WEBVTT - How To Analyze A Marijuana Stock 0:00:11.119 --> 0:00:14.240 Hello, and welcome to another episode of the Oblots podcast. 0:00:14.320 --> 0:00:17.840 I'm Joe Wise and Paul and I'll Tracy. You want 0:00:17.840 --> 0:00:22.440 to hear something funny always? So, I think in our 0:00:22.480 --> 0:00:25.160 work chat the other day, I don't think you were online. 0:00:25.960 --> 0:00:27.400 I think you were off that day. But in our 0:00:27.400 --> 0:00:29.520 work chat the other day, I was talking to some 0:00:29.600 --> 0:00:32.040 of our colleagues and I found out that they have 0:00:32.120 --> 0:00:35.640 a different description of me and you. They have a 0:00:35.680 --> 0:00:39.880 different way of thinking about our roles. Oh really, okay, 0:00:40.040 --> 0:00:43.680 have you heard this? I'm very curious. No, okay, So 0:00:44.520 --> 0:00:47.280 you know how like I am always sort of jumping 0:00:47.520 --> 0:00:51.040 on like whatever the hot market story is. Last year 0:00:51.200 --> 0:00:54.240 I was talking about crypto a lot, and this year 0:00:54.280 --> 0:00:56.960 I wrote an article about cannabis or whatever it is. 0:00:57.560 --> 0:01:01.680 And you consistently cover of the very serious things, right, 0:01:01.720 --> 0:01:06.520 So you're it's like credit markets and market structure, and 0:01:06.560 --> 0:01:09.600 you basically have an understanding of the things that will 0:01:09.640 --> 0:01:12.600 be enduring through markets for a long time, whereas I'm 0:01:12.640 --> 0:01:14.839 much more flighty and just sort of jumped to whatever 0:01:14.959 --> 0:01:18.800 is hot. So anyway, apparently they say that that I'm 0:01:18.840 --> 0:01:22.319 the momentum I'm the momentum factor, and you're the value factor. 0:01:22.440 --> 0:01:25.800 Is sort of how they see our different roles, and 0:01:25.920 --> 0:01:30.560 that perfect. That's great. Um, I guess we need to 0:01:30.640 --> 0:01:34.400 think about rebranding add thoughts as a momentum and value, 0:01:35.040 --> 0:01:37.920 cause it sounds like a terrible like sitcom, but it 0:01:38.000 --> 0:01:41.880 is a good characterization anyway. So, you know, I wrote 0:01:41.920 --> 0:01:44.960 the story a few weeks ago for Business Week about 0:01:45.160 --> 0:01:48.840 exactly what I'm talking about, cannabis and crypto and various 0:01:48.840 --> 0:01:51.840 investing fads and bubbles and psychology and stuff like that. 0:01:52.520 --> 0:01:57.320 And in doing the research for that story, I came 0:01:57.440 --> 0:02:02.080 across what at the time was a group of anonymous 0:02:02.120 --> 0:02:07.559 experts in marijuana investing called the Canna Lists, and they 0:02:07.640 --> 0:02:12.639 have a podcast and a page on Reddit where they analyze, 0:02:12.840 --> 0:02:16.919 really intensely breakdown the various businesses of all these marijuana 0:02:16.919 --> 0:02:19.760 companies that people are investing in. And it's pretty clear 0:02:19.800 --> 0:02:22.200 that they're very far ahead of the pack, like a 0:02:22.240 --> 0:02:26.480 few different guys whose understanding of the granularity of the 0:02:26.520 --> 0:02:31.079 industry are far above where most of the media and uh, 0:02:31.160 --> 0:02:35.399 most Wall Street analysts are on this nascent area. Right. 0:02:35.480 --> 0:02:38.120 So I remember reading a little bit about this in 0:02:38.320 --> 0:02:40.240 that piece that you did for a Business Week, and 0:02:40.320 --> 0:02:42.480 I thought it was really fascinating because every once in 0:02:42.520 --> 0:02:47.200 a while you see these communities essentially spring up on Reddit, 0:02:47.840 --> 0:02:52.200 and uh, sometimes these communities go into an insane amount 0:02:52.240 --> 0:02:56.240 of granular detail about what they're talking about, and the 0:02:56.320 --> 0:02:59.520 Catalysts is definitely one of those. And even though you know, 0:02:59.560 --> 0:03:01.840 I started by saying how you and I we we 0:03:01.919 --> 0:03:05.400 sort of have different complementary approaches. One thing that I 0:03:05.480 --> 0:03:08.440 know both of us are very fond of is any 0:03:08.440 --> 0:03:12.799 stories of essentially someone on the Internet becoming the ax 0:03:13.000 --> 0:03:14.880 in a certain space. So like we both used to 0:03:15.400 --> 0:03:19.480 like Calculated Risk Bill McBride, we had him on the podcast, 0:03:19.520 --> 0:03:22.519 Like we both love these stories of like someone online 0:03:23.000 --> 0:03:26.560 on their own, independent of major institution, is becoming the expert, 0:03:26.639 --> 0:03:30.720 becoming the must read on some new area, right especially 0:03:30.800 --> 0:03:32.959 when it's new. And that's I think the thing that's 0:03:32.960 --> 0:03:35.640 the most interesting about cannabis stocks right now, because you're 0:03:35.680 --> 0:03:40.000 talking about an entirely new industry potentially with a whole 0:03:40.000 --> 0:03:43.160 new set of rules, in a whole new way of functioning, 0:03:43.640 --> 0:03:46.560 and a lot of the people, the traditional people, the 0:03:46.600 --> 0:03:49.840 cell side analysts on Wall Street haven't really wrapped their 0:03:49.880 --> 0:03:53.040 heads around it just yet exactly right. So the interesting 0:03:53.080 --> 0:03:57.280 thing is right after my article came out. The Canalysts, Uh, 0:03:57.320 --> 0:04:00.560 they d anonymize themselves. They docks themselves in real and 0:04:00.960 --> 0:04:04.800 revealed who they are. And we're very lucky because one 0:04:04.840 --> 0:04:08.400 of them has agreed to come on Today's Odd Lots podcasts. 0:04:08.480 --> 0:04:12.040 So I would like to bring in uh, Craig Wiggins. 0:04:12.120 --> 0:04:14.680 He is one of the three Canalysts. Craig, thank you 0:04:14.760 --> 0:04:18.520 very much for joining us. Joe Tracy pleas pleasure to 0:04:18.520 --> 0:04:21.159 be here. It's it's nice to be a guest on 0:04:21.200 --> 0:04:23.599 a podcast and not have to run the run the show. 0:04:23.800 --> 0:04:26.280 I know it's really I've been whenever a few times 0:04:26.320 --> 0:04:28.799 I've been a guest on a podcast, I always appreciate 0:04:28.839 --> 0:04:31.960 how much easier it is. I'm glad you're with us. 0:04:32.360 --> 0:04:34.839 Tell us, why don't you just give us the background? 0:04:34.880 --> 0:04:37.000 Who are you? Who are the cannalysts? And why do 0:04:37.120 --> 0:04:42.040 people read your stuff? Well? With respect to the cannalysts, 0:04:42.600 --> 0:04:46.960 I actually found both Cytochrome Graham Jones, who's our PhD 0:04:47.040 --> 0:04:52.400 candidate at Brock University in biotech, and Molly Time Andrew 0:04:52.480 --> 0:04:56.560 Udell on social media forums and the social media forums. 0:04:57.480 --> 0:05:00.880 You would think in most cases you to these farms 0:05:01.000 --> 0:05:06.120 and uh, someone characterized it as a zoo very loose dialogue, 0:05:06.120 --> 0:05:09.400 a lot of pumpers, a lot of bashers and the like. 0:05:09.960 --> 0:05:13.920 But both these individuals I found to be incredibly intelligent 0:05:13.960 --> 0:05:15.800 and boy was that was that or a good call 0:05:15.880 --> 0:05:20.240 in my base my part, So we were both All 0:05:20.240 --> 0:05:23.560 three of us were casually introduced by myself as a 0:05:23.560 --> 0:05:26.200 as a group, and in November of last year, we 0:05:26.320 --> 0:05:32.160 decided to break off from another reddit, weedstocks subreddit and 0:05:32.240 --> 0:05:37.120 formed the Cannabists because we wanted a curated place for 0:05:37.200 --> 0:05:43.080 engaged investors that was deep, it wasn't people giving opinions 0:05:43.120 --> 0:05:47.440 without fact. So we actually formed the Cannabists last November, 0:05:47.560 --> 0:05:51.480 very late November early December last year, and we've had 0:05:51.600 --> 0:05:55.640 quite quite a run of it lately. We have several platforms. 0:05:56.360 --> 0:06:01.200 We use our quarterly earnings analysis where I complete rundowns. 0:06:01.240 --> 0:06:04.080 I'm a credit guy by trade. I was in I've 0:06:04.080 --> 0:06:07.760 been involved in international trade finance and supply chain management 0:06:07.760 --> 0:06:13.719 finance for over thirty years now, Molly time Andrew was 0:06:13.760 --> 0:06:16.920 thirty years in credit risk management and energy trading, so 0:06:17.000 --> 0:06:19.400 he knows the equity box. I'm I'm a lender. I 0:06:19.480 --> 0:06:23.000 like to get repaid, So I know that fundamental credit 0:06:23.040 --> 0:06:26.559 analysis stuff. And when we added Graham to the mix, 0:06:27.480 --> 0:06:30.640 which does he does our science side and our patent review, 0:06:30.720 --> 0:06:34.400 we became very very three dimensional. And uh so we've 0:06:34.440 --> 0:06:38.920 we've expanded that or ask me anything series is been phenomenal. 0:06:39.080 --> 0:06:42.520 It is c suite. Uh we bring in the executive 0:06:42.560 --> 0:06:47.159 suites to talk about their companies and our community asks 0:06:47.240 --> 0:06:50.840 them any anything that that like. And uh, it's amazing 0:06:51.000 --> 0:06:53.880 the response we've had. We've had CFOs come on and 0:06:54.160 --> 0:06:58.680 we after two hours they give us six which is amazing. Tracy, 0:06:58.720 --> 0:07:01.480 I was just gonna say, a credit analysts talking about 0:07:01.560 --> 0:07:06.320 cannabis kind of the perfect guest for the two of us. Oh. Absolutely, 0:07:06.440 --> 0:07:09.359 And I love the credit risk manager with thirty years 0:07:09.400 --> 0:07:13.720 experience whose user name is Molly Time. That's fairly unusual. 0:07:14.560 --> 0:07:19.360 It's named after his cat. Actually, just to take a 0:07:19.400 --> 0:07:23.720 step back for a second, why were you all on 0:07:24.080 --> 0:07:27.360 social media or on the Reddit forums talking about pot 0:07:27.440 --> 0:07:32.560 stocks in the first place. What sparked your collective interest? Well, 0:07:32.880 --> 0:07:37.720 on my side, it was about the name accounting treatment 0:07:37.960 --> 0:07:42.080 of h I f r S international financial reporting standards, 0:07:42.600 --> 0:07:48.120 where these companies growing cannabis at harvest we're able to 0:07:48.160 --> 0:07:52.600 take the entire profit before sale, less the selling expense 0:07:52.960 --> 0:07:55.240 through their income state. I found it to be very, 0:07:55.320 --> 0:07:59.920 very misleading, so I dug into that and started commenting 0:08:00.040 --> 0:08:04.080 about that in the industry. For Andrew Uh, it was 0:08:04.160 --> 0:08:09.680 more about a long lifetime passion for cannabis and the 0:08:09.760 --> 0:08:14.600 stock market quite frankly, and for our younger PhD candidate, 0:08:14.960 --> 0:08:18.880 it was about learning the finance side and applying the 0:08:19.040 --> 0:08:21.560 science to it. So all three of us came from 0:08:21.560 --> 0:08:24.280 a different place where we were very fortunate to meet 0:08:24.320 --> 0:08:28.520 each other. So for for those who haven't been following 0:08:28.520 --> 0:08:32.040 the ins and outs of pot stocks, can you maybe 0:08:32.080 --> 0:08:36.240 describe the state of the current cannabis industry, like where 0:08:36.280 --> 0:08:39.360 are we in terms of legalization and where are we 0:08:39.400 --> 0:08:44.360 in terms of companies actually getting started and producing and 0:08:44.559 --> 0:08:49.480 selling cannabis. Well, next week, October seventeen, Canada will become 0:08:49.520 --> 0:08:53.920 the first G seven country to legalize adult use cannabis. 0:08:54.600 --> 0:08:57.720 We've had medical cannabis for a decade and Uh under 0:08:57.800 --> 0:09:00.439 various regimes and the last four year is under a 0:09:00.480 --> 0:09:04.960 pretty steady regime. And when Trudeau was elected, part of 0:09:04.960 --> 0:09:08.319 his platform was I'm going to legalize adult use cannabis. 0:09:08.760 --> 0:09:11.920 So we're we're a week away. It isn't going to 0:09:12.040 --> 0:09:17.199 go smoothly in Canada. It's not California, it's it's not Colorado. 0:09:17.840 --> 0:09:21.880 We have government's provincial governments that have inserted themselves into 0:09:21.920 --> 0:09:25.280 the supply chain and are acting like central warehousers and 0:09:25.320 --> 0:09:29.200 they're gonna handle all the online sales. So that's a 0:09:29.200 --> 0:09:32.880 little different. But right now the market extremely froth. You've 0:09:32.880 --> 0:09:36.479 got to be very careful jumping into this market because 0:09:36.760 --> 0:09:40.120 as an investor, if you're a trader, you love the volatility. 0:09:40.160 --> 0:09:42.040 But as an investor, and I'm an investor, I'm not 0:09:42.080 --> 0:09:45.960 a trader. Andrews the trader in our midst like, I 0:09:46.040 --> 0:09:49.120 look at it and the fundamentals. These companies are so 0:09:49.200 --> 0:09:53.400 far out over their skis right now on valuations versus fundamentals, 0:09:53.440 --> 0:09:57.120 and I think there's gonna be some massive failures within 0:09:57.160 --> 0:10:00.640 the industry, and you've got to be very choosy about 0:10:00.720 --> 0:10:02.920 what you're investing in. I'm fifty two years old. I 0:10:02.960 --> 0:10:04.680 don't have a lot of time to recover if I 0:10:04.720 --> 0:10:07.240 screw up, So I'm a little different than the thirty 0:10:07.280 --> 0:10:09.080 year olds. In the twenty year olds, Well, let's talk 0:10:09.120 --> 0:10:13.120 about this because I think the only two things that 0:10:13.200 --> 0:10:15.280 most people would know when they come to it is 0:10:15.320 --> 0:10:18.800 that the legal cannabis market is still fairly small around 0:10:18.840 --> 0:10:22.040 the world, certainly in the US, but there is pretty 0:10:22.040 --> 0:10:26.200 big potential for it to get much bigger as legalization expand. 0:10:26.280 --> 0:10:30.360 So everybody by now essentially knows that that's the story 0:10:30.440 --> 0:10:33.120 or that's the theme. But then you mentioned there's gonna 0:10:33.120 --> 0:10:34.840 be a lot of failures. A lot of these companies 0:10:34.880 --> 0:10:37.640 are out over the skis, out over their skis. So 0:10:37.720 --> 0:10:41.959 if you're deciding among stocks, what is the first thing 0:10:42.000 --> 0:10:45.880 you do to actually sort of ascertain who's really going 0:10:45.960 --> 0:10:50.560 to be able to profitably exploit this market? Well, I'm 0:10:50.600 --> 0:10:53.679 going to start with something that's probably the hardest thing 0:10:53.679 --> 0:10:58.360 to evaluate, and that's management. Um management is everyone can 0:10:58.440 --> 0:11:01.000 print off a very nice looking TV that that looks 0:11:01.040 --> 0:11:04.800 really good. A lot of companies, uh those cvs. The 0:11:04.840 --> 0:11:09.360 back stories for management look very very good. But making 0:11:09.400 --> 0:11:13.120 sure you map what management says to what they actually 0:11:13.160 --> 0:11:16.960 do to me is very very important, especially in the 0:11:17.000 --> 0:11:20.480 new industry. Like I'm a big believer in jockey before 0:11:20.559 --> 0:11:23.920 horse and hope that the trainer gets the horse up 0:11:23.960 --> 0:11:26.520 to speed and and that's how I've approached it. And 0:11:26.559 --> 0:11:29.160 I'm again I'm a lot more cautious. I'm a little older. 0:11:29.600 --> 0:11:31.560 I'm not going for the I'm not looking for the 0:11:31.600 --> 0:11:34.679 biggest company. I'm looking for the most profitable company. Can 0:11:34.720 --> 0:11:37.760 I ask you, know you mentioned management just then? How 0:11:38.400 --> 0:11:44.600 standardized are corporate practices of cannabis companies at this point? 0:11:44.960 --> 0:11:48.280 You talked about I f r S accounting rules. There's 0:11:48.280 --> 0:11:51.240 certain guidance that comes with being a public company, but 0:11:51.720 --> 0:11:54.720 the vast majority of cannabis companies at the moment aren't 0:11:54.800 --> 0:11:59.560 actually public. So what are the disclosures like? What what 0:11:59.720 --> 0:12:03.720 is the financial um or corporate governance like the corporate 0:12:03.760 --> 0:12:06.640 government needs a lot of work in my mind. There 0:12:06.679 --> 0:12:11.520 are some more professional companies like Constellation coming into Canopy 0:12:11.600 --> 0:12:14.800 I I think was hugely important for them. I think 0:12:14.880 --> 0:12:17.840 it provides a lot more rigor to their operations, which 0:12:17.840 --> 0:12:22.560 I haven't been fond of. Quite frankly, Constellations with with 0:12:22.640 --> 0:12:26.200 four or seven board members, they're professionalizing that firm. And 0:12:26.360 --> 0:12:28.880 I think till Raise another good example. Till Ray, by 0:12:28.880 --> 0:12:31.240 the way, is the only one that does not report 0:12:31.360 --> 0:12:33.960 in under I f r S because they went right 0:12:34.000 --> 0:12:36.439 to the US markets with NASDAC and they're using good 0:12:36.440 --> 0:12:39.280 old U S gaps. So I love chatting with those guys. 0:12:39.559 --> 0:12:42.480 It makes it a lot easier to look through their company. 0:12:42.760 --> 0:12:47.920 Afreya is a very solid company. Aurora interesting company, they 0:12:48.040 --> 0:12:50.920 have a lot of They've done so much vertical integration. 0:12:51.400 --> 0:12:54.280 And you know, it's really fascinating about the industry is 0:12:54.360 --> 0:12:59.200 there's so many different races being run and I'm amazed 0:12:59.240 --> 0:13:01.079 at the different race as they are being run. Who 0:13:01.080 --> 0:13:05.439 knows who wins? But on a corporate governance seriously lacking 0:13:05.559 --> 0:13:08.320 in the in the mid caps and small caps there 0:13:08.360 --> 0:13:11.480 that there's some questionable stuff out there. Well, explain that. 0:13:11.559 --> 0:13:14.600 What do you say multiple races being run? Let's get 0:13:14.600 --> 0:13:19.000 a little more granular. What are the different specific opportunities 0:13:19.040 --> 0:13:22.440 that people are competing for here? Well, let's look at 0:13:22.480 --> 0:13:25.480 the three let's say main players, although till race market 0:13:25.520 --> 0:13:27.679 cap would put them in a main player. Let's look 0:13:27.679 --> 0:13:31.920 at Canopy, Aurora and Afria. Canopy wanted to be the biggest. 0:13:32.880 --> 0:13:34.680 They were first to do a lot of things. First 0:13:34.679 --> 0:13:37.640 to go public, first to acquire a new company, first 0:13:37.760 --> 0:13:41.520 expand into Europe, first to get on the New York 0:13:41.559 --> 0:13:46.000 Stock Exchange or US listing. So Cannopy was about getting big, 0:13:46.240 --> 0:13:49.760 and it's big on both the adult youth side in Canada. 0:13:49.800 --> 0:13:52.839 But medical medical globally is gonna be huge, and I 0:13:52.840 --> 0:13:55.280 don't think a lot of people appreciate that. And all 0:13:55.400 --> 0:13:58.240 these companies are looking at medical globally. Aurora, on the 0:13:58.280 --> 0:14:02.040 other hand, uh one very massive facility that they've they've 0:14:02.080 --> 0:14:05.720 completed as guy in Edmonton. They have some smaller facilities 0:14:06.040 --> 0:14:09.200 and they've acquired a bunch of companies. They acquired Seemed, 0:14:09.840 --> 0:14:12.439 they acquired med Relief, and both of those are I 0:14:12.480 --> 0:14:14.920 think Semed was a billion plus. Med Relief was three 0:14:14.920 --> 0:14:19.160 and a half billion dollars for companies with ten million 0:14:19.200 --> 0:14:22.400 and quarterly sales fifteen million and quarterly sales, which is nuts. 0:14:23.040 --> 0:14:27.880 Then you have Aura, who have largely until this year 0:14:28.000 --> 0:14:32.240 really built to scale, and all they cared about was 0:14:32.680 --> 0:14:36.120 we're gonna build our own facilities in Leamington, Ontario, the 0:14:36.120 --> 0:14:39.280 greenhouse capital of Canada. We're gonna build them to scale. 0:14:39.760 --> 0:14:43.640 We care about EBITDA and as a traditional credit guy, 0:14:43.720 --> 0:14:47.080 EBA does my drug of choice. UM. I really like 0:14:47.160 --> 0:14:49.960 their management and that's where I put a lot of 0:14:50.080 --> 0:14:53.560 my capital in. And I've revolved it around, but they 0:14:53.560 --> 0:14:56.680 still aren my largest holding. And what I like about 0:14:56.720 --> 0:14:58.760 them they are a bit of the tortoise versus the 0:14:58.800 --> 0:15:03.200 hair with canopy, But I care about building scalable businesses. 0:15:03.640 --> 0:15:05.840 To me, there's a lot of hints that you can 0:15:05.840 --> 0:15:10.520 get from from management, even in even when revenue hasn't scaled. 0:15:10.880 --> 0:15:12.520 There's a lot of things you can pick up, and 0:15:13.440 --> 0:15:16.160 I just like the executive over there a little bit better. 0:15:16.800 --> 0:15:20.680 So when you look at the cannabis industry, is there 0:15:20.680 --> 0:15:26.200 a parallel conventional industry that you think it's most similar to. 0:15:26.480 --> 0:15:30.880 Is it, you know, maybe drug developments like the pharma industry, 0:15:31.000 --> 0:15:37.480 or is it potentially something more recreational. It is agricultural, 0:15:37.960 --> 0:15:41.480 it is pharma, it's consumer package goods. It's unlike anything 0:15:41.480 --> 0:15:44.880 I've seen, quite frankly, because you're gonna be producing for 0:15:45.040 --> 0:15:49.360 a recreational market as you try to develop patentable strains 0:15:49.400 --> 0:15:53.880 and drugs for for medical avenues. And to me, again, 0:15:53.920 --> 0:15:57.720 the medical side of this is the big plus. And 0:15:58.120 --> 0:16:01.200 once the US takes the wrap so often, let's farm. 0:16:01.200 --> 0:16:05.360 I really dig in and analyze the plant and analyze 0:16:05.400 --> 0:16:09.360 the hundred plus minor cannabinoids and what each one of 0:16:09.400 --> 0:16:12.800 those is capable of. I think that's the big story. 0:16:13.040 --> 0:16:16.640 It wreck is flashy, wreck is fun, It's it's the 0:16:16.680 --> 0:16:20.960 party cruise. Medical is a longer tunnel, but uh, in 0:16:21.040 --> 0:16:23.920 the endgame, health science and wellness is can be huge 0:16:23.920 --> 0:16:27.920 in this industry. Speaking of recreational marijuana, here's something that 0:16:27.920 --> 0:16:30.840 I've been curious about for a while. So right now, 0:16:30.920 --> 0:16:35.200 when it comes to alcohol or tobacco, people have some 0:16:35.360 --> 0:16:39.320 conception of brands that they like. Maybe I have a 0:16:39.360 --> 0:16:41.680 favorite beer and I drink at the most, but I 0:16:41.720 --> 0:16:44.640 certainly don't drink it every single time I drink beer. 0:16:45.120 --> 0:16:50.040 I'm curious what the expectation is on cannabis. Are people 0:16:50.080 --> 0:16:53.080 going to have brands that they really like, that they 0:16:53.120 --> 0:16:55.760 identify with something that they are going to use all 0:16:55.760 --> 0:16:58.200 the time that will be difficult for smaller brands to 0:16:58.360 --> 0:17:03.280 enter or or consume. Were expected to be more promiscuous, 0:17:03.280 --> 0:17:07.600 so to speak, and making it difficult for the various 0:17:07.640 --> 0:17:13.080 sellers to really establish large moats around their strand that's 0:17:13.200 --> 0:17:17.760 that's a great question. Um. Buying cannabis isn't like entering 0:17:17.800 --> 0:17:20.080 into a cell phone contract. You're not locked in for 0:17:20.160 --> 0:17:23.360 an extended period of time. So I expect a lot 0:17:23.400 --> 0:17:26.560 of brand hopping at the beginning. Uh, people settling in, 0:17:26.640 --> 0:17:29.320 they'll they'll be the cores light of cannabis out there, 0:17:29.520 --> 0:17:31.919 and there also will be the Johnny Walker Blue label. 0:17:32.440 --> 0:17:36.840 We recently toured Broken Coast Cannabis, which after you've purchased 0:17:36.840 --> 0:17:39.199 for almost a quarter billion dollars earlier this year, and 0:17:39.359 --> 0:17:41.720 we have a video out on it, and they're by 0:17:41.760 --> 0:17:45.639 far the highest quality LP that we've ever toured, and 0:17:45.680 --> 0:17:49.040 we've toured quite a few. I think they given their 0:17:49.160 --> 0:17:55.280 their history and uh, their medical side, patients just love them. 0:17:55.600 --> 0:17:58.960 I think that's going to be that's getting Broken Coast 0:17:58.960 --> 0:18:01.320 Cannabs because it's not big facility is gonna be like 0:18:01.359 --> 0:18:04.679 getting Hamilton's tickets on Broadway. So good luck to everybody 0:18:04.680 --> 0:18:06.879 who can actually get their hands on some of that stuff. 0:18:07.119 --> 0:18:09.600 But there's gonna be the cores light. There's gonna vape 0:18:09.640 --> 0:18:12.200 pens aren't going to be legal in Canada for another year. 0:18:12.280 --> 0:18:14.880 Edibles won't be legal in Canada for another year. All 0:18:14.920 --> 0:18:19.199 we're going on for the first year for consumables is 0:18:19.440 --> 0:18:22.080 flour and oil, and it's not the oil that you're 0:18:22.160 --> 0:18:23.840 used to it where you can vape in the States. 0:18:23.880 --> 0:18:28.400 It's it's diluted oil in a carrier oil form, so 0:18:28.680 --> 0:18:30.560 you can use it in baking and stuff like that, 0:18:30.640 --> 0:18:33.199 but it isn't what you fill your vappens with in 0:18:33.240 --> 0:18:35.960 the US, and and vape off vapens are gonna be 0:18:36.119 --> 0:18:39.240 enormous and that's why all the greenhouse capacity is coming online. 0:18:40.040 --> 0:18:44.280 So I have a related question, which is about the 0:18:44.320 --> 0:18:46.680 notion that one of the defining things about weed at 0:18:46.680 --> 0:18:50.320 the moment is just the sheer number of strains that 0:18:50.359 --> 0:18:54.400 are out there, and there are always new ones being created, 0:18:54.560 --> 0:18:58.240 Like that's pretty much what growers do is constantly cross 0:18:58.280 --> 0:19:01.320 breeding different strains. And at the moment, if you're at 0:19:01.400 --> 0:19:06.480 least a recreational consumer, you probably base your choice on 0:19:06.760 --> 0:19:09.600 you know, I like sour diesel or I like Girl 0:19:09.640 --> 0:19:13.600 Scout cookies, and your options are probably limited to whatever 0:19:13.640 --> 0:19:17.800 your dealer happens to have available. So how does the 0:19:17.880 --> 0:19:22.520 sheer number of strains interplay with this brand loyalty that 0:19:22.560 --> 0:19:25.880 we were just talking about. Well, you know, I think 0:19:26.560 --> 0:19:29.119 the strain, the sheer number strains is gonna be a 0:19:29.160 --> 0:19:31.840 lot different in California than it's gonna be in Canada, 0:19:32.320 --> 0:19:35.560 because we're going to have these ten provincial buying authorities 0:19:36.160 --> 0:19:39.800 that are purchasing, and you have to have enough volume 0:19:39.880 --> 0:19:44.560 to fill your skews with them. So I like for 0:19:44.800 --> 0:19:46.800 to give you an example, Broken Coast is only going 0:19:46.880 --> 0:19:50.880 to have five strains. That's it the skew level though 0:19:50.920 --> 0:19:53.359 I've been to Organagram and I think that their skew 0:19:53.440 --> 0:19:56.720 level is somewhere around forty two to fifty two. Excuse 0:19:56.760 --> 0:20:01.200 to one province, but that skew level because there's loose 0:20:01.320 --> 0:20:05.080 roll single loose rolls probably in half gram and gram size. 0:20:05.600 --> 0:20:09.040 There's a a flower in a graham probably an eighth 0:20:09.080 --> 0:20:12.200 and a quarter uh. There might be a complementary oil 0:20:12.280 --> 0:20:15.399 to that strain. So you're not going to get the 0:20:15.440 --> 0:20:18.440 strain selection that that you see, I think in California, 0:20:18.520 --> 0:20:20.639 because you have to fill the pipe and then you 0:20:20.680 --> 0:20:23.880 have to continually fill the pipe. And the problem is 0:20:24.040 --> 0:20:27.880 like from genetics to to product, you're probably looking at 0:20:27.920 --> 0:20:31.359 a year uh if they find something good, and we 0:20:31.480 --> 0:20:34.240 found that finding something good in genetics is one in 0:20:34.440 --> 0:20:36.880 a hundred and one in a thousand chants, you get 0:20:36.920 --> 0:20:41.760 something very unique. So I think the strain selection unfortunately 0:20:41.800 --> 0:20:43.480 is gonna be limited until we see some of the 0:20:43.560 --> 0:20:48.080 craft producers, which is the next round of reg's allowing 0:20:48.160 --> 0:20:51.240 the small batchcraft guys into the market, and then it 0:20:51.320 --> 0:20:55.840 might fracture a little bit. But still these monolith uh 0:20:56.400 --> 0:20:59.840 provincial buying authorities, they think different. They think I think 0:21:00.040 --> 0:21:03.119 alcohol and uh and will they have will we have 0:21:03.200 --> 0:21:06.760 hit records of strains for the summer? I sure hope. 0:21:06.760 --> 0:21:09.239 So I think that would be fun. But you need 0:21:09.280 --> 0:21:13.240 a market that can react quickly, and then I don't 0:21:13.240 --> 0:21:15.879 think Canada is going to be that market because of 0:21:15.920 --> 0:21:20.879 those monolithic buying entities that are between the the grower 0:21:20.880 --> 0:21:25.600 and the consumer. God. I have so many questions right 0:21:25.640 --> 0:21:27.440 now and I don't even I'm trying to think which 0:21:27.440 --> 0:21:30.359 way to go. But I really want to drill down 0:21:30.359 --> 0:21:32.119 on that last thing you said, because I think this 0:21:32.200 --> 0:21:36.000 is really crucial for people understanding the market structure of 0:21:36.080 --> 0:21:39.440 Canadian cannabis. So they're gonna be the LPs, the licensed 0:21:39.440 --> 0:21:41.879 producers who grow the stuff you mentioned a few of 0:21:41.880 --> 0:21:45.600 their names. They're going to be private retail outlets who 0:21:45.640 --> 0:21:48.280 sell the stuff out on the street to people. But 0:21:48.359 --> 0:21:53.119 then in between them there are these state run or 0:21:53.240 --> 0:21:57.119 provincial run warehouses that ultimately are where the buyer and 0:21:57.160 --> 0:22:02.480 seller meet, Can you explain how that works? I get 0:22:02.560 --> 0:22:05.440 asked this a lot, and I always tell people, do 0:22:05.520 --> 0:22:09.320 not think like a retailer, Do not think like a consumer. 0:22:09.480 --> 0:22:13.520 Do not think like the company selling cannabis and growing it. 0:22:13.880 --> 0:22:17.320 You have to think like a greedy finance minister and 0:22:17.440 --> 0:22:20.959 a greedy provincial finance minister. And if you think like 0:22:21.000 --> 0:22:23.560 a greedy provincial finance minister, a lot of this makes 0:22:23.560 --> 0:22:27.480 sense because if the LPs don't grow in your province 0:22:27.520 --> 0:22:29.119 and all the profits are going to land in the 0:22:29.240 --> 0:22:32.919 LPs laps and other provinces, how do you really relocate 0:22:32.960 --> 0:22:36.280 profits while you insist on being a nanny state and 0:22:36.480 --> 0:22:41.360 uh and centrally warehousing the product such that you can 0:22:41.400 --> 0:22:44.800 dispense it within your rights in province, because every every 0:22:44.800 --> 0:22:49.000 province has different regulations on this. Not only that, these 0:22:49.000 --> 0:22:52.800 greedy finance ministers are also taking on the all the 0:22:52.920 --> 0:22:57.000 online sales. So if you're a retailer like Medmen, which 0:22:57.040 --> 0:22:59.520 you're probably familiar within the States and Canada, the model 0:22:59.560 --> 0:23:02.720 is gonna be very very different. You're going to buy 0:23:02.880 --> 0:23:05.679 from just one source, so you don't get to compete 0:23:05.720 --> 0:23:08.680 out all your sources in order to drive down your prices. 0:23:09.200 --> 0:23:11.719 Then that that source that's selling to you is going 0:23:11.760 --> 0:23:15.280 to compete against you online. To me, you've got to 0:23:15.320 --> 0:23:18.400 be very careful entering the retail space in Canada. There's 0:23:18.400 --> 0:23:21.040 a lot of people very anxious to do it. I'd 0:23:21.080 --> 0:23:23.080 be very cautious to do it because I think this 0:23:23.160 --> 0:23:25.399 is gonna be You're gonna have to have a high volume, 0:23:25.480 --> 0:23:28.879 low margin business. Maybe it changes when edibles and the 0:23:29.440 --> 0:23:33.600 secondary products come in, but I really worry for for 0:23:33.640 --> 0:23:36.760 those companies that I think they're going to do really well. 0:23:36.800 --> 0:23:39.639 And what we call it, we've been calling it is 0:23:39.720 --> 0:23:42.959 boxed in retail because you're boxed in by the seller 0:23:43.040 --> 0:23:46.040 to you, who's competing against you. It's it's an odd 0:23:46.040 --> 0:23:50.720 Canadian phenomenon. So just to be clear, when people are 0:23:50.720 --> 0:23:53.000 trying to wrap their heads around who's going to make 0:23:53.040 --> 0:23:57.200 the profit, it's really important to realize that the provinces 0:23:57.240 --> 0:24:02.880 have inserted themselves as essentially monopsony buyers of the product 0:24:03.040 --> 0:24:07.359 from the growers and monopoly sellers to the product to 0:24:07.480 --> 0:24:10.320 the retailers. So just from a pure echo one on 0:24:10.440 --> 0:24:13.399 one standpoint, you could sort of figure out who's going 0:24:13.440 --> 0:24:15.840 to take a huge slice of the profits in the 0:24:15.880 --> 0:24:18.919 whole thing. Plus they're they're layering on an excise tax 0:24:19.000 --> 0:24:21.800