Speaker 1: Hello, and welcome to another episode of the All Thoughts podcast.
Speaker 1: I'm Tracy Alloway.
Speaker 2: And I'm Joe Wisenthal.
Speaker 1: Joe, do you remember five months ago?
Speaker 2: No, it's all, it's all what neither did I?
Speaker 1: I actually had to look this up. You remember? On
Speaker 1: four twenty so April twentieth of this year, we released
Speaker 1: our first ever narrative All Thoughts series, all about the
Speaker 1: legal marijuana market in New York.
Speaker 2: Yes, and obviously that was a fun experiment and I
Speaker 2: hope we do something like that again. My big takeaway
Speaker 2: from that, I learned a lot about market structure. I
Speaker 2: learned a lot about the industry. But my big takeaway
Speaker 2: really from talking to everyone involved, are lots of people
Speaker 2: involved in the New York attempt to legalize marijuana. Is that,
Speaker 2: however complicated you thought it was and difficult it was
Speaker 2: to sort of bring in this new market, it's like
Speaker 2: infinitely more complicated than that.
Speaker 1: Yeah, it can always get worse kind.
Speaker 2: Of and that's another way to put it in.
Speaker 1: Yeah, well it is true. You know, there was so
Speaker 1: much excitement about this last year and then even into
Speaker 1: early this year, and fast forward to now. I have
Speaker 1: the sort of latest figures in front of me. So
Speaker 1: New York signed the law that legalized cannabis possession back
Speaker 1: in March of twenty twenty one. So it's been more
Speaker 1: than two years and we only have like I think
Speaker 1: it's about two dozen legal weed dispensaries, which I think
Speaker 1: is one of the lowest, if not the lowest number
Speaker 1: among all the states that have so far legalized marijuana.
Speaker 1: And meanwhile, we have like more than a thousand unlicensed dealers,
Speaker 1: which is pretty much the outcome that New York was
Speaker 1: trying to avoid.
Speaker 2: I mean, there's probably more than two dozen and within
Speaker 2: a five block radius from my house in the East Village, right, Yeah.
Speaker 2: And so I remember, you know, about a year ago,
Speaker 2: I think the first one opened up, and it was
Speaker 2: like there was a ten minute walk from me, and
Speaker 2: you had to show some card to buy there, and
Speaker 2: I don't know, And then they just kept getting more.
Speaker 2: They're closer and closer, and they're all in all of
Speaker 2: the bodegas now. And now basically, even though there's supposedly
Speaker 2: all these issues with payments at the legal one, at
Speaker 2: the illegal ones, you can buy them buy product with
Speaker 2: credit cards. It really is crazy, but it stems from
Speaker 2: two things, right, there was an attempt to rectify sort
Speaker 2: of past injustices of the War on drugs by giving
Speaker 2: priority to people who had been negatively impacted by the
Speaker 2: drug war when marijuana was still straight up illegal in
Speaker 2: New York State. And then in the meantime, this tension
Speaker 2: now is like, okay, you had you have the people
Speaker 2: who wanted to take the regulated, legal route, and that's complicated,
Speaker 2: and then the people who just open up a shop
Speaker 2: and there's been very little enforcement the absolutely.
Speaker 1: And along the way. You know, again, it's only been
Speaker 1: five months since we released this series, but there have
Speaker 1: been all these different legal developments which we are about
Speaker 1: to get into because I'm very pleased to say that
Speaker 1: we really do have the perfect guests to discuss this.
Speaker 1: We're bringing back cos Marte and Alfredo Angera. They are
Speaker 1: the CEO of Kanbud and the chief compliance officer of Kanbud.
Speaker 1: You might remember them from this series. They are aiming
Speaker 1: to open up their own legal weed shops, but of
Speaker 1: course it's been far more complicated and taken a lot
Speaker 1: longer than perhaps they anticipated. So Caause and Alfredo, thank
Speaker 1: you so much for coming back on all thoughts.
Speaker 3: Thank you for having us. Thank you for welcoming us back.
Speaker 1: Why don't we start with the basics. You know, I
Speaker 1: mentioned some of the legal issues that have taken place
Speaker 1: over the summer. Why don't you just give us the
Speaker 1: state of affairs as it exists right now in relation
Speaker 1: to New York's legal weed industry.
Speaker 4: Have you ever seen that meme with the dog in
Speaker 4: the room it's fine, Yeah, it's fine and everything is
Speaker 4: on fire. That is literally the state of the industry
Speaker 4: right now. And I don't mean that in any kind
Speaker 4: of you know, funny contexts.
Speaker 2: We just got the title of this episode, New York
Speaker 2: City Cannabis. It's fine and everything is on fire.
Speaker 3: If it's on fire.
Speaker 4: So there's been to say, it's been a lot of
Speaker 4: flux as a as a grand understatement. Last time we
Speaker 4: were here, we had a lot of faith that the state,
Speaker 4: because of their vested interest in getting the tax dollars
Speaker 4: and in their vested interest and kind to trying to
Speaker 4: fix the social justice and equities, we're really going to
Speaker 4: get it right. And had the opportunity to look to
Speaker 4: other states and say, well, what is it that they
Speaker 4: did wrong and what is it that they did right?
Speaker 4: And we have we can make the perfect model. We
Speaker 4: have since learned that despite those best efforts, corporate interests
Speaker 4: will always rule. Right when you're talking about the country's
Speaker 4: largest cannabis market, and by way of that, the world's
Speaker 4: largest cannabis market in terms of consumption, we're talking about
Speaker 4: billions and billions of dollars, and the entities that are
Speaker 4: MSOs and the entities that are ros aren't going to
Speaker 4: sit by the wayside, essentially, and they have been throwing
Speaker 4: every monkey wrench you can possibly imagine into the gears.
Speaker 4: So that's currently where we stand.
Speaker 1: So you mentioned corporate interests. Can you expand on that
Speaker 1: a little bit more, because I remember, again from speaking
Speaker 1: to you and lots of other people for the series,
Speaker 1: New York's ambition was to do it a little bit
Speaker 1: differently to other states. They wanted to create this sort
Speaker 1: of vibrant, almost like craft beer market for the weed industry,
Speaker 1: where you would have all these local growers and sellers
Speaker 1: and the money would kind of be kept circulating within
Speaker 1: the state. And that seems to maybe be up in
Speaker 1: the era now or being challenged in some way.
Speaker 3: Yeah. No, it's very difficult to compete with the corporate
Speaker 3: greed and and I think that's the reality is. So
Speaker 3: we were the injunction happened, We were sued. The state
Speaker 3: was sued because they wanted the veterans to move forward first.
Speaker 3: That that was the veterans argument that they should have
Speaker 3: been prioritized and it was just for veterans, not all veterans,
Speaker 3: but it's this service disabled veterans. Now in the case,
Speaker 3: we were intervened by these corporations specific coalition for multi
Speaker 3: state operators that intervened into the case to basically state
Speaker 3: that we shouldn't be able to move forward, and they're
Speaker 3: stopping the whole pathway of us opening up, you know,
Speaker 3: because they they they want to capture as much market
Speaker 3: share as possible in the beginning. And so that's that's
Speaker 3: what we're in.
Speaker 4: Yeah, if we look at this not as cannabis, right,
Speaker 4: let's look at it as any industry, whether it would
Speaker 4: be alcohol or whether it be a food product and
Speaker 4: agricultural product. And you tell Anheuser Busch that they can't
Speaker 4: come into the market, you tell hormale foods that they
Speaker 4: can't come into the market, You tell big tobacco that
Speaker 4: they can't come in the market, because you plan on
Speaker 4: doing it craft wise, you already know you're going to
Speaker 4: be setting yourself up for a variety of legal challenges,
Speaker 4: which is where we're at. I think Costs touched upon
Speaker 4: some of the cases which we are currently involved in,
Speaker 4: which were submitted to the court. The first case was
Speaker 4: an Article seventy eight proceeding that was led by the ROS.
Speaker 4: And Article seventy eight proceeding is a proceeding by which
Speaker 4: that you challenge an agencies authority. You question an agency's
Speaker 4: authority if it was like the DMV or something like that,
Speaker 4: and you want to challenge that, you file an Article
Speaker 4: seventy eight. That was what the ROS had filed initially.
Speaker 3: Sorry ROS Sansori Registered organization.
Speaker 2: Okay, yeah, I'm sorry.
Speaker 3: No, no, no, those medical operators.
Speaker 2: So if I could just just to step back and
Speaker 2: clarify a couple quick things. You're opening this store or
Speaker 2: attempting to open up this location, Conbud, you were granted
Speaker 2: the license in part because out of the social justice
Speaker 2: or social equity efforts of the law cost you had
Speaker 2: served time in prison and so you were, you know,
Speaker 2: in this attempt to sort of reverse some of the
Speaker 2: effects of the War on drugs. You were, I guess
Speaker 2: granted one of the early license licenses to open this
Speaker 2: just real quickly, when was that a very initial grant made?
Speaker 3: So they gave us our license early April? Okay?
Speaker 2: And then real quickly, when were you hoping to have
Speaker 2: the store away?
Speaker 3: We were looking to open up on Labor Day?
Speaker 2: Okay. Now talk specifically about the Article seventy eight proceedings.
Speaker 2: So there's two separate ones. There was one from a
Speaker 2: veterans group and one from the MSOs. Can you just
Speaker 2: talk about specifically what these new legal roadblocks are such
Speaker 2: that we're here in Octoe and the store hasn't opened up.
Speaker 3: Oh fraid? Oh yeah.
Speaker 4: So the ROS filed the Article seventy eight to basically
Speaker 4: stay that they wanted the market opened so that the
Speaker 4: registered organizations, who are these medical entities who are allowed
Speaker 4: to open up bigger places and more places than other licensees,
Speaker 4: that they should be allowed to open up immediately. And
Speaker 4: they're challenging OCM. So that was an Article seventy eight
Speaker 4: that was going through Cannabis Manager, yes, Office of Cannabis
Speaker 4: Management that so they challenged that in the courts, and
Speaker 4: they challenged OCM. Then shortly after that, plaintiffs in the
Speaker 4: case uh and we're involved in litigation, so I would
Speaker 4: just like to prefer to just refer to them as
Speaker 4: plaintiff and not individually.
Speaker 3: But to cut not to cut you off. Originally, the
Speaker 3: law was written for justice involved individuals to be the
Speaker 3: first ones in the game, and so the medical operators
Speaker 3: they were pushed back for three years.
Speaker 4: Now.
Speaker 3: When they put this article seventy eight, the OCM, the
Speaker 3: Office of Cannabis Management responded and said, all right, we're
Speaker 3: going to allow you to move forward by a year now,
Speaker 3: which means December thirtieth. They were allowed to open up now.
Speaker 3: All they had to wait was a couple more months.
Speaker 3: And you know, due to wanting to capture the market
Speaker 3: as much as they can, they're pushing everything back and
Speaker 3: they're saying it's not fair, we want to open up now.
Speaker 4: And plaintiff's argument who's involved in the case. The attorneys
Speaker 4: represent some service disabled veterans. Their argument is that the MRTA,
Speaker 4: which is the law that passed cannabis in New York,
Speaker 4: that the MRTA states that all applicants will be allowed
Speaker 4: to open at the same time, with certain preferences given
Speaker 4: to subgroups. So their challenge is that the entire card
Speaker 4: program which is the conditional adult recreational dispensary licenses that
Speaker 4: were given to social justice equity individuals. That entire licensed
Speaker 4: subcategory is unconstitutional and therefore they should all be pulled.
Speaker 4: And that's why they requested an injunction, and it froze
Speaker 4: all the card applicants, got it. Now, that puts that
Speaker 4: creates a variety of issues. Right one, there are certain
Speaker 4: applicants who've already received their license and who are already
Speaker 4: opened in operational. Now we're talking about me taking away
Speaker 4: a property of yours. You have something, and the removal
Speaker 4: of that is a totally different legal procedure. Right That's
Speaker 4: like a Fourteenth Amendment kind of thing. Right now, absent that,
Speaker 4: there are also other individuals who are within that bucket
Speaker 4: who maybe haven't opened up and maybe haven't been processing
Speaker 4: sales yet, but have an irreparable harm. And what do
Speaker 4: I mean by that is they detrimentally relied upon the
Speaker 4: state saying, hey, you're good, you can continue to move forward.
Speaker 4: Enter into these contractual agreements, enter into this lease agreement,
Speaker 4: enter into this purchasing agreement, enter into the staffing agreement.
Speaker 4: And then now it's hey, wait, everybody has a freeze well,
Speaker 4: where we have debts of mounting over five million dollars
Speaker 4: or you know, two hundred and fifty thousand dollars or
Speaker 4: whatever it is. Now there's this entire other group of
Speaker 4: individuals who find themselves behind the eight ball. And it's
Speaker 4: really weird because that particular group, the social justice impacted individuals,
Speaker 4: the individuals who were over policed, over targeted, and came
Speaker 4: from these disproportional areas now beg barrowed and stealed and
Speaker 4: took all that money that they could from their family,
Speaker 4: their friend, their fur one k scraped everything together to
Speaker 4: open up this business, did the application, follow the guidelines,
Speaker 4: did everything that you told them to do, and now
Speaker 4: they're left holding the bag. It's it's almost like insult
Speaker 4: to injury, and it's there. It's like almost all over again.
Speaker 4: This whole thing is happening and they're being further impacted,
Speaker 4: and it's like this kind of a second war on
Speaker 4: drugs that is just going through a legal proceeding as
Speaker 4: opposed to on the streets.
Speaker 1: So you have the injunction from the veterans group who
Speaker 1: think that they should also receive priority. You have the
Speaker 1: multi state operators who also want to get into the market.
Speaker 1: Can I ask a really simple question, which is how
Speaker 1: much money have you guys spent so far on a
Speaker 1: business which isn't yet open.
Speaker 3: We've spent definitely over a million dollars.
Speaker 1: Wow.
Speaker 4: Ye, And that that was all self funded and came
Speaker 4: from our personal businesses. I know that, you know, most
Speaker 4: card applicants don't even have those resources. We are blessed
Speaker 4: enough that my business partner, Junior, and I own and
Speaker 4: operate several restaurants, costs, owns and operates a very successful
Speaker 4: gym business. You know, the money that we put into
Speaker 4: this particular venture came at the sacrifice of our other businesses.
Speaker 4: You know, so we've we've given all that we could
Speaker 4: to this.
Speaker 2: Are you currently paying rent month to month on a
Speaker 2: location that's just sitting there unused?
Speaker 3: October first rent was just paid and that was for
Speaker 3: thirty eight thousand dollars.
Speaker 2: So every month you're just it's thirty eight thousand out
Speaker 2: the door.
Speaker 1: How tempted are you at this point to just go
Speaker 1: rent a van and like park it in Washington Square
Speaker 1: Park like everyone else seems to.
Speaker 3: Yeah, I mean, you know, I contemplated that, and it's
Speaker 3: like I'd rather still state work instead of block work,
Speaker 3: just because I've waited for so long, you know, I mean,
Speaker 3: I've been advocating for legalization of cannabis since twenty sixteen
Speaker 3: and still wait, you know, still waiting and going and
Speaker 3: feeling like every milestone we've reached was a success. I
Speaker 3: think we celebrated alf Raido and I probably about five
Speaker 3: celebrations every time we went to court, yeah, or even
Speaker 3: got a license or even got into the next step
Speaker 3: so far, application being graded, is submitted and everything. So
Speaker 3: it's been dreams of nightmares for real, Okay.
Speaker 1: And how much responsibility do you think the State of
Speaker 1: New York bears in all of this, because on the
Speaker 1: one hand, you know, they made promises saying that this
Speaker 1: was going to be a social restitution exercise compensation for
Speaker 1: the War on drugs and things like that. But on
Speaker 1: the other hand, you know, if the veterans want to
Speaker 1: challenge the legality of that, it seems like maybe that's
Speaker 1: outside of New York's control. I guess another way of
Speaker 1: asking this is what could they be doing better?
Speaker 3: They could They could have codified card so the conditional
Speaker 3: adult use Retail dispensary license could have been codified into law.
Speaker 3: I actually went up and spoke to legislators months ago
Speaker 3: about codifying Card and they were like, no, the law
Speaker 3: is fine. We don't need to rectify anything. And so
Speaker 3: you know, come today. You know, in August the injunction
Speaker 3: was placed, and you know, now we're like, oh, we
Speaker 3: should have codified Card and this would never happen, and
Speaker 3: we'reritten this into law. But it didn't.
Speaker 4: And here were the state could I mean, the state
Speaker 4: is dealing with a lot right now. Right where does
Speaker 4: this fall on their hierarchy of issues? We have asylum
Speaker 4: seekers sleeping in the streets. The city is inundated by
Speaker 4: hundreds of thousands of individuals looking to get their slice
Speaker 4: of the American dream, housing costs or through the roof
Speaker 4: for certain individuals.
Speaker 3: You know, we.
Speaker 4: Still have a budget that is busted still as a
Speaker 4: result of COVID. We can you know, on my way
Speaker 4: here to the studio, we can see the streets in
Speaker 4: New York are nowhere near what they used to be
Speaker 4: four years ago. We have really mounting problems here. So
Speaker 4: where does this fall on the hierarchy of the state.
Speaker 4: Sure Card applicants who faced a large hill of social
Speaker 4: injustice are involved. Sure, farmers upstate are involved. Sure there's
Speaker 4: an illicit market running rampant, but the state, like that
Speaker 4: meme has fires all over the house. Right, So where
Speaker 4: what could they have done? Yes, Coss is a million
Speaker 4: percent correct. They could have codified it, and they didn't.
Speaker 4: So that would have required a special session. And to
Speaker 4: call a special session to come in to do this
Speaker 4: is not going to happen, right, So it would have
Speaker 4: had to be a multiple things tied into that bill.
Speaker 4: Why didn't they codify it in the first place? Right,
Speaker 4: you didn't ask it, But that's a great question. It's
Speaker 4: because there wasn't an appetite for it initially, and then
Speaker 4: they didn't feel like it needed to be because they
Speaker 4: felt the bill covered it. What do I mean by that?
Speaker 4: I mean, if Congress passes a tax law and says, okay,
Speaker 4: this is going to be the corporate tax rate. They
Speaker 4: don't go to the irs and say, okay, bring us
Speaker 4: all the tax codes. We're going to go over this
Speaker 4: line by line with you. Congress gives kind of this
Speaker 4: broad mandate to these agencies, the same way it would
Speaker 4: be to the EPA or to a variety of other agencies.
Speaker 4: They say this is the goal we want you to
Speaker 4: get to. How you decide to get to that goal
Speaker 4: is upon the agency's discretion. We don't need to know
Speaker 4: the parts per milli leter of something in water that
Speaker 4: you find safe, or we don't need to know you know,
Speaker 4: what the exact deductions are. We're not going to vote
Speaker 4: on every single item. We're just going to give you
Speaker 4: the mandate. And the mandate was given to the Office
Speaker 4: of Cannabis Management to fulfill this social justice equity component.
Speaker 4: And how the Office of Cannabis Management found the best
Speaker 4: way to do that was through this card program.
Speaker 2: So you know, let me ask you the other element.
Speaker 2: You're paying all this money, you're dealing with these legal
Speaker 2: headaches that you didn't anticipate. The other thing that we
Speaker 2: were talking about a lot when we had our conversation
Speaker 2: in April was the existence of all these sort of
Speaker 2: gray market, non licensed operators. And you know, we're sort
Speaker 2: of premised on this idea that maybe there would be
Speaker 2: a crackdown. Not only does there not seem to have
Speaker 2: been a crackdown, it seems like there are way more
Speaker 2: than there were in April, and nicer ones.
Speaker 1: So it's not just wait, wait, wait a lot of
Speaker 1: the trucks are gone.
Speaker 2: The truck.
Speaker 1: You have to admit that there are more stores. It
Speaker 1: feels like more like brick and mortar shops.
Speaker 2: Yeah, I see fewer trucks. I see way more brick
Speaker 2: and mortar shops. I see nice brick and mortar shops.
Speaker 2: So like actually ones that were clearly not just sort
Speaker 2: of a bodega type environment, but like something that really
Speaker 2: looks like an Apple store or a Nike store. All
Speaker 2: these entities somehow allow you to pay with a credit
Speaker 2: card or some sort What is your confidence at this
Speaker 2: point that, whether it's the city or the state, has
Speaker 2: some sort of way to I guess make sure that
Speaker 2: people who are not going down the licensed route won't
Speaker 2: be your competitors.
Speaker 3: I think we need to educate the public, you know,
Speaker 3: more more forms like this, more forms that you know,
Speaker 3: the media puts out in terms of what is a
Speaker 3: legal store, that there is a lot of issues with
Speaker 3: these nice stores being popped up everywhere and you walk
Speaker 3: in and you're like, oh wow, these people got their
Speaker 3: licenses beautiful in here. So the general public doesn't even know,
Speaker 3: you know. And I think the more we put out there,
Speaker 3: the more ads, the more marketing that the state could do.
Speaker 3: You know, we could educate the audience. But right now
Speaker 3: it's going to be difficult. You know, I have in
Speaker 3: a thousand foot radius, there's you know, probably fifty to
Speaker 3: sixty shops around me, and there's not supposed to be one.
Speaker 3: We're supposed to be the only one, you know, and
Speaker 3: so it's it's going to be difficult. But I think
Speaker 3: we planted ourselves in the right neighborhood. I'm born and
Speaker 3: raised in the Lower East Side and I'm a local
Speaker 3: business owner there and a lot a lot of people
Speaker 3: know me. A lot of people are anticipating our opening.
Speaker 3: We've been able to really educate it through word of mouth,
Speaker 3: at which the state hasn't really done successfully. But we'll see.
Speaker 3: I'd rather spend a million dollars on a legal store
Speaker 3: than an illegal store and then be shut down right
Speaker 3: and have that, you know, open air.
Speaker 1: I remember talking to someone from the state and they
Speaker 1: were making a similar argument, like, if you build the
Speaker 1: legal wed bodega, they will come, like the public will
Speaker 1: eventually have a preference for legal shops. But I guess
Speaker 1: Devil's advocate question here. The longer this uncertainty goes on,
Speaker 1: and the longer that you have these illegal or gray
Speaker 1: market stores, does do people get used to that option? Because,
Speaker 1: like I can tell you, up until very recently, there
Speaker 1: was a truck parked relatively close to me, and it
Speaker 1: was fairly easy to go there, and they had stuff
Speaker 1: from California that theoretically I might enjoy. If my dad
Speaker 1: is listening to this, I never went to the weed truck,
Speaker 1: but you know, like I got used to it being there.
Speaker 1: It had the same offerings every day. It seemed pretty professional.
Speaker 1: It took credit cards. That was a pretty good option.
Speaker 3: But we got to re educate on what you're using.
Speaker 3: You know, you don't know what this is. They found
Speaker 3: a whole bunch of metals, they found a whole bunch
Speaker 3: of you know, insane substances. In this substance that's supposed
Speaker 3: to be organic and clean and safe, you don't know
Speaker 3: what you're consuming. It's like it's like I don't know
Speaker 3: buying buying a uh on FDA, children in the in
Speaker 3: the subway train. You know, like you could do you
Speaker 3: do it, but you might you might have the you
Speaker 3: might have the runs later, right, you know, so you
Speaker 3: just never know. And now with this whole fatinal scare.
Speaker 3: I mean that's a bigger that's a bigger, like, you know,
Speaker 3: solution to like educate the audience, like, hey, we found
Speaker 3: fetanyl in weed. You know, there's been a whole bunch
Speaker 3: of stories on that.
Speaker 4: Cost is right. Education is crucial, But that puts the
Speaker 4: onus on the consumer. And New York City is if
Speaker 4: the population hasn't decreased post COVID, right, it's about eight
Speaker 4: million people in the Greater New York region. That puts
Speaker 4: the onus on eight million in different people. And that's
Speaker 4: a lot to ask of them.
Speaker 3: You know.
Speaker 4: And what calls is right. You know, you eat the
Speaker 4: Trudeau from the subway station. You may get the runs,
Speaker 4: but they're there for a reason because people purchase it. Yeah,
Speaker 4: the people are.
Speaker 3: Buying it, and it's worth it.
Speaker 4: Yeah, it's worth the runs later where people are becoming
Speaker 4: creatures of habit to your point, right, And if I
Speaker 4: see it there every day and it may be illicted,
Speaker 4: I'm still going to go in. It puts the onus
Speaker 4: on you. Where you go into a bar, and if
Speaker 4: a bar is open and you walk in and you
Speaker 4: order a drink, you automatically assume that they are a
Speaker 4: licensed to have a liquor license. You don't say, hey,
Speaker 4: where's your liquor license number? Are you licensed by the
Speaker 4: State of New York because you make that exsumption, because
Speaker 4: we've come accustomed to that. So I think the next
Speaker 4: prong besides educating the consumer is enforcement. If I couldn't,
Speaker 4: I couldn't open up next to your studio and just
Speaker 4: open up next to McDonald's without a license and start
Speaker 4: selling hamburgers, or start selling wine, or start selling anything
Speaker 4: without somebody eventually coming and saying, hey, we got to
Speaker 4: shut you down. This doesn't meet how Department requirements, This
Speaker 4: doesn't meet state liquor authority requirements, This doesn't meant construction requirements,
Speaker 4: this doesn't meet you know, requirements that you're basically trying
Speaker 4: to market to children. You don't meet any of these things.
Speaker 4: We have to close you down. And in New York
Speaker 4: City that has some of the most stringent building codes
Speaker 4: and has some of the most stringent laws in relation
Speaker 4: to opening up businesses, enforcement is key. And these places
Speaker 4: that are illicit, that are putting you know, that are
Speaker 4: selling products that aren't tested, that may have a variety
Speaker 4: of heavy metals and fence it all in a variety
Speaker 4: of other things. Enforcement is key, education and enforcement.
Speaker 2: You know, you mentioned the alcohol analogy, and I think
Speaker 2: about that all the time because I walk home from
Speaker 2: the subway on Saint Mark's most days and there are
Speaker 2: literally people you know, outside selling on a table and
Speaker 2: I would never you would never see in this day
Speaker 2: and age, like you know, someone selling shots of liquor
Speaker 2: out of this Excuse me?
Speaker 1: Are you the guy that buys nutcrackers on the beach
Speaker 1: in the summer? What do you think those are?
Speaker 3: You? I have?
Speaker 2: Yeah, you know you're out there. I'm just you wouldn't
Speaker 2: expect to see. I'm not saying you would never buy it,
Speaker 2: And we don't want to.
Speaker 3: We don't want to take those individuals that are are
Speaker 3: hustling in the streets and making them their money, because
Speaker 3: that's it, that's a livelihood.
Speaker 2: No, no, I get it. I'm just saying, it's just
Speaker 2: extraordinary that here was this drug that people were going
Speaker 2: to prison for and not many years ago, and now
Speaker 2: there's much less enforcement, it would seem than even alcohol.
Speaker 2: It was literally literally the only point I was trying
Speaker 2: to make, just from an operational standpoint, if say tomorrow,
Speaker 2: it's like all the legal issues go away. It's like
Speaker 2: Conbud is Kanbud ready to go? Can you turn on
Speaker 2: the lights and open the door?
Speaker 3: Like the lights are on, the doors are closed, Okay,
Speaker 3: like we were. All we're missing is product, so we
Speaker 3: were not allowed to get product. But you know, basically
Speaker 3: we're turnkey.
Speaker 4: We would need a couple of days just to make
Speaker 4: sure we dusted everything and yeah, got the staff in
Speaker 4: and did a couple of dry runs.
Speaker 3: But yeah, we're ready to go.
Speaker 1: How long can you sort of wait in stasis?
Speaker 3: That is a very good question.
Speaker 4: Again, we're in pending litigation, so certain things we don't
Speaker 4: sure disclose, but we've done our math. We know how
Speaker 4: long we can hold out and we can continue to
Speaker 4: be in this run asset at a deficit until things
Speaker 4: turn around. And I'll say it is not very long.
Speaker 3: We don't have a long run, right, yeah, we do
Speaker 3: not have very long.
Speaker 2: Just sounds like I'm incredibly frustrating both the month to
Speaker 2: month clause, seeing the seeing these stores open up and operate.
Speaker 2: How many did you say, fifty or sixty within a
Speaker 2: ten thousand foot radius from where you are?
Speaker 3: A thousand for radios thousands? Right?
Speaker 2: Crazy?
Speaker 1: Also the broken promises, broken promises.
Speaker 3: Yeah, well, speaking optimistically, if we do have a great
Speaker 3: day at court and things move forward, you know, we're
Speaker 3: looking to open up October twentieth. That's what we want
Speaker 3: our goal to be. The court.
Speaker 4: Yeah, the court this Friday is hearing the case of twelve.
Speaker 4: Are you familiar with the court process of what's happening
Speaker 4: right now?
Speaker 2: Why don't you fill us in exactly what we're.
Speaker 3: Looking all right?
Speaker 2: So this Friday, just so people know, we were recording
Speaker 2: this October fifth. So when you say this Friday, October
Speaker 2: just so people understand the day, yes, October six.
Speaker 4: So October sixth, emotion will be heard. When the plaintiffs
Speaker 4: filed their lawsuit, we impled, meaning we said, listen, you
Speaker 4: are suing the state and you're suing OCM, but we
Speaker 4: have a vested interest. This affects us, so we want
Speaker 4: to impleade into this case. Okay, So it is combad
Speaker 4: and three other dispensaries that joined us and we inpled
Speaker 4: into the case. We are the only actual card applicants
Speaker 4: that are involved besides the State of New York itself.
Speaker 4: So the judge asked for a variety of things for
Speaker 4: the injunction. We requested that the injunction be lifted because
Speaker 4: it was doing irreparable harm to us. We were bleeding money.
Speaker 4: You know, we had staff, we had contracts, and this
Speaker 4: was putting us in a position where you know, we
Speaker 4: couldn't recover from and in very short order we were
Speaker 4: gonna have to file bankruptcy. So that we put that
Speaker 4: request before the court, and basically the judge at one
Speaker 4: point basically said, Okay, listen, here's what we're going to do.
Speaker 4: We're going to free x amount of people from this
Speaker 4: injunction as so long as the Office of Cannabis Management
Speaker 4: says that they have met these following requirements. The Office
Speaker 4: of Cannabis Management supplied a list to the court. The
Speaker 4: plaintiffs contested that list. That initial list was thirty card applicants,
Speaker 4: of which we were one. Then the plaintiffs contested several
Speaker 4: of them and that list was whittled down to twelve.
Speaker 4: OCM supplied that list of twelve to the court, and
Speaker 4: that list of twelve is going to be heard this Friday.
Speaker 4: Because we were not on that list of twelve, but
Speaker 4: because we are inpled into the case and we have
Speaker 4: our own counsel on it, we don't have to wait
Speaker 4: for OCM. We will be circumvating OCM, and this Friday,
Speaker 4: our own motion as well will be heard to lift
Speaker 4: the injunction from those twelve as well as us.
Speaker 1: All right, well, since we're recording this a day before
Speaker 1: a very important court date, it sounds like we're gonna
Speaker 1: have to get an update from you, maybe before we
Speaker 1: release the episode and just see which way things have gone.
Speaker 4: Or we could send you a photo of us celebrating.
Speaker 3: A celebrating for the sixth time, and by the way,
Speaker 3: for the sixth time. And by the way, the market
Speaker 3: has already opened October. Actually yesterday the market opened to
Speaker 3: the general public, so anyone could apply. We actually submitted
Speaker 3: our application yesterday as well, so we.
Speaker 4: For a general application up there.
Speaker 1: All right, all right, well, Costin Alfredo, thank you so
Speaker 1: much for coming back on and providing us an update,
Speaker 1: and we'll see what happens.
Speaker 3: Yeah, thank you. I appreciate it. Joe.
Speaker 1: I think you summed it up perfectly in the intro.
Speaker 1: No matter how complicated you thought, the legal weed market
Speaker 1: already lives in New York. It seems like it's just
Speaker 1: grown even more complex. The other thing I was thinking
Speaker 1: about was Alfredo's point about you know, you can't place
Speaker 1: the onus for the entire industry on the consumer.
Speaker 2: Uh.
Speaker 1: You know, I myself am not the best consumer of
Speaker 1: certain things, and so I really think you have to
Speaker 1: twin it with enforcement. And of course the difficulty so
Speaker 1: far has been what does that enforcement actually look like.
Speaker 1: No one wants to go back to the days of
Speaker 1: the War on drugs. But at the same time, you
Speaker 1: cannot have a thriving illegal market with you know, a
Speaker 1: lower cost overhead that's competing with the thing that is
Speaker 1: supposed to be funneling money into the state.
Speaker 2: Yeah, this is I mean, this is the key thing,
Speaker 2: which is that you know, the the idea is that
Speaker 2: the licenses were designed to you know, hopefully encourage people
Speaker 2: to go that route. And yet you know, in theory,
Speaker 2: even when conbud opened, at least as of right now,
Speaker 2: there are going to be numerous competitors who, in theory
Speaker 2: have potentially lower taxes, lower cost bases, are able to
Speaker 2: potentially bring in product from out of state, which the
Speaker 2: New York State operators aren't able to do. Payments are
Speaker 2: challenged still for the legal operators. Meanwhile, like I said,
Speaker 2: it seems like all these places suddenly accept normal credit
Speaker 2: cards right now, So it does feel like there is
Speaker 2: a limit to the extent to which the market can
Speaker 2: be solved through consumer education.
Speaker 1: So a little update. After we recorded this episode, we
Speaker 1: spoke to the Konbud team on October fifth. On October sixth,
Speaker 1: the Friday, the injunction was in fact lifted, which means
Speaker 1: it looks like Conbud should be able to open on
Speaker 1: October nineteenth, so.
Speaker 2: They can do their celebration.
Speaker 3: Let's go check it out.
Speaker 1: Shall we leave it there?
Speaker 2: Let's leave it there.
Speaker 1: This has been another episode of the Odlots podcast. I'm
Speaker 1: Tracy Alloway. You can follow me at Tracy Allaway.
Speaker 2: I'm Joe Wisenthal. You can follow me at the Stalwart.
Speaker 2: Follow our guests on Instagram, Combud at Conbud and Why
Speaker 2: follow our producer Carmen Rodriguez at Carmen Arman and dash
Speaker 2: Ol Bennett at Dashbot, and check out Potlots, our series
Speaker 2: from the last April tremendous amount of background context. To
Speaker 2: further understand this conversation and for more Oddlots content, go
Speaker 2: to Bloomberg dot com slash od Lots, where we post
Speaker 2: transcripts a blog and a newsletter, and go to our
Speaker 2: discord discord dot gg slash odd lots to talk about
Speaker 2: this episode and others with fellow listeners.
Speaker 1: And if you enjoy odlots, if you want us to
Speaker 1: do a deep dive another series into another particular market,
Speaker 1: then please leave us a positive review on your favorite
Speaker 1: podcast platform. Thanks for listening in