WEBVTT - We want to be a consolidator in the industry: William Weld 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:33.199 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. In 0:00:33.240 --> 0:00:36.800 the past week, as people fretted over trade wars and 0:00:36.880 --> 0:00:41.400 the decline in tech shares, ten year treasury yields quietly 0:00:41.440 --> 0:00:46.400 but very steadily moved back toward that two point nine threshold, 0:00:46.479 --> 0:00:49.879 getting back toward that three line in the sand at 0:00:49.920 --> 0:00:52.960 which many investors said they would pile back into the debt. 0:00:53.080 --> 0:00:56.000 Joining us now to figure out what's behind this move, 0:00:56.160 --> 0:00:59.560 what does it mean about the global economy, and where 0:00:59.600 --> 0:01:03.360 should investors take their money? As Dave Lafferty, chief market Strategist, 0:01:03.640 --> 0:01:06.160 and it takes this investment manager, as he joins us 0:01:06.160 --> 0:01:08.480 here in our eleven three oh studios, Dave, thank you 0:01:08.520 --> 0:01:11.199 so much for being here. I'm trying to make sense 0:01:11.240 --> 0:01:13.880 of this. We're talking about a flattening yield curve and 0:01:13.880 --> 0:01:17.480 we're also talking about a steadily climbing ten year treasure yield. 0:01:17.680 --> 0:01:23.319 Are we looking at stagflation? I don't think we're there yet, certainly, 0:01:23.440 --> 0:01:26.080 I do think inflation is part of the story that 0:01:26.080 --> 0:01:29.399 we've seen in the yield curve UM, I should say, 0:01:29.520 --> 0:01:32.759 in terms of ten years backing up UH. We've seen 0:01:32.760 --> 0:01:35.919 that the correlation between things like the price of oil 0:01:36.720 --> 0:01:40.679 UH and inflation break evens have been fairly consistent. So 0:01:40.760 --> 0:01:44.040 as oils backed up, it seems like inflation expectations are 0:01:44.080 --> 0:01:47.160 backing up. We've seen a little bit of the risk 0:01:47.240 --> 0:01:50.760 off trade that we've seen around geopolitics FADE. I think 0:01:50.800 --> 0:01:53.240 that's allowing yields at the long end to back up 0:01:53.280 --> 0:01:56.880 a little bit, and there's still the the underlying strength 0:01:56.880 --> 0:02:00.960 and the global economy. I still think that the equilibrium 0:02:01.080 --> 0:02:04.360 rate for interest rates out the yield curve is still 0:02:04.480 --> 0:02:08.680 higher UH if we look at nominal rates versus nominal growth, 0:02:08.680 --> 0:02:12.160 which should be related at something like the five year 0:02:12.240 --> 0:02:14.440 tenor in the long run. I don't think we're gonna 0:02:14.440 --> 0:02:16.440 get anywhere near this in the short run, but in 0:02:16.480 --> 0:02:20.000 the long run, the five year treasury is probably seventy 0:02:20.320 --> 0:02:22.520 basis points below where it probably ought to be in 0:02:22.560 --> 0:02:27.320 the long run. UH. Nominal growth versus nominal yield, meaning 0:02:27.520 --> 0:02:30.360 the yield is much lower than nominal growth is. Right now, 0:02:31.440 --> 0:02:34.799 David Macro in your note, you're right about the macro 0:02:35.000 --> 0:02:39.400 peak reached in January with quote synchronized global growth and 0:02:39.600 --> 0:02:44.760 tax cut euphoria. Right, If that's correct, Why would you 0:02:44.800 --> 0:02:47.480 want to be buying into a market that has those 0:02:47.560 --> 0:02:50.399 kinds of headlines. Why wouldn't you want to just sit 0:02:50.440 --> 0:02:53.760 and wait for everything to go as they say, you know, 0:02:54.080 --> 0:02:57.160 pair shape and then buy assets. What do you want 0:02:57.160 --> 0:02:59.040 to buy assets when you're at the top or near 0:02:59.080 --> 0:03:01.280 the top of a cycle. Yeah, it's a great point. 0:03:01.280 --> 0:03:02.960 So this is why I think I've been a little 0:03:02.960 --> 0:03:06.320 bit more cautious, because at the end of the day, 0:03:06.360 --> 0:03:09.919 we tend to be more value investors in the long run. 0:03:10.560 --> 0:03:12.440 Um And, as I mentioned, sort of you had that 0:03:12.520 --> 0:03:15.880 macro euphoria. If you went back and read everybody's two 0:03:15.960 --> 0:03:19.160 thousand eighteen outlooks that we all wrote in two thousand seventeen, 0:03:19.480 --> 0:03:22.640 it was all about that quote synchronized global growth. The 0:03:22.760 --> 0:03:26.080 global economy was priced to perfection in the fourth quarter 0:03:26.160 --> 0:03:29.400 and into January. Uh. And I think that makes it. 0:03:29.440 --> 0:03:32.240 That makes it for both the equity markets and for 0:03:32.280 --> 0:03:35.240 the global economy a very high bar to get over. 0:03:35.520 --> 0:03:39.240 So again, the underlying fundamentals, we like the long term trend. 0:03:39.720 --> 0:03:42.200 It's not uh, it's not that we were telling people 0:03:42.200 --> 0:03:43.880 to get out of the market, but I think you 0:03:43.920 --> 0:03:46.440 have to be a little bit more cautious given how 0:03:46.520 --> 0:03:49.480 much euphoria had been priced into the market. When was 0:03:49.520 --> 0:03:54.400 the last time that you changed to your recommended allocation? Uh? 0:03:54.480 --> 0:03:57.240 Interestingly enough, it hasn't changed much. I've been sort of 0:03:57.280 --> 0:04:01.640 in this low beta camp for a few years. Uh. 0:04:01.800 --> 0:04:04.320 Going back to uh, you know, we we had been 0:04:04.360 --> 0:04:07.240 fairly fairly bullish. I'm sorry to interrupt you, but I 0:04:07.280 --> 0:04:11.520 mean with respect to the bonds, the stocks, the cash, 0:04:11.880 --> 0:04:14.960 that's what I'm talking about. The ratios. Uh. Well, again, 0:04:15.000 --> 0:04:17.080 it depends on the client. But for an over let's 0:04:17.080 --> 0:04:22.520 say a plane, Jane, it really hasn't changed that much 0:04:22.640 --> 0:04:25.080 in a couple of years. What would make you change it? 0:04:25.960 --> 0:04:28.279 What would make me change it is if I thought 0:04:28.360 --> 0:04:31.720 the global economy was beginning to falter more than what 0:04:31.800 --> 0:04:36.279 we've already seen. We don't see the underlying trends changing 0:04:36.440 --> 0:04:40.720 that much. Uh. So I do think there may come 0:04:40.720 --> 0:04:45.440 a time to get bearish. We're not there yet. I will, however, 0:04:45.520 --> 0:04:48.599 say that the gap, this idea that equities were the 0:04:48.640 --> 0:04:50.440 only game in town. If you went back a year 0:04:50.480 --> 0:04:53.599 and a half ago, you had stocks that weren't that expensive, 0:04:53.839 --> 0:04:58.359 you had all this global QUEI, the gap, the the 0:04:58.360 --> 0:05:04.320 the equity risk premium had gotten extremely wide. Well, now 0:05:04.400 --> 0:05:06.800 yields have started to back up, so bonds look a 0:05:06.800 --> 0:05:10.520 little bit more attractive. Peas have gone up, so earnings 0:05:10.600 --> 0:05:13.400 yields on the equity market have come down. There's still 0:05:13.440 --> 0:05:16.200 a big gap between fixed income and equity, but it's 0:05:16.200 --> 0:05:19.160 not nearly as big as it was before. But we 0:05:19.160 --> 0:05:23.240 were never that massively optimistic in the first place. I 0:05:23.720 --> 0:05:27.000 think that market timing is pretty hard. So it's better 0:05:27.080 --> 0:05:30.000 to be slightly de risk going into a risk off 0:05:30.080 --> 0:05:32.600 environment than hoping that your clients are gonna be able 0:05:32.600 --> 0:05:35.240 to time the markets correctly, which never seems to be 0:05:35.279 --> 0:05:37.680 the case. Right, So if that's never the case, why 0:05:37.720 --> 0:05:40.160 not take some money off the table when everybody is 0:05:40.200 --> 0:05:43.440 trying to figure out reasons to be bullish. You've got earnings. 0:05:43.720 --> 0:05:45.960 You take a look at the global economy. As you 0:05:46.040 --> 0:05:49.960 just said, oil prices, even though you get tweets from 0:05:50.000 --> 0:05:52.760 the President, oil prices barely move. You got oil at 0:05:52.800 --> 0:05:56.160 around sixty seven dollars a barrel. If all things are 0:05:56.440 --> 0:05:59.720 benign and sanguine, why not take a little money off 0:05:59.720 --> 0:06:02.599 that's able and then wait when everybody else is panicking 0:06:02.640 --> 0:06:05.240 and hitting the sell button. Yeah. I still think the 0:06:05.240 --> 0:06:09.360 global economy is strong enough where uh, if the implications 0:06:09.520 --> 0:06:12.400 take some money off or be mildly defensive, that makes 0:06:12.400 --> 0:06:15.040 sense to us. But it's not a scenario where you 0:06:15.080 --> 0:06:17.360 want to be bailing out. The global economy is still 0:06:17.400 --> 0:06:20.159 probably growing at almost a three and a half to 0:06:20.200 --> 0:06:22.360 four percent run rate, I think three point eight three. 0:06:22.440 --> 0:06:23.839 But I mean you can at least take some of 0:06:23.839 --> 0:06:25.760 the profits and then you let the money that you 0:06:25.880 --> 0:06:29.520 made move and you take out your original investment, so 0:06:29.560 --> 0:06:31.680 at least you have some dry powder if in case 0:06:31.800 --> 0:06:34.200 you end up with a scenario where people say I'm 0:06:34.240 --> 0:06:36.320 getting out and then you get to get back in. Yeah, 0:06:36.400 --> 0:06:38.400 And this is the sort of the notion I was 0:06:38.440 --> 0:06:41.279 mentioning before. It isn't really our view of jumping out 0:06:41.279 --> 0:06:43.520 of the market. It's staying in the market, but being 0:06:43.640 --> 0:06:46.360 more defensive in terms of doing it. So those could 0:06:46.400 --> 0:06:50.799 be things like option hedging or low vall or minimum 0:06:50.920 --> 0:06:54.840 beta low, low variant strategies are our advices? Are there 0:06:54.839 --> 0:06:57.400 ways to be in the market without sticking your neck 0:06:57.440 --> 0:06:59.680 out too far? Thanks very much for being with us. 0:06:59.760 --> 0:07:04.279 Dave Laherty is the chief market strategist for Natixis Investment Managers. 0:07:19.720 --> 0:07:22.280 What is it like to be a value investor? Well, 0:07:22.360 --> 0:07:24.440 that's why we ask Scott and Black. He is the 0:07:24.480 --> 0:07:27.320 president of Delphi Management to be our guest. He joins 0:07:27.360 --> 0:07:29.840 us from Boston, home to Bloomberg one or six one 0:07:29.880 --> 0:07:33.520 Boston New Report and in Metro West in the South Shore. 0:07:33.560 --> 0:07:37.760 Scott Black always a pleasure. How do you define value investor? 0:07:39.240 --> 0:07:41.920 Really a value investor? There's somebody either sticks to a 0:07:42.000 --> 0:07:46.400 discipline throughout all cycles and buys absolutely low peas or 0:07:46.480 --> 0:07:49.880 buy consistently at a price to break up that's close 0:07:50.440 --> 0:07:54.560 below theoretical value of where the breakup value is, and 0:07:54.680 --> 0:07:57.720 so it's you know the all Benjamin Graham, the idea 0:07:57.760 --> 0:08:00.600 has get that margin of safety by not paying up. 0:08:00.680 --> 0:08:04.320 How difficult has it been to maintain that disposition of 0:08:04.400 --> 0:08:07.200 being a value investor in the last let's say twelve 0:08:07.280 --> 0:08:11.239 to twenty four months, how about in the last ten years? 0:08:11.280 --> 0:08:14.280 Has been very difficult? To be frank with you. I mean, 0:08:14.280 --> 0:08:16.960 even though our companies come through with earnings that don't 0:08:17.000 --> 0:08:20.400 seem to get much respect, the bottom line is systematically, 0:08:20.560 --> 0:08:22.880 especially with the emergence of the e t f S, 0:08:23.400 --> 0:08:26.600 value has systematically trailed growth over the last five and 0:08:26.640 --> 0:08:29.960 ten year period. Scott, I know that you recommend to 0:08:30.040 --> 0:08:34.120 your clients to target companies that pay high dividends. I 0:08:34.160 --> 0:08:37.880 wonder at what point those companies will look less attractive 0:08:37.920 --> 0:08:41.880 to you when you can actually start earning something on cash. No, 0:08:42.120 --> 0:08:45.320 the bottom line is that we own a panoply of 0:08:45.360 --> 0:08:47.920 companies that are low p There's some that have divd 0:08:48.000 --> 0:08:49.800 in yields, which I was going to suggest a few 0:08:50.000 --> 0:08:52.600 to your readership so they don't have to buy junk bonds. 0:08:52.880 --> 0:08:56.319 It's not necessary that we have companies with divid in yields, 0:08:56.320 --> 0:08:58.960 but we like companies that generate lots are free cash. 0:08:59.679 --> 0:09:01.160 So I mean, I can give you a couple of it. 0:09:01.280 --> 0:09:05.360 Go ahead, give us some example. Okay, here's one high crush. 0:09:05.679 --> 0:09:09.480 It's an lp UM. It's basically one of the largest 0:09:09.480 --> 0:09:12.160 producers of frack sand in the United States. It's a 0:09:12.520 --> 0:09:16.040 eleven dollar ninety cents stock and they're gonna earn about 0:09:16.040 --> 0:09:18.920 two forty. It's a five p selling at one point 0:09:18.960 --> 0:09:21.360 three times booked, and they just bumped the diving in 0:09:21.440 --> 0:09:25.040 again to ninety cents annualized. You get the seven point 0:09:25.120 --> 0:09:27.960 six percent yield, and the earnings are exploding this year 0:09:28.400 --> 0:09:30.480 UM last year they get about a dollar one. They'll 0:09:30.480 --> 0:09:33.280 do two forty two forty five. And as you know 0:09:33.720 --> 0:09:37.079 you've been watching, UM fracking has done one just for 0:09:37.120 --> 0:09:39.400 Americans oil production. We're up to ten and a half 0:09:39.440 --> 0:09:42.720 million barrels a day. Last year at nine point three million, 0:09:42.960 --> 0:09:44.600 and you need to use a lot of this fine 0:09:44.720 --> 0:09:48.000 sand to frackt and they have roughly a thirteen share 0:09:48.280 --> 0:09:51.040 of the whole United States market. So you have the 0:09:51.080 --> 0:09:53.560 wind tear back, plus you're getting paid while you wait, 0:09:53.800 --> 0:09:56.679 and the stock is ridiculously cheap. How did you find 0:09:56.920 --> 0:10:00.719 high crush? Did you go to Houston? You know what 0:10:00.840 --> 0:10:04.040 we do oftentimes we do a lot of mathematical screening, 0:10:04.120 --> 0:10:07.400 initially PIM and then if it looks attracted, we call 0:10:07.559 --> 0:10:10.040 and visit the company. So we've talked to the management 0:10:10.080 --> 0:10:13.160 on this company, you know several times. We never buy anything, 0:10:13.240 --> 0:10:15.360 as they say, off the shots or on a whim. 0:10:15.679 --> 0:10:17.679 We always talk to management to see you know, if 0:10:17.679 --> 0:10:20.920 they're really they're under control, and whether they have certain 0:10:21.000 --> 0:10:23.839 targets for returns on capital and growth and revenue and 0:10:23.880 --> 0:10:26.240 earnings per share. All right, let's talk about another one. 0:10:26.280 --> 0:10:29.360 Give us another name, because high car symbol hc LP, 0:10:29.640 --> 0:10:32.720 as you said, based in Houston, paint about a six 0:10:32.880 --> 0:10:36.160 or seven point six percent dive. And then right now, okay, 0:10:36.240 --> 0:10:38.360 Now another one that I like is part of the 0:10:38.480 --> 0:10:41.320 Aries group is the b d C. The business development 0:10:41.400 --> 0:10:44.839 corp is Aries Capital ai c C. The stock is 0:10:44.920 --> 0:10:48.520 rough the fifteen nineties six. It sells below tangible books 0:10:49.200 --> 0:10:52.040 cents on the book, the dividends of dollar fifty two 0:10:52.160 --> 0:10:54.880 or the nine and a half percent yield, and about 0:10:54.920 --> 0:10:57.760 six point eight billion market cap, and they'll learn this 0:10:57.920 --> 0:11:01.160 year about a dollar sixty, So it's a MP selling 0:11:01.240 --> 0:11:04.760 below book um. They make very few mistakes, and their 0:11:04.840 --> 0:11:10.360 portfolio less than one percent historically, and the company will 0:11:10.400 --> 0:11:14.040 grow its organic portfolio about five or six percent. But 0:11:14.200 --> 0:11:18.000 this is one company that benefits from rising rates. They 0:11:18.040 --> 0:11:22.679 asked that sensitive not liability sense of for example, of 0:11:22.760 --> 0:11:26.520 the portfolio loans float, so rates go up, but eighty 0:11:26.559 --> 0:11:29.480 two percent of their funding is fixed. And so for 0:11:29.600 --> 0:11:33.040 each hundred basis points in library at sixteen cents to share, 0:11:33.480 --> 0:11:38.920 so as interest rates rise they benefit very nicely. And uh, well, 0:11:39.120 --> 0:11:41.640 what if it turn has been like on these cash 0:11:41.800 --> 0:11:48.000 rich companies well over time, um probably areas with the 0:11:48.120 --> 0:11:51.920 dividend has probably done about double digits between your growth 0:11:52.360 --> 0:11:55.280 and the stock price over time, and in the dividend 0:11:55.360 --> 0:11:57.880 high Crush is a relatively new company, so it doesn't 0:11:57.880 --> 0:12:00.240 have a long history, but I mean relative of to 0:12:00.280 --> 0:12:06.320 say the broad index. As I say, you can't look 0:12:06.720 --> 0:12:09.360 at it on that basis because I'm buying it now 0:12:09.480 --> 0:12:12.040 on a statistical basis that they are achieved. You know, 0:12:12.080 --> 0:12:14.920 there are certain times, you know, let's say after the 0:12:15.000 --> 0:12:16.840 market crash in a way I'll give you an example. 0:12:16.880 --> 0:12:18.959 I was able to bi Oracle and Microsoft. They saw 0:12:19.000 --> 0:12:22.240 that our types of p s there are opportunities. It's 0:12:22.280 --> 0:12:24.280 not that we're going to put them away forever. You know, 0:12:24.400 --> 0:12:26.959 our longest term holdings have been things like Berkshire half 0:12:27.040 --> 0:12:29.280 the Way, which we've going forever. But these are just 0:12:29.440 --> 0:12:33.960 opportunistic as the valuations are so cheap at this current time. Scott, 0:12:34.040 --> 0:12:36.240 what's the biggest mistake? Give you thirty seconds. What's the 0:12:36.280 --> 0:12:39.240 biggest mistake investors make when they think that they are 0:12:39.280 --> 0:12:43.280 a value investor, but they're not. Well, they think if 0:12:43.320 --> 0:12:46.480 a company used to sell it and it's now an 0:12:46.520 --> 0:12:50.439 eighteen multiple, that somehow it's value. That's a relative value, 0:12:50.440 --> 0:12:53.480 because that's roughly the market multiple. The idea of your 0:12:53.559 --> 0:12:57.480 value investor is really to stick to absolute valuation, and 0:12:57.559 --> 0:13:00.480 the other thing is to stay away from the downs. 0:13:00.520 --> 0:13:03.679 Forget about technical analysis. You have to have your own 0:13:03.760 --> 0:13:06.959 conviction about the company, and if if something's out of 0:13:07.040 --> 0:13:09.959 stab or oftentimes, that's the time to buy it, because 0:13:10.240 --> 0:13:12.920 when the consensus is good, to be buying stocks off 0:13:12.960 --> 0:13:15.480 the high, not off the low. Scott Black, thank you 0:13:15.520 --> 0:13:19.360 so much for joining us. Scott Black, president of Delphi Management, 0:13:19.800 --> 0:13:24.400 overseeing about a billion dollars from Boston, and uh disregard 0:13:24.520 --> 0:13:44.680 technical analysis. I'm sure some people him. We're really lucky 0:13:44.760 --> 0:13:47.680 to have our next guests hitting a very hot topic 0:13:47.840 --> 0:13:51.160 right now, and that is medical marijuana, in particular the 0:13:51.280 --> 0:13:56.800 shifting tides of major politicians who have previously opposed marijuana use, 0:13:56.920 --> 0:13:59.920 even on the medical front, but are changing their tune. 0:14:00.200 --> 0:14:02.079 I want to offer a warm welcome to the former 0:14:02.160 --> 0:14:06.000 Massachusetts Governor William Weld, as well as Kevin Murphy, chief 0:14:06.080 --> 0:14:10.000 executive officer of Acreage Holdings, which is the medical marijuana 0:14:10.080 --> 0:14:14.520 business that has garnered support from a former governor at Weld, 0:14:14.559 --> 0:14:17.680 as well as from John Byner, the former Republican Speaker 0:14:17.760 --> 0:14:20.600 of the House who once said he was quote unilaterally 0:14:20.720 --> 0:14:25.120 opposed to decriminalizing marijuana laws. I want to start with you, 0:14:25.520 --> 0:14:29.840 Kevin Um, yourself, as a former alternative money manager for 0:14:29.880 --> 0:14:33.240 Stanfield Capital Partners, what drew you to this business and 0:14:33.400 --> 0:14:38.800 what do you attribute the shifting tide right now in sentiment? Well, 0:14:38.840 --> 0:14:40.920 first and foremost, thanks so much for having me on 0:14:41.160 --> 0:14:46.120 the program. Uh, my shift really had come in two thousand, 0:14:46.240 --> 0:14:50.160 two thousand eleven when I was introduced to the space 0:14:50.320 --> 0:14:55.479 by a friend and I was very skeptical about marijuana 0:14:55.480 --> 0:14:58.680 in general. Didn't have a strong working relationship with the 0:14:58.760 --> 0:15:03.320 plant UM, so it really wasn't for me. But when 0:15:03.360 --> 0:15:06.360 I had done further due diligence on the business itself 0:15:06.640 --> 0:15:10.440 and having run a multi billion dollar money management firm, 0:15:10.920 --> 0:15:15.320 understanding business and the operating leverage in that business, UM, 0:15:15.480 --> 0:15:19.120 it was that coupled with UM, the medicinal value of 0:15:19.200 --> 0:15:24.400 this plant could potentially be the silver bullet um for 0:15:24.760 --> 0:15:28.240 the medical community over the next twenty to thirty years. 0:15:28.560 --> 0:15:32.200 It is simply remarkable what this plant can do for 0:15:32.920 --> 0:15:38.160 children with epilepsy, um people with cancer, and the list 0:15:38.280 --> 0:15:41.000 goes on and on. I want to focus for just 0:15:41.160 --> 0:15:44.760 a second, not on the medicinal potential for cannabis, but 0:15:44.920 --> 0:15:49.560 on the financial potential for cannabis. UH. William Weld, former 0:15:49.640 --> 0:15:54.440 governor of the state of Massachusetts from you have a 0:15:54.800 --> 0:15:58.040 bit of experience when it comes to state UH finances. 0:15:59.160 --> 0:16:03.360 What do you leave to be the main obstacles for 0:16:03.600 --> 0:16:09.520 lawmakers to approve the legal sale of cannabis. Forget the 0:16:09.600 --> 0:16:13.000 medical part of it for just a moment. When you have, 0:16:13.240 --> 0:16:16.200 for many years already had the legal sale and taxation 0:16:16.640 --> 0:16:22.360 of tobacco products, the legal sale and taxation of alcohol products, Uh, 0:16:22.800 --> 0:16:27.400 we don't necessarily have a prohibition on substances that we 0:16:27.600 --> 0:16:31.800 know can create health issues, if indeed they exist. What 0:16:31.920 --> 0:16:36.160 about the financial implications of taxing cannabis and using that 0:16:36.320 --> 0:16:39.280 money to fill all of these budget holes? Well, nothing 0:16:39.480 --> 0:16:42.520 is holding back legislators in any state from doing that, 0:16:42.640 --> 0:16:46.760 absolutely nothing, not fiscal policy, not criminal law. Nothing. That's 0:16:46.800 --> 0:16:50.360 why that's why nine states have already legalized so called 0:16:50.400 --> 0:16:54.880 adult reck adult recreational use. I I supported the Question 0:16:54.960 --> 0:16:58.120 four in Massachusetts, my state, back into two thousand and 0:16:58.200 --> 0:17:02.440 sixteen elections in that past, despite being opposed by almost 0:17:02.480 --> 0:17:05.639 all the politicians in the state except this former politician. 0:17:05.800 --> 0:17:08.480 But so why do they oppose it? Well, I think 0:17:08.520 --> 0:17:10.440 it's a cultural thing. You know, it takes a little 0:17:10.480 --> 0:17:14.920 getting used to some people. Probably they're they're buried. Antipathy 0:17:15.040 --> 0:17:17.879 towards cannabis goes all the way back to the nineteen 0:17:17.960 --> 0:17:20.960 thirties when the you know, the movie Reefer Madness and 0:17:21.040 --> 0:17:23.720 the federal government really came down hard on it. It's 0:17:23.720 --> 0:17:26.639 almost like the panic that beset everybody in the nineteen 0:17:26.640 --> 0:17:29.159 eighties about crack cocaine. They thought it was gonna, you know, 0:17:29.320 --> 0:17:32.560 take over our streets, and it's simply not true. One 0:17:32.600 --> 0:17:35.159 thing both Speaker Bayner and I think is right on 0:17:35.280 --> 0:17:38.840 the table now is a legal issue, is to deschedule 0:17:39.040 --> 0:17:42.720 cannabis as a Class one narcotic in Washington d C. 0:17:43.280 --> 0:17:45.159 I mean, that is supposed to be for drugs with 0:17:45.320 --> 0:17:50.320 absolutely no redeeming medicinal value whatsoever. We already know that's 0:17:50.359 --> 0:17:52.960 not true. I mean I endorsed medical marijuana back in 0:17:53.080 --> 0:17:56.719 nineteen ninety two, my second year in office, for relief 0:17:56.800 --> 0:18:00.680 from nausea from chemotherapy and glaucoma, And even then it 0:18:00.840 --> 0:18:04.960 was known that the drug was helpful in treating those. UH. 0:18:05.359 --> 0:18:07.200 We know more now than we used to. People have 0:18:07.280 --> 0:18:09.919 focused on the fact that there are other cannabinoids besides 0:18:10.000 --> 0:18:14.440 th HC in the cannabis plant. There's uh CBD, which 0:18:14.840 --> 0:18:17.480 has none of the potentially negative effects of th HC 0:18:17.960 --> 0:18:23.199 and is enormously helpful in UH treating pain anxiety. UM. 0:18:24.160 --> 0:18:26.520 So you know, I I got into this. In fact, 0:18:26.560 --> 0:18:28.800 I jumped at the chance because I spent a couple 0:18:28.840 --> 0:18:31.359 of hours with Murph, Kevin Murphy, and I could see 0:18:31.920 --> 0:18:34.920 his passion about doing something on the medical side. Most 0:18:34.960 --> 0:18:37.000 of his acquisitions were on the medical side. We're not 0:18:37.080 --> 0:18:41.119 opposed to adult wreck, but we think that's that's up 0:18:41.160 --> 0:18:43.800 to the States. And you know, I note with approval 0:18:43.960 --> 0:18:47.440 that candidate Trump during the election said adult wreck, that's 0:18:47.480 --> 0:18:49.760 the States rights issue. And he has now said we 0:18:49.840 --> 0:18:52.680 want to hear comments to the f d A by 0:18:53.040 --> 0:18:57.760 April on de scheduling cannabis as a Class one narcotic. 0:18:57.880 --> 0:19:01.920 Those are two very hopeful sign is from the President. Yeah, Kevin, 0:19:02.080 --> 0:19:05.840 I want to get your sense. Um Acreage Holdings operates 0:19:05.920 --> 0:19:09.359 currently in eleven states. It's headquartered in New York. I 0:19:09.480 --> 0:19:13.320 just want to know, given the backing of Governor Murphy, 0:19:13.800 --> 0:19:16.639 governor here, who is joining us now as well as 0:19:16.800 --> 0:19:21.560 John Bayner, do you expect to expand much more or 0:19:21.640 --> 0:19:24.040 do you think that it's gonna be tepid? And what 0:19:24.119 --> 0:19:31.080 about financing? We do anticipate expanding, having UM again been 0:19:31.119 --> 0:19:36.840 in the financial services business. UM this is much like cable, 0:19:37.240 --> 0:19:40.760 this is much like cellular. This is a business that 0:19:41.160 --> 0:19:45.000 has started out as a fragmented business. Uh. You can 0:19:45.040 --> 0:19:49.960 look back five years the cable industry, the cellular industry 0:19:50.000 --> 0:19:54.440 had thousands of players. Today there's five to ten players 0:19:54.760 --> 0:19:58.399 in both sector. UM Acreage being the largest footprint in 0:19:58.480 --> 0:20:03.840 the country today, we anticipate maintaining that pole position. So 0:20:03.960 --> 0:20:07.720 what we're here to do is bring the finest operators 0:20:07.800 --> 0:20:11.760 we can with the best people we can. And no 0:20:11.960 --> 0:20:15.840 better place to start then with the Speaker and the governor. 0:20:16.680 --> 0:20:18.639 Governor world, I just want to get your sons in 0:20:18.880 --> 0:20:22.560 twenty seconds, do you foresee a lot more support coming, 0:20:22.600 --> 0:20:27.600 particularly from the Republican delegation in Congress? I do of 0:20:27.680 --> 0:20:33.440 the country wants adult wreck. UH wants medical marijuana, wants 0:20:33.480 --> 0:20:37.200 adult reck. It's it's coming and Uh, Acreage Holdings, you know, 0:20:37.280 --> 0:20:39.000 I'll let the cout out of the bag. We want 0:20:39.040 --> 0:20:41.560 to be a consolidator in the industry. The management is 0:20:42.400 --> 0:20:45.440 blue chip Wall Street background. That's a good combination with 0:20:45.520 --> 0:20:48.160 the passion that Kevin Murphy also brings to the table. 0:20:48.760 --> 0:20:50.359 I want to thank you both for joining us. So 0:20:50.440 --> 0:20:54.200 William Wells, he is the former governor of Massachusetts, joining 0:20:54.280 --> 0:20:56.720 us here in studio with Kevin Murphy. He's the chief 0:20:56.800 --> 0:21:01.720 executive of Acreage Holdings, the largest multi state cannabis operator 0:21:01.880 --> 0:21:06.080 in the country. And just a note that just today 0:21:06.880 --> 0:21:10.080 opening in New York City, that the Los Angeles based 0:21:10.160 --> 0:21:15.280 cannabis retailer MEDMN is launching its first dispensary in New 0:21:15.400 --> 0:21:18.680 York City and it will be open for on site 0:21:18.760 --> 0:21:22.920 consultations with pharmacists to determine best fit remedies for chronic 0:21:23.080 --> 0:21:27.439 pain and other ailments diagnosed by doctors. Competition heating up, 0:21:27.920 --> 0:21:46.040 could be President tweeting today on oil and opeque looks 0:21:46.160 --> 0:21:48.879 like OPEC is at it again, he wrote, with record 0:21:48.920 --> 0:21:51.480 amounts of oil all over the place, including the fully 0:21:51.560 --> 0:21:55.280 loaded ships at sea. Oil prices are artificially very high, 0:21:55.800 --> 0:21:58.879 no good and will not be accepted. Joining US now, 0:21:59.160 --> 0:22:03.800 Joe Carroll, US energy reporter and Houston Bureau chief. Joe, 0:22:03.880 --> 0:22:05.720 we've gotten so much news on oil in the past 0:22:05.760 --> 0:22:09.400 twenty four hours, with OPEC deciding to continue cutting production 0:22:09.440 --> 0:22:15.320 despite declines in the stockpiles, President Trump tweeting shale production 0:22:15.400 --> 0:22:19.320 facing challenges. What should traders focus on as to the 0:22:19.400 --> 0:22:22.840 direction of crude? You know, the real fundamental issue out 0:22:22.880 --> 0:22:25.960 there and and and it's it's what's it's what really 0:22:26.040 --> 0:22:28.320 drove the the rise and prices as OPEC has been 0:22:29.040 --> 0:22:34.040 uh un characteristically you know, disciplined in imposing these these 0:22:34.080 --> 0:22:38.600 cuts since late and they've if what we found this 0:22:38.640 --> 0:22:41.160 week is they they've pretty much wiped out the glut 0:22:41.400 --> 0:22:44.800 that that led to the to the collapse and fifteen 0:22:45.240 --> 0:22:49.480 in the first place. So supplies are definitely tightening overseas 0:22:49.760 --> 0:22:53.040 and here in the US, and we're just seeing that 0:22:53.080 --> 0:22:56.320 reflected in prices. Joe, if you were to take us 0:22:56.359 --> 0:22:59.880 on a trip to the Permian basin in West Texas 0:23:00.240 --> 0:23:04.960 and New Mexico, what would we find, Well, we'd find 0:23:05.000 --> 0:23:07.280 the roads are clogged, um and a little bit and 0:23:07.320 --> 0:23:09.879 crumbling a bit, just because there's so much heavy truck traffic. 0:23:10.680 --> 0:23:13.720 We might find it hard to get served at a restaurant, 0:23:14.240 --> 0:23:16.879 and you'd find hotel prices that would compete with what 0:23:17.000 --> 0:23:20.240 you'd pay there in in Midtown Manhattan. There is just 0:23:20.359 --> 0:23:24.240 so much activity in the Permian. Uh. You know, the 0:23:24.320 --> 0:23:26.159 unemployment rate in Midland, which is sort of the the 0:23:26.240 --> 0:23:29.280 unofficial capital of the Permian base, and the unemployment there 0:23:29.440 --> 0:23:33.080 right there is around around two um were the rest 0:23:33.119 --> 0:23:35.720 of the state of Texas is around four. Uh. It's 0:23:35.760 --> 0:23:38.600 just it's a classic boom story and they just can't 0:23:38.640 --> 0:23:42.240 get enough get enough people there to fill the jobs. Okay, 0:23:42.520 --> 0:23:44.359 while I was going, was the idea that if you 0:23:44.520 --> 0:23:47.480 have this increased output, and I believe output is projected 0:23:47.520 --> 0:23:52.040 to climb to four million barrels a day within two years, 0:23:52.119 --> 0:23:56.440 that's three million barrels, is that going to be enough 0:23:56.560 --> 0:24:01.560 to offset whatever production cuts get from OPEC? You know, 0:24:01.760 --> 0:24:04.480 it's it's it's an interesting question because the Permian just 0:24:04.600 --> 0:24:07.240 continues to grow. It grew right through the bus as well. 0:24:07.880 --> 0:24:11.280 The Permian didn't require sixty or seventy dollar oil for 0:24:11.400 --> 0:24:14.440