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- [00:05]
Leslie Heaney
Hello, everybody, it's Leslie, and you're listening to the interview with Leslie Heaney. I got some feedback from my husband over the weekend that I am not really expressing myself or showing myself in my introductions. He loves my podcast, but he doesn't like my introductions. And then I should be more informal and perhaps a little more myself than reading. Reading bios. So I'm going to. I'm going to give it a shot today. It's the first time you're hearing it live. I just got back from taking my 15 year old to the DMV. This is our second try to get his permit. And I thought I brought everything, but apparently I was missing the piece of mail that shows that we live where we live. Didn't have my name on it, had my husband's name on it. Let's just say I think that we could use DMV experiences to rev up people before Ultimate Fighting matches because I. I'm lucky that I'm not tuning in from a padded cell right now. That was quite a frustrating experience and we were rejected and have to go back at a later time. So I'm coming in hot from the DMV right now. Hot from the dmv. And as many of you know who listen frequently, we moved to Tennessee a couple months ago, and I've been seeing billboards around town kind of advertising a bar that has CBD drinks and then some billboards about a place that might sell THC products, but in very small amounts. And I sort of confused by it and thought, gosh, is pot legal in Tennessee? And then I started thinking, I'm not really sure what the difference is between cbd, thc, hemp, or cannabis. I don't know if this is something that you all experience or if it's just the 15 overset, but I have some confusion there around what's what. I also know from being a New Yorker, you know, for my life, but, you know, recently, obviously a transplant here, that it's legal in New York technically, but there are very few places to get it. So then I started thinking about, you know, what states is pot legal in? What states is it not? And why is it even legal to begin with? What was the thing that triggered it becoming a criminal drug? And these are the things I think about when I'm driving in the car looking at billboards. So now, you know, and then I sort of wondered about the history of it becoming legal. You know, I thought California might be the first state for medicinal purposes. But then I. Colorado sort of came to Mind. So anyway, this is me in the car thinking about this and then I remember that a friend of mine, a close friend of mine, an old friend of mine I went to high school with, I know works with a fund, an investment fund based out of London that's investing solely in cannabis companies. So I decided to reach out to him to get his thoughts about it and you know, not just the cannabis market in the US but what's going on, what's going on with cannabis worldwide and what is sort of gauge from him, is it growing? You know, no, no pun intended. And if it is a growing market, where is it growing and what are the forces at play and what will it take to make cannabis fully legal or federally legal in the us so anyway, I reached out to him and he connected me with his partner who's a really a true expert in this space called. His name is Will Muke and Will is the co founding managing member and chief investment officer for Artemis Growth Partners. Artemis is a private equity platform which is just solely dedicated to investing in the cannabis industry worldwide. It has over $400 million in assets under management. And before Will worked with Artemis, he was the co founding managing partner of Coreco Private Equity and prior to that he is the former co head of the healthcare services sector in the healthcare investment banking group at Goldman Sachs. So Will and I had a great conversation and we set up our Zoom interview with me in Tennessee and Will over in London. And in our conversation which you're about to hear, he and I talk about the history of cannabis and its criminalization. He does help me right out of the gate, kind of leveling the play on field, giving me definitions of everything. So that'll be helpful again to the over 50 set. And then the state of cannabis in the US today, the growth of cannabis in the European markets and kind of the future of cannabis for cannabis in the United States and cannabis worldwide. It was really a great pleasure to talk to someone who has such a vast knowledge base in this subject. He's so smart, so interesting. And if you're curious at all about cannabis, the market, or you just want to know, you know as much as you can so that you're well versed in the subject for a dinner party. This episode is for you. So now here is Will Mukey. Will, thank you so much for coming today, for coming on our Zoom. Very excited to talk to you about cannabis and the future of cannabis today. Before we get into discussion about it, in learning about it or reading more about it in preparation for this conversation, I realized there's so little I knew about it and there's so many kind of terms that are used that I thought were kind of interchangeable and they're not. So I thought it might be helpful for listeners to kind of do a level set on some of these things. What is cannabis? What is hemp? I think the cannabis, hemp, marijuana and then the thc, CBD distinctions I think would be helpful to kind of have an understanding of.
- [06:06]
Will Muke
I'll couch this in. I am an investor and I've been in the space for a long time. I'm not a botanist. I did study honors chemistry and I was pre med for a while before not going to medical school. But I am not a scientist. This is a layman's approach to do.
- [06:20]
Leslie Heaney
Like a, like a 30,000ft, 30,000ft on these different.
- [06:23]
Will Muke
So cannabis is a plant. It's gone by colloquial names. Weed and even marijuana is a colloquial name that now has some negative connotations because of the way that it was applied, going back to the history of cannabis. But cannabis is a plant that produces a whole bunch of things, like many plants, but specifically cannabis produces a number of cannabinoids, which are lipids, they're oils, molecules that the plant produces that when ingested, have certain properties that affect the human body, affect other animal bodies. And I think Today there are 113 or 114 known cannabinoids that the plant produces. It has been seen historically as a medicinal plant and it's been used, you know, over thousands of years, going back, I think the records go back 10,000 years to when humans were using cannabis, likely in ritual settings, because it does have a intoxicating effect, a soporific effect. There is an element of spirituality that people associate with cannabis as well. So it's funny that this plant, which has been stigmatized and almost put out of, out of business by jurisdiction and legal frameworks, it's really a pretty important plant in the evolution of the human species and of society. And it's coming back around now to being both medicinal and a recreational opportunity for consumers and patients in the world. So cannabis is kind of a, it's a catch all phrase for the cannabis sativa plant, which actually expresses itself in both hemp and in what we think is regulated cannabis, or what's colloquially known as marijuana or weed. The real difference between hemp and regulated cannabis is just the concentration of a molecule called thc. And THC is a naturally occurring molecule in all cannabis plants. The level of expression really is dependent on the, I think the genus of the plant, genus species. I'm trying to go through the King Philip came out of Greater Spain. So the difference of the species of the plant, but the same genus, what THC is really just a molecule that crosses the blood brain barrier and has a psychotropic effect. It's what gets you high. And the difference between regulated cannabis and hemp is the hemp plant, legally defined in the US is a cannabis plant that expresses no greater than 0.3% THC by dry weight. And that's actually a federally legal plant. It's legal under the 2018 farm bill. It has a myriad of uses as a plant. So it's. It's actually grown for fiber, it's grown for textile. It's grown for a host of industrial uses that cross, you know, everything from paper and packaging, fiber and textile, composite materials, biofeed, biostock, and even things like carbon fiber replacement. So it's a pretty interesting plant from an industrial perspective. But what we're focused on as an investor and where the market has been focused on is on the high THC plant. So cannabis plants that produce more than 0.3% THC, which is a federally illegal plant under current US law, but it's a plant that everyone from a patient or consumer aspect wants to have access to, because it is the plant that gives you that feeling of relaxation, of euphoria, pain relief. It's seen as the medicinal plant, but also crosses into a consumer category, and that's where much of the market is focused today.
- [09:56]
Leslie Heaney
So let's talk about that. You mentioned sort of the distinction between the two. The federal government has not passed any law legalizing cannabis, but some states have legalized it for medicinal and recreational purposes. From where you sit or people who are looking to have access to cannabis, what are the broader implications? I know there's implications for banks, for payment in crossing state lines. Can you sort of talk about the broader implications of it being illegal on a federal level, I guess, versus being legal in the state?
- [10:26]
Will Muke
So I'll go back a little bit through history because for a period of time in the U.S. there was no regulation around cannabis, and there was no illegally set doctrine around what you can or can't have access to as far as the cannabis plant. So if you go back to the early 1900s or even before that, cannabis was used as medicinal. It was prescribed by doctors. It was really in the 20s and 30s when a gentleman named Dr. Harry Anslinger, who was head of the FDN which is the Federal Bureau of Narcotics at that point in time deemed that cannabis should be made illegal or have regulations around, around cannabis that would take it away from sort of fair and free access.
- [11:02]
Leslie Heaney
Let's talk about that background you mentioned earlier, talking about hemp and all the uses for hemp and that product. And from what I was sort of reading about the history of cannabis and around the legislation against cannabis, the use of cannabis, it kind of came out of, or at least one of the theories was that you mentioned this Dr. Anslinger, that he, I guess, had some, you know, hemp was being used for fiber, for rope, for clothing. It was. Had all different kinds of uses in the early 20th century. In fact, I think they used the fiber to make our uniforms during World War II.
- [11:35]
Will Muke
That's all very factual and true. And if you think about sort of the expansion of Western culture, it really is on the back of the cannabis plant, really the hemp plant. I don't think there was a differentiation, to be honest. All the way back in the, you know, the sailing ship days when we were expanding from Europe to the colonies, all of our sails, all of our rope were made out of hemp. And they grew the plant everywhere. In fact, they brought the plant to the US and our, Even George Washington and I believe many of our forefathers were farmers growing hemp because it was a cash crop and it was used in industry. There's an incredibly strong use case for the industrial side of cannabis. I think behind that, the personal use, the medicinal use of cannabis really just walked alongside the industrial expansion of hemp. And so people have been consuming cannabis, using cannabis for literally thousands of years. And the US lens on cannabis, as you, as you point out, started really with Dr. Anslinger. I think it goes even beyond the, again, this isn't just dark conspiracy theory, this is factual from a historical standpoint. And there are quotes and documents around Ansinger's views on society. But he was kind of a white nativist. It's not a pretty picture back at who he was. And the FBN was to some degree a political tool for him to put in place what he thought his social policies were. So it wasn't just cannabis, but it was other drugs, including narcotic drugs, including medicinals, that he cordoned off because he thought that certain areas of society had affinity for those, those substances. And he wanted a way of regulating that and kind of stratifying society. So. So it's a pretty dark history that cannabis comes out of. Even though if you look back again, at the hemp plant. It's been a fairly miraculous plant as far as what it's been able to contribute to the growth of Western society, of economies around the world, and even of our kind of understanding of health and wellness. But you're right, the history here is not a pretty history for cannabis. And we're still, unfortunately, living under some of the. The overhang of those. Those laws set back in the 20s and, and really doubled down on by. By Nixon in the 1970s when he established the Controlled Substances act that placed cannabis As a Schedule 1 drug alongside, you know, some of the most scary compounds that, that, you know, have been cordoned off from. From society to use, mainly because those Schedule 1 drugs are seen as having no application or no medicinal use, no medical efficacy, and are highly prone to abuse. I'll add a footnote here. The interesting thing about all of this focus on the CSA, the Controlled Substances act and Schedule 1 alcohol has been completely carved out, and alcohol has no medical efficacy and is highly prone for abuse. And yet again, it's been carved out of the Controlled Substances Act. And you can add that as another layer on what's happening behind closed doors as these laws are written, because the alcohol lobby, I think, was very strong to say, you know, if you write these laws as they are for the csa, you can't write alcohol into that. So amazingly. So we've gone from the 20s to the 70s, and we're still now in the 2000s living under arcane laws that really don't have an application to what the plant is or what it can do.
- [15:04]
Leslie Heaney
So when did that start to shift? I mean, the 80s you started, was it the AIDS epidemic becoming prevalent in the 80s and cancer, and then discovering how the use of marijuana actually could help mitigate some of those horrible side effects of the diseases like loss of appetite and that sort of thing. Was that where we started to see a shift in perception or more studies being done around the positive or medicinal effects of cannabis?
- [15:34]
Will Muke
Well, certainly California led the way, and it was really out of Northern California where there's an epicenter for AIDS and those suffering from the effects of aids. And you're right, the wasting corposysarcoma, the other sort of physical issues, pain, they were all seen as addressable categories, or at least cannabis was offered as an analgesic for the folks that were suffering from the effects of the disease. And it was one of the cornerstone pieces to really move California, I think it was, in 1996, to have compassionate use of cannabis on a legal basis. As caregivers providing cannabis to AIDS patients. So that really was sort of the origin of the opening of the dialogue to say, the laws that we have in place are prohibitive, there is medicinal effect and benefit to a population. And at this point in time, it was focused on small population, but really for a wider population as well, that the planet really has significant benefit. And it was California that then said, well, let's allow people to have access to the plant because it's the right thing to do. And it began through the conversation around what cannabis is, what it really is, versus what the law say is, and what the benefits are of the plant writ large. And it was the kickoff point for others to focus on the opportunity of cannabis to no longer be held back by these arcane laws that were really based in no science and based on really social dialogue and social ideas that were terrible for the U.S. and terrible for the population of the U.S. again, going back to Dr. Harriet Anslinger, so we had an opening of the conversation, and at that starting point in the 1990s, we've kind of taken that now to a much broader dialogue to where we are today, talking about opening up cannabis not just for medical use, which is where it was focused on in the 90s, but for both medical and recreational use.
- [17:33]
Leslie Heaney
And maybe it was like sort of mention having California kind of introduce it and that all the stigmas and fears kind of around it. Right. Of. Because I don't remember if you remember the 80s, you know, I don't know if it was part of Nancy Reagan's Just say no, but pot was like the gateway. It was the gateway drug. Right. Even though there's no, from what I've read, no scientific evidence to support that, you know, pot is a gateway drug into other, other more serious, just dangerous drugs in general. And so maybe by having California have that, you know, actually take the first step and seeing what the societal impacts were, it kind of debunked all of those fears and stigmas around it. Right. You didn't see, you know, society wasn't crumbling. You didn't have violent outbursts from having, you know, the legalization of cannabis for medicinal uses. And then. And then Colorado, somehow, I don't know why Colorado, what the background was for them being the first state to legalize it for recreational use, but they were the first one to do that. Right. And in 2014, yep.
- [18:37]
Will Muke
It's interesting. The science has never been on the side of prohibition. So even going back to the days of Dr. Harry Anslinger in New York State, when Governor LaGuardia was looking into cannabis, he actually employed not just scientists, but police, psychiatrists, sociologists. He actually had a study on cannabis that concluded it was really a do no harm substance. And it was embraced by the jazz era. And I think, again, the racial politics there from the negative side just increased the stigma on cannabis and its use. But the reality was, even from LaGuardia's report, is that the real sort of sinister compound here when we're talking about societal ills is not cannabis, but it's really alcohol. Right?
- [19:28]
Leslie Heaney
Yeah.
- [19:29]
Will Muke
And even when we run forward to where we are today and sort of the laws around cannabis and why people still talk about cannabis as this, this gateway drug, the reality is, when you talk to a scientist, an addiction scientist, the gateway drug is alcohol. It's the addictive side and the sort of moral peril that comes along with that addiction that opens up the door to a whole bunch of other things. And we also know that addiction isn't sort of a chemical thing. It's much more of a societal element. And so you're seeking out self, medication and things like alcohol that are addictive. Where cannabis, frankly, is, is not addictive. It's not biologically addictive. You can smoke a room of cannabis and wake up the next day and go run a marathon. You can drink a fifth vodka by yourself, and you'll likely go to the hospital, and if you're not attended to, you will likely die. So these elements of stigma have been in place for so long that they've been seen as the rule, not the exception. You know, you tell the lie so many times, it becomes kind of the truth. And we're still in this discussion about trying to walk back the stigma and get to the science, which is where actually we are today with these discussions currently around rescheduling cannabis from a Schedule 1 drug to a Schedule 3 compound. Because we've already heard from the scientists in this process, it's really through hhs, but it's really a board of scientists at the FDA that have said that there is no medical evidence to say that cannabis is a substance that's prone for high abuse. And there is also evidence now to say that cannabis does have medical efficacy. So we're living in, like, a lie that's been told so many times that people believe it's the truth. And we're now finally bringing fact to the table to unwind that lie. But it's been around for over a century. So shifting minds and shifting the stigma is a heavy process.
- [21:30]
Leslie Heaney
But a lot of Progress is being made right around that. You've got 24 states have now legalized it.
- [21:36]
Will Muke
Right.
- [21:36]
Leslie Heaney
On some level it was interesting to me to see different states have different regulations on how many ounces you can have on your person, how many plants you can have, ounces of plants you can have in your home. There's different kind of regulations around both in each state. And some are higher, some are up to 2.5 ounces. Like Maine, I think is one. And then you've got like, I don't know, Connecticut is one ounce or something. And I don't know if that's just arbitrary or if there are other lobbies involved in that as to why it's one versus the other. It was interesting to me that a lot of southern states have not legalized it. And we're here in Tennessee now and is sort of listed, I think is still illegal. But you can sell it up to like 0.25 THC level, up to like up to 0.25 or which is sort of interesting to me. If you were to buy gummies with that level, couldn't you then take two to get to whatever level of ta? Is it just the individual? Even though it's sort of technically you can have access to it, it's not widely available. I mean, it's not accessible. And that's I think on purpose. And you've sort of, I'd love for you to speak to that a little bit too. Sort of how different states have, you know, are restricting it because of just the. Their access. And maybe that's how local governments are handling it. But it's. Sometimes it's harder to. Even though it's quote legal in New York State, it's hard to find dispensaries in New York State.
- [23:02]
Will Muke
Right. So, so look, I'm, I'm coming from the standpoint that cannabis should never have been prohibited. I think that when we look around the world and countries like Germany that have gone through their own sort of rescheduling process and have moved cannabis from a narcotic to non narcotic status, there's an acceptance outside the US that cannabis is actually a medicinal. It's still a controlled substance, it has to be delivered to the patient by script. But there are plenty of people that are crossing over in the private pay market to have access to cannabis outside the US through a medical channel. In the US as you're pointing out, the way that cannabis is legalized on a state by state basis because again, it is federally illegal. So writ large, federally illegal. In the U.S. but each state, because we're in a federalist society, each state has gone through its own process, either through referenda or through ballot votes to legalize, which I think now are there 34 states, or, sorry, 38 states that I think have medical programs in the U.S. plus D.C. and then there are 24 states, I think, that have legal adult use programs, plus D.C. so 25. And each state has its own individual profile for what is legal, what people can grow in their house or can't grow in their house, what they can buy or can't buy, what their holding is either on the street or in the house. It's all a patchwork. It's. Every state is like a little walled garden in cannabis land. But as you're pointing out, the laws don't necessarily always make sense because even if a product has a certain concentration, you can take more of the product and get a higher concentration in your body. So the use case for how the laws are written aren't always equivalent to what we think the intent of the jurisdiction or the regulation is. So in the US we have this patchwork of different states, different legalities, different ways of approaching the industry. And that goes down to even taxation, that goes down to wholesale versus retail markets. It's kind of a myriad of different laws, state to state. And that's just how cannabis has kind of come of age in the U.S. very different outside the U.S. but that's just how the U.S. is. And you're right, it's a confusing patchwork when you're moving state to state. There is no interstate commerce. You're not supposed to be taking cannabis across state lines. But as a private citizen, I think that things happen, you know, outside in the gray areas. And so we have a little bit of a weird situation because of this federal prohibition that we now have, you know, some states that are legal, some states that are not legal. And until we really get resolution at the federal level, we're going to continue to have this, this patchwork system at the state level.
- [25:43]
Leslie Heaney
Well, when you talk about some of the implications of it being illegal on a federal level in terms of how it affects cannabis commerce, I know you. We had talked in another conversation that we had about sort of how about US Banks sort of not allowing US Banks that are federally regulated, obviously not allowing, not being allowed to invest, I think in cannabis companies, maybe you're not. Is it not being able to use.
- [26:07]
Will Muke
Yeah, right.
- [26:08]
Leslie Heaney
So because of that, and there might be other, other examples of that too, of how that just impacts that is that the federal government's way, I guess, of impacting the industry or trying to control the cannabis industry on a federal level.
- [26:22]
Will Muke
Yeah, I mean, it kind of kneecaps the industry to some degree by keeping the federal prohibition in place. But you're right, because cannabis is illegal on a federal level, it means that a cannabis operator doesn't have access to the same benefits that a normal company that's not in any controlled space like cannabis does have access to. So safe and legal banking doesn't exist for cannabis. You can bank either with a state credit union or state chartered bank, and even banking with those institutions, you're always in a safe harbor jurisdiction. Meaning that at some point in time, you know, the feds could say, you know, we want to change our minds and we want to go in and start, and start going after the state operators. That hasn't been the case. And actually going back to Obama and the administration where Cole, who was the attorney general, had something called the Cole memo which said that we will allow the states to do what the states want to do. We are not going to prosecute and go into states from a federal standpoint. That's allowed the cannabis industry to operate again on the state level, but you don't have access to any regulated service, so no banking. Many services, like lawyer services, accounting firms, many won't work with cannabis companies because they themselves are afraid of being regulated. If you touch, if you touch the money stream that comes out of cannabis, theoretically you are aiding and abetting a criminal organization, as crazy as that sounds. But that's really how the laws are written. So it creates an issue for the cannabis industry that you don't really have the ease of access, of moving cash. It's actually a really dangerous situation if you look about what's happening in some states. California is a unfortunate example about this, where a cash based system like cannabis is a huge target for kind of smash and grab robberies. And it's been a major issue in places like Oakland and in, in LA as well. So unfortunately these issues around having no real banking has actually increased the risk to both cannabis operators and the communities in which they operate because there's so much cash floating around. So that's one element is the banking issue. The second is because cannabis is federally illegal under the IRS code, there's something called 280E, which is effectively a punitive regulation that taxes cannabis companies at the gross profit level. So everything that goes below the gross profit line, sort of general sales and administration, marketing costs, things that typically are deductible costs from a normal business's expenses that's not available to cannabis companies. So taxation is incredibly high, which makes it a very difficult place to actually make money and make profit. And the last piece is medical research which has only now started to open up, has been really cordoned off because as much as we've been talking about the medical aspects of cannabis and there are actually FDA approved drugs that come out of some of the cannabinoids, that has really been blocked because thc, which is an area of potential new drugs, new opportunities for medicinal applications, Pharma companies, universities, research institutions don't want to dabble in a molecule that's seen as federally illegal. Now, luckily we have some changes in the laws that are going to open up that space sort of currently and going forward, but it's been a pretty big overhang to the industry just because of the federal illegality of the plant.
- [29:48]
Leslie Heaney
I don't know what the stats are on what the public opinion is on having it legalized at a federal level, but I would think that it would be pretty popular and pretty high because it's legalized for recreational uses, as you said, In 24 states, it is for medicinal purposes in 38 states. What is the real barrier here? Is it, you mentioned pharmaceutical companies, is it alcohol companies? Are there other lodges that are at play that are trying to prevent this industry from being legalized at a federal level because of its potential impact to those other industries? Because it just doesn't make sense to me. Right. When you see that there's public support for it, you see the benefits of being able to. And I don't know, you mentioned the tax implications for the proprietors, but I think that part of the reasoning behind some of these states wanting to legalize it was to be able to tax it. Right. And so you see that benefit to states and a potential benefit to the federal government. So I just don't. It seems to me there must be other forces at play here.
- [30:54]
Will Muke
Our opinion is that if you look at the polling, so Gallup polling, whether you are Democrat, Republican or independent, the overwhelming majority, like up towards the high 80s, low 90s, percentage of the polled populace believes that there should be at least medical, legal access to cannabis everywhere. And if you ask the same question about recreational cannabis, still Democrats, Republicans, independents poll at greater than a 50% margin. So a majority of each of those sort of voting classes believe that we should have some form of safe and legal access to cannabis on an adult use basis. The crazy thing about all this is that no Matter where you go in the US There is access, adult use, access to cannabis. It's just through the illicit market. And so the craziness of all of this is, you know, we turn a blind eye to the illicit market and let a population go out and seek cannabis from a source that is likely untested, potentially has heavy metals or pesticides or other toxins in it. And we're doing a whack, a mole to try and kill the illegal market through enforcement, when actually what we should be doing is legalizing cannabis everywhere on a recreational basis as well as a medical basis. Medical is easy because there's millions of illicit users in the US that are going to the illegal market. And the best way to kill the illegal market is to offer a safe legal supply that is priced at or below the pricing that the illicit market delivers cannabis to the consumer. So that's a little bit of the framework. I think the issue is why aren't the politicians voting for this? I think speaks more to our political system in the US Right now and how polarized we are. Because cannabis is political football. And whoever has the baton to make cannabis legal federally and moves in that direction will gain the votes. And we know that the elections these days are really not won by other side, but won by the swing votes in between. And this is a big swing vote issue. So I think the political will. There has been, especially in an election year, to kind of not do anything. It will be interesting to see whether it's a Harris administration or Trump administration, which direction they take, because Harris has stated that cannabis should be decriminalized or even legalized. Trump actually even said, and then maybe it wasn't an open mic, was actually an answer to a question that a reporter had asked. He kind of responded on the question of about cannabis legalization. He said, well, isn't it already legal? Because he was talking about how the states have already had opportunities to have legal sales on a state level basis. And so our reading of that is even in a Trump administration, there is a opportunity to say that they will do what the Republican platform typically has done, which is allow states to make decisions for themselves and allow this kind of patchwork of walled garden states to exist or even to even grow. So I think it's much more based on the political merit. And there's still stigma that overhangs a lot of the political side. You know, when you talk to senators that haven't really touched the issue very heavily, they still believe that it's almost the Nancy Reagan, you know, it's the. Not the exit ramp, but it's really the gateway to all bad things. And so it's really an education process that we have to go through to get those who are uninformed informed. But really we need to move beyond this polarized political theater that we have right now in this election year and hopefully look in 2025 to a much more thoughtful approach to cannabis and cannabis legalization. So the voter populace is there. It's now just getting the politicians to follow what the voter populace wants.
- [34:43]
Leslie Heaney
It's really interesting a thing. You mentioned the illicit market. Right. And in the states. I have two questions for you on that. In the states that have legalized it, how has the illicit market had an impact on, on those businesses? Is there a tension between the two? That's one question I have. And then on the other, just as a point about the illicit market, and I'm sure this is not in parenting books, but our daughter's almost 19. What I've said to her is like, if you're offered pot or gummies or whatever, make sure they're from a dispensary. Like, you know, do not. Like, my brother grew this or I got this from a guy. Because it could have fentanyl in it. I mean, it could have anything in it. I mean, maybe I'm wrong about that. But I. On the paranoid parent part of me, I would rather, I think most parents would rather know that their child is getting those products from a dispensary where there are standards and there are safety practices and all of that versus just somebody off of the street.
- [35:40]
Will Muke
Yeah, we're the same in our household. We have three college age kids and cannabis is everywhere. And we had the same conversation. Don't take anything really from a source that you don't know. But if it's cannabis, I'd much rather have you source it from a legal supply than an illegal supply, because illegal supply, it's been tested. It actually has a certificate of authenticity that it came out of a legal grow. And you don't have heavy metals, you don't have pesticides. And it's just the right conversation to have. So, yeah, we're in the same boat as far as legal versus illegal supply. The issue about what's happened in the US and I think where a lot of the cannabis industry is still groaning and I think even the general population is a little bit surprised, is where states have fully decriminalized. The way that decriminalization happened, it happened sort of with a stroke of the pen. So like from one day to the next, cannabis went from being illegal to being decriminalized. And there was no real enforcement or thought around how to not just allow the illicit market to take root in these states or to have this proliferation of illegal sales of cannabis. I mean, you walk around New York City, it's amazing. I think only now are we starting to see some enforcement come into play. But it used to be you walk up Lexington Avenue and every, you know, there were two shops on every block that were vape stores with big CBD or hemp signs in the window. But you walk inside and you could buy as much cannabis product that you want, illegal or legal. And again, when we talk about the illegal side, there's some really good counterfeits as well. So when you get it from a dispensary, you know it comes from the actual manufacturer. When you buy it from a bodega on, you know, 61st and Lex, you don't know if the packaging has been sourced from China and what's inside is from an illegal grow. And there's no testing. But because there's been no enforcement and no budget around enforcement, it's like we're in the post prohibition days and everyone's running around with bathtub gin. Yeah. So we need to get away from that. And just like, you know, bathtub gin was terrible because you're not only producing ethanol, but you're producing methanol. And people were going blind or dying because they were drinking stuff that was not regulated. Luckily, you can't die from cannabis, but you certainly don't want to be inhaling mold or mercury or something else. And we did have some really bad things happening around juul and illegal vapes and actually in cannabis. Illegal vapes, again with. With bad things in the, in the concentrate where people were getting some. Some pretty frightening outcomes from that. The, the issue with enforcement is only one piece of it, however, because reality is, again, because the way the laws have been written as states have legalized, again, starting with the taxation issue at 280E, which is a very expensive issue for cannabis operators, there are a host of state taxes that go on top of that that basically price cannabis out of the market. So if I'm a consumer and I'm just thinking it's price, you know, dollar per milligram of thc, the illegal market will likely supply me every time with a cheaper product. And until we kind of undo these issues around what's pushing the price of cannabis to be so extraordinarily high compared to the illegal supply we're going to continue to have an arbitrage opportunity for illegal growers to basically continue to deliver cannabis in a market that's been decriminalized, has very light enforcement, and has a very high priced product. As my competitor, I don't want to jump too much to Europe right now and kind of dilute the US conversation. But when you look at Germany, which on April 1 moved cannabis from a narcotic status to non narcotic status and made cannabis available for every general practitioner to write by script, the friction cost for actually getting cannabis is very low. In Germany, you go to a, to a doctor, you can be your orthopedist and you say, you know, I have a back issue, I'm having pain, I'm tired of doing opioids, and I, I haven't found any other relief. And the doctor says, well, why don't you try cannabis? Either you can smoke it in a flower or you can take an oil orally, and then he gives you a prescription. You get the prescription filled by a, by a pharmacy. It comes to you. Either you get it, you know, in store, you go and pick it up at the pharmacy, or it comes to you by DHL overnight. So in 24 hours you get your cannabis delivered to your door. It's legal, it's safe, it's tested. And the amazing thing is, because the way that Germany has opened up the market, Germany is allowing importation of medical cannabis from all sorts of legal grows around the world, meaning that we have a very large supply chain coming into Germany, bringing price down to at or actually even below the illicit market pricing on a sort of program basis. And so if I think about, you know, the use case in the US if we had kind of the German model in the US which again is a medical only model, you could actually have an incredibly robust market that prices cannabis at a level that the illicit market finally kind of gives up because they can't make margin there. And you also have an audience, a patient base that for very little effort can get a prescription and have access to cannabis. I think where Germany is going is to open up an experiment called Pillar 2, which is talking about having sites to do real adult use. Kind of, if you're 18 or older, you can go into a pharmacy and buy cannabis as you can buy, you know, going into a store and buying beer. If we had sort of that opportunity in the US as well, where you had enough supply, low tax and federally compliant operators, then we would have a market where there really isn't room for the illicit market to take root or thrive, which is what's happening right now. And we'd have a really robust cannabis market that addresses both the medical population as well as the recreational population in a safe and kind of mediated fashion. And it doesn't take a lot to get there. But until we get there, we have this very big difference in price and in accessibility of illegal product versus legal product. And that's just a bad situation right now that needs to be rectified. I don't want to kick the cannabis boards too heavily in the states that have legalized because they have been underfunded. And we are in these post prohibition days. And again, I'll go back to the to post alcohol prohibition with bathtub gin. It took a while for us to get to a regulated industry, a three tier industry, which is how the alcohol industry runs today, to have safe and legal access to alcohol. So people aren't drinking methanol. So it's going to take a little while to get there in the US state by state. But I do think the model is already there. We've seen this before with alcohol, we should see the same thing happening with cannabis. And in the end, you know, the funny thing is when again, you look across the pond here in the UK as well, everyone agrees, like the conservative politicians agree, the police enforcement heads agree, the healthcare officials agree, that having safe legal access to, in this case a medical profit in Europe is the best way of addressing a lot of these negative issues around cannabis that are otherwise going unchecked in the illegal market. So if we could again federally legalize in the US, remove things like 280e and frankly rescheduling of cannabis in the US if we move it from Schedule 1 to Schedule 3, will at least remove the 280e issue, but it doesn't remove the state tax issue. It certainly doesn't remove a lot of the other encumbrances that we have on cannabis. So it's really, when we finally federally legalize, we can actually see a shrinking of the illegal market and we can see a growth the cannabis market, which today amazingly has produced, you know, over 420,000 jobs, permanent jobs in the US and a cumulative tax revenue base of over $15 billion. So, you know, when we talk about politicians and political will and how to make things change, jobs and tax revenue are a really strong advocate for changing the laws around cannabis, especially when the science is there to back us up, to say it's not a substance that's highly prone for abuse, it is a substance that has medical efficacy and in a recreational basis with safe use. Just like safe use, you know, we don't recommend on the alcohol industry that everybody goes out and buys a fifth of gin and drinks that fifth of gin on a daily basis. We have ideas around what proper consumption is. So cannabis in that same lens should be sitting alongside alcohol on every shelf, wherever alcohol's sold. And it should be a medicinal. That's applied to patients that don't want to do pharma and want to have access to a plant based medicine that has high efficacy for pain management and for especially people going through chemotherapy, an antiemetic, anti nausea effect and increases appetite and really opens up this whole conversation on the medical benefits and how we can apply cannabis to more places rather than fewer places.
- [44:54]
Leslie Heaney
Well, when you talk about pain management, I mean giving people oxycodone, for example, or oxycontin, I don't know if it's oxycontin or oxycodone, but that, that is the gateway into. That's how a lot of people, right. So you start on the Vicodin and then you go and actually I don't know which child it was, but one of them, I got oxycodone and my prescription was running out and I remember saying to my husband, like I might go down to Washington Square Park. I mean I try to see if I could find, I could see where could go. I mean it is like highly addictive. You're not getting that from cannabis for paint management. Like it would never take you in that direction. But I want to ask you on the illicit piece, the tension between the illicit industry and the legal industry in a lot of states, part of it also, I think probably has to do with accessibility, right? The restrictions around accessibility. I'm sure each state is different, but I, you know, in New York state there are so few dispensaries versus Massachusetts, for example, that if you're someone who has been a marijuana user for many years, you're like, why would I have tried to drive or find a place 45 minutes or an hour from my house when I can keep going to my guy that I've been buying pot from for 15 years or whatever, right? So that's the other part of it. And I don't know how. And I guess each state is different how they regulate it to limit the number of dispensaries. But in your view, is that also another one of the issues that I've sort of of. I've noticed that just in New York versus Connecticut, you Know, they have nothing going on like Massachusetts does. Massachusetts, you know, and we're. We're kind of in this part of the world where we were. Where we were on the border of Connecticut, New York and Massachusetts, and, you know, Massachusetts was the whole Great Barrington area. There's a dispensary every 10ft, but there's nothing in Connecticut and there's nothing in New York in that same neck of the woods.
- [46:46]
Will Muke
Yeah, I mean, you're dead on that. Safe and legal access, as far as the points of access, are critical to having, again, another sort of choke point on the illicit market, because anywhere that you don't have legal access, you have ubiquity on illegal access. There's always a guy on a bike with a backpack, no matter where you go. So I think that the rollout of dispensary licenses state by state has, you know, each state is sort of a unique story, and there's a reason why some have done very well and some have kind of gone very slowly. And some of that is based on the approach to who they were giving out the licenses to and why. But I think that overall, the more points of contact you have, the more points of supply that you have where a consumer has access to safe and legal cannabis, that's just another nail in the coffin of the illicit industry. And I think the New York State right now, for the population that it has, they're only. I think they're fewer than 90 dispensaries. They're like 85 or 87 legal dispensaries right now. But it's amazing. You walk again, you walk through New York City and they're probably hundreds of points of contact, illegal points of contact in bodegas, and then obviously a whole myriad of folks that are on a. On a telegram or WhatsApp dial code to get illegal access. So it's more of an evolution of time, post prohibition rollout of the cannabis industry, we will get to a point where. Where hopefully we'll have ubiquity on cannabis points of contact. But you're right, if you don't have a dispensary or a delivery service or a legal way of getting cannabis in a certain jurisdiction, jumping in a car and driving an hour, that's something that likely a consumer is not going to do. They're likely going to pick up their phone or their chat, and they're going to find an illegal supply to give them the same product that they would buy otherwise in the legal market. So, again.
- [48:29]
Leslie Heaney
But is New York state limiting, though, the number of licenses for dispensaries. Is that how they're controlling or is.
- [48:36]
Will Muke
It just they're going to process? They started with the card applicants, which were sort of a social equity program focused on folks that had already been hurt by the war on drugs. And so those were. You needed to have someone that was affected by cannabis negatively, incarceration or otherwise, in your family or you yourself. And that would give you sort of the first line access to those licenses. It's now expanding beyond that. And again, every state has a different approach to how they rolled out licenses, but it is a process that they continue to increase the number of licenses that they administer. My gut is that that's more on an issue of oversight and budget. What the BCC has in New York is still a very thin budget and they don't have a lot of. A lot of people to administer what's going on. And a huge number of huge volume of applicants. I do think it's just going to take time to get to a place. But there's no cap right now that says you can't do more than a certain number of dispensaries, that if there is a cap, it keeps on moving and they keep on adding licenses to it. But it's just been a very slow rollout, mainly because, you know, these, these cannabis boards that are overseeing the legal process in each state are brand new, inexperienced. This is kind of a new thing for everyone. And they typically don't come with a lot of budget, so they don't have a great ability to process things as quickly as either the consumer or the industry would like.
- [49:56]
Leslie Heaney
So you were not always in the cannabis investment business. You have a long background in finance, but you had your own kind of personal experience. Right. Watching the benefits of cannabis by having a family member that was sick with cancer.
- [50:12]
Will Muke
Yeah, look, I'm 56. I grew up under the. Nancy Reagan just hit under drugs. I remember the commercials of the hot skillet and the eggs cracking on the skillet like this is. And my mother was actually. She was a counselor, she was an md, but her area was addiction. And she worked for the ADC and see the Alcohol and Drug Council of North Carolina. She was an advocate for that. And she also worked for the state as a physician to help treat addicts coming out of the state, out of the North Carolina system. So it's funny, I came from a more conservative approach to cannabis. And actually my kind of colloquial thoughts around cannabis growing up is it's kind of like people drink or they smoke cannabis on the weekends, it's kind of kids giggling behind the gym after school. There wasn't a big focus. And I was also, I'm still an aging athlete, but I was an athlete growing up. And so, you know, our coaches were always stay away from cannabis. So there was always this negative stigma on it. In 2007, my sister was sort of in the last stages of a pretty terrible battle with, with cancer that had gone, you know, gone on for many years. And she was at a level of pain because cancer, the cancer had spread into her bones and it was such a deep bone pain that she couldn't get any relief. So she eventually had a pain pump installed where she was being, you know, with a press of a button that she would administer, self administer. She was given a little drip of liquid morphine. And just the way your body reacts to opioids, you reach a level of homeostasis like your body tolerates the opioid and gives you an analgesic effect. It gives you a pain management effect up to a certain level where your body just kind of gets used to the level of opioid coming in and it doesn't give you any greater pain effect. Yet the opioid in your body going through your blood system and affecting your organs can be lethal. And so my sister had reached the point where she was using the pain pump so much that her doctor said, look, the next press on the pain pump likely will not give you any pain relief and it will likely do something really bad like kill you. So my sister was in Los Angeles, so under the California laws had access to medical cannabis. And her doctor prescribed her first Marinol, which is basically a, an extraction of thc. And then she used flower as well, the smokable cannabis. And it was amazing to see the impact on her experience. And it wasn't just my sister's experience, because her personal experience went from, you know, being on this opioid morphine drip and when she was on that, she wasn't even in this plane of existence. She was like on another planet. And she was sleeping all day and when she was awake, she wasn't really coherent. And at the time she had, you know, four kids in the house, three under the age of six. And so mommy wasn't really there. And with my sister, who at that point in time was even on fentanyl lollipops. So she was, she was self administering as much opioid as she can because the pain was so great. With cannabis, she was able to back off the opioids to A degree that she was actually coherent, she could speak. And I have connection with her kids again. We had her last Thanksgiving and her last Christmas were around her bed. And it's funny, when she first had cannabis, I was in bed with her, you know, teaching her how to. Out of my high school days, teaching her how to smoke a bong. And we were giggling about it. It became this really positive experience. And what was amazing is it affected her in such a positive way that she was able to basically come back to earth and reconnect with her family and so have this great opportunity of reconnection before she finally passed away in December 2007. But more than that, it affected her children in a positive way. It affected our greater family. I mean, the knock on effects were positive. And the ripple that went out from that was so significant that I was really like, I can't believe that this thing is illegal. Like, I'm seeing it every day that I, my sister, I'm seeing the medical efficacy, I'm seeing how it's delivering her pain management, I'm seeing her backing off the opioids. And so it was really with that experience that I kind of started reading more about the history of cannabis, understanding what the darkness was and laws around cannabis that ancilling their days into the. Into the Controlled Substances act days of Nixon, and just realizing that the reason that cannabis is illegal has nothing to do with science. It's all political, and it's unfortunately very darkly, racially political. And so you're right, I haven't always been a cannabis investor. I was an investment banker for many years, and then I ran an equity fund, a private equity fund in the emerging markets. And when I really realized what cannabis had as a promise for society, I was like, this is like a human right. Like, everybody should have access to this plant. And so we decided that, you know, we were going to try and make a mission of this. Learned a lot about the space, did a lot of homework, and then in2017, formed what we now have is our private equity shop called Artemis Growth Partners and raised a tiny bit of capital and started investing in early 2018. And that really was sort of the growth of why I'm now a professional investor in cannabis. But it really came out of my personal experience and just seeing my sister's arc through those last sort of stages of her disease progression, how much relief it gave her, how beneficial it was for all of us as a family. I couldn't imagine not providing that to every patient that wanted to have access to it. So I'm a little bit like, you know, it's like the Blues Brothers. I'm on a mission.
- [55:56]
Leslie Heaney
Yeah, yeah, yeah, yeah, yeah.
- [55:59]
Will Muke
And the amazing thing is it's a mission that has so many positive underpinnings, both commercially for society, for patients, for consumer access. I, you know, I've been in now steeped in this, in this industry for so long. I just look around, it's like everybody else, you just need to understand what we're talking about. And there's no way that you won't say that we should have federally legal cannabis. It just doesn't make sense that the laws are the laws that they are.
- [56:24]
Leslie Heaney
I noticed because I think you were a panelist at one of their annual conferences. But there's a Cannabis Europa Group, I think it's called, that's kind of bringing together all the different businesses and lobbying organizations in Europe around cannabis. But is there a similar organization in the us? How strong is the lobby? What needs to happen, I guess, in order to have it be legalized at a federal level?
- [56:49]
Will Muke
So look, I think there are two really strong industry groups in the US and both are working very hard to educate and help politicians understand what the opportunity is for cannabis. Unfortunately, they're not very well funded and they're a little bit spread thin resource wise, but they have the right message and I think they've been very effective in bringing the topic to the table. So the fact that we're talking about cannabis in a presidential election year as potentially at least one of the pivotal points for swing voters, that's really on the heels of the growth of the industry and what the effectiveness of these lobby groups have been in the US but we're still kind of underweighted for what we need to do for the industry. And so, you know, we participate in those industry groups. We've actually planned to bring together a group of regulators both in the US and worldwide to start talking about how do we harmonize the laws around cannabis. Because even in Europe there's a bit of a patchwork of what works and what doesn't work country to country, whether in the EU or outside the eu. And at some point in time we need to have kind of fair trade access globally for cannabis. So we, from an Artemis standpoint, fully support the current lobbies, but we're also really focused on let's talk to the people that are actually making the decisions. Let's bring the regulators together, let the regulators speak amongst themselves. Let's let industry inform those regulators about what they need to be safe and legal operators in cannabis. And let's have the patience and the consumers speak to what they want to have for access. And if we can bring together patient consumer parties, industry parties and regulators, I think we have a conversation that it's not going to happen overnight. It's going to be a multi year process. But over time we will get to a place that the laws are more thoughtful, are harmonized, are current and have left the legacy behind. But we spend a lot of time speaking to politicians and speaking both to industry and to patient groups. It's not really our bailiwick. We have a partner group. One of our investors is a member of the Bacardi family and he's been spending a lot of time in cannabis and has been putting a lot of money and resources into the, the political venue here in Europe. So we're kind of picking up on his chops. But we realized that cannabis really is on the medical side just like any other medical group. Highly regulated industry, safe access of medicinal compounds for patients and safe administration of those compounds through proper channels. And then the consumer level, it's a little bit like, are we a consumer product? Are we sort of like a, a wine or a beer or alcohol company? And I think the answer to that is yes. So we're both medicinal and a, and sort of a consumer product. And so the lobby groups need to speak to both of those, those, those audiences and with both of those agenda. So it's, it's really been a great change from where it had been years in the past, but we still have a little ways to go. It's just we have a lot of really smart people bringing the science, bringing the patient anecdotes, bringing the safety issues. And then we have great folks, you know, like Mike Penning here in the uk, who was the former Minister of defense and was head of police when he actually legalized or was the one to strike the pen to sign that in 2018, the UK should have a legal medical program. So we have some really experienced politicians and regulators as well who are, who are stepping in and I think all of that can inform the discussion in the US when we finally do move to have that frank discussion about how do we move from an illegal, federally illegal cannabis market to a federally legal cannabis market. And there are plenty of hands around to help lift that boat and plenty of voices to carry that conversation. So we're just trying to add to that as much as we can.
- [60:37]
Leslie Heaney
So you're bringing together kind of the regulators with the different industries or stakeholders, whether you've got the pharmaceutical companies around medicinal purposes or having just regular consumers, right, who are using it for recreational purpose, getting them all kind of together. Does that happen at these industry conferences?
- [60:54]
Will Muke
I mean, the conferences are a great place to bring people together. There's a reason to bring people together because there's, it's topical. I think the worry about the conferences sometimes is they become echo chambers and there's not a lot of new information that goes in. So you have to go just beyond these nodal points of the conferences and really, you know, sit down in people's offices, go find the politician who is open to having the discussion. And as we were talking about before, it really starts with jobs and tax revenue. And so the regulators are there to make sure that the framework that's ultimately put in place is safe and legal. And they've done this time and again for other pharmaceutical products, narcotic products, other even consumer products. So there's an easy playbook to set up the framework. It's more of the education process about how do we bring the topics to the politicians that will ultimately do the right thing legally to open up the opportunity for these regulators to step in and start talking about what a legal framework could look like. It happens actually in the hallways here in Parliament in the uk it happens the same way in Germany. It's not like a foreign topic over here. And in fact there's more voice coming to cannabis because it is one of those very few brand new growth industries that is promising sort of an industry growth curve of like 20 to 25% year over year growth for the next five or even more years going out. And we're talking about hundreds of thousands of permanent jobs and billions of dollars of tax revenue. And because we're in a different framework here in Europe, I think there's an easier conversation, especially with Germany showing such a successful transition from narcotic to non narcotic status of cannabis and what that's provided to the marketplace. And ultimately what we're going to see in the data that we're collecting is how we're actually shrinking the illicit market, increasing medical efficacy, lowering some of the healthcare costs, because you're supplementing cannabis as a cheap alternative to pharma and also lowering budget costs on policing. I think what we're trying to do is now package what we're seeing here in Europe and bring that to the U.S. to say you already have this federalist patchwork of state referenda that have brought cannabis to at least state level legality. The leap to do a Change at the federal level actually isn't that big of a leap. And here are all of these examples from Europe that. Here are all the benefits.
- [63:23]
Leslie Heaney
And with Europe, I mean, the European market, Germany has legalized it for medicinal purposes. Luxembourg I think has as well. And multi, I mean, there's a couple of countries in Europe that have, I.
- [63:33]
Will Muke
Think Malta and Luxembourg are a little bit different. And it's not like a full kind of California style legal market. I'd say that the countries that have made the most sort of substantive progress on showing what a legal adult use market could look like are really Switzerland and now the Netherlands. And they're running pilot programs and they're calling them pilot programs and saying they're sort of scientific programs of data collection that they've created sort of certain operators that have licenses. So there's a legal supply chain from cultivation all the way to delivery into a pharmacy or dispensary. And then there are legal retail operators that have those dispensaries that can then provide it to a consumer. And the consumer is really just anyone walking off the street that satisfies the minimums of age and applicability. And so Europe is all watching what's happening in Switzerland and the Netherlands to see what that data looks like. Germany, as I said, has something called Pillar two. So kanji, the laws that went through that made cannabis a non narcotic Pillar one actually allowed individuals in Germany to grow three plants themselves, grow and possess three plants. And in fact, under this sort of first phase of Kanji called pillar one, they not only had the access of legally owning and, and growing three plants, but they can collaborate. So you can bring 500 individuals together and have what are called cannabis clubs. It's almost like a wine club where.
- [65:00]
Leslie Heaney
There'S a cultivation cannabis club. I like that. I mean, they have. Yeah, so.
- [65:05]
Will Muke
So you can have your green thumb on the weekend and instead of like growing daisies, you can grow cannabis in these licensed arenas. And ultimately you can't commercially sell that cannabis, but you can trade it and you can use it personally. So. So there is an aspect of personal use that's legalized in Germany today. The next piece will be trying to set up a commercial framework, which is Pillar two, where you'll have either dispensaries or pharmacies, or a hybrid mix between dispensaries and pharmacies that allow points of access for the consumer to walk in. And again, if you're aching or over, you can present your id, select the cannabis without a prescription and be able to Walk out with it. Now, that hasn't yet been fully codified. So there may be limitations on concentration of THC and what's, you know, available by prescription and not sort of an otc, not, not prescription based. That's still being sort of hammered out. But the fact is we're moving in a direction that countries are saying, okay, it makes sense to have legal access and it probably makes sense to have commercial access, but let's go slow on commercial access. Let's open it up for a four year or five year program, run that program, collect the data and then make a decision whether we open this up more broadly than we have just in the pilot programs. But it's a very sensible, very European approach. It's slow, but it's steady and it's based in regulatory change that is supported widely by all political parties, which is a very unique situation when you compare that to the U.S. so if you're.
- [66:32]
Leslie Heaney
Looking in your crystal ball, once these pilot programs, like four or five years out, if you were to kind of make that kind of prediction, would it be that you see other countries in Europe begin to either adopt their own pilot programs or adopt, you know, the exact program that Germany had, if it worked in Germany? And I mean, the Germans do do it better. They just know how to, they know how to organize and structure things. I mean, they're very good at that. So do you see that happening though? Do you see those programs sort of acting as catalysts for other countries in Europe to, to do the same thing?
- [67:05]
Will Muke
Absolutely. I mean, even with, with just the passing of Kanji, there were a host of countries that were making statements. Czech Republic was probably the most most vocal, raising their hand to say, you know, what they did, we want to do too. In fact, we want to do it faster and better. I do think that much of the conversation is around jobs and tax revenue because people that this is a great plug for holes in the budget. And they also understand that on an operating basis, countries are spending hundreds of millions of dollars on enforcement of cannabis trafficking. That will likely go away as these programs roll out or at least be contained. They will never all fully go away. So I do see Germany as the catalyst for the rest of Europe. It really is the engine on the train. If you think about the European market, it's 750 million people. And so the impact or the effects of what the German Kangi laws have had on Germany will, will really ripple out across all of Europe over time. And our expectation is that the data that will come back from these Pilot programs will show that, you know what, actually there isn't an increase in criminality, there is not an increase in traffic issues, there's not an increase in sort of overall societal ills. In fact, what we're going to see is there's a benefit and we're going to see some of the positives coming back on cost and spend, as I've said, on enforcement and on, on health, health cost. Because a lot of these programs, in fact most of the ones in Europe today have some form of state based subsidy. Some are not. But places like Germany do have for certain indications a state sponsored program where the state will pay for most, if not all of the cost of your prescription. France will actually be a very likely new entrant at the end of this year, early 2025 with a state sponsored cannabis program a little bit different than Germany with some of the particulars. Meaning that instead of having a flower based system where you're actually getting smokable plant, it's going to be a fully finished product system, so concentrates, edibles, things that you typically think of as medicine. And it's going to be likely 100% or at least nearly 100% sponsored by the state. Because French society in general has never paid for a pharma product ever. It's always been sort of an entitlement provided by the state. And cannabis is going to sit alongside, you know, you getting your, your hay fever medicine.
- [69:24]
Leslie Heaney
Hopefully they'll roll, they'll roll that into food somehow like croissants and other things. I mean, that would be a, that would be a natural.
- [69:31]
Will Muke
You'll be using cannabis butter today.
- [69:33]
Leslie Heaney
Yeah, I know. Let's, let's hope so.
- [69:35]
Will Muke
Germany definitely is the catalyst. I think that again, this is all under the medical rubric, so, so it's a little bit different than the US but there are so many benefits that we're going to see in Europe that can be applied to the US model that I think people are going to, you know, prick their ears and, and, and take a look at what, what the European rollout looks like and see how, how that can enhance change of.
- [69:54]
Leslie Heaney
Laws in the U.S. uruguay is also, it's legal in Uruguay as well. So there's, that's kind of maybe a node for South America. You've got Canada and you've got Thailand. I don't know when it was legalized there, but I think having these kind of legal nodes throughout the world might have ripple effects in those, those regions.
- [70:12]
Will Muke
The frustrating thing is I think the data is already There like you don't really need to wait another five years for the US to say, okay, now I'll take the data in. I think that we, we've shown in the US that in the states that have, have legalized cannabis, you don't have, you know, increased traffic, traffic deaths, you don't have, you know, major issues, major ills coming out of the legalization of cannabis. The data and the science are already there. It's as we were talking about earlier in the conversation. It's really the political will isn't there because of just where we are in sort of U.S. politics today. But given that the electorate wants to have legal access to cannabis, at least, you know, the overwhelmingly medical access and for the majority want to have legal adult use access, it's just a matter of getting the politicians on board and so giving the politicians the right data, which is jobs, tax revenue, cost savings, enforcement. We just need to continue to roll out that set of information, let politicians absorb that, let the politicians hear from their voter populace that the voters really want to have this legalized. And as you said, you know, it's not necessarily the industry conferences, but the lobby groups packaging this data and delivering it to the right ears. Hopefully against a backdrop of a more sane overall political state in the US we should see change. It's just frustrating that it hasn't happened already because the data is already there. We don't have to do anything to say that it's safe. There's actually not a great risk or greater risk, certainly not a greater risk than alcohol and even intrinsic to cannabis, not that great of a health risk overall. I don't want to totally whitewash cannabis because the data is there that some people are susceptible to having psychosis and other effects when consuming cannabis, but typically that's temporary. As soon as you stop consuming cannabis, it's not a permanent effect. And I certainly, absolutely, and I think everyone in the industry just underscores this. I certainly believe that we need to have the proper controls in place to age gate cannabis so kids aren't getting access to it inappropriately. Like no child under the age of 21 should have access to cannabis, the same way they shouldn't have access to alcohol. Of course it's a porous issue, but from an industry standpoint, we all believe in safety and protection and yet we also believe that if you're an adult, you should have the opportunity of putting in your body what you want to put in your body, especially if it's a do no harm substance like cannabis.
- [72:33]
Leslie Heaney
Yeah, I mean, for sure. So what's next for you? What's next for Artemis Growth or is it sort of focused on looking at the European market, global markets, or what do you have your eye on?
- [72:43]
Will Muke
We're looking at all markets. We already have a large established base in the US and at Artemis today we managed about 400 million of assets under management, invested 100% in the cannabis space. And our primary holdings are really in the US and they're kind of commercial consumer product companies like Kiva, which is the largest edibles company can, which is sort of the best well known and large footprint at a drinks company, and in Royal Garden, which is a vape company in California. So we already have large bets that we kind of oversee and we have a myriad of portfolio companies that are in and around the US I think we run now 39 companies in the portfolio and something like 70 or 80 positions or even more numbers of positions of investments. But our focus currently as far as an investor focus is really on Europe because until we get through the elections and we start seeing change in the U.S. it's been a really frustrating market for us to invest into because all the encumbrances that are, that we've talked about are still there. It's a, it's a difficult market with high competition, really not among the other cannabis companies, but high competition between the regulated market and the illicit market. And that's a really hard paradigm for us to continue to support. So we've been sitting here in Europe for five years. We started actually investing before that. We started investing in Europe in 2018. And we see this even though it's a small market compared to the U.S. i mean, the U.S. is like a $40 billion market and the European market is a billion dollar market. But we see the growth and traction happening in Europe demonstrably and we see some really interesting, strong operators coming out of that with some great management teams. So our focus right now as an investor is to help drive our European portfolio. We probably have, you know, 70% of our efforts and resources are dedicated to building and supporting the European supply chain. But we do see cannabis as a global opportunity. And so we look at new markets opening up. We certainly do not want to abandon the U.S. it's too big of a market, too important of a market. It's more of just where we are today going into 2025. Most of our effort is going to be on the growth markets of Europe rather than kind of the frustrating markets of the US but we'll continue to push in the US at least on a regulatory basis and advocacy basis, because it will change, it will ultimately change in the US and it's just going to be a gigantic market economically driving a tremendous number of jobs, a tremendous opportunity to create investor gains. And so we're actually really excited about the long term future of cannabis, despite all the noise and all the pain that we've been going through for the past five years.
- [75:27]
Leslie Heaney
On the European front, I mean, do you, you talked about supply. Are there certain countries in Europe that have large growing operations or are you importing it from other countries? And how does that work? For example, could a US grower supply Germany? Are they not able to do that because it's international commerce?
- [75:51]
Will Muke
The US because of its federal illegality, can neither, it cannot, can neither export nor import cannabis, whether it's or otherwise outside the US for those countries that have legal medical programs, they can trade amongst themselves. So a legal program can supply cannabis to another legal medical program. And in fact, you know, Germany as, as really the, the main consumer market right now in the world outside of the US There are a number, a host of both European countries and non European countries, whether it's New Zealand, South Africa, South America, supplying Germany, even places like Northern Macedonia, that those low cost supply chain opportunities are delivering low cost cannabis to Germany. So there is, in the medical world, I wouldn't call it sort of open free trade, but there's regulated trade of cannabis that is legal and you can cross borders with cannabis as long as it is under that medical rubric. Recreational cannabis is not allowed to be either trafficked, moving across boundary lines or borderlines. And it's outside of the pilot programs that we talked about. Luxembourg, sorry, the Netherlands and Switzerland, there's not really a legal commercial market for recreational cannabis other than Canada and Uruguay right now.
- [77:17]
Leslie Heaney
But in the Netherlands and Switzerland, are those countries just growing their own then to supply it to those cafes and what is it called, the cannabis clubs? That's all happening in those countries, right?
- [77:29]
Will Muke
So in the Netherlands you refer to them as coffee shops. In Germany they're cannabis clubs. I think they're just dispensaries and pharmacies and so Switzerland, but each of those countries for a recreational program, an adult use program, by definition it has to be domestic supply. You can't, you can't cross a national border with cannabis. So if you have a pilot program in place or even just, you know, libertarian access from an individual standpoint, that cannabis must be domestically supplied. So there is a domestic supply chain in Switzerland that supplies those dispensaries with legal cannabis for the commercial adult use pilot program. The same is happening in the Netherlands. And then Germany is allowing again, individuals to produce, grow and harvest their own plants. And as they move into pillar two, they will be handing out licenses, likely to the three incumbents that already supply domestic medical cannabis. They'll be handing out expansions of those licenses to supply the pilot program markets and perhaps even issue new licenses to new domestic legal operators to supply cannabis to those domestic adult use markets. But as far as adult use, it's always domestic. There's no legal trade of adult use cannabis across national boundaries.
- [78:44]
Leslie Heaney
Is there any. And I know you're not a botanist, but is there anything about the plants in different regions? Like, for example, I went to college in California. I had a friend who was from Humboldt County. It was like they really specialized back in the day. And what he referred to as the kind green buddy. How does that work? I mean, I think the soil and the. I mean, of course, now it's in greenhouses and it's more controlled, but is there any. Are people kind of advertising their particular blend or brew? I mean, is there a. Will there get to a point where, you know, France, it's like wine, like France has the best. Or Germany, or, you know, sort of based on their own growing practices? Is there any.
- [79:26]
Will Muke
Yeah, at the main commercial level, cannabis is really an industrial farm product. So whether it's outdoor, greenhouse, or indoor grow, the way that cannabis is grown today, it's grown like any other monoculture at scale. You do like corn.
- [79:43]
Leslie Heaney
It's like corn or any other product.
- [79:46]
Will Muke
Or crop product because you have all these different varieties of tomatoes. You have tomatoes, large tomatoes, heirloom tomatoes, cannabis. You know, part of the allure of cannabis is there is a little bit of a terroir. This idea of each strain has an individual profile. We talk about terpenes and flavonoids. The terpenes are sort of the smell and the gassy aroma around cannabis, and the flavonoids are kind of the taste. And when you have cannabis, either in a heated vessel or a combustible like a joint, you can taste those terpenes. And so there's. There's a taste that goes along with it. The terpenes are also shown now to have different effects. So the, the high you experience or the, the intoxication effect that you experience isn't just thc. It's actually the constellation of terpenes. And the profile of the terpenes and how that makes you feel, it can make you feel sleepy. It can make you feel euphoric, it can make you feel very introspective. And a lot of that has to do with what the terpene profile is of a certain strain. But because we have almost like industrial farming now, those strains, which originated first of all on the Central Asian steppe, have now been taken into garages for the past 70 years and grown by producers in California and elsewhere in an underground basis and really concentrated on amplifying things like the THC concentration, because when you're illegally growing, you want to have the highest bang for your buck, the most THC coming out of the plant. But we're starting to see that, that there's consumer affinity around certain strains. And so, yes, there is an issue of branding around the strain itself. There's some play, some. Some operators. Cookies is probably one of the best known that has their own strains in house, they've developed with their own breeders. It's kind of like, you know, it's their ip, it's, it's their brand. And so certain patients and certain consumers will have certain affinity for, for strains of cannabis, one strain versus another. And so, yeah, you know, it's not just like one plant. You have hundreds of different, different strains that are out there. And, you know, the more sophisticated, sophisticated cannabis consumer will be like, you know, an onophile. And we'll be talking about the taste and the terroir and the terpene profile. And there really is an element, just like wine, to experience and enjoy cannabis on a craft side, like you would, you know, craft. Craft alcohol, craft whiskeys, craft wine. So it's a really interesting.
- [82:16]
Leslie Heaney
Is that part of your. When you're looking to. Either to acquire a company or invest in a company, are you looking at. Is that part of it sort of how, how they're growing it or who's making it, or how they're. They're marketing it, or what kind of factors do you look at when you're looking to different companies?
- [82:33]
Will Muke
We think about cannabis like the supply chain to really reduce it to a more simplified state. We kind of think about it like Apple and Foxconn. So where we like to invest is not in the commodity side of the business, but in the side of the business that we think has defensible barriers to entry moats around those opportunities and the chance to increase margin or deliver new products that have either patient or consumer effect that will be sort of new growth areas. And so if you think about, like Apple and Foxconn, you know, on the origination side, Apple has the IP and the code, they write, the iOS, they originate the products and they have all of the technology and patents that go around that they then take that to Foxconn. Foxconn is the supply chain that builds the iPhone or builds the I, what used to be the ipod or the other consumer products that coming out, the iPad and other components. And they operate on a very high volume basis, low margin basis, but deliver these magnificent products that Apple then picks up as a branded product and sells to the consumer. And so we would like to invest typically more in the Apple side of the business, which is a high margin business, defensible business, much more so than investing in the Foxconn side of the business, which is more commodity based and has a little bit more risk for margin erosion over time. That said, cannabis still needs to have its supply chain built. So we are investing in the Foxconn side in the areas of the business that we think are least prone to competition or least prone to degradation of margin over time and commoditization. We don't really like being in the grows because you have to be massive at scale and have low input costs to make money. But we do like companies that have genetic unique opportunities. So whether it's a tissue culture company or a seed company that can produce these different strands that we were talking about that have terpene profiles and THC concentrations, the market wants, or we go all the way to the other end, which is, you know, the, the, the strain itself, the IP of cannabis, if you will, the genetics really become the brand. And so having having some element around brand and a relationship with the consumer. Kiva is a great example of that. They produce chocolates, they produce gummies, they produce a full sort of suite of manufactured SKUs. The quality that they produce is super high, but also the dialogue, they have the footprint, the way that they bring in sustainable cacao and they have a relationship with the consumer. It's a really powerful channel to continue to bring new product to a consumer base that wants to continue to buy. So we liked being the Apple side. We like either being in the IP and the genetics or in the brand. We, especially in Europe, will invest in the supply chain and the Foxconn piece because we're still building that supply chain. But over time, as we move more towards a consumer, a consumer base, the really total addressable market of cannabis, the largest part of that is when this goes fully adult use. We do like the idea of, you know, global brands, global opportunities. They haven't really been built yet, but we're kind of investing In a thesis that we think that brand is going to be very important. And then those nodal points of the supply chain that we think are defensible are also areas of investment for us. So we're trying to stay away from commodity and stay in the, in the higher margin, better protected areas of the business. And we're applying our capital and our resources to execute on that strategy.
- [85:59]
Leslie Heaney
But you're right, there will be one day there will be, right, the, probably the Coca Cola of or like these larger global brands. Right. And, and Artemis is right there on, at the forefront of all of that, which is so exciting. Well, I've kept you on like way too long. I mean, it's 11:15 national time. It's, I don't know, you're six hours ahead, so it's five, it's cocktail time or it's terpene time, I don't know, or cannabis club time in London. But I really appreciate you taking the time. It's been so fascinating. It's such an, it's such an important industry. As you mentioned, talking about your own personal experience with your sister, but just all the positive effects and it is, it's, you know, having read a lot about the history of it, it is kind of shocking that the, that the United States and other countries have kind of ended up here based on sort of false studies and misinformation from the 30s that kind of put us where we are with the current perspective on it for some. But I think there is such broad public support for its legalization on the federal level. I do, I mean, just anecdotally, I find that it's interesting to me, I, to see who is president, how they address it. And of course, if it is Trump, it would be his last term, so he might feel like he has more flexibility there. I don't know. But Kamala Harris, coming from California, that's had it be legal for some time. Maybe she also would have a positive view on it becoming legal federally.
- [87:26]
Will Muke
Yeah, look, I think we on the activist and investor side trying to help these larger economies legalize cannabis. We're on the right side of history. The science and the data is on our side. The voter populace is on the side of legalization. We just need to have the politicians do a little bit more of embracing what the voters want and learn more about what the industry can produce as far as jobs and tax revenue. But we're on the right side of history and we will get there. Whether it's Harris or Trump, I think that's going to be an interesting outcome in some ways for the cannabis industry. For the small investors, having federal illegality and state legality preserved is actually a good place for folks like us that have only $400 million of assets that we manage. Right now. We're trying to put more 30, 50, $100 million into the market. It's a great place to have federal illegality because it keeps all the big guys out. But the reality is that's not the right way to serve the patient and it's not the right way to serve the consumer, and it's not the right way to serve society. So we really do hope that whether it's a Harris administration or a Trump administration, that the data and the science will shine through and people will understand that cannabis is actually a do no harm product. It's going to be rescheduled from Schedule 1 to Schedule 3. It's no longer a narcotic. The population wants it. The tax and revenue opportunity is huge. And we want jobs. We want people to be involved in this industry and have careers that you can put food on the table. And we want to stop criminalizing something that shouldn't be criminalized. And we don't want to have anybody arrested or incarcerated for possessing a plant that really is not dangerous and is efficacious and frankly produces a. An effect that a lot of people like even more so than alcohol. So it's one of those weird opportunities where you have so many things lining up. You just need to tip the scale on the politician side. And I think that we're going to work really hard to make that happen. And as I said, I think we're on the right side of history here. So very excited about where the future can bring.
- [89:36]
Leslie Heaney
Thank you so much, Will. It was such a pleasure. It was really terrific.
- [89:40]
Will Muke
Thanks, Leslie. I appreciate you telling your interest.
- [89:46]
Leslie Heaney
That brings us to the end of this episode of the interview. A huge thank you again to Will Muke for joining and as always, thank you all for listening. If you enjoyed the show, please please rate and review us on Apple Podcasts and Spotify. If you don't know how to do that, which I don't, reach out to me by email on our website and and I'll figure out a way to give you instructions on how to. How to read and review us and you can follow us on Instagram at the interview with Leslie Heaney. A new podcast is released every Wednesday to join the interview.