the noses of anyone who consumed tobacco. And

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Speaker 2: I guess that didn't work. But it really shows that,

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Speaker 2: you know, you have these like crackdowns and people get

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Speaker 2: really anti nicotine consumption, but it really just doesn't go

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Speaker 2: away like nicotine. It's Lindy nicotine consumption.

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Speaker 3: I feel like we should just caveat this entire conversation,

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Speaker 3: or at least I should.

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Speaker 2: With you know, don't do drugs, folks.

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Speaker 3: I do not endorse nicotine consumption. However, everything in the

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Speaker 3: world is relative and on a continuum, and I can say,

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Speaker 3: you know, when I was in high school in Japan,

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Speaker 3: I used to smoke clove cigarettes. Like there were days

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Speaker 3: where I would smoke like a whole pack of clothes,

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Speaker 3: which is just insane when I think about it now,

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Speaker 3: and so certainly relative to a pack of clothes, I

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Speaker 3: feel better about some of these new nicotine products. The

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Speaker 3: one that I kind of like, and we're going to

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Speaker 3: talk about it now, is the gum.

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Speaker 2: Yes, right, because Nicorette has existed for a while, but

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Speaker 2: now we're seeing that more and more companies are doing

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Speaker 2: it with different flavors and stuff like that. We are

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Speaker 2: truly again, nicotine is definitely having a moment right now.

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Speaker 3: Yes, and beyond personal preferences and consumption, it is just

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Speaker 3: a really interesting business. So there are these new products

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Speaker 3: being developed and sales of them have exploded in recent years.

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Speaker 3: But then secondly, in the background. As with all nicotine

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Speaker 3: and tobacco products, there's always the regulatory threat and what

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Speaker 3: policymakers actually decide to do about these things, and the

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Speaker 3: health considerations and things like that. So it's just a

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Speaker 3: interesting industry to observe and talk about totally.

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Speaker 2: And you know, you mentioned the Zin shortages, which are

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Speaker 2: real because I've gone into stories and they just like

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Speaker 2: don't have any et cetera. But there are all these

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Speaker 2: other like ZIN competitors. There's Zemo, there's Zalt, there's Rogue,

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Speaker 2: there's they have in them. Right, my guess would be

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Speaker 2: will Zen exists, and so let's come up with a

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Speaker 2: name that's sort of But anyway, we're going to be

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Speaker 2: speaking with the CEO and co founder of yet another

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Speaker 2: one of these nicotine pouches, because I want to actually

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Speaker 2: understand how this business really works. And in fact, it's

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Speaker 2: the company that makes the gum that you like.

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Speaker 3: Yeah, so the gum. The reason I found it is

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Speaker 3: actually because you gave me a sort of industrial quantity

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Speaker 3: of it for some reason, and so I have it

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Speaker 3: stored in a drawer at home, and uh, yeah, by

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Speaker 3: all accounts, it's s seem to be increasing and so

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Speaker 3: it is very emblematic of this new era of nicotine products,

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Speaker 3: and we should talk more about what that business actually

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Speaker 3: looks like.

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Speaker 2: I am very excited. We have indeed the perfect guest

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Speaker 2: we are going to be speaking with, John Coogan. He

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Speaker 2: is the co founder of Lucy Nicotine, which is one

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Speaker 2: of these ZIN competitors. They make the pouches, they make gums,

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Speaker 2: they make something called breakers, which I don't really know

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Speaker 2: what that is. I haven't tried it yet, maybe we'll learn.

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Speaker 2: And they've been around since twenty sixteen, so long before

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Speaker 2: the Internet, this Internet became flooded with memes about all

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Speaker 2: of this stuff. He was early on the bandwagon, so

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Speaker 2: to speak, or before there was even a bandwagon. And

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Speaker 2: we're going to understand how this business actually works and

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Speaker 2: why so many people are consuming this stuff. So John,

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Speaker 2: thank you so much for coming on odd.

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Speaker 4: Lots, Thanks for having me.

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Speaker 2: On what is nicotine culture.

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Speaker 4: Nicotine culture has evolved a lot, but right now, I mean,

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Speaker 4: I think the Z internet is great portmanteau to describe it.

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Speaker 4: It's certainly become a little fratty, a little broie, but

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Speaker 4: that doesn't actually capture the broader nicotine user because there

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Speaker 4: are millions and millions of nicotine users, and the average

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Speaker 4: smoker is, you know, a gen xer or boomer, and

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Speaker 4: they are definitely not posting zen memes on Instagram. But

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Speaker 4: that's certainly what's driving this new wave of consumers moving

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Speaker 4: down the continuum of risk and moving away from cigarettes,

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Speaker 4: which I see as a very positive thing.

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Speaker 3: So, speaking of Bros, you co founded Soilent before co

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Speaker 3: founding Lucy, and I always thought of Soilent as the

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Speaker 3: sort of I think someone wrote this at some point,

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Speaker 3: but the slim fast for men? What was it about?

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Speaker 3: What was it about nicotine products that attracted you to

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Speaker 3: that space? You know, going from a company like Soilent

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Speaker 3: and starting something new.

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Speaker 4: It was a few things. So with Soilent, we just

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Speaker 4: kind of stumbled into it. We were actually running out

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Speaker 4: of money and hungry, and we needed a meal replacement

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Speaker 4: to kind of help us stay healthy and provide for

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Speaker 4: our food needs, and so we just kind of made

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Speaker 4: this product. It went viral because we wrote this very

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Speaker 4: edgy blog post about how our CEO quit eating food

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Speaker 4: for thirty days straight and lived on this er members exclusively. Yeah. Yeah,

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Speaker 4: And so it was the ultimate stress test. And so

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Speaker 4: even though we were a new company, and we couldn't

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Speaker 4: show that, oh we had one hundred thousand people consume

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Speaker 4: our product, they all liked it. We were able to

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Speaker 4: show that one person was able to consume it in

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Speaker 4: the extreme, and so if this one guy can can

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Speaker 4: use this product for thirty days straight, you can probably

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Speaker 4: have it for you know, launcher and after snack, and

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Speaker 4: so it went very viral. It was very controversial. But

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Speaker 4: what we learned was that the market for meal replacement

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Speaker 4: shakes and protein shakes was not oligopolistic or monopolistic in

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Speaker 4: any way. We actually kind of learned this in a

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Speaker 4: pitch with Peter Teel where we went in to present

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Speaker 4: the company and he kind of laid out how the

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Speaker 4: market would evolve and explain to us that this would

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Speaker 4: be a potentially a very good business, but not a

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Speaker 4: venture backable business. Of course, we wound up not taking

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Speaker 4: his advice and raising a bunch of venture money and

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Speaker 4: the company didn't do that well because of that. But

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Speaker 4: we learned that it was much more important if we

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Speaker 4: were going to be consumer products entrepreneurs to go into

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Speaker 4: products that had moats. So in the nicotine space, there's

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Speaker 4: a pretty significant regulatory mote, yeah, and also take things

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Speaker 4: much slower. So we've been in business for eight years now,

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Speaker 4: raised a lot less money, were much more profitable, much

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Speaker 4: more cash flow positive, and we're trying to accumulate more

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Speaker 4: brand power, more market power, more moats and that's really

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Speaker 4: what motivated us. Of course, there was also the personal need.

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Speaker 4: My co founder was quitting smoking. He didn't like any

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Speaker 4: of the alternatives. It's kind of the classic story that

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Speaker 4: you see in this in this category. And we thought

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Speaker 4: that there was enough expertise among our team members to

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Speaker 4: launch a product in a more regulated space. One of

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Speaker 4: our co founders is a PhD from Caltech and had

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Speaker 4: worked in biotech and dealt with the FDA on the

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Speaker 4: cancer drug side of things, and so we knew that

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Speaker 4: we could we could both work with the FDA but

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Speaker 4: still do all the standard e commerce shipping shopify, you know,

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Speaker 4: make a product, sell it online. The blocking and tackling

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Speaker 4: of getting one of these businesses working.

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Speaker 2: So, as I mentioned, you know, I've tried, I've consumed

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Speaker 2: Zen in my life. I've consumed some of the others

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Speaker 2: because they're all over the place and often you know,

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Speaker 2: in zores and stuff. So I've tried them all. I'm

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Speaker 2: going to be honest here, I'll pop one in my

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Speaker 2: mouth from time to time. I have no idea what

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Speaker 2: I'm putting in there, you know, it's like, oh, yeah,

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Speaker 2: the cave, there's no tobacco. Whatever. What's a nicotine pouch?

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Speaker 2: What's in it?

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Speaker 4: Like?

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Speaker 2: What am I sticking up in my gums?

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Speaker 4: Yeah, it's pretty it's pretty simple. I mean, the goal

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Speaker 4: of these products is really just to deliver pure nicotine

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Speaker 4: and remove the tobacco and any of the nitrosamines or

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Speaker 4: harm causing agents as possible. Now you can't. I mean,

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Speaker 4: you could just take a vial of pure nicotine and

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Speaker 4: drop like a liquid drop on your gums, but that's

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Speaker 4: a terrible form factor. It doesn't really work. So what

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Speaker 4: these products have done, generally speaking broadly, is they bind

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Speaker 4: the nicotine to a like a bulking agent, usually a cellulose.

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Speaker 4: We use microcrystalline cellulose, which is essentially just you take

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Speaker 4: a tree, you grind it up, you get wood pulp.

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Speaker 4: You chemically treat that a little bit to get kind

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Speaker 4: of a powder. And so when you're done with the pouch,

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Speaker 4: you notice that even though you might not be getting

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Speaker 4: any nicotine from that, pouch, there's still something in there

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Speaker 4: that's the cellulose. And then you also add flavors, maybe

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Speaker 4: a sweetener. There's different things that you can do to

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Speaker 4: increase moisture, adding different oils, but that's pretty much it.

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Speaker 4: You want to keep the number of ingredients as low

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Speaker 4: as possible because you only want to use ingredients that

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Speaker 4: have been studied for years and years in the mouth.

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Speaker 4: So when someone says, how do we know that oral

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Speaker 4: nicotine is acceptable? While we can look at the data

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Speaker 4: from Sweden, we can also look at what's happened with

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Speaker 4: oral nicotine users in nicoret for fifty years, and then

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Speaker 4: what about cellulose. Well, cellulose is used in a lot

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Speaker 4: of products, same thing with a lot of these flavoring chemicals.

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Speaker 4: So you take these flavors and if they've been used

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Speaker 4: in sodas for fifty years and they're not causing cancer,

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Speaker 4: well then that's a good case that you can go

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Speaker 4: and make to the FDA that hey, this flavor is

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Speaker 4: also is also to consume. And this is really important

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Speaker 4: because as we saw during the vape crisis, the nicotine

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Speaker 4: was not the principal agent of harm in the It's

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Speaker 4: called evoli. The e cigarette and vapor acute lung injury

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Speaker 4: kind of fiasco. What was going on was that there

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Speaker 4: were a certain class of vapes that included vitamin e acetate,

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Speaker 4: which was not safe to ingest into your lungs, and

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Speaker 4: so that hadn't been tested. So all of these companies,

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Speaker 4: zen every company in the space, wants to keep the

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Speaker 4: number of ingredients as low as possible and only use

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Speaker 4: things that have been studied for a really, really long

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Speaker 4: time so they can go and make a really really

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Speaker 4: strong case to the FBI.

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Speaker 3: What's the difference between Lucy and nick Caret, which you

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Speaker 3: just mentioned.

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Speaker 4: So there's a few differences from our gum. So we

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Speaker 4: have a variety of products. One is a nicotine lossenge

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Speaker 4: that's actually approved as a smoking cessation aid by the FDA.

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Speaker 4: The FDA has a number of ways that you can

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Speaker 4: bring a nicotine product to market. One is through the

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Speaker 4: drug pathway. That's what Nicorette went through. So Nicorette is

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Speaker 4: an approved smoking cessation aid. We are our nicotine los

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Speaker 4: ange is also an approved smoking cessation aid, so we

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Speaker 4: can go and say this product is proven to help

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Speaker 4: you quit smoking. Our gum goes through what's called the

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Speaker 4: Tobacco Products Pathway, which is the pre market tobacco application pathway.

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Speaker 4: There's also the modified risk Tobacco Product Pathway, which is MRTP.

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Speaker 4: It's all very complex and there's a few different ways

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Speaker 4: to bring products to market, but in terms of our gum,

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Speaker 4: we have focused on differentiating around the brand. We recognize

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Speaker 4: that when my co founder was quitting smoking, he noticed

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Speaker 4: that Nicorette was working for him as a product ingesting

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Speaker 4: nicotine orally was helping him not smoke. But when he

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Speaker 4: pulled out a packet of Nicorette, everyone would say, why

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Speaker 4: are you on this medicine? You must be a really,

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Speaker 4: really bad smoker. So there was a lot of work

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Speaker 4: to be done into destigmatizing nicotine gum and trying to

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Speaker 4: trying to make it feel less medicinal and more aspirational.

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Speaker 4: And then we've done a lot of work on the flavor, texture,

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Speaker 4: and strength side. So Nicorette actually in the United States

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Speaker 4: they sell a two milligram and four miligram gum. Internationally

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Speaker 4: they do sell a six miligram gum. We found that

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Speaker 4: the six miligram gum worked very well, and so in

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Speaker 4: the United States we have also chosen to sell a

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Speaker 4: six miligram gum, which is stronger, and if you notice

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Speaker 4: what's going on in the pouch market, Zin sells a

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Speaker 4: three miligram and six miligram product. Clearly, six miligram and

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Speaker 4: stronger products are more effective for getting for convincing smokers

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Speaker 4: to switch, and so we've been really interested in that,

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Speaker 4: but obviously there's obvious there are also risks that come

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Speaker 4: with that because it is a stronger product.

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Speaker 2: Sitting aside the health questions about nicotine and so forth,

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Speaker 2: how much are you seeing people consume any of these

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Speaker 2: cigarette alternatives as a help to get people to quit

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Speaker 2: smoking versus someone who wants to consume nicotine and maybe

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Speaker 2: was never a smoker in the first place.

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Speaker 4: It's hard to say. I mean, we do survey all

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Speaker 4: of our customers when they come in, and about a

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Speaker 4: third of them are former smokers or directly like the

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Speaker 4: product that they used right before they ordered was cigarettes.

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Speaker 4: Another third comes from e cigarettes and vapor products, so

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Speaker 4: that's the product that they were using right before. And

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Speaker 4: then another third is basically people that are coming from

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Speaker 4: other pouches, like they've tried other brands and then they

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Speaker 4: come to us because they've heard of us. Ideally it

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Speaker 4: would be you know, one hundred percent cigarettes, but it

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Speaker 4: is very, very difficult to target smokers. We actually tried

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Speaker 4: on Facebook in the early days, and when we targeted

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Speaker 4: people who were interested smoking, there was a lot of

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Speaker 4: overlap with people who enjoy smoking meats. I don't know

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Speaker 4: if that's like a Zuck thing, but it but it

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Speaker 4: was very It was very tricky because if you are

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Speaker 4: a smoker, it's not like you're following, you know, smoking

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Speaker 4: pages on Instagram. You're probably just doing this in the background,

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Speaker 4: and you can do some general, broad level correlations between Oh,

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Speaker 4: smokers tend to be into this type of thing, they

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Speaker 4: tend to be in this age demographic. But it's much

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Speaker 4: harder to target than say, Okay, someone follows this particular band,

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Speaker 4: I'm going to try and sell them a shirt with

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Speaker 4: that band on the shirt. It's very direct. It's much

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Speaker 4: harder to target smokers. But obviously, like everything that we

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Speaker 4: do is focused on that because that's where the biggest

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Speaker 4: impact for the mission is. But then also smokers spend

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Speaker 4: the most money on nicotine every year, so there's the

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Speaker 4: strongest economic incentive to go after smokers.

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Speaker 2: By the way, Tracy, there are more cigarette memes to

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Speaker 2: these days, like some Instagram act that I think, you know,

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Speaker 2: it's like cool people smoking cigarettes and stuff like that,

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Speaker 2: So that's on the on the rise. Anyway, let's not

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Speaker 2: do that.

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Speaker 4: That's very edgy. So yeah, exactly, Yeah, it's very edgy.

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Speaker 4: So people are starting to you know what's boy with that?

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Speaker 2: Ye, cigarettes are like the really hip one right now

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Speaker 2: that all the Yeah, yeah, and.

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Speaker 4: I can't support that anyway.

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Speaker 3: Wait, so on this note, I mean, the amount of

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Speaker 3: smokers in the world has declined dramatically, and if Lucy

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Speaker 3: is in theory targeting people who are trying to stop

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Speaker 3: smoking cigarettes, then is this how is this a growth

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Speaker 3: market for sales?

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Speaker 4: Oh, it's a huge growth market. So just to give

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Speaker 4: you some background, the nicotine market in the United States

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Speaker 4: is seventy five billion dollars. Fifty five billion of that

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Speaker 4: is still cigarettes, so that's seventy two percent of the total.

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Speaker 4: Now ten billion is smokeless which includes oral nicotine, but

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Speaker 4: these pouch products, and I guess you would include our

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Speaker 4: in this as well, that's only like two and a

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Speaker 4: half billion, maybe three billion. The mass that like, still

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Speaker 4: the majority of smokeless nicotine is those traditional tobacco pouches

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Speaker 4: you might have seen, like dip or General Snooze, those

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Speaker 4: types of products which oddly have a higher regulatory status

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Speaker 4: with the FDA. Right now, Beach Match has two products,

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Speaker 4: Zen and General Snooze. Zen has yet to be approved

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Speaker 4: for PMTA, which is kind of like the level one approval. Meanwhile,

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Speaker 4: General Snooze has both PMTA and MRTP, which allows them

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Speaker 4: to say that General Snooze is less harmful than cigarettes,

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Speaker 4: which is great because it probably is, and I agree

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Speaker 4: with the FDA on that, but it's just interesting that

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Speaker 4: the FDA has chosen to kind of fast track General Snooze.

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Speaker 4: I mean, it's an older product, so it's easier to

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Speaker 4: you know, run the data on I suppose. And then

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Speaker 4: e cigarettes and vapor that's a five billion dollar category,

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Speaker 4: but it's declining, and it's declining faster than cigarettes. So

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Speaker 4: over the last year, the cigarette market has declined by

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Speaker 4: five percent, whereas the e cigarette vapor market has declined

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Speaker 4: by something around ten percent. And the decline in vape

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Speaker 4: is actually accelerating. So just in the last month it

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Speaker 4: went down sixteen percent. And so the way we see

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Speaker 4: the market growing is that this fifty five billion dollars

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Speaker 4: cigarette market that should be zero, right, and it's getting there.

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Speaker 4: It's five percent, and the actual the declines are accelerating.

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Speaker 4: So every year there's something like a billion dollars of

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Speaker 4: value that's up for grabs, and we're hoping that almost

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Speaker 4: all of that codes to oral nicotine if someone is

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Speaker 4: switching from smoking.

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Speaker 3: But I guess what I'm getting at is is there

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Speaker 3: like a generational cliff risk where you mentioned baby boomers earlier,

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Speaker 3: but where older smokers, you know, stop buying cigarettes all together,

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Speaker 3: either because they age out of the market or because

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Speaker 3: you know, governments around the world have breast desire to

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Speaker 3: get people to stop smoking. And is that a risk

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Speaker 3: for nicotine gum sales.

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Speaker 4: Yeah, it could be in the sense that, like the

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Speaker 4: overall nicotine market could decline over the next one hundred

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Speaker 4: years and we could be talking about, you know, in

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Speaker 4: twenty sixty, we could be talking about a US market

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00:20:21,359 --> 00:20:24,960
Speaker 4: that's not seventy five billion, but twenty five billion. I

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Speaker 4: think if you look back to the pre cigarette era,

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Speaker 4: humans were consuming nicotine, and I think that there will

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Speaker 4: be a continued trend there just because of the way

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Speaker 4: the nicotinic receptor has evolved. In the brain and the

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Speaker 4: desire for humans. I mean, Joe mentioned that nicotine consumption

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Speaker 4: is Lindy in some ways, and I think that's right.

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Speaker 4: We just made a terrible mistake during the Industrial Revolution

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Speaker 4: by building the cigarette rolling machine, which allowed us to

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Speaker 4: ramp up the burning ash that we were inhaling to

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Speaker 4: the point where people were smoking twenty cigarettes a day.

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Speaker 4: But over time, we do think that there will continue

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Speaker 4: to be some amount of ambient nicotine use. I don't

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Speaker 4: think it'll ever be everyone. And you can just tell

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Speaker 4: from talking to people that some people nicotine they really

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Speaker 4: enjoy it, and some people don't get anything out of it.

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Speaker 2: I have a lot of questions I want to just

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Speaker 2: get afore we get I want to learn more about

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Speaker 2: how these packs are as symboled and market and sold.

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Speaker 2: But before we do that, I just want to get

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Speaker 2: a slightly understand the regulatory environment for nicotine a bit more.

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Speaker 2: If I start a pouch company, A like, what do

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Speaker 2: I need to do to be able to legally sell it?

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Speaker 2: And then B you know, I've been wondering about this

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Speaker 2: for a while, and since you know the business, I'm

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Speaker 2: just going to ask you. Even though it's not pouch

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Speaker 2: or gum related. You know, the FDA went after Jewel

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Speaker 2: and rapidly massively constrained what it's able to sell. I

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00:21:56,200 --> 00:21:59,040
Speaker 2: think some of that's been actually loosened a little bit.

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Speaker 2: But then so they killed Jewel more or less, and

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Speaker 2: then you just saw this explosion of disposable vapes. And

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Speaker 2: those vapes taste like candy. I mean, Tracy mentioned the

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Speaker 2: green tea ones, but they have ones that really taste

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00:22:13,800 --> 00:22:18,040
Speaker 2: like you're inhaling cotton candy, and they're disposable. People trash

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Speaker 2: them all over the place. So there's got to be

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Speaker 2: all sorts of like waste because whatever in those batteries.

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Speaker 2: So they basically opened the door to these candy flavored

396
00:22:27,320 --> 00:22:30,720
Speaker 2: ones that are significantly more wasteful and they end up

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Speaker 2: on landfills or in gutters and in sewers and something.

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Speaker 2: How did that happen? Like what was it that, like

399
00:22:36,520 --> 00:22:39,520
Speaker 2: the elf bar like from China or whatever was able

400
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Speaker 2: to become massive even while Jewel was so heavily constrained.

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Speaker 3: Good question.

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00:22:45,680 --> 00:22:49,000
Speaker 4: Yeah, let me give you a little bit of the prehistory. Sure,

403
00:22:49,280 --> 00:22:51,240
Speaker 4: and we can work we can work up to the

404
00:22:51,320 --> 00:22:57,600
Speaker 4: Jewel story. So cigarettes were unregulated for the entire twentieth century.

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Speaker 4: But in the fifties, sixties, seventies, Surgeon General warning comes out.

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00:23:01,920 --> 00:23:05,359
Speaker 4: People start learning that cigarettes cause cancer. There's the Master

407
00:23:05,440 --> 00:23:09,480
Speaker 4: Settlement Agreement in the nineties where all of the tobacco

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00:23:09,520 --> 00:23:13,760
Speaker 4: companies came to create a settlement with the US government.

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Speaker 4: The basis for this was, you know, billions and billions

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Speaker 4: of dollars paid to American governments, essentially because the tobacco

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Speaker 4: companies were placing a negative externality on the healthcare system. Yeah,

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00:23:26,760 --> 00:23:30,639
Speaker 4: and so that was it wasn't it wasn't a necessarily

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Speaker 4: like a moral judgment, even though you could argue that

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00:23:32,840 --> 00:23:36,640
Speaker 4: it should have been. It was you are causing cancer,

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Speaker 4: which is putting stress on the healthcare system, so you

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00:23:39,400 --> 00:23:43,120
Speaker 4: need to pay the government for that cost. And then

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00:23:43,280 --> 00:23:46,760
Speaker 4: after that there were a lot of restrictions, mostly on advertising,

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Speaker 4: so mostly FTC related now an FCC related now. Later

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Speaker 4: in early two thousands, the vaporizer is invented by this

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00:24:00,200 --> 00:24:05,960
Speaker 4: Hans Licks in China, and a company called Enjoy starts

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00:24:06,280 --> 00:24:10,960
Speaker 4: building really popular e cigarettes for the United States. These

422
00:24:11,040 --> 00:24:14,239
Speaker 4: get popular and the FDA wants to regulate them. The

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00:24:14,320 --> 00:24:20,080
Speaker 4: FDA makes a claim that Enjoy is a combined drug

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00:24:20,160 --> 00:24:24,320
Speaker 4: and medical device product, and it's delivering nicotine for the

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00:24:24,359 --> 00:24:29,560
Speaker 4: purpose of smoking cessation, which is or cigarette addiction prevention.

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Speaker 4: So cigarette addiction is a disease and this product was

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00:24:33,880 --> 00:24:36,760
Speaker 4: designed to relieve that disease, which makes it a drug

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00:24:36,760 --> 00:24:40,399
Speaker 4: and medical device. That case went all the way to

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00:24:40,400 --> 00:24:44,000
Speaker 4: the Supreme Court and Enjoy actually won, So the FDA

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Speaker 4: lost and the Supreme Court said that the FDA could

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Speaker 4: not regulate e cigarettes. Shortly after, this didn't make any

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Speaker 4: sense in this so Enjoy actually went out of business

433
00:24:55,720 --> 00:24:58,600
Speaker 4: because they had a whole bunch of import restrictions while

434
00:24:58,600 --> 00:25:01,280
Speaker 4: they were fighting this case, so they went bankrupt. Eventually,

435
00:25:01,720 --> 00:25:03,960
Speaker 4: a hedge fund guy bought the company, turned it around,

436
00:25:03,960 --> 00:25:06,160
Speaker 4: and they just got approved and now it's a multi

437
00:25:06,200 --> 00:25:11,480
Speaker 4: billion dollar company. But the Obama administration in two thousand

438
00:25:11,520 --> 00:25:14,720
Speaker 4: and two thousand and nine passed the Tobacco Control Act

439
00:25:14,760 --> 00:25:19,080
Speaker 4: the TCA. This gave the FDA regulatory authority over all

440
00:25:19,160 --> 00:25:23,600
Speaker 4: nicotine containing products. Essentially, now the FDA, they have a

441
00:25:23,720 --> 00:25:28,600
Speaker 4: number of regulatory sub organizations within the overall organization. So

442
00:25:28,680 --> 00:25:32,560
Speaker 4: there's drug, medical device, there's veterinary, there's biologics, there's a

443
00:25:32,560 --> 00:25:35,679
Speaker 4: whole bunch of different there's supplements, you know, the protein

444
00:25:35,720 --> 00:25:38,680
Speaker 4: powders that you get, and they all regulate things slightly differently.

445
00:25:39,440 --> 00:25:43,080
Speaker 4: The Tobacco Group was new and they took some time

446
00:25:43,119 --> 00:25:46,200
Speaker 4: to spin up. So by twenty sixteen they had put

447
00:25:46,240 --> 00:25:50,200
Speaker 4: into place what's called the pre Market Tobacco Application Process,

448
00:25:50,240 --> 00:25:53,720
Speaker 4: the PMTA, and so all new products that were brought

449
00:25:53,720 --> 00:25:56,919
Speaker 4: to market would need to submit what's called the PMTA

450
00:25:57,280 --> 00:25:59,760
Speaker 4: to the FDA, and then the FDA would review that

451
00:26:00,080 --> 00:26:04,160
Speaker 4: and say is this suitable for the protection of public health.

452
00:26:04,680 --> 00:26:06,760
Speaker 4: If it is, they will approve it and you will

453
00:26:06,800 --> 00:26:10,960
Speaker 4: be able to continue selling this product. Otherwise they will

454
00:26:11,080 --> 00:26:14,480
Speaker 4: give you what's called a marketing denial order, which means

455
00:26:14,480 --> 00:26:17,200
Speaker 4: that you cannot sell your product in the United States. Now,

456
00:26:17,200 --> 00:26:19,359
Speaker 4: there was a grace period for products that were on

457
00:26:19,440 --> 00:26:23,040
Speaker 4: the market before twenty sixteen, so that includes our products,

458
00:26:23,080 --> 00:26:27,920
Speaker 4: that includes Zen, that includes Jewel, So all of these

459
00:26:27,960 --> 00:26:31,880
Speaker 4: products they still had to file the pmtas, but they

460
00:26:31,920 --> 00:26:34,080
Speaker 4: had a grace period where they could continue to sell

461
00:26:34,119 --> 00:26:40,000
Speaker 4: while the FDA approved and reviewed those applications. Now, so

462
00:26:40,200 --> 00:26:43,160
Speaker 4: if you want to start a product now, you cannot

463
00:26:43,240 --> 00:26:46,320
Speaker 4: sell a single unit in the United States until the

464
00:26:46,359 --> 00:26:49,800
Speaker 4: FDA gets back to you with your application. So to

465
00:26:49,840 --> 00:26:51,719
Speaker 4: your question of if you want to start a pouch company,

466
00:26:51,760 --> 00:26:53,480
Speaker 4: we just can't. If you wanted to do it legally,

467
00:26:54,240 --> 00:26:55,719
Speaker 4: what you would have to do is you'd have to

468
00:26:56,160 --> 00:26:59,840
Speaker 4: raise some money, develop your product, run a whole battery

469
00:26:59,840 --> 00:27:02,880
Speaker 4: of tests, including stability tests, which could take a year,

470
00:27:03,040 --> 00:27:05,199
Speaker 4: because you need to wait around to see if the

471
00:27:05,240 --> 00:27:09,560
Speaker 4: product is different at month twelve than month one. Then

472
00:27:09,600 --> 00:27:13,359
Speaker 4: you submit that data and the huge packet it's you know,

473
00:27:13,480 --> 00:27:17,040
Speaker 4: thousands and thousands of pages to the FDA. They review it.

474
00:27:17,119 --> 00:27:19,440
Speaker 4: You're at the back of the queue. This could take

475
00:27:20,200 --> 00:27:23,920
Speaker 4: tens of millions of dollars. There's rumors that bigger companies

476
00:27:23,920 --> 00:27:26,879
Speaker 4: have spent hundreds of millions of dollars on these applications.

477
00:27:27,280 --> 00:27:31,600
Speaker 4: And I mean, Zin's been on the market since twenty fourteen.

478
00:27:31,680 --> 00:27:33,879
Speaker 4: I'm not exactly sure when they submitted their PMTA, but

479
00:27:34,240 --> 00:27:38,520
Speaker 4: you know it's been five six years since pmtas first

480
00:27:38,640 --> 00:27:43,000
Speaker 4: were submitted. The FDA is prioritizing vapes first because of

481
00:27:43,040 --> 00:27:46,000
Speaker 4: the vape crisis, which we'll go into about duel, and

482
00:27:46,119 --> 00:27:51,080
Speaker 4: they're also organizing based on market share. So theoretically Zin

483
00:27:51,160 --> 00:27:54,000
Speaker 4: should be the first oral product that they review and

484
00:27:54,040 --> 00:27:57,639
Speaker 4: so your new pouch, the you know, the odd lots pouch,

485
00:27:57,760 --> 00:27:59,960
Speaker 4: that's that's going to be at the back of the queue.

486
00:28:00,920 --> 00:28:04,000
Speaker 4: And so it could be three, four or five years.

487
00:28:04,000 --> 00:28:07,959
Speaker 4: No one really knows, but it requires a lot of

488
00:28:08,040 --> 00:28:11,080
Speaker 4: a lot of time. Now with the Jewel story, there

489
00:28:11,080 --> 00:28:13,280
Speaker 4: are a bunch of fascinating things with that that we

490
00:28:13,320 --> 00:28:16,639
Speaker 4: could go into. Essentially, they were on the market before

491
00:28:16,640 --> 00:28:18,880
Speaker 4: twenty sixteen, so it was legal for them to sell

492
00:28:18,920 --> 00:28:23,240
Speaker 4: that product. It got really really popular twenty eighteen twenty nineteen.

493
00:28:23,480 --> 00:28:27,720
Speaker 4: Around that time, we have the vape crisis EVOLI as

494
00:28:27,720 --> 00:28:32,119
Speaker 4: it's known in the industry, and there were I think dozens,

495
00:28:32,200 --> 00:28:37,240
Speaker 4: if not hundreds of deaths that were attributed to acute

496
00:28:37,320 --> 00:28:41,280
Speaker 4: lung injury from vaping or e cigarette use. Now, the

497
00:28:41,320 --> 00:28:44,800
Speaker 4: CDC came in studied everything. It turned out that it

498
00:28:44,880 --> 00:28:48,880
Speaker 4: was related mostly to these marijuana cannabis vapes that had

499
00:28:48,960 --> 00:28:52,920
Speaker 4: the vitamin E acetate ingredient. No one's ever proven that

500
00:28:53,040 --> 00:28:55,280
Speaker 4: Jewel killed anyone. I don't think that they did, but

501
00:28:55,320 --> 00:29:00,760
Speaker 4: that's conjecture. Nevertheless, there was kind of a pan about

502
00:29:01,160 --> 00:29:05,239
Speaker 4: two separate issues. One was people in the abstract were

503
00:29:05,320 --> 00:29:08,520
Speaker 4: dying from vapes as a class of product from the

504
00:29:08,600 --> 00:29:15,600
Speaker 4: vitamin eestate. And then separately, underage users were adopting jewels

505
00:29:15,800 --> 00:29:19,760
Speaker 4: in mass and so before Jewel was introduced, about twenty

506
00:29:19,800 --> 00:29:25,400
Speaker 4: percent of underage kids we're using vapor products, and within

507
00:29:25,520 --> 00:29:27,680
Speaker 4: a few years of Jewel being on the market, that

508
00:29:27,800 --> 00:29:31,880
Speaker 4: number climb to almost forty percent. And so this data

509
00:29:31,960 --> 00:29:37,240
Speaker 4: is collected through what's called the NYTS, the National Youth

510
00:29:37,280 --> 00:29:41,200
Speaker 4: Tobacco Survey, So pediatricians across the country are required to

511
00:29:41,280 --> 00:29:44,240
Speaker 4: ask kids when they come in I think it's thirteen

512
00:29:44,280 --> 00:29:48,440
Speaker 4: to eighteen. They asked them have you used nicotine products?

513
00:29:48,560 --> 00:29:50,400
Speaker 4: They ask a lot of questions, but this is for

514
00:29:50,520 --> 00:29:53,479
Speaker 4: tobacco specifically. They ask have you used nicotine products? What

515
00:29:53,520 --> 00:29:56,200
Speaker 4: products have you used? Have you used over the last

516
00:29:56,200 --> 00:29:58,720
Speaker 4: thirty days? Have you ever tried this product? Have you smoked?

517
00:29:58,720 --> 00:30:01,040
Speaker 4: What brands? They ask all these different questions. It's all

518
00:30:01,080 --> 00:30:03,480
Speaker 4: compiled into this great data set that then is used

519
00:30:03,520 --> 00:30:08,480
Speaker 4: for regulation. And so the E cigarette numbers were spiking.

520
00:30:08,760 --> 00:30:11,840
Speaker 4: Now cigarette use was declining, which is great. We don't

521
00:30:11,880 --> 00:30:14,600
Speaker 4: want underage kids smoking, but we also don't want them

522
00:30:14,680 --> 00:30:18,120
Speaker 4: using nicotine at all because until you're a full grown adult,

523
00:30:18,120 --> 00:30:22,520
Speaker 4: your brain's still developing. And most importantly, if you start

524
00:30:22,600 --> 00:30:26,120
Speaker 4: using nicotine at fifteen sixteen, you're going to be addicted forever.

525
00:30:26,200 --> 00:30:28,120
Speaker 4: It's going to be something that's very ingreat It's the

526
00:30:28,120 --> 00:30:30,120
Speaker 4: same thing with gambling, it's the same thing with drinking.

527
00:30:30,200 --> 00:30:34,360
Speaker 4: Like the underage there are reasons we have age restrictions

528
00:30:34,400 --> 00:30:37,400
Speaker 4: on all of these things. Now, fortunately the industry has

529
00:30:37,440 --> 00:30:39,840
Speaker 4: moved forward in many ways, and tobacco is now twenty

530
00:30:39,880 --> 00:30:42,600
Speaker 4: one plus. It's kind of crazy to think that back

531
00:30:42,680 --> 00:30:45,200
Speaker 4: during the jewel craze, you could just ask like a

532
00:30:45,240 --> 00:30:48,600
Speaker 4: cool senior to go out and buy you jewel legally

533
00:30:48,840 --> 00:30:52,280
Speaker 4: on their lunch break. Now it's twenty one plus, which

534
00:30:52,280 --> 00:30:55,800
Speaker 4: is I think, much better. But obviously people are still

535
00:30:55,840 --> 00:30:59,360
Speaker 4: worried about bleedover because there are eighteen year olds with

536
00:30:59,360 --> 00:31:01,200
Speaker 4: fake IDs who can figure out how to get something

537
00:31:01,240 --> 00:31:04,560
Speaker 4: that's like plus. And if you look at the underage

538
00:31:04,760 --> 00:31:07,680
Speaker 4: alcohol use rates, that's at something like fifty percent, and

539
00:31:07,760 --> 00:31:10,640
Speaker 4: same thing with cannabis, it's something around fifty percent. And

540
00:31:10,720 --> 00:31:15,400
Speaker 4: so Jewel received because of all this pressure. They were

541
00:31:15,520 --> 00:31:18,760
Speaker 4: fighting with the FDA. They were submitting their their products

542
00:31:18,920 --> 00:31:21,640
Speaker 4: and they got into this battle with the FDA, who

543
00:31:21,680 --> 00:31:25,280
Speaker 4: at that time was run by Scott Gottlieb, Trump appointee,

544
00:31:25,400 --> 00:31:29,040
Speaker 4: former venture capitalist at Nea, very very sharp guy, but

545
00:31:29,760 --> 00:31:32,000
Speaker 4: he was kind of warning them that hey, this is

546
00:31:32,000 --> 00:31:34,239
Speaker 4: getting out of control. You need to do something. And

547
00:31:34,320 --> 00:31:37,400
Speaker 4: then they took money from Altria and kind of got

548
00:31:37,400 --> 00:31:40,320
Speaker 4: in bed with Big Tobacco. Jewel was they had a

549
00:31:40,320 --> 00:31:42,560
Speaker 4: lot of kind of weird marketing stuff in the early

550
00:31:42,640 --> 00:31:46,040
Speaker 4: days that came out, stuff like visiting schools and then

551
00:31:46,120 --> 00:31:49,200
Speaker 4: also they were like they had a sister company that

552
00:31:49,280 --> 00:31:52,480
Speaker 4: was originally part of their company that was selling cannabis vapes,

553
00:31:52,520 --> 00:31:57,200
Speaker 4: which is kind of crazy time just like yeah, it's

554
00:31:57,240 --> 00:32:00,520
Speaker 4: just like it doesn't it's crazy.

555
00:32:00,560 --> 00:32:03,840
Speaker 2: There's a good documentary on Netflix. Basically like they went

556
00:32:03,880 --> 00:32:06,160
Speaker 2: into schools and the like don't vape kids, and then

557
00:32:06,240 --> 00:32:08,680
Speaker 2: everyone went out and vaped. It seemed very strange and

558
00:32:08,680 --> 00:32:10,120
Speaker 2: I was shocked by it.

559
00:32:10,320 --> 00:32:14,600
Speaker 4: Yeah, yeah it was. It was very very poorly executed,

560
00:32:14,840 --> 00:32:17,760
Speaker 4: and yeah, they just made a ton of mistakes and

561
00:32:17,800 --> 00:32:21,960
Speaker 4: they became kind of the tall poppy, the you know,

562
00:32:22,360 --> 00:32:26,840
Speaker 4: the the sacrificial lamb for our society, for the for

563
00:32:26,920 --> 00:32:30,520
Speaker 4: the sin of underage nicotine use. They became somewhat of

564
00:32:30,520 --> 00:32:34,600
Speaker 4: a scapegoat in my opinion, because after Jewel was quote

565
00:32:34,640 --> 00:32:37,520
Speaker 4: unquote banned. Now, what actually happened was they received a

566
00:32:37,520 --> 00:32:41,840
Speaker 4: marketing denial order from the FDA. The FDA essentially rejected

567
00:32:41,840 --> 00:32:45,040
Speaker 4: their PMTA. That meant that they needed to stop selling

568
00:32:45,040 --> 00:32:51,120
Speaker 4: their products nationally, and they'd actually already stopped selling flavored products,

569
00:32:51,120 --> 00:32:53,640
Speaker 4: so the mango jewel pods that were so popular, they

570
00:32:53,640 --> 00:32:57,080
Speaker 4: had voluntarily pulled those off the market. They've still kept

571
00:32:57,120 --> 00:33:00,760
Speaker 4: those off the market voluntarily. They legally could sell those,

572
00:33:01,080 --> 00:33:04,160
Speaker 4: but Jewel got a stay of the marketing denial order

573
00:33:04,360 --> 00:33:06,440
Speaker 4: in the courts, so they were able to continue selling.

574
00:33:06,680 --> 00:33:09,320
Speaker 4: And if you look at Jewels numbers, they're still doing

575
00:33:09,400 --> 00:33:11,960
Speaker 4: about a billion dollars in sales, and they've never really

576
00:33:12,000 --> 00:33:15,400
Speaker 4: stopped doing a billion dollars of sales because they were

577
00:33:15,400 --> 00:33:17,840
Speaker 4: only off shelves for a couple of weeks while the

578
00:33:17,880 --> 00:33:20,600
Speaker 4: marketing denial order was in effect. It got stayed in

579
00:33:20,640 --> 00:33:23,520
Speaker 4: the court and then most recently it got reversed because

580
00:33:23,840 --> 00:33:27,200
Speaker 4: now they're not the biggest problem. And it's interesting if

581
00:33:27,240 --> 00:33:30,200
Speaker 4: you look at the some of the social media posts

582
00:33:30,280 --> 00:33:34,320
Speaker 4: that announced the Jewel ban quote unquote, yeah, the comments

583
00:33:34,960 --> 00:33:38,960
Speaker 4: are all from former Jewel users, like former kids that

584
00:33:39,120 --> 00:33:43,680
Speaker 4: used it joking about, like, why are they banning Jewel?

585
00:33:43,800 --> 00:33:47,120
Speaker 4: Don't they know We've moved on to el bar and

586
00:33:47,160 --> 00:33:50,760
Speaker 4: all of our favorite products. And that's where we get

587
00:33:50,800 --> 00:33:55,080
Speaker 4: into the story of the new disposable market, which is

588
00:33:55,160 --> 00:33:59,880
Speaker 4: now the second largest class of products after cigarettes.

589
00:34:17,120 --> 00:34:21,160
Speaker 3: Talk about what elf bar did or is doing that

590
00:34:21,280 --> 00:34:22,880
Speaker 3: is different to Jewel.

591
00:34:23,600 --> 00:34:28,160
Speaker 4: It's hard to explain exactly what elf bar is because

592
00:34:28,719 --> 00:34:34,320
Speaker 4: it's kind of a hydra of companies. Like the IP

593
00:34:34,560 --> 00:34:39,080
Speaker 4: has been sold so many times, they've rebranded a million times.

594
00:34:39,120 --> 00:34:42,920
Speaker 4: There's also puff bar and puff stick, and essentially what

595
00:34:42,960 --> 00:34:46,120
Speaker 4: these companies do broadly, I'm not speaking about any particular company,

596
00:34:46,160 --> 00:34:49,640
Speaker 4: but broadly, the strategy has been to instead of engage

597
00:34:49,680 --> 00:34:54,239
Speaker 4: with the FDA directly and file the PMTA, wait for approval,

598
00:34:54,560 --> 00:34:58,560
Speaker 4: then market your product. They've just said, let's push this

599
00:34:58,680 --> 00:35:01,359
Speaker 4: product as many play this is possible, get it into

600
00:35:01,400 --> 00:35:05,480
Speaker 4: every independent store that maybe doesn't care about the regulatory

601
00:35:05,520 --> 00:35:09,600
Speaker 4: status of these products. Let's just flood the market with

602
00:35:09,640 --> 00:35:12,520
Speaker 4: these products. And if we get shut down, what's going

603
00:35:12,600 --> 00:35:15,840
Speaker 4: to happen is that we're essentially just have a front

604
00:35:15,920 --> 00:35:20,000
Speaker 4: company that's just a couple random American citizens that are

605
00:35:20,280 --> 00:35:22,880
Speaker 4: acting as a front for us in the US. The

606
00:35:22,960 --> 00:35:24,719
Speaker 4: FDA is not really going to be able to shut

607
00:35:24,760 --> 00:35:26,680
Speaker 4: them down. They're going to try and shut us down

608
00:35:26,719 --> 00:35:28,840
Speaker 4: at the ports. All we need to do then is

609
00:35:28,960 --> 00:35:32,839
Speaker 4: just set up a new company structure and import under

610
00:35:32,840 --> 00:35:35,600
Speaker 4: a different label. So that's how you see the evolution

611
00:35:35,760 --> 00:35:38,239
Speaker 4: of these things, where like I don't even think elf

612
00:35:38,239 --> 00:35:39,960
Speaker 4: bar is on the market anymore. I think it might

613
00:35:39,960 --> 00:35:41,560
Speaker 4: be called like elf Tech.

614
00:35:41,840 --> 00:35:44,240
Speaker 2: Yeah no, there's like what they all look the same

615
00:35:44,320 --> 00:35:46,680
Speaker 2: under like different names, and I'm like, is it exactly?

616
00:35:46,719 --> 00:35:49,080
Speaker 4: So they're all made in the same Shenzen Like the

617
00:35:49,640 --> 00:35:53,360
Speaker 4: core company behind elf Bar's shenzhen I Miracle Company. Just

618
00:35:53,400 --> 00:35:57,719
Speaker 4: a hilarious name, but it's like the Miracle. But then

619
00:35:57,760 --> 00:36:00,919
Speaker 4: also I which I think is like an Apple Friends,

620
00:36:00,719 --> 00:36:04,000
Speaker 4: it's very convoluted. But the shenzhen I Miracle Company, they

621
00:36:04,040 --> 00:36:06,600
Speaker 4: have a massive facility where they make this stuff and

622
00:36:06,600 --> 00:36:09,960
Speaker 4: then they just find a new front man. And I

623
00:36:10,000 --> 00:36:14,800
Speaker 4: get emails every single day from a new random Gmail

624
00:36:14,840 --> 00:36:19,200
Speaker 4: account that says like huff bar five hundred puffs, like

625
00:36:19,239 --> 00:36:21,320
Speaker 4: would you like to white label this? Because they're looking

626
00:36:21,360 --> 00:36:25,880
Speaker 4: for someone that has American citizenship distribution lines and can

627
00:36:26,160 --> 00:36:28,680
Speaker 4: order their products. And then get them into stores, and

628
00:36:28,760 --> 00:36:31,520
Speaker 4: so they're they're really it's not just like a normal

629
00:36:31,560 --> 00:36:35,400
Speaker 4: spam campaign. It's very sophisticated. It always gets through Gmail

630
00:36:35,440 --> 00:36:38,279
Speaker 4: spam filter for me, and I finally created a filter

631
00:36:38,360 --> 00:36:42,120
Speaker 4: that actually cut them out, you know, but eventually, like like,

632
00:36:42,400 --> 00:36:45,319
Speaker 4: this is the game that they're running. And so if

633
00:36:45,360 --> 00:36:50,560
Speaker 4: you look at the stats, the leading disposable vape company

634
00:36:50,880 --> 00:36:53,279
Speaker 4: might be doing one hundred million dollars in sales or

635
00:36:53,320 --> 00:36:55,120
Speaker 4: two hundred million dollars in sales, so they don't have

636
00:36:55,200 --> 00:36:57,759
Speaker 4: anywhere near the brand awareness as a ZIN which is

637
00:36:57,800 --> 00:37:01,400
Speaker 4: doing two billion in sales. But if you think of

638
00:37:01,440 --> 00:37:05,760
Speaker 4: them as this aggregate hydra, then it is a massive,

639
00:37:05,800 --> 00:37:10,920
Speaker 4: massive category. And so the fundamental reason why this is

640
00:37:10,920 --> 00:37:14,239
Speaker 4: happening is because the Center for Tobacco Products at the FDA,

641
00:37:14,320 --> 00:37:16,160
Speaker 4: this is a new organization. I mean, they only got

642
00:37:16,160 --> 00:37:19,560
Speaker 4: authorization via the Tobacco Control Act in two thousand and nine,

643
00:37:19,760 --> 00:37:22,520
Speaker 4: and they've really only been super active in twenty sixteen,

644
00:37:22,680 --> 00:37:24,680
Speaker 4: and then of course in twenty twenty, the FDA had

645
00:37:24,719 --> 00:37:27,280
Speaker 4: to completely pivot the entire organization to dealing with COVID,

646
00:37:27,560 --> 00:37:32,000
Speaker 4: and so resources have been tight. And so even though

647
00:37:32,040 --> 00:37:36,160
Speaker 4: they have the ability to review pmtas and issue marketing

648
00:37:36,160 --> 00:37:39,640
Speaker 4: granted orders or marketing denial orders. They don't necessarily have

649
00:37:39,840 --> 00:37:42,440
Speaker 4: enough field agents to go to every store in America

650
00:37:42,800 --> 00:37:44,920
Speaker 4: and make sure that all the stores and all the

651
00:37:44,960 --> 00:37:48,080
Speaker 4: products on the shelves are legal and approve and they

652
00:37:48,160 --> 00:37:50,000
Speaker 4: so they can kind of do stuff at the ports,

653
00:37:50,160 --> 00:37:52,160
Speaker 4: and they can. That's what I find.

654
00:37:53,120 --> 00:37:56,440
Speaker 3: Why don't they stop it at the import stage? I mean,

655
00:37:56,480 --> 00:37:59,719
Speaker 3: my experience of shipping goods from Hong Kong to New

656
00:37:59,840 --> 00:38:02,800
Speaker 3: York is that they go through everything, right, like you

657
00:38:02,840 --> 00:38:06,680
Speaker 3: can't have medications, you can't have food. Agents will stop

658
00:38:06,760 --> 00:38:09,160
Speaker 3: and go through boxes or at least sample the boxes.

659
00:38:09,160 --> 00:38:10,360
Speaker 3: Why don't they stop them there?

660
00:38:11,480 --> 00:38:15,120
Speaker 4: Yeah, so they try, but it's very difficult because if

661
00:38:15,160 --> 00:38:18,040
Speaker 4: the hold at the port is for one company's name

662
00:38:18,520 --> 00:38:21,080
Speaker 4: and it's under a different company's name, it can be

663
00:38:21,239 --> 00:38:24,120
Speaker 4: very hard to get through. The FDA hasn't really figured

664
00:38:24,120 --> 00:38:28,000
Speaker 4: out how to create a blanket ban on everything that

665
00:38:28,480 --> 00:38:31,960
Speaker 4: you know is a nicotine containing disposable device. And some

666
00:38:32,000 --> 00:38:33,799
Speaker 4: of them might be legal, you know, some of them.

667
00:38:33,920 --> 00:38:35,680
Speaker 4: Some of them might have been on the market before

668
00:38:35,719 --> 00:38:39,719
Speaker 4: twenty sixteen. They might have pmtas in I don't know.

669
00:38:40,200 --> 00:38:42,919
Speaker 4: I'm sure that there's some disposable company that's taking things

670
00:38:43,040 --> 00:38:46,920
Speaker 4: very very seriously and they shouldn't be blanket banned at

671
00:38:46,920 --> 00:38:48,040
Speaker 4: the ports necessarily.

672
00:38:48,160 --> 00:38:51,120
Speaker 2: This is so fascinating because I actually I once wanted

673
00:38:51,160 --> 00:38:53,759
Speaker 2: to do we should do like an elf Bar episode,

674
00:38:54,160 --> 00:38:55,879
Speaker 2: and part of the issues we couldn't find a guess

675
00:38:55,880 --> 00:38:58,600
Speaker 2: because like it didn't seem like anyone even understood this

676
00:38:58,719 --> 00:39:00,160
Speaker 2: company and what it is.

677
00:39:00,200 --> 00:39:03,200
Speaker 4: Oh, it's really really hard. It's really really hard. Your

678
00:39:03,520 --> 00:39:06,400
Speaker 4: story is crazy too, Yeah, I mean the puff Bar

679
00:39:06,520 --> 00:39:10,080
Speaker 4: story is potentially more interesting because there's a Wall Street

680
00:39:10,120 --> 00:39:13,359
Speaker 4: Journal article about the founders and they're these guys who

681
00:39:13,840 --> 00:39:17,080
Speaker 4: people they kind of came out of nowhere, and they

682
00:39:17,080 --> 00:39:19,279
Speaker 4: didn't have the same story as like Adam Bowen and

683
00:39:19,400 --> 00:39:22,279
Speaker 4: jamesons use it. But they're like they're pictures on their

684
00:39:22,280 --> 00:39:25,080
Speaker 4: Instagram of them like driving Ferraris and McLaren's on like

685
00:39:25,160 --> 00:39:28,720
Speaker 4: the freeways and it's like these guys are bawling and

686
00:39:28,760 --> 00:39:30,960
Speaker 4: then they got, you know, shut down. But there's a

687
00:39:31,000 --> 00:39:33,680
Speaker 4: whole bunch of rumors swirling in the industry about, oh,

688
00:39:33,800 --> 00:39:36,399
Speaker 4: like what exactly happened there? Did they just like take

689
00:39:36,400 --> 00:39:38,640
Speaker 4: the money and run? But like it's not like a

690
00:39:38,680 --> 00:39:41,960
Speaker 4: traditional startup where oh yeah, they were investors and then

691
00:39:41,960 --> 00:39:45,120
Speaker 4: they sold the company. It's much more like they made

692
00:39:45,120 --> 00:39:46,680
Speaker 4: a bunch of money and they ran with it or

693
00:39:46,760 --> 00:39:47,439
Speaker 4: something like that.

694
00:39:47,600 --> 00:39:50,239
Speaker 2: So we just have a couple of minutes left and

695
00:39:50,480 --> 00:39:53,840
Speaker 2: I just want to you know, the actual business of

696
00:39:53,880 --> 00:39:57,440
Speaker 2: the pouches, like, how did so let's say Tracy and

697
00:39:57,480 --> 00:40:04,120
Speaker 2: I want to start our nicotine a lots branded pouch, right,

698
00:40:04,480 --> 00:40:06,680
Speaker 2: lots lots Yeah, we got to start it with a

699
00:40:06,800 --> 00:40:11,280
Speaker 2: Z like Zemo corsult setting aside all the regulatory issues.

700
00:40:11,480 --> 00:40:14,560
Speaker 2: Is there like a Taiwan semiconductor for pouches that I

701
00:40:14,719 --> 00:40:16,719
Speaker 2: just like, we give them our brand, do we give

702
00:40:16,760 --> 00:40:18,880
Speaker 2: them our flavors and they make it? Like walk us

703
00:40:18,880 --> 00:40:20,560
Speaker 2: through the manufacturing supply chain.

704
00:40:20,680 --> 00:40:23,960
Speaker 4: I was joking with you about Helsingborg Sweden is kind

705
00:40:23,960 --> 00:40:28,400
Speaker 4: of the Taiwan of niicten pouches. Zen, of course, is

706
00:40:28,440 --> 00:40:32,840
Speaker 4: a Swedish match product. Swedish Match is a former matchmaking company.

707
00:40:32,880 --> 00:40:36,840
Speaker 4: They literally made matches to light cigarettes, and then over time,

708
00:40:37,160 --> 00:40:41,040
Speaker 4: once cigarettes started declining, they needed other products and Sweden

709
00:40:41,040 --> 00:40:45,640
Speaker 4: adopted these smokeless oral nicotine pouches. It's been incredible for

710
00:40:46,400 --> 00:40:49,080
Speaker 4: getting Sweden smoke free there's a bunch of incredible data

711
00:40:49,120 --> 00:40:52,880
Speaker 4: about how Sweden now has the lowest lung cancer rates

712
00:40:52,880 --> 00:40:57,360
Speaker 4: in all of Europe. But there isn't necessarily a TSMC

713
00:40:57,480 --> 00:41:00,560
Speaker 4: in the sense that there's not one scaled coman factorer

714
00:41:00,680 --> 00:41:05,439
Speaker 4: that everyone is using. Zin of course, has their own facilities.

715
00:41:05,560 --> 00:41:07,879
Speaker 4: They have a number of facilities, and they just this

716
00:41:07,920 --> 00:41:10,600
Speaker 4: week announced that they're investing I think six hundred million

717
00:41:10,600 --> 00:41:13,360
Speaker 4: dollars in a Colorado facility. They already have an American

718
00:41:13,400 --> 00:41:17,000
Speaker 4: facility as well as several others across the globe. It's

719
00:41:17,000 --> 00:41:20,759
Speaker 4: not an incredibly complex process. It is just at the

720
00:41:20,800 --> 00:41:25,080
Speaker 4: end of the day blending up six or seven ingredients

721
00:41:25,560 --> 00:41:29,520
Speaker 4: that are powders and then they need to be dumped

722
00:41:29,520 --> 00:41:33,200
Speaker 4: into a bag. We have a slightly more complicated process

723
00:41:33,239 --> 00:41:36,239
Speaker 4: with our Breakers product because we put a capsule in

724
00:41:36,320 --> 00:41:39,880
Speaker 4: the pouch. And so the history of these products is

725
00:41:39,920 --> 00:41:43,160
Speaker 4: that it used to be people would just chew loose

726
00:41:43,239 --> 00:41:46,600
Speaker 4: leaf tobacco. Then it was ground up tobacco. This is

727
00:41:46,640 --> 00:41:51,279
Speaker 4: the dip spit cup that you've seen probably the baseball players. Eventually,

728
00:41:51,680 --> 00:41:54,680
Speaker 4: Swedish Match and a couple other companies took the ground

729
00:41:54,800 --> 00:41:58,839
Speaker 4: up tobacco product put it in a pouch. That's where

730
00:41:58,840 --> 00:42:02,840
Speaker 4: you get general snooze. Camel snooze, and snooze became very popular,

731
00:42:02,920 --> 00:42:06,399
Speaker 4: especially in Sweden. Now, the modern oral category that we've

732
00:42:06,400 --> 00:42:09,080
Speaker 4: been talking about, the zins of the world, the vellows,

733
00:42:09,239 --> 00:42:13,960
Speaker 4: the rogues, the lucy's, these they don't contain any tobacco

734
00:42:14,120 --> 00:42:17,040
Speaker 4: leaf whatsoever, which is great, it's a huge step forward.

735
00:42:17,080 --> 00:42:20,680
Speaker 4: But the problem has always been that tobacco leaf, although

736
00:42:20,719 --> 00:42:24,640
Speaker 4: it did contain carcinogens, it also contained moisture, and so

737
00:42:25,120 --> 00:42:28,680
Speaker 4: a snooze product was generally more moist When you take

738
00:42:28,719 --> 00:42:31,279
Speaker 4: out the tobacco leaf, you take out the moisture. And

739
00:42:31,320 --> 00:42:33,600
Speaker 4: so the number one complaint that we found was that

740
00:42:34,200 --> 00:42:37,040
Speaker 4: these tobacco, these tobacco free pouches, they would dry your

741
00:42:37,080 --> 00:42:39,120
Speaker 4: mouth out. And so we put a capsule that has

742
00:42:39,160 --> 00:42:44,480
Speaker 4: liquid inside in the pouch. Oh the breakers. Yeah, and

743
00:42:44,560 --> 00:42:48,440
Speaker 4: so it's somewhat similar to a camel crush the cigarette

744
00:42:48,480 --> 00:42:53,480
Speaker 4: where you crush the capsule and it releases flavoring. Same idea,

745
00:42:53,880 --> 00:42:57,920
Speaker 4: add the flavor and moisture back into the pouch in

746
00:42:58,040 --> 00:43:01,040
Speaker 4: order to kind of get give all the benefits of

747
00:43:01,080 --> 00:43:05,880
Speaker 4: the moist pouch that oral tobacco users enjoyed without adding

748
00:43:05,920 --> 00:43:08,440
Speaker 4: back any tobacco leaf. And so that's a little bit

749
00:43:08,440 --> 00:43:10,719
Speaker 4: more complex for us because we actually have to have

750
00:43:11,080 --> 00:43:14,880
Speaker 4: a machine that drops a little capsule into each pouch

751
00:43:15,440 --> 00:43:18,520
Speaker 4: and then seals the pouch. And sealing the pouches is

752
00:43:18,640 --> 00:43:20,840
Speaker 4: very tricky. You can see that some brands when you

753
00:43:20,880 --> 00:43:25,239
Speaker 4: open up the tin, it's just everywhere. It's a little

754
00:43:25,280 --> 00:43:29,239
Speaker 4: bit of a mass. But in general, you know, these

755
00:43:29,280 --> 00:43:32,960
Speaker 4: products are fairly easy to scale. It's much less complex

756
00:43:33,040 --> 00:43:35,920
Speaker 4: than vapor products, which essentially.

757
00:43:35,920 --> 00:43:38,319
Speaker 2: Less complex than semiconductor manufacturing.

758
00:43:38,400 --> 00:43:41,759
Speaker 4: For sure, certainly less complex than semiconductor manufacturing. I mean,

759
00:43:41,840 --> 00:43:46,040
Speaker 4: jewels tagline was like the iPhone of vaping, and obviously

760
00:43:46,040 --> 00:43:49,080
Speaker 4: there's a lot. There is literally a semiconductor in a jewel.

761
00:43:49,280 --> 00:43:52,640
Speaker 4: There is not a semiconductor in any nicotine pouches. Now,

762
00:43:52,719 --> 00:43:55,799
Speaker 4: now these disposables, they've gotten so cheap that you can

763
00:43:55,840 --> 00:43:58,800
Speaker 4: buy one that has an LED screen or LCD screen

764
00:43:58,840 --> 00:44:01,040
Speaker 4: on the outside and it shows you all these things.

765
00:44:01,040 --> 00:44:04,200
Speaker 4: That's crazy, but it is a simple process. But there

766
00:44:04,200 --> 00:44:08,560
Speaker 4: hasn't been major concentration in the co manufacturing space because

767
00:44:08,840 --> 00:44:13,359
Speaker 4: most of the big tobacco companies have wanted to make

768
00:44:13,360 --> 00:44:14,000
Speaker 4: it themselves.

769
00:44:14,200 --> 00:44:18,879
Speaker 3: Setting aside the very opaque worlds of elf bar, what

770
00:44:19,000 --> 00:44:23,360
Speaker 3: is raising financing like for something like a Lucy Goods

771
00:44:23,400 --> 00:44:25,479
Speaker 3: Because I can see, on the one hand, okay, maybe

772
00:44:25,480 --> 00:44:28,560
Speaker 3: you could make a sort of health argument where at

773
00:44:28,640 --> 00:44:31,719
Speaker 3: least you're arguing that this is a product for people

774
00:44:31,760 --> 00:44:34,719
Speaker 3: who are addicted to cigarettes to try to move on

775
00:44:34,800 --> 00:44:37,360
Speaker 3: to something that has fewer side effects. But on the

776
00:44:37,400 --> 00:44:40,279
Speaker 3: other hand, I have to imagine that anything with the

777
00:44:40,320 --> 00:44:44,319
Speaker 3: word nicotine in it, there's probably some wariness, and there's

778
00:44:44,360 --> 00:44:48,000
Speaker 3: probably investors out there who are very, very worried about

779
00:44:48,040 --> 00:44:52,120
Speaker 3: being perceived to be getting people hooked on an addictive substance.

780
00:44:52,200 --> 00:44:54,560
Speaker 3: So what is that like? What do you do when

781
00:44:54,600 --> 00:44:57,200
Speaker 3: you go out to investors and what are the concerns

782
00:44:57,200 --> 00:44:58,960
Speaker 3: that they have there? And who do you actually raise

783
00:44:59,000 --> 00:45:00,600
Speaker 3: money from.

784
00:45:00,960 --> 00:45:04,000
Speaker 4: Yeah, it's been tricky. There's a lot of venture capital

785
00:45:04,000 --> 00:45:06,520
Speaker 4: firms that have what are called vice clauses in their

786
00:45:06,960 --> 00:45:09,880
Speaker 4: limited partner agreements, and a lot of those vice clauses

787
00:45:09,920 --> 00:45:14,120
Speaker 4: are very broad. They say things like no weapons, no

788
00:45:15,440 --> 00:45:18,960
Speaker 4: drug products, no sex products, these types of things. Now,

789
00:45:19,040 --> 00:45:22,120
Speaker 4: over the years, there's been a kind of a steady

790
00:45:22,160 --> 00:45:25,759
Speaker 4: flow of companies that have kind of defied those vice

791
00:45:25,800 --> 00:45:30,160
Speaker 4: clauses and role is a famous example in the defense

792
00:45:30,200 --> 00:45:33,160
Speaker 4: space where a lot of venture funds went back and

793
00:45:33,239 --> 00:45:36,400
Speaker 4: revisited their vice clauses because they kind of realized that

794
00:45:36,440 --> 00:45:40,520
Speaker 4: they were written in a blanket way. And I think

795
00:45:40,880 --> 00:45:44,400
Speaker 4: the vice clause broadly is kind of a mistake for

796
00:45:44,640 --> 00:45:48,919
Speaker 4: venture capitalists to lean on because it doesn't allow them

797
00:45:48,920 --> 00:45:52,600
Speaker 4: to actually engage with the moral question of what is

798
00:45:52,640 --> 00:45:56,160
Speaker 4: the impact of this company. You know, it would be

799
00:45:56,239 --> 00:46:00,560
Speaker 4: crazy if a VC said, hey, we have a fraud clause,

800
00:46:00,600 --> 00:46:04,120
Speaker 4: we will never invest in a fraud It's like, obviously

801
00:46:04,200 --> 00:46:07,799
Speaker 4: that's the case, But it's incumbent on the venture capitalists

802
00:46:07,840 --> 00:46:11,320
Speaker 4: to assess the fraudulent nature of the business and avoid

803
00:46:11,360 --> 00:46:14,319
Speaker 4: investing in an FTX or at arause, right, And the

804
00:46:14,360 --> 00:46:17,800
Speaker 4: same process should be run for quote unquote vice companies,

805
00:46:18,160 --> 00:46:22,080
Speaker 4: and that should allow you to determine that maybe Anderil

806
00:46:22,640 --> 00:46:25,839
Speaker 4: is a good company and is doing a positive thing

807
00:46:25,880 --> 00:46:28,400
Speaker 4: for the world, even though yes, it would trigger a

808
00:46:28,480 --> 00:46:32,840
Speaker 4: traditional vice clause. More broadly, I think that derivor of

809
00:46:33,440 --> 00:46:36,440
Speaker 4: decision to invest in something like this is that this

810
00:46:36,600 --> 00:46:39,880
Speaker 4: is such a such a narrow market in the sense

811
00:46:39,920 --> 00:46:44,359
Speaker 4: that if you're investing in B to B software, there's

812
00:46:44,400 --> 00:46:48,680
Speaker 4: a new unicorn every six months. There's a new unicorn

813
00:46:48,719 --> 00:46:53,000
Speaker 4: in the nicotine space once a decade maybe, and rarely.

814
00:46:53,120 --> 00:46:57,280
Speaker 4: So even if you are an investor and you see

815
00:46:57,440 --> 00:47:00,120
Speaker 4: something that's promising, it's not really something that you can

816
00:47:00,160 --> 00:47:03,239
Speaker 4: build a career around. Where oh, yeah, you were the

817
00:47:03,280 --> 00:47:06,640
Speaker 4: first investor in jewel and so you get all the

818
00:47:06,640 --> 00:47:09,640
Speaker 4: deal flow for the next ten jewels. That doesn't happen,

819
00:47:09,800 --> 00:47:12,320
Speaker 4: whereas that certainly does happen in B to B software.

820
00:47:12,400 --> 00:47:15,719
Speaker 4: And so I think the bigger difficulty has just been

821
00:47:15,760 --> 00:47:18,560
Speaker 4: with the market structure and the desire of venture capitalists

822
00:47:18,560 --> 00:47:21,960
Speaker 4: to participate in this particular industry, because it's not something

823
00:47:22,000 --> 00:47:24,759
Speaker 4: that's a gold mine that you can just, you know,

824
00:47:25,080 --> 00:47:26,440
Speaker 4: build a whole career around.

825
00:47:26,840 --> 00:47:31,279
Speaker 2: I just have one last question. You're in addition to

826
00:47:31,840 --> 00:47:36,400
Speaker 2: founding Lucy, He's according to your Twitter profile, you're an

827
00:47:36,480 --> 00:47:40,160
Speaker 2: entrepreneur in residence at the founder's fund, Peter Teal. You

828
00:47:40,239 --> 00:47:43,440
Speaker 2: mentioned Teal earlier when you were talking about Soilan in

829
00:47:43,719 --> 00:47:46,560
Speaker 2: Zen culture. I think there was an article that all

830
00:47:46,600 --> 00:47:52,120
Speaker 2: of jd Vance's staffers are big are big Zin consumers.

831
00:47:52,560 --> 00:47:55,000
Speaker 2: I know this is like a blanket statement. It certainly

832
00:47:55,040 --> 00:47:58,799
Speaker 2: doesn't nearly encompass every nicotine user at all. But just

833
00:47:58,840 --> 00:48:03,279
Speaker 2: from your perspective, how would you describe the synthesis of

834
00:48:03,680 --> 00:48:07,000
Speaker 2: nicotine consumption and conservative politics more broadly?

835
00:48:07,600 --> 00:48:12,840
Speaker 4: Oh, it's really hard. I think it's probably something around

836
00:48:13,040 --> 00:48:16,759
Speaker 4: the edginess that comes with saying something like nicotine is

837
00:48:17,400 --> 00:48:20,920
Speaker 4: not bad for you. It's kind of this, it's kind

838
00:48:20,960 --> 00:48:24,440
Speaker 4: of this secret that people love to learn about. They

839
00:48:25,400 --> 00:48:30,680
Speaker 4: have this chemical exactly exactly, and so it's very countercultural.

840
00:48:30,840 --> 00:48:35,640
Speaker 4: And if you pull people broadly, people believe that nicotine

841
00:48:35,719 --> 00:48:40,839
Speaker 4: is what causes cancer in cigarettes, and that's actually a misconception.

842
00:48:41,080 --> 00:48:43,000
Speaker 4: And that's why if you look at a tin of

843
00:48:43,120 --> 00:48:46,320
Speaker 4: zin or a tin of lucy, the warning just says

844
00:48:46,600 --> 00:48:50,719
Speaker 4: this product contains nicotine. Nicotine is an addictive chemical, whereas

845
00:48:50,960 --> 00:48:55,520
Speaker 4: on tobacco products it says this product causes cancer. And also,

846
00:48:55,960 --> 00:48:59,480
Speaker 4: you can look at the California prop sixty five, is

847
00:48:59,520 --> 00:49:02,600
Speaker 4: that it lists cancer parsonogenically.

848
00:49:02,600 --> 00:49:04,360
Speaker 2: Everything cancer, cancer and.

849
00:49:04,360 --> 00:49:09,520
Speaker 4: Comtory basically but not but not these nicotine p which is, like,

850
00:49:09,880 --> 00:49:12,840
Speaker 4: you know, notable. I think because obviously California is a

851
00:49:12,920 --> 00:49:15,160
Speaker 4: very careful state, as they should be with this stuff.

852
00:49:15,440 --> 00:49:17,919
Speaker 4: I think that might be part of it. The other

853
00:49:18,000 --> 00:49:20,680
Speaker 4: part of it is, if you look at the lineage

854
00:49:20,719 --> 00:49:26,440
Speaker 4: of where oral tobacco has been popular, the the baseball

855
00:49:26,480 --> 00:49:29,719
Speaker 4: players and the hockey players that were dipping in the

856
00:49:29,840 --> 00:49:33,799
Speaker 4: nineties and early two thousands, that tends to be a

857
00:49:33,880 --> 00:49:40,520
Speaker 4: more red state phenomenon, and so the earliest adopters. It's

858
00:49:40,560 --> 00:49:45,080
Speaker 4: always hardest to get someone to switch form factors. It's

859
00:49:45,160 --> 00:49:48,320
Speaker 4: easy to get someone who's already using a tobacco pouch

860
00:49:48,480 --> 00:49:52,279
Speaker 4: to use a tobacco free pouch because it's fundamentally the same,

861
00:49:52,480 --> 00:49:55,200
Speaker 4: the same shape of product in their pocket, the same

862
00:49:55,520 --> 00:49:58,760
Speaker 4: feeling in their lip. It's much harder to get someone

863
00:49:58,800 --> 00:50:03,960
Speaker 4: who's maybe vaping in a blue state to switch over.

864
00:50:04,040 --> 00:50:08,320
Speaker 4: Although obviously it's happening now, I really hope that it

865
00:50:08,360 --> 00:50:11,919
Speaker 4: doesn't become a culture war issue, or that culture war

866
00:50:11,960 --> 00:50:14,640
Speaker 4: issue subsides, because we don't want to wind up with

867
00:50:14,680 --> 00:50:19,239
Speaker 4: a situation where all of a sudden, smoking becomes important

868
00:50:19,280 --> 00:50:23,200
Speaker 4: to the left and we're seeing Democrats drop dead because

869
00:50:23,520 --> 00:50:27,440
Speaker 4: of some protest of Tucker Carlson, like who cares, it's

870
00:50:27,480 --> 00:50:30,680
Speaker 4: not important, Like this is so much the stakes are

871
00:50:30,680 --> 00:50:34,799
Speaker 4: so much higher than you know, avoiding an association with

872
00:50:35,239 --> 00:50:38,800
Speaker 4: you know, a right wing firebrand. And we've seen something

873
00:50:38,800 --> 00:50:42,799
Speaker 4: similar with the menthol cigarette ban where Biden, the Biden

874
00:50:42,840 --> 00:50:46,319
Speaker 4: administration rolled back plans to ban menthol cigarettes, and the

875
00:50:46,400 --> 00:50:51,239
Speaker 4: NAACP condemned the White House for that action because it

876
00:50:51,280 --> 00:50:54,600
Speaker 4: was seen as kind of a cynical play for votes.

877
00:50:54,640 --> 00:51:02,400
Speaker 4: And realistically, every single demographic or political leaning needs reduced

878
00:51:02,400 --> 00:51:05,600
Speaker 4: harm products. They need options that are down as far

879
00:51:05,680 --> 00:51:09,040
Speaker 4: down the continue of risk as possible. So I don't know,

880
00:51:09,440 --> 00:51:11,640
Speaker 4: maybe the answer here is that we need to we

881
00:51:11,680 --> 00:51:15,880
Speaker 4: need to make the like an ultraliberal out.

882
00:51:15,800 --> 00:51:19,040
Speaker 2: The left coating the left coated the left, Yeah, exactly.

883
00:51:19,360 --> 00:51:21,399
Speaker 4: I don't know who the Tucker Carlson of the left

884
00:51:21,440 --> 00:51:24,360
Speaker 4: would be. Maybe we could get John Stewart to promote

885
00:51:24,400 --> 00:51:27,399
Speaker 4: it or something. But I mean, in general, our our

886
00:51:27,440 --> 00:51:31,840
Speaker 4: planet Lucy has been you know, to sponsor podcasts on

887
00:51:31,920 --> 00:51:34,279
Speaker 4: both sides of the aisle, and you know, we don't

888
00:51:34,280 --> 00:51:38,880
Speaker 4: take a firm stance uh politically because the issues is

889
00:51:38,960 --> 00:51:41,680
Speaker 4: so much bigger than that and and the political lines

890
00:51:41,920 --> 00:51:45,040
Speaker 4: do not align around the harm that cigarettes are. Calling.

891
00:51:45,840 --> 00:51:49,000
Speaker 2: John Cougan, co founder of Lucy Nicotine, thank you so much,

892
00:51:49,200 --> 00:51:51,720
Speaker 2: so many questions. I had been curious about this space

893
00:51:51,800 --> 00:51:54,280
Speaker 2: answered there. So really appreciate you coming on outline.

894
00:51:54,320 --> 00:51:55,360
Speaker 3: Yeah, that was so interesting.

895
00:51:55,520 --> 00:51:56,560
Speaker 4: Yeah, thanks for having me on.

896
00:52:10,640 --> 00:52:13,120
Speaker 2: First of all, that was really fascinating about the elf bar,

897
00:52:13,200 --> 00:52:15,520
Speaker 2: which the whole thing is so weird to me that

898
00:52:15,719 --> 00:52:21,080
Speaker 2: like here's this regulated Philip associated company jewel that like

899
00:52:21,760 --> 00:52:23,399
Speaker 2: that sort of went off the market for a while

900
00:52:23,440 --> 00:52:26,560
Speaker 2: and then we just got flooded by cotton candy made

901
00:52:26,640 --> 00:52:27,680
Speaker 2: in that.

902
00:52:27,719 --> 00:52:31,760
Speaker 3: Consumes more resources and ends up like taking up more space.

903
00:52:31,840 --> 00:52:32,600
Speaker 3: I sin fills.

904
00:52:32,680 --> 00:52:35,879
Speaker 2: I see disposable vapes on the street all the time,

905
00:52:35,920 --> 00:52:38,880
Speaker 2: and there's like semiconductors in there, and like all this

906
00:52:38,920 --> 00:52:41,799
Speaker 2: stuff and batteries and everything, it just gets thrown away.

907
00:52:41,840 --> 00:52:42,360
Speaker 2: That's crazy.

908
00:52:42,520 --> 00:52:43,279
Speaker 1: It's also just.

909
00:52:43,200 --> 00:52:47,040
Speaker 3: This weird like gray market where if you walk into

910
00:52:47,360 --> 00:52:51,040
Speaker 3: stores in New York, like the elf bars are kind

911
00:52:51,080 --> 00:52:54,720
Speaker 3: of hidden away like behind the cash registered, but everyone

912
00:52:54,800 --> 00:52:57,919
Speaker 3: knows that they're there, and like clearly no one's really

913
00:52:57,960 --> 00:53:00,840
Speaker 3: cracking down on them. Now, there's so much to pull

914
00:53:00,880 --> 00:53:04,160
Speaker 3: out of that conversation. One thing that I thought was

915
00:53:04,200 --> 00:53:07,839
Speaker 3: really interesting was like just the different pathways, the sort

916
00:53:07,840 --> 00:53:12,480
Speaker 3: of like pre market tobacco pathways. I hadn't realized that

917
00:53:12,520 --> 00:53:14,359
Speaker 3: there were all the I mean I guess it makes sense,

918
00:53:14,360 --> 00:53:16,239
Speaker 3: but I hadn't realized that you had to make a

919
00:53:16,280 --> 00:53:19,239
Speaker 3: decision about that so early on. And then the other

920
00:53:19,280 --> 00:53:21,520
Speaker 3: thing that I thought was really interesting was John was

921
00:53:21,520 --> 00:53:26,160
Speaker 3: talking about how they saw regulation basically a regulated space

922
00:53:26,520 --> 00:53:30,399
Speaker 3: as an additional mote, so something that was desirable from

923
00:53:30,400 --> 00:53:32,839
Speaker 3: a business perspective, and that's why they targeted it.

924
00:53:33,200 --> 00:53:37,560
Speaker 2: No, that is super interesting. And when you think about like, Okay,

925
00:53:37,560 --> 00:53:38,840
Speaker 2: you have to like get in the queue, and you

926
00:53:38,880 --> 00:53:42,360
Speaker 2: have to do this testing or the fact stability testing.

927
00:53:42,520 --> 00:53:45,800
Speaker 2: So even after you design the power to the gum,

928
00:53:45,880 --> 00:53:47,719
Speaker 2: you have to make sure that it's the same try

929
00:53:47,760 --> 00:53:50,239
Speaker 2: to keep it on a shelf. Yeah, yeah, shelf stability.

930
00:53:50,239 --> 00:53:52,640
Speaker 2: That's interesting. And then this application. And then there's this

931
00:53:52,800 --> 00:53:57,880
Speaker 2: que interesting that you mentioned COVID sort of obviously and

932
00:53:58,000 --> 00:54:01,880
Speaker 2: probably for good reason, taking resources away from some of

933
00:54:01,920 --> 00:54:07,040
Speaker 2: the health regulators who had higher priorities than approving nicotine pouches.

934
00:54:07,239 --> 00:54:10,800
Speaker 2: They're in twenty twenty. Just lots of really interesting details

935
00:54:10,800 --> 00:54:12,920
Speaker 2: about how we got to this state of the market.

936
00:54:13,200 --> 00:54:13,400
Speaker 1: You know.

937
00:54:13,440 --> 00:54:15,279
Speaker 3: The other thing I'm kind of wondering is what the

938
00:54:15,320 --> 00:54:18,759
Speaker 3: distribution network, Yeah, helf bars looks like now, no, and

939
00:54:18,840 --> 00:54:21,440
Speaker 3: how like maybe we need to find someone with a

940
00:54:21,440 --> 00:54:23,480
Speaker 3: bodega and ask them like, how do you how do

941
00:54:23,560 --> 00:54:25,879
Speaker 3: they get how bars in the first place?

942
00:54:25,960 --> 00:54:28,640
Speaker 2: Yeah, that's a good question. We should just find any

943
00:54:28,840 --> 00:54:31,080
Speaker 2: of them, just we could just walk into some of

944
00:54:31,120 --> 00:54:33,080
Speaker 2: them and ask them if they'll come on. I also

945
00:54:33,239 --> 00:54:37,719
Speaker 2: think it's funny the Helsingborg Sweden has like the Shenzen

946
00:54:38,680 --> 00:54:42,240
Speaker 2: or the Taiwan, the Taiwan of nicotine pouches. It's interesting.

947
00:54:42,560 --> 00:54:45,120
Speaker 2: I had done Swedish match started off as a match.

948
00:54:44,920 --> 00:54:47,879
Speaker 3: Company, did you know, speaking very.

949
00:54:48,000 --> 00:54:51,000
Speaker 2: Very Ricardo houseman coded that we learned.

950
00:54:51,760 --> 00:54:57,560
Speaker 3: Did you know, speaking of international tidbits about this particular topic,

951
00:54:58,480 --> 00:55:02,400
Speaker 3: what's the only I think this is still this is

952
00:55:02,440 --> 00:55:04,680
Speaker 3: still true and up to date. But the only country

953
00:55:04,680 --> 00:55:09,359
Speaker 3: to have banned cigarettes entirely, uh.

954
00:55:08,320 --> 00:55:12,200
Speaker 2: No, Bhutan, Oh, the happy country.

955
00:55:12,400 --> 00:55:16,359
Speaker 3: Yeah, and I think it failed terribly because it just

956
00:55:16,640 --> 00:55:19,560
Speaker 3: started a black market in cigarettes and people were, you know,

957
00:55:19,600 --> 00:55:21,239
Speaker 3: taking them over the border, and so I think they

958
00:55:21,280 --> 00:55:23,880
Speaker 3: actually ended up reversing it. But kind of interesting, it

959
00:55:23,920 --> 00:55:24,400
Speaker 3: really is.

960
00:55:24,560 --> 00:55:27,600
Speaker 2: Like I do think about that conversation from years ago

961
00:55:27,719 --> 00:55:30,640
Speaker 2: with Laurence hamp Till about like, you know, when I

962
00:55:30,680 --> 00:55:33,400
Speaker 2: was a kid, like the things I knew is like

963
00:55:33,480 --> 00:55:37,840
Speaker 2: cigarettes are really bad. Bad people smoke cigarettes. And also

964
00:55:37,880 --> 00:55:39,600
Speaker 2: it seemed like they're going away, like it's totally a

965
00:55:39,600 --> 00:55:41,960
Speaker 2: matter of time. But then you recognize that there's been

966
00:55:41,960 --> 00:55:45,320
Speaker 2: a war against nicotine or tobacco for you know, close

967
00:55:45,360 --> 00:55:49,120
Speaker 2: to centuries. It's not going away. It'll just continue to

968
00:55:49,160 --> 00:55:51,160
Speaker 2: evolve in different forms. They're never going to get rid

969
00:55:51,160 --> 00:55:51,440
Speaker 2: of it.

970
00:55:51,719 --> 00:55:55,600
Speaker 3: Okay, well on that Lindy note, shall we leave it there?

971
00:55:55,680 --> 00:55:56,399
Speaker 2: Let's leave it there.

972
00:55:56,680 --> 00:55:59,400
Speaker 3: This has been another episode of the Odd Thoughts podcast.

973
00:55:59,480 --> 00:56:02,840
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

974
00:56:02,520 --> 00:56:05,360
Speaker 2: And I'm Joe Wisanthal. You can follow me at the Stalwart.

975
00:56:05,640 --> 00:56:09,239
Speaker 2: Follow John Cougan He's at John Cougan. Follow our producers

976
00:56:09,320 --> 00:56:13,000
Speaker 2: Carman Rodriguez at Carman Arman, dash O Bennett at Dashbot

977
00:56:13,040 --> 00:56:16,920
Speaker 2: and Kilbrooks at Kilbrooks. Thank you to our producer Moses onm.

978
00:56:17,200 --> 00:56:20,080
Speaker 2: For more Oddlogs content, go to Bloomberg dot com slash

979
00:56:20,080 --> 00:56:22,520
Speaker 2: odd Lots, where we have transcripts, a blog, and a

980
00:56:22,600 --> 00:56:25,360
Speaker 2: newsletter and you can chat about all of these topics.

981
00:56:25,440 --> 00:56:27,600
Speaker 2: We don't have a nicotine room, but people will find

982
00:56:27,600 --> 00:56:30,160
Speaker 2: a way to talk about it. In the discord Discord

983
00:56:30,200 --> 00:56:32,280
Speaker 2: dot gg, slash odlogs.

984
00:56:32,080 --> 00:56:35,239
Speaker 3: And if you enjoy odd Lots, If you want us

985
00:56:35,280 --> 00:56:38,160
Speaker 3: to do a deep dive into elf bars and the

986
00:56:38,200 --> 00:56:41,040
Speaker 3: business model there, then please leave us a positive review

987
00:56:41,120 --> 00:56:44,560
Speaker 3: on your favorite podcast platform. And remember, if you are

988
00:56:44,640 --> 00:56:47,200
Speaker 3: a Bloomberg subscriber, you can listen to all of our

989
00:56:47,200 --> 00:56:50,239
Speaker 3: episodes absolutely ad free. All you need to do is

990
00:56:50,239 --> 00:56:53,920
Speaker 3: connect your Bloomberg account with Apple Podcasts. In order to

991
00:56:53,960 --> 00:56:57,040
Speaker 3: do that, just find the Bloomberg channel on Apple Podcasts

992
00:56:57,120 --> 00:57:15,040
Speaker 3: and follow the instructions there. Thanks for listening, Bead