WEBVTT - The Pound Could Drop 5 to 10 Percent If May Loses Vote (Podcast) 0:00:05.800 --> 0:00:08.719 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 --> 0:00:32.159 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. If 0:00:32.159 --> 0:00:34.239 you thought the Brexit was over, you were wrong. We 0:00:34.320 --> 0:00:38.240 actually got that vote yesterday against Theresa May, prime Minister 0:00:38.360 --> 0:00:42.840 of the United Kingdom, against her plan for Brexit. Not surprising, however, 0:00:42.840 --> 0:00:47.040 it was surprising the magnitude of her loss. Today she 0:00:47.080 --> 0:00:50.519 faces a no confidence vote. The pound up against the 0:00:50.520 --> 0:00:52.760 euro and the dollar. Go figure on that one. Joining 0:00:52.800 --> 0:00:55.400 us now to explain what we should look for and 0:00:55.440 --> 0:00:57.840 whether we're going to soon come out of this Brexit malaise. 0:00:58.040 --> 0:01:01.600 Dr Sam nap President of em Are Global Ventures, joining 0:01:01.680 --> 0:01:05.640 us here in our BLOOMBERGNNA Active Brokers Studios. So, Dr 0:01:05.680 --> 0:01:08.559 and natapoff, what do you think will happen today? Well, 0:01:09.280 --> 0:01:12.600 remember what happened yesterday, Prime Minister Theresa May suffered an 0:01:12.640 --> 0:01:16.840 historic political defeat. Today she in about four hours she's 0:01:16.840 --> 0:01:19.280 going to have a vote of no confidence and these 0:01:19.319 --> 0:01:21.920 don't happen very often. The last one happened twenty four 0:01:22.000 --> 0:01:24.320 years ago, and the last time someone lost one was 0:01:24.400 --> 0:01:28.200 forty years ago. If she loses the vote today, which 0:01:28.240 --> 0:01:31.040 is very unlikely, she'll probably win it by about ten votes. 0:01:31.400 --> 0:01:33.840 If she loses it today, the pound could drop by 0:01:33.840 --> 0:01:37.480 between five and ten percent. This is a totally unpredictable, 0:01:37.560 --> 0:01:40.840 unpredicted event, and the capital and financial markets would go 0:01:40.840 --> 0:01:44.280 and say, so, let's say that she does win, as 0:01:44.319 --> 0:01:47.480 you say, by ten or twelve votes. Boy, where do 0:01:47.520 --> 0:01:50.520 we go next here? Well, now there are only three 0:01:51.040 --> 0:01:54.160 there's only three options for Britain right now. There's a 0:01:54.240 --> 0:01:59.800 modified deal Brexit, a no deal Brexit, or no Brexit. Now, 0:02:00.200 --> 0:02:02.480 the problem is in Britain is that each one of 0:02:02.520 --> 0:02:05.280 these groups thinks that they have victory within their grasp. 0:02:05.680 --> 0:02:07.840 There reason may think that, you know, as we get 0:02:07.840 --> 0:02:10.560 closer to March twenty nine, the day that Britain actually 0:02:10.639 --> 0:02:14.360 formally leaves the EU, recalcitrant MPs will come back to 0:02:14.440 --> 0:02:17.799 her side and vote her deal through in some form. 0:02:17.840 --> 0:02:20.679 The Brexiteers who want Britain to go back to their 0:02:20.720 --> 0:02:25.560 pre lapse arian form they are are desperate for this, 0:02:25.880 --> 0:02:29.200 you know, purifying no deal Brexit until they can go 0:02:29.240 --> 0:02:31.720 back and be Britain of the nineteenth century. And the 0:02:31.800 --> 0:02:36.600 remainders are desperate to redo the referendum, and they're thinking 0:02:36.760 --> 0:02:38.960 this is a huge step forward towards a second referendum. 0:02:38.960 --> 0:02:41.640 Do you think that's going to happen. I actually think 0:02:41.680 --> 0:02:44.160 that Britain will stay in the European Union in some form, 0:02:44.200 --> 0:02:46.760 whether it's a Norway Plus which is a lesser version 0:02:47.040 --> 0:02:49.920 of membership, or there'll be a second referendum. But that 0:02:50.000 --> 0:02:52.840 brings us back to the vote of no confidence today again. 0:02:53.000 --> 0:02:55.680 The Labor Party in Jeremy Corbyn, it's leader, brought this 0:02:56.040 --> 0:02:58.480 brought this vote today, which is the first one in 0:02:58.480 --> 0:03:02.080 twenty four years. It's very rare. His party said they're 0:03:02.320 --> 0:03:05.080 open to bringing more of them in the near future. 0:03:05.520 --> 0:03:07.639 What that means is that the Labor Party has committed 0:03:07.840 --> 0:03:10.440 more towards trying to get a new general election than 0:03:10.480 --> 0:03:13.360 pushing for a second referendum. For some reason, I've always 0:03:13.360 --> 0:03:16.120 felt a second referendum is kind of where the country 0:03:16.200 --> 0:03:20.079 should go, given the greater knowledge of what is really entails. 0:03:20.120 --> 0:03:23.080 But that doesn't that may may not happen what side 0:03:23.320 --> 0:03:28.720 do you think of? This argument will move first towards accommodation. 0:03:30.919 --> 0:03:34.000 The problem with Brexit is that it has only two constants. 0:03:34.280 --> 0:03:38.400 It's totally irrational and totally unpredictable. Uh. A lot of 0:03:38.440 --> 0:03:42.800 the opponents of a second referendum UM have an argument 0:03:42.880 --> 0:03:45.960 that Trump supporters here would would would support, which is, 0:03:46.160 --> 0:03:48.920 we had to vote, the country spoke, we got an outcome, 0:03:49.040 --> 0:03:52.240 and now you want to revisit it. Donald Trump is president, 0:03:52.680 --> 0:03:54.800 get used to it. Well, hold on, if you if 0:03:54.840 --> 0:03:58.400 they did hold another referendum, do you think that most 0:03:58.440 --> 0:04:01.680 people in the United Kingdom would vote against Brexit? Now 0:04:01.760 --> 0:04:04.200 there seems to be in in polling and people have 0:04:04.240 --> 0:04:09.160 pulled this extensively, about a fifty one percentage in favor 0:04:09.200 --> 0:04:13.000 of remain. Now now that the the the facts are 0:04:13.000 --> 0:04:17.040 coming out. The amazing thing about the Brexit referendum was 0:04:17.080 --> 0:04:21.839 that the Leave folks campaigned on things that weren't true 0:04:21.960 --> 0:04:24.479 and rubbish the things that were. Now we are in 0:04:24.640 --> 0:04:28.120 exactly the reverse situation. So what is your sense of 0:04:28.360 --> 0:04:32.479 timing here? I see discussions about delays and delays? Is 0:04:32.520 --> 0:04:34.800 that the mode written now? Or do you expect something 0:04:34.880 --> 0:04:37.280 quickly to happen? One way or the other. Theresa May 0:04:37.400 --> 0:04:40.960 is required on Monday to provide her Plan B for 0:04:41.040 --> 0:04:45.000 what comes next. Uh. In many ways, Theresa May is 0:04:45.040 --> 0:04:47.960 no longer in charge of this process because she's Prime 0:04:48.000 --> 0:04:51.880 Minister in name only, with enormously diminished powers of executive office, 0:04:52.279 --> 0:04:54.880 much the same way that Donald Trump is as president 0:04:55.080 --> 0:04:58.560 after the election. Now he's balanced by the House of 0:04:58.600 --> 0:05:03.440 Representatives led by nance Dallassandro Pelosi. So we're not going 0:05:03.520 --> 0:05:06.160 to explain all that right now, but there's a backstory. 0:05:06.279 --> 0:05:10.000 But um on Monday, Theresa May will put out a 0:05:10.000 --> 0:05:13.560 new plan and it won't be terribly relevant because she's 0:05:13.560 --> 0:05:16.000 already so damaged and in a normal year she would 0:05:16.040 --> 0:05:18.520 have been she would have resigned yesterday. But we're not 0:05:18.560 --> 0:05:20.960 in a normal year. This isn't in a normal situation, 0:05:20.960 --> 0:05:23.080 and no one can predict what comes next. Here's my question, 0:05:23.120 --> 0:05:25.960 at what point will the European Unions say we want 0:05:26.000 --> 0:05:28.920 to be negotiating with Prime Minister May. She has shown 0:05:28.960 --> 0:05:31.560 her grit, she has shown stomach through all of the 0:05:31.680 --> 0:05:35.440 jeers and the and the rowdy meetings in Parliament. We 0:05:35.480 --> 0:05:37.760 want to deal with them, so so let's throw her 0:05:37.760 --> 0:05:40.120 a bone. We don't want to be dealing with Corbin. 0:05:41.000 --> 0:05:44.000 Is that likely? No, it's not, You're like, no, that 0:05:44.120 --> 0:05:46.560 not because the European Union doesn't want to get involved 0:05:46.560 --> 0:05:50.640 in internal British politics, because not even Britain's understand internal 0:05:50.640 --> 0:05:53.080 British politics. And I'll just remind you that back in 0:05:54.240 --> 0:05:58.360 when Margaret Thatcher went under a leadership challenge, she won 0:05:58.440 --> 0:06:00.919 the first vote, the first out, but not by that 0:06:01.000 --> 0:06:03.680 much and she said, I fight on, I fight to win. 0:06:04.240 --> 0:06:07.279 Twenty four hours she resigned. Theresa May's on very thin nice. 0:06:07.400 --> 0:06:10.920 Is there any scenario where the EU would accommodate anything 0:06:10.960 --> 0:06:12.800 at this point just to get a deal done? Are 0:06:12.800 --> 0:06:14.480 they just gonna let the Britain's figure it out? They 0:06:14.520 --> 0:06:16.280 probably want this to fail, right as sort of an 0:06:16.320 --> 0:06:18.800 example to the rest of the Nation's Well, yeah, you 0:06:18.800 --> 0:06:20.680 have to remember what Britain brings to the table for 0:06:20.720 --> 0:06:22.919 the EU, which is considerable. One is Britain as a 0:06:22.960 --> 0:06:25.640 net contributor to the EU budget. They give more money 0:06:25.720 --> 0:06:28.080 to Brussels than they take and that's not true of 0:06:28.120 --> 0:06:31.080 a lot of the members of the European Union. Secondly, 0:06:31.360 --> 0:06:35.080 Britain is the second largest economy and an important economic 0:06:35.120 --> 0:06:38.840 part and home to the europe to the European capital Um, 0:06:38.960 --> 0:06:43.880 the European financial capital. But also important, let's just say 0:06:44.000 --> 0:06:46.440 still is and is moving. But the final thing is 0:06:46.600 --> 0:06:49.560 there are social and legal issues within the European Union. 0:06:49.560 --> 0:06:53.159 Their Eastern European members are becoming a little bit more authoritarian. 0:06:53.320 --> 0:06:56.039 And Britain has long been a pillar of the rule 0:06:56.080 --> 0:06:58.520 of law and and it's importance that EU wants to 0:06:58.600 --> 0:07:01.240 keep Britain in. If Britain wants to stay in. It's 0:07:01.240 --> 0:07:03.840 just Brussels has no idea what Britain wants right now. Wow, 0:07:04.040 --> 0:07:06.080 this is something. Uh, you know we're gonna be talking 0:07:06.080 --> 0:07:07.680 about this, We've been talking about for over two and 0:07:07.680 --> 0:07:09.760 a half years. It's just it's not gonna go away. 0:07:10.280 --> 0:07:11.920 And here we go. All I know is I think 0:07:11.960 --> 0:07:15.320 we're gonna be having Sam uh Not in our studios 0:07:15.360 --> 0:07:18.480 more often going forward, just because it's never gonna end. Uh. 0:07:18.720 --> 0:07:22.600 Thanks Dr Sam not a president Empire Global Ventures. Uh 0:07:22.720 --> 0:07:40.320 here with us in the Bloomberg Interactive Broker studio. So 0:07:40.400 --> 0:07:44.000 let's talk a little Netflix. Netflix is reporting earnings tomorrow 0:07:44.080 --> 0:07:47.480 after the close. Stocks had a phenomenal run. What else 0:07:47.600 --> 0:07:49.880 is new? It's up? Uh, I guess you know, thirty 0:07:49.920 --> 0:07:52.760 percent year to date, up about six over the last 0:07:52.760 --> 0:07:55.720 twelve months, so stock continues to perform extremely well. The 0:07:55.720 --> 0:08:00.200 company announced yesterday a significant price increase, the four one 0:08:00.240 --> 0:08:03.160 we've seen recently. Uh and stock traded up on that news. 0:08:03.200 --> 0:08:06.440 So let's get some more color on Netflix with Mark 0:08:06.480 --> 0:08:11.120 Douglas Marcus the CEO of Steelhouse. It's based in Los Angeles, California, 0:08:11.160 --> 0:08:13.720 but Marcus with us is here at the Bloomberg eleven 0:08:13.720 --> 0:08:17.000 three oh Studios. Mark, welcome. What do you make of 0:08:17.120 --> 0:08:20.040 the price increase? That was an aggressive price increase yesterday. 0:08:20.160 --> 0:08:23.880 What does it tell you about the company and its future? Yeah, so, 0:08:23.920 --> 0:08:27.200 I think in the immediate literally tomorrow, I think it's 0:08:27.240 --> 0:08:31.040 an indicator, a pretty strong indicator that they're gonna report 0:08:31.120 --> 0:08:33.839 really good numbers. I don't think. I don't think most 0:08:33.880 --> 0:08:38.280 people would basically report something that could make people think 0:08:38.320 --> 0:08:41.000 that maybe they might the growth might slow, and then 0:08:41.160 --> 0:08:44.120 report slower numbers. So I'm betting that they report really 0:08:44.120 --> 0:08:46.719 good earnings. I think. The other thing is is that 0:08:46.840 --> 0:08:48.800 I think there's no place else for you to go 0:08:49.120 --> 0:08:52.560 as a consumer. Netflix is the for everyone I know, 0:08:52.920 --> 0:08:57.280 Netflix and in their numbers, the first place to go. Second, 0:08:57.400 --> 0:08:59.720 I want to because I want to push back Disney 0:09:00.160 --> 0:09:03.559 coming out with their own streaming service, supposedly the Netflix 0:09:03.640 --> 0:09:06.599 killer right this year, and they're gonna take some of 0:09:06.640 --> 0:09:09.880 their movies off of Netflix rotation. Is that going to 0:09:10.000 --> 0:09:11.880 matter or you think no, it doesn't matter that Disney 0:09:11.920 --> 0:09:15.640 is now irrelevant. I think that basically the consumers have 0:09:15.679 --> 0:09:17.840 a short list and starts with Netflix. That's where the 0:09:17.880 --> 0:09:21.120 money goes first. A monthly subscription is less than the 0:09:21.160 --> 0:09:24.280 cost of a single movie. It's increasingly all new, all 0:09:24.320 --> 0:09:27.840 original content. They crushed it with bird Box at the 0:09:27.920 --> 0:09:29.720 end of the year. Another reason why I think they're 0:09:29.720 --> 0:09:33.120 going to report really good numbers and then everything after 0:09:33.160 --> 0:09:34.720 that is where do I go next? Do I go 0:09:34.800 --> 0:09:36.679 to Hulu? Do I go to Disney? You don't have 0:09:36.760 --> 0:09:41.240 kids to you? I actually do. But they're not Disney age, 0:09:43.480 --> 0:09:48.680 the Netflix age. So from the computer, from the competitive 0:09:48.720 --> 0:09:51.960 lent landscape perspective, You're right. Netflix has been it. They've 0:09:51.960 --> 0:09:54.120 been first to market. They've got the market share a 0:09:54.160 --> 0:09:57.680 hundred thirty seven million subscribers globally. Everybody else is playing catchup. 0:09:58.160 --> 0:10:01.040 But I'll come back to what I heard from some 0:10:01.080 --> 0:10:03.800 of the Redstone thirty years ago, where content is king 0:10:04.160 --> 0:10:08.120 the big media companies are pulling their content off of Netflix. Uh, 0:10:08.360 --> 0:10:11.160 Disney doubles down the twenty one century Fox acquisition, so 0:10:11.240 --> 0:10:14.080 it loads up it's it's content. It does feel like 0:10:14.120 --> 0:10:17.959 the competitive landscape in ten is going to be materially 0:10:17.960 --> 0:10:21.120 more difficult for Netflix, and it's been in the past. Yeah, 0:10:21.160 --> 0:10:24.120 but I think they look, you know, Toyota and Ferrari 0:10:24.200 --> 0:10:28.600 don't compete right the the you can it's where money 0:10:28.600 --> 0:10:30.960 goes to a number of these companies. Where does it 0:10:31.000 --> 0:10:33.880 go from consumers? Where does it go first? Where's it 0:10:33.920 --> 0:10:36.679 go second? Where does it go third? Until you see 0:10:36.760 --> 0:10:40.760 people saying I'm going to cancel my Netflix subscription to 0:10:40.840 --> 0:10:44.840 get a Disney subscription, then not really competing. So you 0:10:44.880 --> 0:10:48.560 think there's a the marketplace can support two or three 0:10:48.600 --> 0:10:52.720 or four. Yeah. I would be concerned about NBC Universal, 0:10:53.040 --> 0:10:55.160 like I wouldn't be concerned about Hulu. I wouldn't be 0:10:55.160 --> 0:10:58.160 concerned about Disney. I wouldn't be concerned about Netflix. So 0:10:58.280 --> 0:11:03.000 let's talk about, um my fixed expenses. How much can 0:11:03.160 --> 0:11:07.000 Netflix raise prices before people push back? In other words, 0:11:07.160 --> 0:11:08.839 a year from now, could they say, you know what, 0:11:09.240 --> 0:11:13.080 you love our stuff so much? A month? I think 0:11:13.160 --> 0:11:17.000 that their next price increase is very quiet. There was 0:11:17.040 --> 0:11:20.480 a meme, so bird Box spawned all these memes on 0:11:20.559 --> 0:11:23.560 Instagram and other social media. One of the funniest ones 0:11:23.720 --> 0:11:27.079 was how those forty five million people watch bird Box 0:11:27.120 --> 0:11:31.480 with twelve Netflix accounts? Right, so everyone knows is sharing accounts. 0:11:31.520 --> 0:11:34.960 I think Netflix's next price increases to start locking down 0:11:35.000 --> 0:11:38.560 the ability to share the accounts starting to drive consumers 0:11:38.559 --> 0:11:41.320 who are borrowing accounts to buy. How do they do 0:11:41.360 --> 0:11:43.559 that and why haven't they done it already? Well, because 0:11:43.600 --> 0:11:46.720 it's a form of free trial to to basically allow 0:11:46.920 --> 0:11:49.679 accounts to be as easily shared. There's a little bit 0:11:49.679 --> 0:11:52.920 of control on it, but for the most part, every 0:11:52.960 --> 0:11:55.640 you can easily get access to Netflix account without paying 0:11:55.640 --> 0:11:59.280 for it. The locking it down technically is is pretty easy. 0:11:59.400 --> 0:12:02.520 Hulu does it. So I think their next price increases 0:12:02.600 --> 0:12:06.800 not announced. It's just it's harder to share, which creates 0:12:06.840 --> 0:12:10.320 more subscribers. I would I'm bullish on Netflix. I would 0:12:10.360 --> 0:12:13.880 be that that that's a whole another increase in revenue 0:12:13.920 --> 0:12:17.679 that's not accounted for. They still have so many levels 0:12:17.720 --> 0:12:20.600 to push. They're basically the biggest production company in the world. 0:12:20.800 --> 0:12:22.200 Let's go to that point. That you know, on the 0:12:22.240 --> 0:12:24.400 other side of the income statement, where it's not just 0:12:24.480 --> 0:12:27.160 a revenue story, it's a call story. And they're spending 0:12:27.360 --> 0:12:30.840 like drunken sailors in Hollywood. The Ted Serrando's checkbook is open, 0:12:30.880 --> 0:12:33.360 nobody spends more money. Nobody's got a bigger check book 0:12:33.600 --> 0:12:35.400 is there, and they have no free cash flow. By 0:12:35.400 --> 0:12:37.040 the way, they can't pay for it, so they're going 0:12:37.040 --> 0:12:38.840 to the bond market. Is there a point where you 0:12:38.880 --> 0:12:42.439 get concerned that they're spending too much? Um, Well, they 0:12:42.520 --> 0:12:45.720 just generated another billion dollars in cash annually with the 0:12:45.760 --> 0:12:49.280 price increase they announced yesterday. I mean, that's the that's 0:12:49.320 --> 0:12:52.400 the that is the long term concern they I think 0:12:52.400 --> 0:12:55.840 they have twelve billion dollars in debt um they're negative 0:12:55.880 --> 0:12:59.239 cash flow three billion dollars a year. But they're expanding 0:12:59.240 --> 0:13:03.280 their user bay rapidly. And you know that they added 0:13:03.280 --> 0:13:06.160 a billion dollars in cash all jess with Essay's announcement, 0:13:06.440 --> 0:13:11.160 assuming that there's no consumers don't leave, so you know 0:13:11.200 --> 0:13:13.880 they're managing it for now. Two or three years from now, 0:13:13.960 --> 0:13:15.600 I might be a little more concerned. I think for 0:13:15.640 --> 0:13:18.560 the foreseeable future, they have a lot of levers to 0:13:18.640 --> 0:13:22.960 continue to generate subscriptions and generate cash in literally ten seconds. 0:13:23.000 --> 0:13:26.240 Who's their biggest competitor. I think Disney is the biggest competitors, 0:13:26.280 --> 0:13:28.760 so they're not they can't really compete, but they can compete. 0:13:28.880 --> 0:13:31.319 They can compete, but I don't think they take subscriptions 0:13:31.320 --> 0:13:34.000 away yet. But they are the number two. They become 0:13:34.040 --> 0:13:36.199 the number two choice. Mark Douglas, thank you so much 0:13:36.200 --> 0:13:38.199 for being with us. Always a pleasure. Mark Douglas is 0:13:38.240 --> 0:13:40.760 chief executive of Steelhouse based in Los Angeles, but he 0:13:40.840 --> 0:14:00.240 joins us here in our Bloomberg Interactive Broker's studios. You know, 0:14:00.280 --> 0:14:02.840 one of the fastest growing segments of the consumer products 0:14:02.840 --> 0:14:06.000 business has been the cannabis sector. UH. We have thirty 0:14:06.040 --> 0:14:07.840 eight states approximately in the US right now that have 0:14:07.960 --> 0:14:12.679 legalized cannabis. There's companies coming public, much greater awareness and 0:14:12.840 --> 0:14:17.120 acceptance of legal cannabis. UH. Joining us today is Kevin Hart, 0:14:17.160 --> 0:14:20.520 founder and CEO of green Check Verified out of New Haven, Connecticut. 0:14:20.520 --> 0:14:22.600 He joins us in the Bloomberg eleven three oh studios 0:14:22.840 --> 0:14:24.360 to talk to us a little bit about what how 0:14:24.440 --> 0:14:27.200 his company is playing in the food chain, if you will, 0:14:27.240 --> 0:14:29.600 of the legal cannabis business. So, Kevin, thanks for being 0:14:29.600 --> 0:14:32.680 here with us real quick, you give us our listeners 0:14:32.760 --> 0:14:35.360 kind of the thirty second elevator pitch for what your 0:14:35.400 --> 0:14:38.680 company doesn't, how you fit into the ecosystem. Sure, we 0:14:38.800 --> 0:14:41.920 recognize three years ago that you know, the banking for 0:14:41.960 --> 0:14:44.480 the cannabis industry was believed to be illegal, and that's 0:14:44.480 --> 0:14:47.400 simply not true. It's it's legal within the states where 0:14:47.400 --> 0:14:50.200 those programs are compliant and they're recognized to the number 0:14:50.240 --> 0:14:53.520 that you said. The challenges, it's just very complex and 0:14:53.640 --> 0:14:57.360 very expensive for state charter banks and financial institutions, which 0:14:57.440 --> 0:15:00.200 means it's impossible for a cannabis business to actually be 0:15:00.240 --> 0:15:02.920 able to do this. So you have these two independent, 0:15:03.040 --> 0:15:06.000 highly regulated industries that really don't know much about each 0:15:06.000 --> 0:15:08.640 other but would love to work together. That screams the 0:15:08.640 --> 0:15:12.480 opportunity for technology. So we developed the technology framework of 0:15:12.560 --> 0:15:15.440 platform and web AP that integrates all the rules and 0:15:15.480 --> 0:15:18.840 regulations at the local level that the cannabis business operates on. 0:15:19.280 --> 0:15:23.359 We monitor their them for compliance. We monitor every individual 0:15:23.480 --> 0:15:27.240 transaction at the dollar level, and therefore that information has 0:15:27.280 --> 0:15:30.920 passed along to the financial institutions so they can review 0:15:30.960 --> 0:15:34.400 the money bring it into deposit accounts and financial institutions, 0:15:34.400 --> 0:15:37.000 state charter banks and credit unions are dying for new 0:15:37.000 --> 0:15:40.760 deposit dollars. It's a challenged industry because of the bigger banks. 0:15:41.120 --> 0:15:43.360 They can bring that money in and they can pass 0:15:43.480 --> 0:15:46.720 their rules and their risk profile internally, and then they 0:15:46.760 --> 0:15:48.880 can pass that information back all the way through to 0:15:48.960 --> 0:15:51.360 the exam cycle on the back end. So it is 0:15:51.400 --> 0:15:57.440 a holistic, integrated, horizontal approach to attacking the banking challenge. 0:15:57.680 --> 0:16:01.320 And we work within the banking system, not around it. Okay, 0:16:01.360 --> 0:16:04.760 So rather than just saying we'll use bitcoin, right, you're saying, actually, 0:16:04.800 --> 0:16:07.600 here is an ecosystem that can that can perhaps be 0:16:07.680 --> 0:16:10.840 sustainable within the existing financial world. What I'm trying to 0:16:10.920 --> 0:16:13.840 understand is first of all, how you make money, who 0:16:13.920 --> 0:16:16.240 pays you? And then second of all, is it just 0:16:16.480 --> 0:16:21.160 state and local UH financial firms that adhere to this 0:16:21.280 --> 0:16:24.040 sort of local guidance from the rules or can it 0:16:24.120 --> 0:16:26.040 be the JP Morgan to Bank America On the back 0:16:26.120 --> 0:16:29.200 end here, the larger financial institutions aren't going to get 0:16:29.240 --> 0:16:32.280 involved in this industry yet, it's not worth the reputational risk. 0:16:32.360 --> 0:16:34.760 And you know candidly, they just don't have the monitoring 0:16:34.800 --> 0:16:38.640 ability of those individual transactions and the rules and regulations 0:16:38.680 --> 0:16:40.960 at that local level. Um. You know, at some point 0:16:41.000 --> 0:16:44.440 in time is laws change and regulations evolve. I think 0:16:44.480 --> 0:16:46.800 we'll see the bigger banks getting involved. You can't deny 0:16:46.920 --> 0:16:49.560 the size of the industry and the growth, but not today. 0:16:49.640 --> 0:16:51.680 And so this is a ripe opportunity for those state 0:16:51.760 --> 0:16:56.200 charter banks, great unions that are looking for new deposit dollars. Um. 0:16:56.240 --> 0:16:58.040 You know there are the reason why Bitcoin and the 0:16:58.080 --> 0:17:02.520 others don't participate is, you know, it's it's complex enough. 0:17:02.600 --> 0:17:05.000 You take non regulated currencies and you add that to 0:17:05.040 --> 0:17:07.119 the mix, and that's just gonna push people farther and 0:17:07.160 --> 0:17:10.760 farther away. So you know, this is about monitoring cash. 0:17:11.080 --> 0:17:13.399 You know, it's eight plus percent of the transactions are 0:17:13.400 --> 0:17:17.080 still done in cash. This is an essentially cash intensive business. 0:17:17.359 --> 0:17:20.439 Where do you get your cash? Our fee structure is 0:17:20.440 --> 0:17:24.360 based upon the dispensary. They pay a nominal fee structure. 0:17:24.359 --> 0:17:26.439 It's cheaper than the cost of a debit or credit 0:17:26.440 --> 0:17:29.520 card transaction fee. And we also have a tiered pricing 0:17:29.600 --> 0:17:32.440 structure with the financial institutions, so we do collective fee 0:17:32.440 --> 0:17:35.399 on both ends, but it's still cheaper than the cost 0:17:35.440 --> 0:17:39.040 of cash. So how are the local financial institutions viewing 0:17:39.080 --> 0:17:42.880 the cannabis business. Are they receptive to it? Are they 0:17:42.880 --> 0:17:46.480 still resistant to it? Does your presence and your regulatory 0:17:46.480 --> 0:17:49.840 framework help ease that? Where are they in the general? Okay, 0:17:49.880 --> 0:17:52.240 I'll do business with the local cannabist company. It's a 0:17:52.280 --> 0:17:54.879 fascinating process that we've been involved with so far. We 0:17:54.920 --> 0:17:57.080 knew we had to not convince, but we knew we 0:17:57.119 --> 0:17:58.800 had to be able to position our value to the 0:17:58.840 --> 0:18:02.760 financial institution. And to date, the street will end. And 0:18:02.800 --> 0:18:04.919 you know, I'm a sports person. I believe in hot streaks. 0:18:04.920 --> 0:18:08.280 The street will end. Every financial institution that we've had 0:18:08.320 --> 0:18:11.639 conversations with and demo this platform too, has asked us 0:18:11.640 --> 0:18:14.920 for an exclusive on the product and the geography there. 0:18:14.920 --> 0:18:17.480 And I've been selling enterprise software for forty years and 0:18:17.560 --> 0:18:20.560 been involved. Nobody's ever done that before. So this is 0:18:20.600 --> 0:18:24.040 compliance software, but it's compliance that comes with new business. 0:18:24.320 --> 0:18:27.280 It actually comes with the deposit dollars attached to it, 0:18:27.560 --> 0:18:30.719 and they see those opportunities, so they're very excited about it. 0:18:31.000 --> 0:18:34.520 So what's the longer term plan for green check Verified. 0:18:34.560 --> 0:18:36.720 I'm just wondering, do you see this is eventually being 0:18:36.840 --> 0:18:40.760 acquired by a major bank when the reputational risk goes away, 0:18:40.840 --> 0:18:43.800 or will there be an I p o UM. We 0:18:43.880 --> 0:18:46.239 look at all those options. I'm a big believer to 0:18:46.400 --> 0:18:48.199 begin with the end of mind and you always have 0:18:48.280 --> 0:18:50.280 to keep your options open as to what you might 0:18:50.280 --> 0:18:53.080 do from a company perspective. But our goal right now 0:18:53.160 --> 0:18:56.719 is to continue our growth trajectory. We started our national 0:18:56.800 --> 0:18:59.680 launch that's rolling out. We're in fifteen states right now, 0:18:59.680 --> 0:19:04.280 and for levels of conversation and implementation, we'll see where 0:19:04.280 --> 0:19:07.120 the market goes. There will be some changes as things 0:19:07.160 --> 0:19:12.080 involve in Washington, but legalization and State's Right Act actually 0:19:12.080 --> 0:19:14.720 are going to become an accelerant for us because the 0:19:14.760 --> 0:19:16.800 Treasury is never going to turn a green line onto 0:19:16.800 --> 0:19:19.040 banking and all the black market money that's out there. 0:19:19.480 --> 0:19:24.160 And I wonder if actually federal law legalizing marijuana fight 0:19:24.280 --> 0:19:27.280 her no, and it will actually help Okay, it will 0:19:27.359 --> 0:19:30.160 actually help us. All right, Well, we'll have to continue 0:19:30.200 --> 0:19:32.760 exactly how that would help you at another time. Unfortunately 0:19:33.000 --> 0:19:35.760 out of time. But Kevin Hart, really interesting having you on. 0:19:35.840 --> 0:19:37.760 Thank you for being with us. It's important to kind 0:19:37.760 --> 0:19:41.480 of look at the infrastructure of the cannabis industry. I 0:19:41.880 --> 0:19:44.440 speak to so many people on Wall Street who say, Gosh, 0:19:44.480 --> 0:19:48.400 I coul should have gotten into cannabis, not training play 0:19:48.160 --> 0:19:51.080 and consumer. Kevin Hart is a founder and chief executive 0:19:51.080 --> 0:19:54.320 officer of green Check Verified, which is based in New Haven, 0:19:54.320 --> 0:19:59.119 Connecticuty choices here in our New York City headquarters of 0:19:59.200 --> 0:20:19.760 Bloomberg LP. Lisa, I think we're on day if I'm 0:20:19.800 --> 0:20:23.720 not mistaken of this partial government shutdown. And obviously, in 0:20:23.720 --> 0:20:27.200 addition to the question of how long will it last? Uh? 0:20:27.200 --> 0:20:29.359 And is there any end in sight? The question is 0:20:29.880 --> 0:20:32.200 can it get any worse than what we're seeing right now? 0:20:32.200 --> 0:20:35.160 It looks like President Trump has ordered thousands of federal 0:20:35.200 --> 0:20:39.160 employees back to work, most notably without pay. But let's 0:20:39.200 --> 0:20:43.680 bring in Chris Flavel, Bloomberg policy reporter for Bloomberg News. 0:20:43.720 --> 0:20:46.960 He's at studio in Washington, d C. And he's out 0:20:46.960 --> 0:20:49.159 with a story on this topic. So, Chris, thanks so 0:20:49.280 --> 0:20:52.560 much for joining us. You know, where do you think, uh, 0:20:52.640 --> 0:20:56.000 this shutdown goes maybe over the near term, the next 0:20:56.160 --> 0:20:58.960 week or so. Yeah. So we've got a story where 0:20:59.000 --> 0:21:01.719 we put that to people who follow this stuff and 0:21:01.760 --> 0:21:04.760 to people inside and around government. And there's a list 0:21:04.880 --> 0:21:06.480 and I would, you know, I'd be folly to try 0:21:06.480 --> 0:21:08.840 and say here are the scariest things. But one that 0:21:09.040 --> 0:21:12.359 certainly is alarming is what happens to government workers who 0:21:12.440 --> 0:21:15.800 decide they just no longer want to be working for free. 0:21:16.080 --> 0:21:19.080 You mentioned that the president has ordered more federal employees 0:21:19.440 --> 0:21:22.360 back to work, even though they're not paid. That's certainly 0:21:22.400 --> 0:21:24.480 one way of addressing this. But the problem that we're 0:21:24.520 --> 0:21:27.959 told is really concerning people at senior levels of government 0:21:28.400 --> 0:21:31.000 is what if people in vital functions like T s 0:21:31.040 --> 0:21:34.560 A just stop showing up. They can call in sick, 0:21:34.760 --> 0:21:37.119 they can quit, they can do anything else, but if 0:21:37.119 --> 0:21:40.320 they're not they're doing their job, really vital functions start 0:21:40.400 --> 0:21:43.360 to stop, whether that is food inspection, whether it's people 0:21:43.400 --> 0:21:46.400 getting on planes, whether it's prison guards. And we've never 0:21:46.440 --> 0:21:48.520 been here before, so we're not really sure if it 0:21:48.520 --> 0:21:51.680 goes on weeks or even months, how they'll respond. Well, 0:21:51.720 --> 0:21:53.760 And Chris, I mean, we haven't we seen that to 0:21:53.760 --> 0:21:56.880 some accent already with the lines at uh it sort 0:21:56.880 --> 0:22:01.240 of security checkouts at airports, T S agents showing up. Yeah, 0:22:01.280 --> 0:22:03.600 that's a great example. So the latest figures I heard 0:22:03.680 --> 0:22:06.520 yesterday where I think somewhere in the neighborhood of seven 0:22:06.560 --> 0:22:10.920 percent of workers calling in sick. That's almost three times 0:22:10.960 --> 0:22:14.199