Episode 2
Jason Wilson is Principal at Fourth Wall Advisory, a strategic marketing advisory firm, and a Cannabis Banking Expert. He led the first installment of the Voice of Cannabis Series, presented in partnership with ETFMG | MJ and Fourth Wall Advisory.
Joining Jason is David Culver, Vice President of US Government and Stakeholder Relations for Canopy Growth Corporation, Patrick Martin, Principal & Director of Midwest Public Strategies for Cozen O’Connor and Erik Huey, President of Platinum Advisors.
Episode 2 includes an overview on the the MORE Act, social justice reform and the possible results of the 2020 Presidential Election.
LISTEN AND SUBSCRIBE
SPEAKERS
Patrick Martin
Principal & Director, Midwest Public Strategies
Cozen O’Connor
Erik Huey
President
Platinum Advisors
David Culver
Vice President, US Government & Stakeholder Relations
Canopy Growth Corporation
EPISODE TRANSCRIPT
John Darsie: (00:11)
Hello, everyone. Welcome back to SALT Talks. My name is John Darsie. I'm the Managing Director of SALT, which is a global thought leadership forum at the intersection of finance, technology, and public policy. Again, I'm excited to be back in SALT HQ today in Manhattan as we start to get back to normal a little bit. It's great to be here with the SALT logo behind me in our little SALT conference room, so I hope everyone out there is safe and healthy as well.
John Darsie: (00:37)
SALT Talks are a digital interview series we've been doing during this work from home period with leading investors, creators, and thinkers. What we're really trying to do during the SALT Talks series is replicate the experience that we provide at our SALT Conference series, which is to provide a platform for what we think are big important trends and ideas that are shaping the future, as well to provide our audience a window into the minds of subject matter experts.
John Darsie: (01:01)
We're very excited today to welcome our audience to the second episode of the Voice of Cannabis series, where we bring together leaders and innovators from the front lines of the fast-growing cannabis industry to talk about cannabis politics, cannabis regulation, and the business of cannabis. Today's episode is titled Congress and Cannabis, and it's in partnership with Fourth Wall Advisory, a strategic marketing advisory firm focused on the cannabis industry, as well as Canopy Growth Corporation, a leading international cannabis company.
John Darsie: (01:31)
Hosting today's talk is Jason Wilson, who's a Principal at Fourth Wall, as well as being a cannabis banking expert. With more than 15 years of experience in the asset management, finance, and structured products base, Jason has a track record of bringing hard to access asset classes to market. He's been working in connection with the legal cannabis industry for the past decade and continues to be one of the leading experts in the space.
John Darsie: (01:55)
If you have any questions during today's talk, just a reminder, you can post them in the Q&A box at the bottom of your video screen. And with that, I'm going to turn it over to Jason to host today's interview.
Jason Wilson: (02:06)
Thanks, John. Pleasure to be on with you guys again and glad you're back in the office and hopefully have some semblance of normality down there. Today's episode is in many ways a continuation of the topics and issues we discussed on our Essential Cannabis Panel we did back in June. Hard to believe that's almost three months ago. A lot's happened since then. But given the similarity of topics, we've actually decided to bring back the same expert panelists with us today.
Jason Wilson: (02:32)
So joining us is David Culver, who is Vice President of US Government and Stakeholder Relations at Canopy Growth Corp. We also have Patrick Martin, Principal of Cozen O'Connor, back with us. And, as well, Eric Huey who's the President of Platinum Advisors, is joining us. So thank you all, gentlemen, in advance for joining us today. Great to have you back.
Jason Wilson: (02:56)
David, why don't we kick things off with you? Looking at the landscape, a lot has happened in the last three months, but particularly with, I guess, the MORE Act? What is happening there? I understand we have another vote coming up. What's happening with co-sponsorships? What kind of momentum have you seen happening with respect to the MORE Act?
David Culver: (03:15)
Yeah, thanks, Jason. First of all, thanks to the folks at SALT for hosting this again. It's great to be back with all of you. And, Jason, thanks to you for moderating today. Good to see you, Mr. Martin and Mr. Huey. I know we get to see each other on a fairly regular basis, but nice to be on the panel with you both as well.
David Culver: (03:35)
Jason, the MORE Act is indeed the question of the day. I'm here in Washington, D.C., and it's what the media is completely focused on in the cannabis space and probably will be for the next week plus. But let me back up just a little bit. It's been three months since we've spoken to you and to the audience, and probably the most important thing to make note of is that the MORE Act now has 111 co-sponsors as of this morning. This is over 30 more than where we were three months ago. So all of the cannabis advocacy groups that have been up on the Hill talking to members about this have done a really good job in terms of building that co-sponsor number.
David Culver: (04:15)
The other thing that's happened is that you saw in late August notification from House leaderships, two notifications, actually, one stating that the MORE Act was going to come to the floor in September, and then that notification was immediately followed by another one that said that it was going to come to the floor on the week of September 21st, which is next week, which is why this is such a timely question that you're asking.
David Culver: (04:42)
Now, having said all of that, there have been some rumblings, and this is me speculating, I don't have anything concrete, but there have been rumblings both inside the media and from my contacts on Capitol Hill regarding some levels of discomfort inside the Democratic Caucus about bringing this bill to the floor for a vote prior to the election. There's a number of groups out there that we've heard could be concerned. The most prominent, of course, is the front-line members, and these are members of the House of Representatives that are the targeted races for this 2020 election cycle. I think that those members are already going to have a difficult race and are concerned about the electability of cannabis. I, of course, don't agree with that particular assessment at all. I've talked many, many times openly about how important I see cannabis as an election issue for anybody that wants to run on it. But, that aside, there is some levels of discomfort.
David Culver: (05:41)
We've also got some more conservative members, like the Blue Dogs, and also some freshman members that we've heard may be having some concern as well, primarily because they've just never dealt with cannabis as an issue before. So I understand all that. There also was a comment yesterday that Representative Hoyer made to the Washington Post that was tweeted out. He's the number two in leadership in the House of Representatives, and, basically, he said that the House needs to stay focused on the continuing resolution and also on COVID relief and maybe not so much on cannabis. But they backtracked that a bit this morning, and their office made the statement very clear that this bill is still on the schedule for next week. So we are still very hopeful, as all of our advocacy friends are, that we do see this voted on next week.
David Culver: (06:32)
I wanted to touch just very quickly, if I could on two more quick things related to this bill. One is that we spent a lot of time last time talking about the regulations within the MORE Act and just general ideas around federal regulations in cannabis. The MORE Act has a structure in its original form that would basically yield to the tobacco model, which tobacco and cannabis are very, very different products and cannabis is going to need its own regulatory structure. And since we last spoke, there has been a great deal of appetite on the Hill with the Committees of Jurisdiction to talk about that regulatory structure. I don't know what we're going to see in the MORE Act if it comes to the floor next week in terms of some new regulatory structure, but those conversations have begun. If the bill is to stall this Congress and we have to address it next year, we're going to spend a lot of time talking to the House and Senate leaders about this.
David Culver: (07:23)
And then the final thing I'll say is that because we are so close to this bill potentially coming to the floor, if you are interested in cannabis and you are at home, please pick up the phone and call your member of Congress. Let them know that this is a bill that's important to you, you want to see Congress vote on it, and you want to see it passed. Your voice is much more important than mine as a constituent, and I encourage everybody that's watching to go ahead and do that.
Jason Wilson: (07:51)
It's not surprising at all, I guess, given what's at stake. We have competing viewpoints, competing interests, and it's not going to be an easy road to legalization, no question. But, Patrick, turn to you for a little bit. What's your perspective on how recent events will affect the chance of success for the MORE Act passing and getting through, specifically with respect to COVID-19 and what that could mean?
Patrick Martin: (08:18)
Sure, absolutely, and thank you so much to SALT for having us back to talk about this very exciting topic. I think David hit the nail right on the head when he said that there is just some concern within the Democratic Caucus, not so much around the substance of the legislation but around the timing of it. Leadership is hearing from front-line members who are running in moderate to conservative districts that they're worried about the perception that if Congress and the White House don't reach a larger agreement on a COVID-19 relief bill that the House Democrats will look distracted and off-base passing a cannabis legalization bill without addressing what they consider to be the larger concerns first.
Patrick Martin: (09:01)
What David and Eric and others and I who work on this every day have been saying is that just isn't true at all. When you look at states and localities that are suffering because of COVID-19 and are desperately looking to Washington for economic relief, a cannabis legalization bill provides a tool to get economic dollars to the states. Look at the tremendous success that states that have legalized cannabis are having just from a pure economic standpoint. The numbers in my home state, in Illinois, in medical, have been staggering, particularly throughout COVID-19. Everything that the national conversation has centered around with race and policing reform and inequality, this bill addresses that, too, in a very serious way.
Patrick Martin: (09:48)
So I would say to anyone on Capitol Hill, any member of Congress, anyone who doesn't think that the timing is right for this bill, the timing is exactly right for this bill. This is us meeting the moment and addressing a true injustice and, quite frankly, taking a bold and important stand on behalf of this industry and on behalf of consumers who want to see this pass.
Jason Wilson: (10:13)
So it may be a great time to actually have the political will to be able to get this, through.
Patrick Martin: (10:18)
Absolutely. And I would add, to answer your question as well ... The thing I would add is that this legislation will provide a tremendous amount of energy to core Democratic voters that we need to come out in November. So to those members who are nervous about this not being a net positive, I've never seen a poll in the history of cannabis that doesn't show that it isn't popular. And it's incredibly popular among young people and people of color, two voting blocks the Democrats aren't going to win anything in November if we are not motivated and excited in those communities to go out and vote.
Jason Wilson: (10:51)
Eric, touching on voters quickly, what are we seeing demographically? We know millennials are big supporters, for sure, but what are we seeing across other demographics?
Eric Huey: (11:02)
What's amazing about this issue is it transcends party. It has almost as much support on the Republican side as the Democrat side, not quite as much but almost as much, across socioeconomic lines, across agenda lines, and across age lines. You've seen 66% of Americans think that recreational cannabis should be legal right now across America, and when you break that down by various strata and you look at the cohort of 65 and older, these folks have doubled their amount of cannabis intake and purchasing in the last five years. So people over 65 have purchased twice the amount of cannabis in the last five years as they had prior to that because nobody remembers, or people should remember, that this is the Woodstock generation. These are people who grew up, who came of age, with cannabis when it was illegal, and now that it's legal again, they're rediscovering it, and they may be rediscovering it in flower form, but they also may be rediscovering it through beverages or sublinguals or edibles or a whole range of different intake methods.
Eric Huey: (12:17)
So this is something that transcends all age groups, and people up and down the socioeconomic scale. I think policymakers would be remiss if they don't catch onto this. America's already there, right? This train has left the station. We are past the tipping point. The only people who aren't there are a lot of state and federal policymakers who still, for some reason, can't quite get behind cannabis. But this is something that it's to their political disadvantage if they don't do it, particularly as you look at some of the key battleground states. You look at Ohio, 62%. Arizona, 62%. Even some states like Missouri, it's 52%. So these are places you wouldn't ordinarily expect, but America's there, so it's time for the policymakers to meet the people where they are.
Jason Wilson: (13:17)
America's there, apparently. That's an incredible statistic you have with respect to those 65 years old and older. I guess that explains-
Patrick Martin: (13:25)
Jason, can I-
Jason Wilson: (13:25)
... Martha Stewart coming out with Canopy.
Patrick Martin: (13:27)
Jason, I want to add something [inaudible 00:13:29] said because I think it's an incredibly important point. The conversation around is it a political disadvantage to do this before the election, I think punting on it could be a real political disadvantage, and Eric, for the reasons he just laid out, is exactly right. If you show the voters that we need to come out, that this isn't a priority or that we think it's too politically difficult, that really could hurt us, and I think that needs to get talked about just as much as what certain front-line members are saying about their fears about it.
Jason Wilson: (13:59)
Well, and the other thing, obviously, we're hearing loud and clear is social justice reform, right? So that's curious that you had another opportunity. And, again, I guess to your point, the MORE Act presents a great way to address some of those injustices. So, again, passing on it would seem to be a massive disservice. What's happening on the Hill with respect to social justice reforms? Is Congress actually doing enough? Can you get us up to speed a bit?
Patrick Martin: (14:30)
Sure. It was a busy summer in terms of the legislative process looking at some of these issues. The House of Representatives passed a policing reform bill that was written by the Congressional Black Caucus. It got some Republican votes as well. The Senate had their own process in coordination with the White House that was not able to produce a bill that passed. But the conversation has continued to be top of mind for lawmakers and the general public. We see news stories every week about policing issues that are causing great anxiety in communities all across this country, and I think there's a recognition, both on this issue of cannabis and legalization and on policing reform, that Congress needs to act and needs to do something to address the injustices that we all see. Unfortunately, just like we're seeing with the COVID relief bill, the politicians are not able to get on the same page and do this. It's unfortunate because it needs to happen now.
Eric Huey: (15:28)
And, Jason-
Jason Wilson: (15:28)
Eric, yeah, you had a lot to say on the matter before. What's your view?
Eric Huey: (15:32)
Building on Patrick's point, this is a critical issue in communities of color, right, where Black men are arrested at four times the rate of white men, despite only being 12% of the population. So if probable cause is the color of your skin and if the allegation of a police officer smelling marijuana is the pretense for that interaction with the police, if we could decriminalize that, we are going to stop disinvesting in an entire strata of people. We spend 3.5 billion dollars annually on marijuana enforcement. We arrest 600,000 people a year, disproportionately Black and brown, in this country in cannabis. Can you think of a bigger waste of resources than that? We've got real issues that we need to be tackling, and taking key members of our society out of public circulation over something that is legal in 33 states for medical and 11 states plus the District of Columbia for recreational, it's almost unthinkable. But it's morally unjustified, it's morally wrong, and I would posit that for politicians looking at this, there is a moral imperative for them to act.
Jason Wilson: (17:06)
David, from a business perspective, an industry perspective, how is the industry responding? You guys are a leader in the space. What are you seeing in this arena? How's the social justice reform enacting any kind of change?
David Culver: (17:19)
Yeah, well, first of all, I think that the comments that Eric and Patrick both made on this are so critically important. It's really easy for me, from a corporate perspective, to talk about what this could mean in terms of jobs, post-pandemic most likely, but post-pandemic and post-legalization, what those nationwide job numbers could look like, how this could help fill budget deficits in state capitols all across the country because we all know that they're growing exponentially, and just be a general new engine as we begin to restart this economy as we come out of the pandemic. But the harder thing for me to talk about is social justice. The harder thing for my company to talk about is social justice. But it's something that we do talk about every day. These two gentlemen that are with me, we are up on the Hill and in state capitols talking about this because you cannot have legalization without tackling that social justice piece of the puzzle. And the MORE Act does a very good job of that.
David Culver: (18:20)
Let me just share a personal story with you. I've got a little video series that I do every two weeks that's called Under the Canopy, and we primarily focus on Capitol Hill and on state regulators. And I'll give you a sneak peek into who's coming up next week. It's a woman that I spoke to that she was imprisoned for a nonviolent cannabis offense about four years after she graduated from college. She had a minor role in a distribution operation, again, no criminal record, and she was sentenced to 87 months in prison. Let me just pause for a minute, and you soak that in. 87 months, no criminal record, nonviolent cannabis offense. It's just alarming for me to listen to it. She had good behavior, she served five years of the sentence and was released. She had all sorts of issues related to reentry both personally and professionally. She is a person that experienced firsthand why the war on drugs does not work.
David Culver: (19:27)
And this type of story has got to end. We can't have this again, can't have these any more. I think that that's part of the reason why the MORE Act is so important, and I want her message, when we put it out there next week, to be the thing that the legislators hear first and foremost. Because it's easy, again, to talk about the jobs and the economic benefit, that's a no-brainer, but this part is hard. That's really what elected officials need to hear, and they need to have the courage to move this type of legislation to deal with this problem, and it's not easy, but it's what they need to do.
Eric Huey: (20:03)
And, Jason, every 30 seconds in America, somebody is arrested for a cannabis offense. We've been talking for about 20 minutes, so that means since we've started, 40 people across our country have been arrested for cannabis. And those people, they're going to have records that are not going to be expunged unless things like the MORE Act passes. So, again, this is a moral imperative.
Patrick Martin: (20:23)
And to put a finer point on what Eric just said, to address the issue we talked about on the last series we did, the people that Eric just referenced don't look like Eric and David and I. We don't know what that's like to be a person of color and to know that you're going to get unfairly targeted. Growing up in the Chicago suburbs, I have a lot of friends who would have broken taillights and cannabis in their car, and none of them ever got pulled over. This is unfairly policed, and we cannot have a conversation about criminal justice reform and policing reform in this country without addressing the issue of cannabis.
Jason Wilson: (20:59)
No, it's a continuation of massive repression. You mentioned 40 people since we've been speaking. That's 40 people times five, eight, 10 years. I mean, it's complete destruction of not just an individual's life but their family, sons, daughters, parents. It's unfathomable, actually. How can this not be a major part of the federal election? Looking at the Democratic Republicans, what are they saying? How big is this going to be with respect to the presidential race?
Patrick Martin: (21:35)
Well, I think the key thing to note about this particular presidential election, and we talked about it a little on our last series, you have two nominees for the major parties who are white 70-something [inaudible 00:21:49] who came of age at a time when this was viewed a lot differently. So you have to contend with that at the presidential level for how much coverage this issue is going to get among the two major candidates. But with the momentum of something like the MORE Act passing in the House of Representatives, with Vice President Biden's selection of Kamala Harris as his running mate, who has been a leader on this issue in Congress, and with the general public in the states that this has passed through ballot initiatives, state legislatures continuing to say, "We want to see change," this is truly going to be a grassroots movement issue, and the people are going to force the politicians to pay attention to this.
Patrick Martin: (22:32)
So I think it will continue to be an issue. You saw it in the primaries. This became a major issue for the Vice President because his position at the time was just not consistent with the other candidates, and I think that if he's fortunate enough to win in November, you're going to see that play out as he begins to govern.
Jason Wilson: (22:50)
So much momentum, so much at stake. David, does it really matter who's president? Is it really more about the Senate? Is that the roadblock here? There's all those magnanimous ... Whoever is in power are going to say, if it makes it all the way through to the president, are they just going to go, "Yes," or what's happening there?
David Culver: (23:09)
Well, I think that the momentum in the cannabis space is going to continue next year no matter who is president of the United States. My eyes are primarily on the US Senate, and you asked in your question there about if the Senate flips. I think that the Democratic leader, Senator Schumer from New York, has made it very clear that cannabis is going to be a priority for him, and if he's the leader next year and Nancy Pelosi stays speaker of the House, which all indicators point to the fact that she will, then I do think we're going to see some sort of full legalization package come out in the first six months and sent to the president's desk. I don't think it's unrealistic to say that at all.
David Culver: (23:55)
This is assuming, of course, that things stall this year. So action in the Senate related to the MORE Act, if it is to pass in September, is still unknown, and I'm not sure what kind of appetite they'll have. But I do think that if the political winds keep blowing as they are now and the Senate does flip, then we'll see something in the first six months. The big unknown, of course, is if it does arrive on Biden's desk or Trump's desk, do either one of them sign it? And to Patrick's point earlier, Biden's going to already have to start to think about his left flank when he gets on day one of being elected, both for the 2022 election and for his own reelect if he chooses to go that route. So he's going to need to protect himself from that left flank, and there's no better way to do it than with cannabis. We've already seen it, as referenced earlier in this chat, during the primaries because countless members were primaried from the left, and so many of them led with the cannabis issue.
David Culver: (24:53)
But we don't know exactly. My gut says that either one of these men that are president would go ahead and just stand out of the way and let it happen, if Congress chooses to act. Also, I should point out that at this point, in January of next year, let's say it takes Congress three or four months to act. We could legitimately be coming out of the pandemic, and either man would be looking for jobs and for tax revenue for state capitols, so cannabis is going to be a brand new industry and will generate a lot of both. So those are really the main things that are on my mind related to the Senate. Good question.
Jason Wilson: (25:31)
So regardless of the outcome and when it happens, obviously, it doesn't stop momentum at the state level, and notwithstanding what happens at the federal level, presumably it'd still be up to the states to legalize or not. Eric, what's happening on the ballot with respect to the state level?
Eric Huey: (25:47)
Well, you've got ballot initiatives in five states, and what's interesting is four of them are red and rural states. You've got Arizona, South Dakota, Montana, and Mississippi that all have ballot initiatives, and they're joined by New Jersey. Mississippi would legalize medical cannabis use. Montana, Arizona, and New Jersey already have legalized medical, and they would transition or add recreational use. And South Dakota would do them both at the same time. Particularly over the last 10 years in an era that is often marked by congressional intransigence if not inaction and gridlock, the states put themselves at the forefront, and you saw California lead on this issue very, very early and other states begin to follow. You also saw that on the gay marriage issue. As we said, 33 states have already enacted medical marijuana as legal, and 11 states plus the District of Columbia have legalized recreational cannabis.
Eric Huey: (26:55)
So when you look at the degree to which this has turned, you have to look no farther than Montana. Montana is hardly known as a blue coastal state. Nevertheless, four years ago, 60% of Montanans opposed legalizing cannabis in any form. Now, 54% of Montanans agree with the proposition that it should be available for recreational use in their state. That's in the span of four years. You've heard me joke, Jason, that Libertarians are just Republicans who smoke pot. This does cross party lines, and it crosses geographic lines as well. So I think in at least three of those states, Montana, Arizona, and New Jersey, the numbers are in the 50s and 60s, it's going to pass, right? Measure 65 in Mississippi, it's unclear. It's still Mississippi. And then ballot measure 26 and Amendment A in South Dakota, which are the medical and the recreational ballot measures, those are likely to pass in South Dakota. Then you're at a point where the overwhelming majority of the American people live in states where this is legal and the overwhelming majority of states have now legalized. So then, again, what is the federal government waiting for?
David Culver: (28:22)
Yeah. Jason, if I can add to that, just to reiterate the point that we've made previously. Eric just rattled off three red states, very red states, and the whole idea here is that if we can get states that are red to legalize, whether medical or recreationally, then it puts a lot of pressure on their federally-elected officials to follow suit. And you need to look no further than Senator Cory Gardner from Colorado, who has become a champion in the cannabis space but wasn't at the beginning of the process. So as more and more states tackle this, more and more red states, it's going to be more and more of a bipartisan issue and give those legislators more freedom to vote in favor of cannabis because their constituencies already want it.
Eric Huey: (29:07)
Yeah. And I would add, to build on David's point earlier about this being a win for the state coffers, these coffers have been decimated for tax revenues by the Coronavirus. When you look at the numbers involved, the projections for New Jersey alone are close to a billion dollars in sales by 2024, 800 million dollars in Arizona, even in South Dakota, you're looking at 200 million dollars. So the numbers are there, and in addition to tax revenues based off those sales, you're also, as David said, you're creating an industry and you're creating jobs. So there's a fiscal component to it, but there's also an investment component to this. And these jobs are not just going to take place in the large cities of the states, it's going to be throughout these smaller towns.
Patrick Martin: (29:57)
Yeah, look at what David's company accomplished in Smiths Falls, Ontario, which could be so similar to many industrialized cities in the US and the economic ecosystem that they've built. In the wake of COVID-19 and the continued changes that our economy has gone through from manufacturing to consumer and to technology, there is a crying out for some type of investment. This is going to be a real opportunity for them, and I think everyone is going to be open to ideas because we're at a time of tremendous economic change and recovery.
Jason Wilson: (30:31)
You hit it right on the head. Not just Smiths Falls in Ontario, what Canopy's done in upstate New York as well, honestly, very well.
Patrick Martin: (30:38)
Yeah.
Jason Wilson: (30:39)
One more question for you guys and we'll pass it over to John for Q&A. And it kind of touches on what we had with episode one, just shortly. The legislation that actually comes through, how it's shaped, what are we seeing for industry ... Call it industry unity, if you will. How are we making sure that whatever is passed as law is effective? Obviously, if you look at hemp in the Farm Bill, there's a lot of confusion there with respect to USDA, FDA, DA, what have you. What are we learning from that in the industry to prevent the same issues with respect to marijuana legalization?
David Culver: (31:27)
Yeah, Jason, that's a good question to conclude on. It's something that I harp on all day, every day, so I appreciate the question. I think that, first of all, we've seen a lot of really good collaboration within the industry and the advocacies related to the MORE Act. The addition of the 30-plus co-sponsors in the last three months was a big lift. I didn't know that we were going to be able to get over 100, and we're at 111, and I bet we get a bunch more before, hopefully, the vote next week. So that took a lot of unity to do that. But we still have multiple voices that are here in D.C. and also in state capitols. It would be better if we had a singular voice for the industry so that we can advocate with one voice related to the regulatory structure, all the pieces of that.
David Culver: (32:19)
There's so many parallels, but I see this as almost like the highway before they wrote the Highway Bill. You had the two trucking associations that were competing, and they came together as one, and they decided to merge because they knew they needed one singular voice to be effective. We could be in the position next year that the full legalization package goes through, if the political wins are right and you have the right leadership there. If that's the case, the industry must have a singular voice in order for us to get this right. Because if we don't get the regulatory structure right, if we don't get the social justice right, if we don't get the tax rate right, there's all sorts of things we're going to spend the next umpteen decades cleaning up the mess. So it's something I'm working on right now and I will continue to work on in preparation for next year.
Eric Huey: (33:11)
That's a critical question, and David's leadership on this at Canopy and Canopy's leadership has been incredible. The level of sophistication that they have brought to this entire industry has lifted the entire industry. But what we're seeing across the industry is a growing level of involvement and integration into the political process at the state and federal level. I think, five years ago, if you asked most policymakers what the cannabis industry looked like, they would say it looks like the parking lot at a Phish concern. Now, when they see it's more suits than ponytails, they say, "Wait a second, this is going to be a 56 billion dollar industry, it now employs a quarter million people, four times as many people as the coal industry? Wow, how do I get this in our state?" So there is a transformation both within the industry but also how the industry is perceived on Capitol Hill.
Jason Wilson: (34:02)
Excellent. Gentlemen, thank you a ton for your time, your views, your perspectives. As always, great to have you on. Just want to thank you before we go over to Q&A because we probably won't get a chance to sign off. But, John, I'll turn it over to you, answer any questions.
John Darsie: (34:18)
All right. So we have some great audience engagement so far. Reminder to anybody watching, if you have additional questions, you can post them in the Q&A box at the bottom of your video screen within the Zoom window. Our first question is obviously from an enthusiastic supporter of cannabis legalization. They say the polling, the success you've seen in certain states, as well as citizen demand seems to be off the charts and it feels like the dam, from a public opinion perspective, is either getting ready to break or has already broken. How, as an individual in the country, can somebody become an activist and push for the type of change that they'd like to see within cannabis regulation? Are there specific steps that someone can take to push their local legislators or become part of this movement?
Patrick Martin: (35:02)
Absolutely. And that's a fantastic question and love the enthusiasm behind it. As advocates every day, David and Eric and I love to remind folks in what we do every day that we're exercising our First Amendment right. My wife was a high school government teacher for a long time, and we always talk about how high school students know many parts of the First Amendment, particularly the right to free speech. But at the very end of that amendment is the right to petition your government, and it is a constitutional obligation that all of us have. Some of us do it for a living. But as a citizen who is passionate about an issue, considering it not only your responsibility and your obligation, I think, is the first step.
Patrick Martin: (35:46)
So get involved with advocacy organizations that are promoting cannabis in your state and at the federal level. Write letters to your elected representatives. Make phone calls on behalf of politicians who are leading on this issue. And find as many possible ways, both in your public and private life, to get involved on behalf of the things you care about because it makes a huge difference. Eric brought up gay marriage earlier as just a nice example of an issue that sped up so quickly in terms of how the public viewed it and how policymakers viewed it, and that was years and years of work that ultimately came from ordinary citizens advocating on its behalf. That's what we're seeing in the cannabis industry. All of us are working very hard to do things like make sure that the MORE Act gets considered in Congress, but we would not be here if it weren't for the millions of Americans who have invested their time and energy into making this an important part of their lives.
David Culver: (36:44)
Go to house.gov, tell your congressman that you want he or she to co-sponsor the MORE Act, you want to see the House vote on it, you want to see the body pass this important bit of legislation. I agree with everything Patrick said, but in terms of this week and next, go to your website, go to house.gov, figure out who your member is if you don't know, contact them directly, and tell them this is important to you because your voice will resonate very loudly with them and their staff.
John Darsie: (37:13)
Eric, you have anything to add, or should we move onto the next question?
Eric Huey: (37:16)
Don't agonize, organize.
John Darsie: (37:18)
There you go. So we have a question from an audience member who seems to be a little bit less familiar with the space, and they're asking what percentage of the states that currently have legalized cannabis ... What is the breakdown of red versus blue states? And you alluded to this earlier, David, but do you think the shortfalls that we're seeing in state budgets is going to be the tipping point where we see a lot more Republican leadership in Congress and at the state level start supporting cannabis legalization frameworks?
David Culver: (37:48)
Yeah, I'll start with that question, and I can punt the rest of it back to Eric. I think he probably has the red to blue split better than I do. But the bottom line is that every single state, doesn't matter whether they're red, blue, or purple, is facing right now massive budget deficits because of the pandemic, and they're going to continue to grow, and they're going to have to do something about it. Just yesterday, actually, I was watching on CNN the governor from New Mexico talking about how cannabis could plug a massive hole in her state's budget deficit. So they're going to be looking under every single rock for money to fill that hole without raising taxes on those that are still suffering and struggling as a result of this pandemic, and I really think that it's something that every single governor is going to be looking at, and it doesn't matter what their politics are. Eric, you-
John Darsie: (38:39)
Governor Lujan Grisham, who you mentioned, from New Mexico, she's a close advisor of President Biden or Prospective President Biden, Vice President Biden, I should say. I don't want to get ahead of myself.
David Culver: (38:50)
Yeah, yeah.
John Darsie: (38:51)
She has his ear as well, so that could be another bullish data point for cannabis regulation.
David Culver: (38:56)
Yeah, for sure. I mean, listen, we'll let Eric comment on the red to blue split, but that's an important point because there are lots and lots of people that are around Vice President Biden right now that have been publicly supportive of full legislation and the social justice associated with it. And, again, Patrick made the parallels to marriage equality from 2008. They really do resonate again right now. And with that many people around him and so many in the party that are comfortable with cannabis as an issue, I don't see how the party doesn't embrace it further as time goes on. But, Eric, let me yield to you on the question on the red and the blue.
Eric Huey: (39:39)
Yeah. In New Mexico, the governor of New Mexico said the biggest mistake of her governorship so far is not legalizing cannabis last year so they could've gotten ahead of this Coronavirus epidemic, and just from a sheer revenue standpoint. In terms of where cannabis is legal for recreational use, it skews blue states. It's the northeast, it's the west, it's Michigan, it's Illinois, Colorado, and Washington, D.C. But when you look for medical use, it's very red state intensive. When you think about the opioid epidemic and the impact that that has had on my home state of West Virginia and other states like it, this is a way for people to deal with pain management and PTSD and a whole range of medical conditions without resorting to opioids.
Eric Huey: (40:38)
I think in those red states where we have seen movement by policymakers, that's come from a recognition that there's a medical component to this that's very real, that's been researched, and that's critical to their constituents. And, also, frankly, from a revenue and jobs perspective, they see this as a revenue, so the morality begins to fall away. And in my observation of the recent history of the Republican party, where money meets morality, money always wins. So I suspect that more red states will continue in the direction, the inexorable march of cannabis legalization.
Patrick Martin: (41:18)
And I would add where states implement medical programs, that ultimately leads to a conversation around adult use. The blue states that Eric named that have adult use programs, all of them have medical programs. This is just sort of human nature. Once people start to see something, they know a veteran in their community who uses the medical program, they know that it's helping a senior in their family deal with managing chronic pain, and they become more comfortable with it, a conversation around adult use doesn't seem as scary anymore. That's why we're so excited to see all of these red states consider medical programs because we know that that forward progress on cannabis, whether it's a medical program or adult use, is all positive movement forward for the movement.
John Darsie: (42:08)
I'll insert a personal anecdote into this. So my wife's family, let's just say they're not exactly Bernie Sanders supporters. There's a member of her family that has cerebral palsy, and they were very hesitant to start using cannabis-based products to start treating some of the brain hyperactivity and other issues that he had. But once they started doing it and they listened to a couple doctors that prescribed some cannabis-oriented products, it's done wonders for his quality of life, and they are full believers in cannabis-oriented products for medical use. It's been a fantastic benefit to him and their family.
David Culver: (42:44)
Yeah. I appreciate you sharing that story because I think it's such an important one. As we begin to normalize this product across the country, this is not a partisan issue. Forget about what your politics are. If it's helping people physically with an ailment that they have, then it's something that it doesn't matter what your politics are, whether you vote for Biden or whether you want to vote for Trump. So I think that one of the most important things that Congress can also do, and they took the first step earlier this month by passing a research bill that was slightly amended that would allow for states that have legalized to let researchers use that plant material versus just the material coming out of Mississippi, which is problematic in a number of ways, as you've read about in the newspapers for many, many years. So we're excited about that, and we hope Congress gets that through. That then opens the door even further for more and more research into areas that can help people all across the country.
John Darsie: (43:47)
So I'm going to ask you guys a tough question here. We have a cannabis skeptic on the call who's asking whether there have been studies and what current studies show in terms of health problems that could grow out of recreational cannabis use and possible declines in productivity. What's the latest data, and what are the costs of more widespread cannabis use, and would legalization even lead to more widespread recreational use, for example?
Patrick Martin: (44:13)
Yeah, I think all of us recognize the importance of making sure that health and wellbeing is a central part of the discussion with legalization. You've heard the Vice President continue saying his position. He wants it to be studied more, and David talked about Congress acting on the research bill. I think all of us are of the belief that legalizing and regulating a product that we already know Americans are using is the most important thing we can do to ensure the consumers are abiding by the rules that will make sure that health is a part of the consideration. You don't want a world in which people are just using products and they aren't regulated in the way that they should be.
Patrick Martin: (44:58)
So what David in particular at Canopy spends so much time doing is working with policymakers to say, "We want to do this in the right way, in a safe way." We're learning more every day about the product and the benefits that it has, but you can't do that when it's not legal. So I think that's a really important part to all of us. And it's a great question.
David Culver: (45:22)
John, I can just add to that, too, that there are a number of products, and I'll pick on our beverages, that are coming to market that these have no impact on the liver whatsoever, they have no hangover, they have no calories. So there's a lot of innovation that's coming onto the market that is very much in contrast to beverage alcohol and tobacco, just to add that quick point to what Patrick said earlier.
Eric Huey: (45:50)
There's an aggressive testing regime in all the states where cannabis is legal, and the only food entity or anything else that hits these standards is baby food, right? So this is rigorously tested across seven or eight different data points, from microbials to fungus to pesticides, and they have very, very rigorous standards, standards that are so tough, sometimes, the reason that a product like a beverage may fail is because of the other ingredients, the chocolate or the barley in the foodstuff itself. So this is an industry that's highly, highly regulated, and the states have gotten this right. Any fears of any adverse health effects are not borne out by any studies or the regulatory regime.
Patrick Martin: (46:44)
That's such an important point. All of the companies we work with recognize the need for a federal regulatory structure for it to be safe, for the products to be safe, for them not to get into the hands of kids. But we have products, food, beverages, things that are legal in this country, that provide absolutely no benefit other than enjoyment. Cannabis has real benefits for patients and for users. That is what makes it so different than a lot of the other products that it gets lumped in with, is the way that it helps some of the people that I named, seniors that are managing pain, veterans who are dealing with anxiety. John, the story you told about the person in your family with cerebral palsy, I can't think of a lot of other products that we're talking about in the regulatory space that help people in that way.
John Darsie: (47:31)
All right, well, we'll leave it there. It's a fascinating conversation. We look forward to continuing this series and hopefully continuing on the road to, as I mentioned before, the dam breaking, if it hasn't already broken, in terms of everyone getting on board with the myriad benefits of cannabis legalization. So we hope to have you guys on in a year's time talking about the landscape now that things have been legalized. But in the meantime, we'll continue to inform our audience about what the implications could be if we can get that legalization taken care of here, hopefully in the next six to 12 months. But thanks, everybody, for joining. Thank you, Jason, for hosting. You have any final word for any of our participants, Jason?
Jason Wilson: (48:10)
No. Just again, thanks for joining me, and hopefully your messaging, everyone is supportive, gets out to their appropriate representative, and we start enacting change. We need it right now.