← Freakonomics Radio
Freakonomics Radio
609. What Does It Take to Run a Cannabis Farm?
00:40:08
Chris Weld worked for years in emergency rooms, then ditched that career and bought an old farm in Massachusetts. He set up a distillery and started making prize-winning spirits. When cannabis was legalized, he jumped into that too — and the first few years were lucrative. But now? It turns out that growing, processing, and selling weed is more complicated than it looks. He gave us the grand tour. (Part three of a four-part series.)
Loading summary
Transcript173 lines
- [00:00]
Stephen Dubner
You made it through all the starts and stops of your tech business. And when you're with Amex Business Platinum, you can count on a network of benefits to keep going, including access to over $1,000 in business and travel value annually. And thanks to five times Membership Rewards points on flights and prepaid hotels booked on amextravel.com you and your plugged in engineers can get rewarded for working in the cloud. That's the powerful backing of American Express. Terms apply. Learn more@americanexpress.com AmExBusiness Freakonomics Radio is sponsored by Mint Mobile. Ditch overpriced wireless by switching to Mint mobile and get three months of premium wireless service for 15 bucks a month. All plans come with high speed data and unlimited talk and text delivered on the nation's largest 5G network. You can use your own phone, your own phone number and all your existing contacts to get this new customer offer and your new floor. Three month premium wireless plan for just 15 bucks a month. Go to mintmobile.com freak that's mint mobile.com freak cut your wireless bill to 15 bucks a month at mintmobile.com freak $45 upfront payment required equivalent to $15 per month. New customers on first three month plan only speeds slower above 40 gigabytes on unlimited plan. Additional taxes, fees and restrictions apply. See Mint Mobile for details. Hey there, it's Stephen Dubner. Before we start today's episode, I have something to tell you. We are doing two live Freakonomics radio shows on January 3rd in San Francisco and on February 13th in Los Angeles. If you have never seen Freakonomics Radio live, it's a lot like this show but you know, live with great guests and it's usually a lot of fun. So I would love you to join us in San Francisco and or Las Angeles early next year. Get your tickets now@freakonomics.com liveshows that's one word. Okay, so Freakonomics Radio live in San Francisco on Friday, January 3rd and in Los Angeles on Thursday, February 13th. Tickets@freakonomics.com live shows. I hope to see you there. And here now is today's episode.
- [02:30]
Chris Weld
So I was asked to be part of a panel that went to a retirement center to talk about cannabis because a lot of those people are what we call canacurious. My discussion was sort of how it works generally, what it does to the body, some of the claims that are made around cannabis in medicine and then how to dose low and slow. I said, listen, it's been what, 80 years? You haven't tried it before. Don't try one gummy the first night. Do a quarter of a gummy. You can afford to take a week to find out if it works.
- [03:03]
Stephen Dubner
That is Chris We. Weld. He is a cannabis farmer in Western Massachusetts. In case you hadn't noticed, cannabis is in a very different place than it was even just a decade ago. This is our third episode in a four part series called Is America Switching from Booze to Weed? If you missed the first two, here's a recap. In part one, we compared the harms of cannabis and alcohol. If somebody came up to me today and said, we'll make a deal with you, you can replace all alcohol use with cannabis use, I would immediately agree to that deal. To be fair, there has been much more research into the harms of alcohol than the harms of cannabis. That's partly because cannabis, even though it is now legal in most US States, is still illegal on the federal level. And this creates a lot of knock on effects. That's what we looked at in part two of this series. The entirety of the cannabis market is.
- [04:00]
Chris Weld
Filled with an amazing number of contradictions.
- [04:04]
Stephen Dubner
Everyone we talked to for that episode, researchers and regulators and industry insiders, they all described a cannabis economy that's in a state of chaos. Three quarters of all licensed operators are losing money. So today on Freakonomics Radio, in part three, what does it take to navigate that chaos? We go on a field trip to Chris Weld's farm to see if being a cannabis man is worth the hassle.
- [04:31]
Chris Weld
I'm a very stubborn person, so I've not given up on the cannabis. It's just been a wild ride.
- [04:36]
Stephen Dubner
Let's take that ride together. This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner. Chris Weld lives and works in Sheffield, Massachusetts, in the Berkshire Mountains. He grew up one state over in New York, about 50 miles north of Manhattan.
- [05:15]
Chris Weld
I grew up on a great piece of property with an apple orchard. My father was a big environmentalist, biologist and wonderful outdoorsman. So I got exposed to gardening at an early age and spent a lot of time outside.
- [05:28]
Stephen Dubner
Weld was not a great student, but he did have what you might call moxie.
- [05:32]
Chris Weld
In eighth grade, I decided that it would become very cool if my science project was to make a still. When my mother, who was game for most things, was on board and then somehow found out that it was a federal offense to distill alcohol.
- [05:47]
Stephen Dubner
What were you going to make?
- [05:48]
Chris Weld
Probably bourbon. My mother was a bourbon drinker.
- [05:51]
Stephen Dubner
Okay, so you did not get to make the still for your science project.
- [05:54]
Chris Weld
I did not. I made a volcano, which was a huge disappointment.
- [05:58]
Stephen Dubner
After a while, Weld started volunteering on the local ambulance squad, and he loved it.
- [06:03]
Chris Weld
So I went to a PA program at Albany Med and then got a master's in emergency medicine and worked in inner city ers, mostly California. Lived with my wife out there and kids. She's an architect. We had a design build company and love working with my hands. And then moved to the Berkshires 20 years ago. We found this great property. Derelict orchard, few hundred trees. It had a historic spring on it. They'd built a hotel there in the 1880s. The spring waters were touted as being the finest in the country. So a great historic spring and a bunch of apples. And I was tired of working in.
- [06:44]
Stephen Dubner
The er and you said, there's no way I'm going to pass up a chance to finally build my still.
- [06:50]
Chris Weld
You got to jump in feet first.
- [06:52]
Stephen Dubner
And what were you making at first? Were you making apple based alcoholic beverages?
- [06:56]
Chris Weld
Correct. Brandy's Calvados, if you're in Europe. And then very quickly learned I would never make a living selling Calvados. So I had an incredible consultant come up. A Jamaican guy helped me make rum and gin and vodka. So those are the three we launched with.
- [07:13]
Stephen Dubner
Weld's company is called Berkshire Mountain Distillers, and today they make more than a dozen spirits. Some of them have won awards. When cannabis was legalized in Massachusetts in 2016, Weld decided to jump into that too, feet first. And now he runs a vertically integrated cannabis farm and dispensary called the Pass. I asked where the name comes from.
- [07:34]
Chris Weld
A bunch of different things. Mountain Pass, since we're in the hills, the mountains, the hall pass of now cannabis is legal, passing from one state of mind to another. Pass the joint.
- [07:45]
Stephen Dubner
In part one of this series, we heard from some customers at the Pass. It was a Monday morning and there were a lot of customers. I asked Weld which of his businesses is bigger, cannabis or alcohol.
- [07:57]
Chris Weld
Cannabis is bigger. Yeah. And the cannabis was bigger from the get go. Do a quick walk through?
- [08:05]
Stephen Dubner
Yeah, let's do it. The farm has three separate growing areas, an outdoor field, a greenhouse, and a warehouse where all the elements, temperature, light and moisture are precisely controlled. That's our first stop.
- [08:20]
Chris Weld
So this is our grow building. This is Luca, who's our head grower here.
- [08:25]
Stephen Dubner
Nice to meet you guys. What do you do? What's your job? I'm the head of cultivation here at the Pass. What's your background, training wise and whatnot? Just was. Been cultivating cannabis a long time, about 15 years now. How does it compare to other crops? I don't know. I don't have a ton of experience cultivating other crops. I have a feeling we take more care when cultivating cannabis because it fetches a higher price per pound. So we can put a little bit more technology and a little bit more care into it. What kind of technology and effort? We use more light than in other crops. You can really tell the difference between indoor grown cannabis, greenhouse and outdoor. So indoor grown is more quality control, I assume it's much more expensive. More expensive. It's definitely going to be more consistent because you can keep temperature and humidity exactly how you want it. All the processes can be repeated. Whereas in the greenhouse and outdoor, you're a bit beholden to the weather. There's more environmental stress, which can be a good thing. But indoors we tend to control the stress consciously rather than we happen to not be in the right temperature humidity range. Today, the indoor grow house has two big rooms and we head into one of them. As you open the door, you're hit with a bright warm wave of amber light and a very fragrant aroma. It reminds me of something I once grew just for fun. Hops.
- [09:43]
Chris Weld
Very closely related to hops, cannabis. And yeah, they're the closest.
- [09:47]
Stephen Dubner
I didn't know that.
- [09:48]
Chris Weld
Yep.
- [09:49]
Stephen Dubner
The plants in the grow house are about 4ft tall and raised up on rolling benches. There's a stepladder there. So I climb up to look down over the top of the plants. It is like looking down on a scale model of a forest bathed in golden light.
- [10:06]
Chris Weld
So if you look at these different plants, you can see the fan leaves, the bigger leaves, you know, chlorophyll. Then these little ones are called sugar leaves. And then you can see all these little trichomes, the little pedunculated dew drops, little shiny things on stalks. That's where most of the THC is kept, in those little glistening things there.
- [10:29]
Stephen Dubner
This is how many square feet? It's 656 of canopy. The way we measure canopy is just the benches that the plants are on. Irrigation is coming in. How and where we hand water this room. Oh, really? Yep. Why? Yep. More attention to detail. Things dry back unevenly when you dripper them. And this way we can water everything uniquely. And how many different strains or varieties are in this room? Three in this room. Are you at all concerned about cross pollination or does that not happen?
- [11:00]
Chris Weld
Every plant in this facility is a Female plant. The male plants have no thc, and they will pollinate a female plant. And then instead of spending that energy developing bigger buds, and those buds are associated with thc, the female plant would spend that energy making seeds. So you end up with, you know, the dirt weed of the 80s that isn't that strong because a lot of the energy went into seed production.
- [11:26]
Stephen Dubner
What do you call a male cultivar? Just a male. A rooster.
- [11:31]
Chris Weld
Bad luck is what you call it.
- [11:33]
Stephen Dubner
Down the hall from the grow house is the greenhouse.
- [11:37]
Chris Weld
So the greenhouse. You know, New England's tough to control humidity. We don't really control temperature except with fans and venting, but we get natural light. So maybe our cost is 55 to 60% of what it is indoor growing versus outdoors, which is a third to a quarter of indoor growing.
- [11:57]
Stephen Dubner
And what do you do here in the winter?
- [11:59]
Chris Weld
Typically, we've been growing year round and heating it. This year, there's a glut on the market. People have been pulling up stakes and moving out of town. There's too much canopy, so people are selling cannabis at cost or at times below cost.
- [12:13]
Stephen Dubner
Now, can you buy it?
- [12:14]
Chris Weld
We can, but we'd rather sell our own cannabis.
- [12:17]
Stephen Dubner
But if you could get it for cents on the dollar, would it be worth it?
- [12:20]
Chris Weld
It's not always the best cannabis, but it is still flooding the market, so there's got to be a shakeout. There's just too much canopy right now. So we're at the point where we're going to let this sit fallow for a couple months, sell through what we have, and then replant.
- [12:34]
Stephen Dubner
What's it cost you to heat it in the winter?
- [12:36]
Chris Weld
It's probably a couple grand a month.
- [12:38]
Stephen Dubner
So what's your typical monthly electricity bill? All in?
- [12:41]
Chris Weld
Everything. All totals 15k, maybe.
- [12:50]
Stephen Dubner
One criticism of the cannabis industry is that it uses a lot of electricity. To be fair, many things use a lot of electricity. Hospitals, for instance. But we tend to hear more about energy consumption when a new industry emerges, particularly a controversial one like cannabis or crypto or AI. Some researchers have suggested that moving weed production from indoor facilities to greenhouses and the great outdoors would help shrink the carbon footprint of the cannabis industry. But the great outdoors isn't always so great. Chris Weld walks us out of the greenhouse and over to his outdoor grow field.
- [13:28]
Chris Weld
So this is outdoor flower. These fan leaves are starting to turn yellow, so they're not really doing anything for the plant. We'll come through soon and defoliate a bunch of this. That'll help with the airflow through the plant, help with powdery mildew or botrytis or anything.
- [13:42]
Stephen Dubner
And is that an indicator of a problem when they yellow?
- [13:44]
Chris Weld
No, they all do that. They're just getting older. But if you look at these plants, this one, the bud structure is beautiful. It's stacking up. This will form a very nice top cola on this. And all these side colas are actually looking pretty good. And then you look at this one here, we don't have that many of meaning.
- [14:00]
Stephen Dubner
It's way behind the brothers.
- [14:01]
Chris Weld
Way behind. Yeah.
- [14:02]
Stephen Dubner
Why is that?
- [14:03]
Chris Weld
Just a different cultivar. I'm not sure which one this is, but it's not one I would probably grow again outside because I'm not sure it's going to finish in time.
- [14:12]
Stephen Dubner
In a perfect cannabis world, you might not even try to grow cannabis in a place like Massachusetts. You might just import it from the parts of California where it grows so well. That's what we do with almonds and lettuce and blackberries. But remember, cannabis is still illegal in the eyes of the federal government, which means it can't be sold across state lines. So if Chris Weld wants to sell cannabis in Massachusetts, he has to grow his cannabis in Massachusetts. Until or unless federal law changes, each state is responsible for its own supply. This kind of forced commercial self sufficiency is an example of what economists call autarky. And they don't like autarky. It is the very opposite of free trade. They say autarky slows growth and reduces options for consumers and raises prices. But for now, this is the system that Chris Weld operates in, which means he not only cultivates his own raw material, but also readies it for sale and then sells it. That readying for sale can be simple, like operating a big joint rolling machine. Or as we will hear after the break, it can be a bit more involved. Whoa. Okay, now I feel like we're in Breaking Bad. I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back. Freakonomics Radio is sponsored by Mint Mobile. Ditch overpriced wireless by switching to Mint mobile and get three months of premium wireless service for 15 bucks a month. All plans come with high speed data and unlimited talk and text delivered on the nation's largest 5G network. You can use your own phone, your own phone number and all your existing contacts to get this new customer offer and your new three month premium wireless plan for just 15 bucks a month. Go to mintmobile.com freak. That's mintmobile.com freak. Cut your wireless bill to 15 bucks a month at mintmobile.com freak $45 upfront payment required equivalent to $15 per month new customers on first three month plan only speeds slower above 40 gigabytes on unlimited plan. Additional taxes, fees and restrictions apply. See Mint Mobile for details. Freakonomics Radio is sponsored by U.S. bank when U.S. bank says they're in it with you, they mean it. Not just for the good stuff, the grand openings and celebrations. Although those are pretty great. But for all the hard work it took to get there, the fine tuning of goals, the managing of cash and workflows, and decision making, they're in to help you through all of it. Because together they are proving day in and day out that there is nothing as powerful as the power of us. Visit usbank.com to get started today. Equal Housing Lender Member FDIC Copyright 2024 US Bank Freakonomics Radio is sponsored by Stripe, zip, Twint, Kria, Oxo, Konbini and PickPay. These are popular payment methods from around the world and even if you aren't an expert on all of these, your checkout will be with the optimized Checkout suite from Stripe. Businesses saw an 11.9% revenue uplift on average when they used the Stripe Optimized Checkout suite. This includes optimizations like intelligently surfacing the right payment methods to each customer using machine learning trained on trillions of transactions globally. That may sound like a minor convenience, but did you know that 85% of consumers will abandon their cart if their preferred payment method isn't offered? Stripe helps businesses avoid abandoned carts by enabling a wide range of payment options to accommodate your customers preferences, grow your revenue and sell globally with Stripe. Learn more@swepe.com Chris Weld has been showing us around his cannabis farm in Sheffield, Massachusetts. The farm is attached to his retail store, the Pass. He sells products from his farm as well as other farms and processors. I asked him which formats are most.
- [18:32]
Chris Weld
Popular so close to half the consumption is still flour. Whether it's, you know, by a pipe, a bong, a joint, it's mostly flour consumption. It's 50, 51% plus or minus. Edibles are super popular. Drinks, beverages are pretty significant.
- [18:50]
Stephen Dubner
What's in the refrigerated case? Sir?
- [18:53]
Chris Weld
That's your lunch. Those are all concentrates. It's wax, it's butter, it's shattered diamonds and sauce.
- [19:00]
Stephen Dubner
Sorry, I don't follow.
- [19:01]
Chris Weld
Okay, here's my sophomoric analogy. So you understand how maple syrup's made, right? You tap a tree, you get SAP out, you boil it down 43 ish to 1 and you get syrup. And you can take that syrup and you continue to boil that down. And if you boil it down enough, you get into like a sugar, right? So soft maple candy. And if you boil it, you can get very hard maple candy, right? So with weed, the flower is kind of the SAP out of the tree to me. You can boil it down and end up with a concentrate that will go into a vape pen. You can clean that up and concentrate it even more. And you get into these concentrate forms like shatter and wax. And there are different stages, but they may be in the low 90s percent THC.
- [19:52]
Stephen Dubner
Cannabis Today is much stronger than it used to be for a couple reasons. Better breeding and cultivating techniques have increased the amount of THC in a given plant. And like Chris Weld said, some cannabis products are processed in a way that greatly intensifies the dose. Even in the legal cannabis world, the dose information on a package is rarely as clear as what you'd expect to see on something like a bottle of aspirin. And it's not always accurate. When Weld talks to customers who aren't familiar with modern cannabis, he advises them to start with low doses.
- [20:26]
Chris Weld
When the store first opened, people would come in and they talk to our budtenders. And the budtender would get the response, listen, whippersnapper, I was smoking that since before you were born.
- [20:38]
Stephen Dubner
But cannabis today is different. And this is deeply concerning to some public health officials and researchers, including Yasmin Hurd. She is a neuroscientist and addiction specialist at the Mount Sinai Health System in New York. The majority of products that are out there today, no one has studied. You have wax and dabbing and shatter that gives nearly 90% THC. There is no cannabis plant that had 90% THC, the modification of cannabis, the hundreds of products that the people who are making them have no clue about. If people want to consume recreationally, fine. But they don't even realize that they are being manipulated with very high concentrations of thc. Heard argues that cannabis legalization has happened too fast and that scientists and state health regulators haven't had the time or the resources to assess long term harms or to prohibit certain formats of the drug. There are also big questions about the addictive nature of cannabis, and some physicians are reporting patients with serious physical and mental health effects, especially younger users. Here's Chris Weld again.
- [21:50]
Chris Weld
There's some evidence that if you start consuming at a younger age, it can actually rewire how your Brain works. There's some literature that shows that if you're younger and you smoke a lot of weed, you may be more prone to depression. Whereas if you're older and smoke weed, it may help with depression. And so it's everything in moderation. But if you're young, cannabis probably isn't the best thing to smoke.
- [22:10]
Stephen Dubner
Weld's overall view of cannabis was informed by his experience as a physician's assistant in hospital emergency rooms.
- [22:18]
Chris Weld
It is interesting. You know, I spent, I don't know, 17 years working in inner city ers, and every day there was a large percentage of cases that were alcohol related. So people get drunk, they shoot people, they get run over by a drunk driver, they shoot themselves all day, every day. I don't think I ever had somebody say, hey, dude, I got so stoned and got in a fight, can you sew me up? It just didn't happen. And when you look at toxicity, do you know the term LD50? Have you ever heard that?
- [22:45]
Stephen Dubner
No.
- [22:46]
Chris Weld
It's lethal dose 50. So it's 50% of the people who take that dose will die. And so if you're comparing cannabis and alcohol, for instance, it's very easy to kill mice with alcohol, but not so easy with cannabis. And the LD50 for a 130ish pound person is 10 to 15 drinks an hour, which if you were to chug a frat hazing, chug a pine of booze, 50% of the time, you might die from that. Versus joints. It's about 20,000 joints.
- [23:17]
Stephen Dubner
But joints are just made from the flower straight off the cannabis plant. The concern from a public health perspective is the scarcity of research on concentrates. From a business perspective, the concentrates make a lot of sense. They fetch a high price because of their potency, they're cheaper to store and they take up less space. Weld offered to show us his processing plant where they turn raw cannabis into finished products. So we took a drive just a couple miles and we parked outside a low slung cinder block building. It used to be a plastic extrusion plant.
- [23:53]
Chris Weld
So we have a gummy room, a cure room for the gummies.
- [23:56]
Stephen Dubner
How long do gummies need to cure for?
- [23:58]
Chris Weld
Just a few days after they're made. This area here is set aside for a beverage thing at some point.
- [24:07]
Stephen Dubner
What do you mean at some point? You're not making.
- [24:09]
Chris Weld
We don't have a beverage right now.
- [24:12]
Stephen Dubner
Ooh, big bags of weed.
- [24:18]
Chris Weld
Smells good, doesn't it?
- [24:20]
Stephen Dubner
Wow. Yeah. Why did we wait so long to come to this room? This is all Your grow. Correct.
- [24:25]
Chris Weld
This is all our grow. So this is a bin of. Good morning. How many pre rolls are in this bin?
- [24:33]
Stephen Dubner
About 2000.
- [24:35]
Chris Weld
About 2000. We just finished up making a batch of pre rolls in here and then now they're going to bag up some flour into eights.
- [24:42]
Stephen Dubner
I have to say, Chris, this does not feel at all like a criminal enterprise. This feels like so blessedly boring.
- [24:49]
Chris Weld
We had a wish list for a gear here and one of them was a big pre roll machine and it made enough to sell $70 million worth of pre rolls in a year.
- [25:00]
Stephen Dubner
And like, you know, just no demand.
- [25:02]
Chris Weld
Yeah, maybe we're $4 million worth of pre rolls in here. We couldn't justify it.
- [25:07]
Stephen Dubner
I've never been in a cigarette factory. How are they made?
- [25:11]
Chris Weld
There were some cannabis companies that started with the cigarette machine rollers to make joints that look like cigarettes. And I haven't. Chris, have you seen them on the market anymore?
- [25:21]
Stephen Dubner
Yes, that's Chris Bennett. He is an operations manager who's been with Weld since the beginning.
- [25:28]
Chris Weld
Do you want to talk about your tolerance? I can eat a thousand milligrams.
- [25:31]
Stephen Dubner
Seriously?
- [25:32]
Chris Weld
Yeah, yeah. But then there's people like. And it doesn't go by size or anything. It's just how your liver processes it. So you could have somebody 350 pounds that eats like a half of a 2 gram, you know, and they're on their butt.
- [25:44]
Stephen Dubner
So what's the effect on you then? A thousand.
- [25:46]
Chris Weld
I'm on the couch.
- [25:47]
Stephen Dubner
What's the effect of 100? What's the effect? What's the effect of 100?
- [25:51]
Chris Weld
100. I don't really feel it.
- [25:53]
Stephen Dubner
Oh, my God. How do you get high?
- [25:54]
Chris Weld
It's expensive.
- [25:57]
Stephen Dubner
Now we get swiped through a heavy locked door. Whoa. Okay, now I feel like we're in Breaking Bad. And what's this room called?
- [26:06]
Chris Weld
Extraction lab.
- [26:08]
Stephen Dubner
This is where they make those high THC concentrates and rosins.
- [26:12]
Chris Weld
So when we get the flower from cultivation, it's not trimmed. We'll run it through these two machines and it'll trim it up nice so.
- [26:18]
Stephen Dubner
Our trimmers don't have to really do.
- [26:20]
Chris Weld
A lot of work.
- [26:21]
Stephen Dubner
Next to the trimmer is a machine that makes the rosin by applying heat and pressure to the cannabis clippings. And next to that is a big jar of syrupy looking cannabis rosin. Weld opens the jar. It's a little potent, it's chirpy. Oh, wow. So what does this become?
- [26:45]
Chris Weld
This is going to carts, live rosin carts. So these are the carts that you Know, for the distillate pens or the rosin pens, they have a reservoir. You heat the solution, the oil, the rosin, and then you just have an injector and it fills each one and then they get capped and they go.
- [27:02]
Stephen Dubner
In a box and they get consumed.
- [27:04]
Chris Weld
How smoke.
- [27:06]
Stephen Dubner
What's happening now with cannabis several years into legalization is a lot like what happened with alcohol. Over time, as new technologies arrived, it got more potent. We started with beer, which was just soupy, fermented grains. The invention of pottery allowed for the creation and transport of wine. And the invention of distillation led to the creation of whiskeys and other spirits, each time with a higher concentration of alcohol. If you are alarmed by the fact that highly concentrated THC products are legal, you should probably also be alarmed at how easy it is to buy a highly concentrated bottle of alcohol like vodka or whiskey or rum. I asked Chris Weld how he thinks about the addictive nature of cannabis versus alcohol.
- [27:54]
Chris Weld
Yeah, I would say probably a little bit worse on the alcohol side.
- [27:58]
Stephen Dubner
Got it. But here's what I'm trying to get at, and there may be no good answer or any answer for this at all. But like, the whole idea of this series is that alcohol has been around forever and the harms are known and they're substantial. Weed might be a replacement for a lot of the uses of alcohol for mood, for creativity, et cetera, et cetera. But the downsides of weeds seem to be less. On the other hand, if it's continued to be treated as this kind of separate and more dangerous and scarier substance, that'll probably never happen.
- [28:33]
Chris Weld
Except if you look at the last five years, it's changed. The stigmas going, the data on how catastrophic everyone thought it would be, it hasn't really come to show that it has been. So I think that the societal acceptance of cannabis is still growing.
- [28:53]
Stephen Dubner
Coming up after the break, is societal acceptance growing fast enough to fix the economics?
- [28:59]
Chris Weld
It's been tough, and it's been tough across the board.
- [29:02]
Stephen Dubner
I'm Stephen Dubner. This is Freakonomics Radio. We'll be right back. Freakonomics Radio is sponsored by Walmart. Keeping track of your prescription medications and managing your health can feel like a full time job of its own. But with the Walmart app, healthy doesn't have to be hard. The Walmart app makes staying on top of your prescriptions easier than ever. You can upload your prescriptions, check on them, and get notified when it's time for a refill all in the same app. Pick up your meds where you already shop for groceries, goodies and more. Your pharmacy wherever you are. Welcome to your Walmart. Freakonomics Radio is sponsored by Amica Insurance. At Amica, you will receive coverage with compassion. When you choose Amica, they'll take the time to explain your options for auto, home and life insurance. You can feel confident knowing that they'll protect what matters most to you. Amica will provide you with peace of mind. Go to amica.com and get a quote today. What's your boldest, truly ambitious life goal? Everyone has one and everyone deserves a way to get there. That's why Estate street offers a wide variety of ETFs to give all investors access to the market and the chance to reach their goals. Like with DIA, where you get 30 US blue chip stocks in a single trade. Wherever you're heading, getting there starts here with State Street. Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit ssga.com for perspectives containing this and other information. Read it carefully. DIA Subject to risks similar to those of stocks all ATs are subject to risk, including possible loss of principal Alps Distributors, Inc.
- [30:42]
Chris Weld
Distributor.
- [30:48]
Stephen Dubner
The state of Massachusetts legalized recreational marijuana in 2016 with the first retail sales in 2018. Chris Weld got into the business early on.
- [30:59]
Chris Weld
It was gold rush days mentality. This is going to be the best thing since sliced bread. Jumping in at that point made sense and it made sense to a ton of people. So you look at these people that ran MSOs, multistate operators that threw a lot of cash into it. We had an incredibly great first couple years, wonderful trajectory. Things are looking fantastic and the wheels kind of fell off in the whole Massachusetts market. I would say what's happened recently is that there's a glut. There's just too much cannabis out there. And so all these people who have spent a lot of money growing cannabis are sitting on it.
- [31:40]
Stephen Dubner
Are you profitable yet?
- [31:41]
Chris Weld
We've been profitable. We vacillated. We had some issues last year with a cultivation mishap that was not our fault.
- [31:51]
Stephen Dubner
What was that? Was it like God's fault? Like weather?
- [31:53]
Chris Weld
Oh, I wouldn't say. Yeah, that's a big topic. God's fault. So it was drift from neighbors spraying for mosquitoes.
- [32:03]
Stephen Dubner
Oh boy.
- [32:04]
Chris Weld
Wiped out a whole crop.
- [32:05]
Stephen Dubner
Holy cow. How did you learn/discover/ Determine that your crop had been contaminated.
- [32:13]
Chris Weld
So this is a great argument for legal versus black market cannabis. I was at the gas station a couple months ago and these two young men were in an Audi pumping gas and I was pumping gas and I looked over and the guy in the front passenger seat had a big bag of weed, little buds. And I looked at him and I said, hey, just to be cool, you probably want to keep that in the trunk. And he said, thank you, sir. Which I took offense to the sir bit. And I said, and by the way, you can buy much better looking weed than that down at the pass, which is, you know, the cannabis shop I have down the road. And he said, yeah man, but the taxes kill us. So we spent $287,000 last year on testing.
- [32:57]
Stephen Dubner
Wow.
- [32:57]
Chris Weld
So to answer your question, we send off cannabis to one of several state sanctioned labs and they test for heavy metals, they test for yeast and mold, they test for pesticides. It's a pretty in depth panel that they do.
- [33:14]
Stephen Dubner
We mentioned earlier in this series that the cannabis plant is what's called a bioaccumulator. That means it's especially good at absorbing minerals from the soil and air and water. In fact, cannabis has been used to remediate contaminated sites. But if you are growing cannabis for human consumption, that absorbency can be a problem. One recent medical study found that cannabis users have higher levels of lead and cadmium in their blood than non users. Here again is Yasmin Hurd from Mount Sinai. People don't realize that cannabis is a plant that actually holds onto metals. It's like hyper sucking of metals. States should, for safety, they should look at metal content. The same thing with pesticides and mold. So when they have looked at products in some research done where they've taken products randomly, they see, for example, that even the content of what's supposed to be in those products do not match what's on the label. When you look at these state bodies that regulate and approve, whether it's a state health department or some other regulatory body, are there typically scientists on those bodies? I can't answer that. Unfortunately for every state. I think that there are states that really do try to have scientists, but you will have these third party companies that are supposed to, you know, verify whether or not they meet all these safety standards. And some of these companies, you know, they will sign anything. So these are the things that the states really need to clamp down on. Everyone wants to make money, but this is a huge issue. And Chris Weld again, some of the.
- [34:50]
Chris Weld
Stuff in Massachusetts is egregiously strict, I would say. I think there needs to be control, certainly. And I think everyone was so worried that there were going to be dire consequences with legalization that it got over regulated when I talk to my local chief of police, which I do quarterly, and say, hey, how's it going? Any problems? He's like, I don't hear anything. We're not coming in to arrest people who are like drunk people in a fight. In general, I think it's a fairly benign drug. Massachusetts tends to be fairly strict on a lot of consumer based things and protective of individuals, which I think is great. And I think Massachusetts rolled out cannabis legalization in a little bit more of a controlled way than New York did. When we would go look at Groves in New York, their security system often would be a trail cam. You know, we had $160,000 security system with a million cameras that you can't hide your big toe in the corner of the room. You can trust when you go to a legal canvas store, especially in Massachusetts, that you're not going to find stuff on it that you would if you go to some bodega in New York City.
- [36:11]
Stephen Dubner
We talked about that New York situation earlier in the series. As Weld says, the legalized rollout in New York City especially has been chaotic with thousands of illegal shops that the city, for a variety of reasons, wouldn't shut down. That is starting to change, but there's a long way to go.
- [36:29]
Chris Weld
I went into one of those stores last time in the city and I was just talking to the young woman at the counter and I said, I'm not a fed. Do you guys have issues with the law coming in here? And she said, yeah, we do. This is my first week. And two days ago, a team of 17 people came in and they took everything that was cannabis related, left nicotine. They asked for the keys to the vault that went in the vault. And they slapped a big illegal sales in the store. Do not visit whatever sticker on the door. And that night the owner came in, pulled the sticker off and restock the shelves.
- [37:01]
Stephen Dubner
Okay. You run an alcohol distillery as well as the cannabis farm. How do the regulations compare In Massachusetts, you've talked about how much tracking and testing and record keeping there is in cannabis. How about the alcohol operation?
- [37:16]
Chris Weld
I have five sheets I fill out every month. It's all revenue driven. Right. So it's all tax basis. They want to know how much you made, how much got wasted in the process of bottling, how much you bottled, how much you sold, how many proof gallons you sold. So that the state gets their carve out for tax on proof gallons, as does the feds. But the cannabis thing is a bit over the top. So there's a system called metric that we use en masse. Other states use it as well. That's a seed to sale tracking program. And that tag follows that plant through harvest when it's dried and bucked and pulled off the plant and put into.
- [37:52]
Stephen Dubner
A bin for every plant.
- [37:54]
Chris Weld
Every plant. So when you get a visit from the Cannabis control Commission, they'll go into your greenhouse and they'll pull up the metric file on the greenhouse and they'll say, you have 873 plants. Let's go find them. And then you go in there and they have an RFID scanner and they scan every plant and they say you're short two plants or you have one.
- [38:17]
Stephen Dubner
Plant extra and then what do you do? Get fined?
- [38:21]
Chris Weld
Jump through hoops? Normally you say like, it got wasted, it died and it wasn't entered in from the waste log. So we may have thousands and thousands of things. And they'll say, hey, you're short three joints. Find them.
- [38:35]
Stephen Dubner
So if you were to take a step back and look at the business as an industry in Massachusetts and then across the country, how would you describe to someone who really doesn't know at all the state of the industry right now?
- [38:48]
Chris Weld
Yeah, it's been tough and it's been tough across the board. You look at Canadian stocks and some of those big ones, if you bought into them five years ago, you've got about 2% of your money left. A lot of them crashed and burned. A lot of the west coast states did the same thing that we're doing. There was over licensing, overproduction, race to the bottom. It's not a stable market environment and I think in those states it's starting to stabilize. Massachusetts hopefully has hit the floor and we will start to stabilize. And people who are growing really good weed will do well. And people have great branding and good products will do well.
- [39:27]
Stephen Dubner
After we toured Chris Weld's cannabis farm and retail store and processing plant, he offered to show us his original business, which is still going strong. Berkshire Mountain Distillers. Up front there is a retail shop with tasting tables set atop whiskey barrels. In the back is the distilling operation. Big stainless steel tanks, many more barrels, copper tubing running high along the walls. You can smell the floral botanicals hanging from pipes overh.
- [39:56]
Chris Weld
So we just did greylock gin, which is our flagship gin, so it's booze as a base, and then juniper, coriander, angelica, orris, orange, cinnamon and licorice.
- [40:07]
Stephen Dubner
By now it's late afternoon on a Monday and we are the only people in the place. The Cannabis store was much busier. On the other hand, here we didn't have to show ID like you do. In legal cannabis shops, there aren't dozens of cameras tracking everyone's every move as required by state cannabis regulators. The bottles of gin and bourbon are just sitting there on the shelves, not stored in a vault the way cannabis is licorice. And what's the economic picture from your distillery here? Is it an easy, healthy business without a lot of variables? You kind of make money and you know you're going to make money versus the cannabis business where there's so many variables and changes and regs?
- [40:49]
Chris Weld
The cannabis business is definitely more fluid and it's hard to guess what's going to happen. And I would say that in the 16 years I've been in operation here, the distillery has been pretty steady state. However, there's definitely been a shake up in the way that spirits are distributed, especially for smaller producers like myself.
- [41:11]
Stephen Dubner
Shake up meaning there's more consolidation and it makes it harder for smaller distributors.
- [41:15]
Chris Weld
Correct. So the bigger suppliers, distributors have coalesced. I think the top 10 do 80% of the business in the country or something. So the bigger volume suppliers dictate what gets sold into who. For the most part, if you add.
- [41:30]
Stephen Dubner
It to do over again. If you go back to four or five years ago when you started the cannabis company, if you had instead decided to, let's say maybe even get the outside investors that you used for the cannabis company and instead just tried to, to expand this distillery, you know, 5x or 10x, do you think that would.
- [41:49]
Chris Weld
Have been a better move from a financial standpoint? I think if I didn't get the outside investors and I spent the time on the distillery that I spent in the cannabis world, that would have been a better move.
- [41:58]
Stephen Dubner
So do you regret getting into the cannabis industry?
- [42:01]
Chris Weld
No, because I'm a half full kind of guy. And by the way, I've not given up. I'm a very stubborn person. So I've not given up on the cannabis. It's just been a wild ride. I mean, it's a wild, wild west, gold rush mentality and it's been super fun too. I've learned a lot. I've worked with a bunch of great, interesting, entrepreneurial type people. The science behind the plant's pretty cool. I'm a huge gardener, I love growing stuff. Just to be part of an industry in its early days with something that was made illegal for the wrong reasons was, you know, I think looking back on that, it'll be something that be Nice to have in your rear view.
- [42:41]
Stephen Dubner
By the way. Chris Weld says he doesn't use cannabis.
- [42:45]
Chris Weld
Yeah, it was just never my. I love the smell of the plant. I love growing the plant. I'm just not a huge consumer.
- [42:51]
Stephen Dubner
But he does drink.
- [42:53]
Chris Weld
I drink my booze all the time. I'm also 59, so it's not as much fun as it used to be.
- [42:58]
Stephen Dubner
Before we leave the distillery, Weld encourages me and our crew to each take home a bottle, whatever we'd like. He is a very generous host. So we each walk out with a bottle, put him in the car, and then Weld says we should stop back at the pass his cannabis shop. He tells us to wait outside. He goes in, comes out five minutes later with a brown paper bag. There's something about being handed a brown paper bag full of weed in a parking lot. I know cannabis is legit now, but it doesn't really feel quite legit, at least compared to the distillery. If cannabis is ever going to substantially replace alcohol, that will have to change. I drove back to New York with my free weed in the paper bag. I still haven't cracked it open. Let me know if you want to drop by. Maybe we'll try it together. That's probably not a great idea, but coming up next time on the show, in the final episode of this series, we will take a look at what it would take to change the reputation of legal cannabis.
- [44:04]
Chris Weld
President Harris is going to sign a federal legalization bill.
- [44:09]
Stephen Dubner
And what would happen then?
- [44:10]
Chris Weld
That process of consolidation and larger companies emerging will be greatly accelerated with national legalization.
- [44:18]
Stephen Dubner
Or is there another model?
- [44:20]
Chris Weld
Producers on small farms maybe have different regulatory requirements than someone who's trying to be the Amazon of weed.
- [44:29]
Stephen Dubner
The future of the cannabis industry. That's next time. Until then, take care of yourself. And if you can, someone else do. Freakonomics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app. Also@freakonomics.com where we publish transcripts and show notes. This episode was produced by Dalvin Abuja and Zach Lipinski. George Hicks was our field recordist in Massachusetts. Thanks, George. Our staff also includes Alina Cullman, Augusta Chapman, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippon, Jasmine Klinger, Jeremy Johnson, John Schnarz, Lyric Bowditch, Morgan Levy, Neal Carruth, Rebecca Lee Douglas, Sarah Lilly, and Teo Jacobs. Our theme song is Mr. Fortune by the Hitchhikers and our composer is Luis Guerra. As always, thank you for listening.
- [45:23]
Chris Weld
Stones versus the Beatles.
- [45:25]
Stephen Dubner
Come on don't get me started. The Freakonomics Radio Network the Hidden side of Everything Stitcher.
- [45:44]
Chris Weld
If you could hear.
- [45:46]
Stephen Dubner
Love, what would it sound like? Son, can we talk about your drinking? Yeah, Dad, I think we should Helping those closest to you think about their excessive drinking. Maybe that's what love sounds like. More@rethinkthedrink.com An OHA initiative Carl's Jr's Big.
- [46:16]
Chris Weld
Carl Fans know nothing beats the layers.
- [46:19]
Stephen Dubner
And layers of flavor of a Big Carl. Nothing beats that char, boiled beef, American cheese and tangy Carl's classic sauce.
- [46:26]
Chris Weld
Nothing except getting a second Big Carl for just $1.
- [46:30]
Stephen Dubner
Big Carl just one upped itself for just one buck. To buy one Big Carl get one for a buck.
- [46:35]
Chris Weld
Deal only at Carl's Junior Big Burger.
- [46:38]
Stephen Dubner
Good Burger available for a limited time at participating restaurants. Tax not included. Price may vary. Not valid with any other offer, discount or combo. Hear that? It could be the sound of your phone dinging every time you sell a product with TikTok ads this holiday season. If you've ever thought about advertising your.
- [46:56]
Chris Weld
Business on TikTok, now is the time to do it. You can drive more customers to your.
- [46:59]
Stephen Dubner
Website, sell products right in the app, and you can even use TikTok's creative tools to easily make content and find creators to help sell your products for you. But you have to start now. So head over to getstarted.TikTok.com holiday24 and drive more holiday sales today.