Ford Smith (2:56)

I'm lovely, man. It's good to see you. Excited to be here. That was beautiful, dude. I've always appreciated just your sense of humility, so thank you for that.

Jason (3:04)

Yeah, thank you. And Ford is the CEO and founder of Alternative vc and he has a cannabis company himself doing cannabis oil manufacturing. We'll hear about that. Noble Pacific is an advisor to can, which makes cannabis beverages, and he's been in the business for a while. Socrates Rosenfeld is the CEO and founder of Jane, which is a cannabis and product marketplace. Welcome to the program, Socrates.

Socrates Rosenfeld (3:29)

Thanks, Jason.

Jason (3:30)

It's not easy having that name, is it?

Socrates Rosenfeld (3:32)

Wow, a lot to live up to. I fall short.

Jason (3:35)

Now, this was given to you by your parents?

Socrates Rosenfeld (3:37)

Yes. My mom proudly named me Socrates, so I'm still living up to it. We'll see.

Jason (3:45)

Wasn't a name you chose. Just to be clear.

Socrates Rosenfeld (3:48)

Wasn't a name I chose. It's the one that was given to me and I'm growing into it, as they say.

Jason (3:55)

What a great name. Now, were you named after the philosopher?

Socrates Rosenfeld (3:58)

It's an inside secret with my mom. The world thinks I was named after the Greek philosopher. I know you're half Greek, Jason. I also have Greek blood. So she appeased the in laws with that name. But deep down in 1982, the World cup was going on while she was pregnant with me and there was a Brazilian, the captain of the Brazilian soccer team who ended up winning the World cup was named Socrates. And so, so she was in her.

Jason (4:30)

So double meaning she appeased the in laws and yeah, she got her passion for the sport. Also with us in our little quartet here is Andrew Duffy. He's the CEO and founder of Sparkplug, which is enterprise software for retailers. But when I met Andrew, which was now probably five or six years ago, he went through the Launch Accelerator Cohort 20, which for those of you who are LPs, is Launch Fund 3. So you can get excited. And he had a really great idea for incentivizing the clerks, the retail workers by educating them on different products in order to increase Sales to increase their engagement. I said, hey, this is a great idea. He said, oh, there's only one problem. It's cannabis. I said, well, you're an enterprise software company. You have cannabis as one of your clients, but you have all these other clients. So we were in the clear. We invested in an enterprise software company that services anything legal. But how's the business been going? I'll start with you, Andrew, just in terms of legal, looking at how things have changed in the five or six years since we, we got into business together?

Andrew Duffy (5:31)

Absolutely. Well, business is booming. As any of the other folks on the panel can tell you, the growth of the industry since COVID really has been astronomical. You know, in the past 10 years, it's gone from about a $3 billion industry to a $30 billion industry. So an order of magnitude of growth primarily fueled by more and more new states opening. So in the early days, Washington, Colorado, but now as we've proceeded along and more and more states have liberalized their cannabis rules, we have huge population centers like New York and California online, as well as now some pending legalization in other states like Pennsylvania, Florida, all those places you see on the election map, those are the ones that are starting to legalize and are becoming the big population centers, adding consumers to the business.

Jason (6:21)

Got it. And, and how's the business itself doing? Is the business still centered around the core premise you shared with me five or six years ago that I fell in love with?

Andrew Duffy (6:29)

Yes, absolutely.

Jason (6:30)

So, and did I describe it well?

Andrew Duffy (6:31)

Yes, very well. Very well. We've, we've grown since then to expand from not just that core premise of accessing the point of sale employee, which still is one of our most important products, but actually to become a coordination co pilot for wholesalers to influence every aspect of the physical retail space. So not just that point of sale employee getting commissions to recommend particular products like a real world influencer, but also managing promotion schedules, managing inventory. Any way that a wholesale operator wants to influence that physical retail space where today 80 plus percent of commerce still happens in the U.S. that's what Sparkplug can do for them. And yeah, it's been going well. And adding that surface area to the product has helped us expand from cannabis into verticals like outdoor gear, beauty, specialty nutrition. Anywhere where you have that influential point of sale employee, we have a pretty meaningful opportunity.

Jason (7:29)

And the retailers like this as well. It's a win, win. They don't mind a commission or a little spiff going to their retail employees. It's like nice. It's like A do they view it as like a tip or like a little bonus that doesn't interfere or maybe even takes a little pressure off of them in terms of salaries?

Andrew Duffy (7:45)

Yes, the latter is precisely the outcome that we see. So essentially they're able to offer their employees a dollar or $2 an hour raise without having to pay for it. All fueled by the marketing budgets of these brands. So that is great for them for reducing turnover, for increasing output from employees, for making people happier working for them. And, you know, overall is a win, win, win for all the folks. And, you know, a lot of these employees are really changing their lives through the platform. You know, we have employees making 20k a year in additional payments from Sparkplug when they're earning 20k in wages. So it's a pretty significant source of income for a lot of these folks, which we're, you know, really happy to be able to provide.

Jason (8:24)

This sounds like something that could work well with your cannabis beverages, because you have to explain the sort of value prop. Tell me a little bit about when you got into this area and how it's going, because that's one of the things I haven't been able to get a handle on. Is it like a great investment opportunity or is it flooded with competition? Because making the flowers is. Seems to be not like a proprietary or very difficult thing to do. So I've heard these reports that the market's gotten flooded with stuff, and I'm sure Socrates will have some input on this as well. But has this been a great business or is it a good business?

Ford Smith (9:01)

I'd say it depends on when you got in. And then if you kind of maybe had the foresight to pivot or jump into the hip market, there's some regulatory framework that needs to be kind of set up to understand this. So many states, and I couldn't give you the exact, exact number, but they have these state regulations like California, Oregon, Colorado, things like that. Inside of those state regulations, you've got to go and apply at a state level, get a license, and then you get certain types of license types, you know, types. Some of that's cultivation, manufacturing, distribution, productizing, more or less, and then retail or like direct to consumer. And what's happened over the past, you know, in 2018, Trump passed the farm bill, and the farm bill essentially legalized. It didn't. Essentially, it legalized hemp. Hemp is a. It's is not another. It's not a separate type of plant other than it's not different from cannabis. Hemp is a legal Definition. So whether you're consuming some product from the hemp plant or from cannabis in a regulated retailer, it's still still the same plant species. At the end of the day, it's just a different form of genetics. Hemp, the legal definition of hemp is less than 0.3% of dry net weight of an actual bud per se. And so what happened was because the farm bill legalized hemp and, and they defined hemp as less than 0.3% THC, they technically still nationally federally legalized THC. So there is a weird loophole that would allow these farmers or extractors or brand builders to say, hey, by the way, I grew a whole bunch of hemp. You know, California, let's say, you know, like on average you're seeing 25 to like 33% THC content in cannabis flower in these regulated markets because patients kind of like, like to spend or get the biggest bang for their buck. So farmers are incentivized to cultivate higher yielding THC crops. What's happened since 2018? Somewhere along the way people realize, oh wow, we could actually go make the argument that the, you know, this 0.3% THC, we can extract that out of hemp and we can concentrate it in and then infuse that into gummies, edibles, pre rolls, etc. And increase that THC content to the same level of what state regulated operators are producing and selling through retail. So it took a couple of years for that to really kind of like catch hold. But as soon as kind of the word had gotten out, a lot of the original operators like myself, I'd been in the California industry for, since probably 2014, I set out, I raised a whole bunch of money in 2020 to go and enter the cannabis beverage market in California specifically. And within about nine months, all of a sudden we started hearing about people running into the hemp market to go and launch their cannabis beverage brands. Because now you're not dealing with the same taxation issues. There's no two issues. Which to it, you know, just for simplicity, is most of the cannabis operators, because cannabis is a Schedule 1 narcotic, they can't write off their cost of goods, which this makes the business extremely cost prohibitive because cannabis is a scheduled drug, but he not a scheduled drug, is a federally legal product. So when you jump into the federal hemp market and you can start shipping D2C and you can hack your way around, you know, Meta and Snapchat to start running, you know, normal CPG type focused ads, it's A much more efficient business. It's true consumer packaged goods at that point. And so we decided to not go into that space because we thought it was a little too risky. We had a conservative investor base. It's a, it felt a little gray area at the time. In hindsight, I wish we had done it because there's been a lot of brands that have done really well and quickly grabbed a lot of market share nationally. To answer your last question, around just market saturation. Yeah. There's an insane amount of these brands on the shelves now. There's a lot of fly by night operators. There's a lot of operators that really, truly don't give a shit about the quality of product they're putting in it. Most of them. There's a very well known lawsuit right now. You go look at online a company for. There's a company called Virtosa that people are claiming have actually been buying distillate THC oil from regulated like call it California, Oregon kind of state operators and then black marketing it into the hemp channel and infusing that and selling that into beverage companies claiming it was coming from hemp. And there's really no way, if you can't follow the paper trail, there's no way to actually know if it came from hemp.

Jason (13:05)

Oh, wow. So basically giving people more bang for their buck or backdooring it when they.

Ford Smith (13:09)

Exactly. Yeah, yeah, yeah, yeah. They're saving themselves.

Sponsor/Announcer (13:12)

Yeah.

Ford Smith (13:12)

An insane amount of money by doing this. I'm not claiming that, that I'm not making any statement around that case other than that's out in the public.

Jason (13:18)

But these are the things that five states have complete prohibitions. As I'm reading here from producer Claude. Idaho, Kansas, Nebraska, Wyoming and Idaho. Launch is a fast growing organization. We've got more than a dozen employees working with me here in Austin and another dozen spread out all over the world. But there's so many moving parts when it comes to hiring and managing employees. There's the onboarding, of course, payroll. You got to pay them. And listen, I've got all these podcasts to do. I don't have time for payroll, benefits, HR taxes, answering questions, nor do I want to hire a full time person and then have them do five hours of work a week. No, I have the perfect partner, Gusto. They're the all in one payroll and benefit product that's built just for your small business. Easy to use, it's incredibly fast to get started and it's designed specifically with remote offices in mind. And Gusto is Not just giving you helpful tools, they're going that extra mile to keep your workers happy and keep everything running smoothly. And they're now offering level funded health plans to keep your insurance costs down and on demand pay and to help workers get access to their cash faster without paying extra interest or hidden fees. So here's your call to action. We want you to try Gusto today. So we're giving you three months free when you run your first payroll. That's right, three months free. F R E. That's my favorite price, folks. Go to gusto.com twist that's gusto. G-U-S-T o.com twist what an amazing service and a partner. Great partner. Socrates, explain a little bit about your business and how long you've been in it and then what is the business outlook here for Cannabis going into 2026?

Socrates Rosenfeld (14:57)

I've been in business, been doing this full time since I left the military. I did a stint with McKinsey and then came over here in 2015, 2016. So I've been doing this for a minute. And the it's been a lot of fun to watch this nascent industry go from an illicit market into more and more of a mainstream market. And, and the truth of this plant is coming out that it helps a lot of people. What we do at Jane is essentially similar to what Andrew, you've been doing with your technology is taking cannabis for what it is. It's a 30, $40 billion market. It's fragmented across thousands and thousands of supply side retailers. There's no direct to consumer capabilities to Ford's point where now you can do that through hemp. You can ship a six pack of can to a doorstep. You can't do that in cannabis. And so I was very interested in what the future of e commerce was going to look like with my founders. And this was agnostic to any industry. And we held this thesis 10 years ago and we see it coming true that the future of e commerce would be in the complete digitization of all commerce. It wasn't going to be taking an Amazon model and trying to beat Amazon at its own game. It's been tried multiple times. Amazon's not going to let that happen. Shopify, another monster in the direct to consumer business is doing extremely well. It's going to be very hard to displace them. And so what we saw was could we take existing retail infrastructure, brick and mortar stores, the CVS is the Walgreens, the grocery stores of the world, and in some automated fashion take all that offline inventory and push that online. So the consumer has an Amazon like experience when shopping, except now the value is being pushed into local economies rather than being consolidated@1amazon.com if you will. And so we saw this as an opportunity that was once in a generation and we jumped on it. It also helped that personally, myself, cannabis really helped me as a veteran coming out of the Army. And what I struggled with was I couldn't get the consistent feeling from one product, from an illicit dealer to another. If you think about how you shop on Amazon, you can have full purchasing power, you know exactly what you're getting. You get recommendations, you get social proof through millions of verified reviews. And we want to bring that same level of consistency and transparency to the industry and launch this. And so we've developed technology that in real time can take live inventory off a brick and mortar store shelf, create a turnkey digital storefront and connect those storefronts so that we're building the Amazon for Main street, applying this here in cannabis and proving this at scale. And then one day we'll probably bring this into other retail goods that are very difficult to ship direct to consumer groceries, alcohol, et cetera.

Jason (17:59)

Here's the reality of the framework changing on a federal basis. We talked about states, you know, the United States of America, we get 50 different sets of regulation. But here's your poly market weed rescheduled by March 31, 9% chance looking at this poly market. But you see, I guess right around Christmas time, it spiked up to well over 60%. I think that was when Donald Trump was talking about it. So, Andrew, what's the chances this gets rescheduled during the Trump second term? What is the buzz in the industry?

Andrew Duffy (18:30)

I think the chances are extremely strong. Anyone who's been in the industry for as long as we have knows that the hype cycles of it's going to happen, it's not going to happen are constant. But this is the first time that we have seen truly bipartisan support at the executive level. So the Biden administration tried to reschedule cannabis. They were slow ruled by the DEA until the transition to the Trump administration. So the Trump administration coming out and saying, hey, our intention is to reschedule. This is the first time that both sides of the aisle at a federal level have said that this is a priority for them. Previously, it has been a small group of Republicans in Congress and the Senate who have said, this isn't a fit with our values, this isn't a fit with what our constituents think. But broadly, at a population Level, cannabis is one of the only bipartisan issues right now. Over 70% of individuals believe that cannabis should be legal in some capacity, whether that's medical or recreational. And it really is across party lines. It's about freedom of access, it's about medicine, it's about economics, it's about personal liberty. It's about all of these philosophical ideas that aren't owned by one party or the other. So I feel quite optimistic that this is something that we can actually generate momentum behind, particularly if in advance of the midterms. The Trump administration is looking to get a little bit of a populist boost.

Jason (20:00)

Ah, very interesting. Yeah. And I think pink reduction is a key there. Your thoughts for it on the potential federal approval of this and what impact that would have on the industry because it did many years ago become legal federally in Canada. Yeah. And I'm curious what the effect there was.

Ford Smith (20:19)

I would agree with Andrew. I mean, I think there's strong tailwinds. I think that the Maha movement has definitely brought to light. It's funny, we've been bouncing these topics back and forth from the right and the left for forever, and somehow it's landed on the right and now the left is, I don't know, not too thrilled about it. But regardless, we're here. I think that, I think the reality is at some point in the next three years, I don't know if it's going to happen for the midterms. I would hope it does. I think that's a great theory. I would, I keep kind of pushing that to whether that happens or not. He has the foresight to think to do that. We'll see if it happens. I think it's, it's, it's a big boom. I mean, I think right now you're already starting to see, you know, whereas traditionally when I was raising funds from investors, I've historically had to go to family office offices here in Texas to go back. These companies, they're usually like high risk, high reward. They write a check. They, that was their bet in cannabis. Don't ask them for another investment again and let's see how it goes. And now you're starting to have the conversations with like traditional consumer packaged goods investors. You've got guys like Clayton Christopher and Brian Goldberg and, you know, there's a hand, I mean, the list goes on of these, like, really top notch, like, you know, skinny pop kind of C4, Coca Cola kind of type executives that are coming in that really understand capital markets. They understand how to raise capital. They know how to take things public and how to get things sold. And those conversations like I was hoping they were going to have five years ago, but ever since this announcement that's when things have really started to heat up. So I think there's some sparks out there that are going to happen. Everybody's getting their documents ready, sitting them on the shelf and then trying to like read the tea leaves to see when this thing happens. And then I know conversations are, I'm having conversations actively right now with a bunch of cannabis beverage, cannabis slash hemp beverage companies to try to put a little portfolio together. Because I think that right now there's this weird, it's almost as an investor, I think this is interesting. There's a weird moment of like almost arbitrage you could play right now because there's, there's still uncertainty. I mean everybody's like these eternal optimists that it's going to go through. And I'm ultimately one of those too. But there's a couple of brands out there that have unfortunately had burned through a lot of marketing dollars. They may have, you know, cans a great example for. They're, they're like this, I'm not going to call them the cockroach but, but these guys are, they're one of the top selling beverage companies in the United States in the THC sector. They've been the darling of cannabis for five years now. They raised a whole bunch of money to go and focus exclusively on state regulated markets starting out in California to Stanford graduates that founded the company, raised a whole bunch of venture capital. Then they saw this opening in the hemp market. They pretty much paused all of their developments in like the 10 or 14 different like state regulated markets they were entering, they said we can build, you know, our margins are going to be significantly better in hemp and kind of focused over there. But now you've kind of got again, I don't, I'm an advisor to the company. I don't fully understand the cap stack and I know that this isn't just them, there's other companies out there like it. But you've got companies that raise an insane amount of money to go and fight against strict regulation taxation in these state markets. And then they pivoted into these, you know, this federal market. And so now you know, there's a lot of dilution that's happened in the business. A lot of capital has been raised and I think there's this weird arbitrage opportunity where you know, the guys that have been sitting on the sidelines Watching the cannabis and hemp market for a long time are now coming to play and they're having these conversations and I think there's interesting pricing that can happen right now because there's uncertainty. And so, you know, when somebody swoops in with a check, you know, in the next kind of nine months before rescheduling or whatever, I think, you know, you might get a nice discount on buying these businesses. So.

Jason (23:38)

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Andrew Duffy (25:30)

Yeah, well, interestingly Enough, I think actually a huge amount of that Investment Capital in 2021 was going into ancillary technology startups. In particular one called Dutchy, which is one of the startups that's taken in the most capital in the industry. But unfortunately that was pretty much peak ZIRP and it was also peak cannabis. And right after that there were a lot of challenges for capital formation in the industry. It wasn't coming online as fast as people expected and ultimately a lot of companies struggled. And you know, the Steve Jobs quote holds here. Success in this industry is spelled survival. It's all about continuing to exist and being able to be poised to take advantage of the opportunity when the market becomes that real explosive, once in a generation opportunity that it can be. Because like we saw in Canada, you know, Canada was a very different market onset than the US in the US we've done this patchwork state by state thing, whereas in Canada they just said, all right, federally we're just going to do this. There wasn't that same lead up of state by state infrastructure. And what that means from my perspective is that now there is a great deal of pent up infrastructure that wants to be unleashed in the US cannabis industry that has been built up in all of these states, like all of the cultivation built up in California, which is getting sent into the illicit market. Because what it really should be doing is getting sent to all the other states where you probably don't need to be growing cannabis. So the ability to have interstate commerce with federal level legalization would totally change the shape of the industry and allow it to progress and mature and grow all at once in the way that all these other industries that we've talked about, these classic CPG industries have been able to.

Jason (27:16)

Yeah. And a question from one of our NODI gang. Those are the people who watch the livestream and have notifications on. We call them the nodi Gang. Sam Houston SF says haven't most of the cannabis companies shut down or have had major layoffs? What's the state there, Socrates? Is it been a bloodbath in the cannabis startup space?

Socrates Rosenfeld (27:34)

It's followed the same trend line as the broader market since 21. Right. Where it's shifted from growth at all costs to you better be profitable and growing. To Andrew's point, it's been a challenging road. And to your point too, Ford, because we've seen it across the board, whether that's operating businesses producing manufactured products or ancillary tech companies, 21 was peak and now it's a game of endurance rather than speed. And this is something that cannabis has faced as an industry and as a plant for decades now. Jason it hasn't been easy for cannabis at any point in this American history. On one hand, it's really challenging and can be daunting and frustrating at times when we're not treated similarly to other industries. But on the other side, a way to look at this is it's going to force the best companies to emerge. We're going to have to think creatively and resourcefully like this industry has for decades. People will find a way to this plant, people will find a way to sell this plant whether it's legal or not, whether the financial markets are backing it or not. Because this plan helps millions and millions of people. I think this is the next great American industry, period. And it's a matter of when, not if that. Our friends in D.C. are going to realize that obviously there are some closed door conversations with the alcohol and pharmaceutical and banking industries that are inevitably happening.

Jason (29:12)

If you go through those, banking I think would be pretty stoked to be able to have this as a customer base. Pharmaceutical will not be stoked because there's no patents here. So they're bummed out and we'll fight it. And really I think that the clearest way to get this federally legalized regulated is to just say, look, think about pain management. You want to be at end of life for cancer patients. We all know somebody in our lives who is dealing with massive pain, had never tried cannabis and then during their hospice care or whatever it was, was giving cannabis and was like oh my God, I should have been doing this for the last 10 years when I was in pain instead of taking oxycontin or other things. And so pharmaceuticals know, CPG companies, hey, they need something. Cause alcohol is absolutely in decline between ozempic and young people just not drinking. I was reading a statistic the other day, Ford, my lord, the alcohol companies are sitting on massive, massive caches of premium and just regular liquor and spirits. So they can't move it. Wine, nobody people stop drinking.

Ford Smith (30:18)

Yeah, I read the other day, Gallup, I think Gallup said that alcohol consumption is down to 54%. 50% of Gen Z's drinking when previous generations were at like 70%. That's, I mean that's a, that's a massive dip. A lot of the newest. We talked to Total Wine the other day and Total Wine said that most of their new 30 some odd percent of their new consumers are actually coming into the store looking for THC beverages and they're not walking out with alcohol either. They're not even like, it's not like lead generation. They're finding alcohol and they're coming specifically for that and they're leaving with that. So yeah, it's, it's happening.

Jason (30:50)

And the taxes are significant. Yeah, Andrew from Spark plug. It's, it's 15, 10, 15, 20% is what you could expect to pay in taxes as a cannabis company and a retailer certainly.

Andrew Duffy (31:03)

Well, taxes for cannabis companies are extremely onerous. On the one hand, there's the classic excise taxes that you're talking about. What do you pay at the counter over and above the purchase price. But as Ford mentioned, tax code 280E prevents these businesses from deducting most of their expenses from their tax bill. So they're paying 60, 70% effective tax rates. So if you were to legalize and remove 2 ADE, then these businesses would be profitable overnight instead of losing money or just barely getting by. So from our perspective, when we see our customers under that burden, operating successfully with the grit to actually power through that, you know, imagine if any of these big tech companies were paying 70% effective tax rates. That would not be okay. We would not like to see that on the pnl. Well, these businesses, if they can get over that hump from a legislative perspective, it's a game changer. And then, yes, those state level excise taxes which today are putting a really challenging burden on them, would be survivable, they would be workable and the states would be able to take in that tax revenue without unduly pushing customers into the illicit market. Like the California market has really struggled with getting people to transition from illicit purchasing to legal purchasing because of that difference in taxes, the expense is just a lot higher. But if you were able to give those businesses a fighting chance by removing that overarching federal tax burden, I think that would change the game and allow states to take in more.

Jason (32:39)

That's incredible that this exists, but it is a hangover from the war on drugs. You know, makes total sense if you were dealing heroin to say like, yeah, you don't get to take the farming of the poppies out of your profits and you know, you just pay your taxes on the profits. Completely reasonable, but in something that's become legalized, completely unreasonable. When we get back, I want to talk about the downsides, specifically some of this cannabis psychosis and these incredibly potent strain shards resins and how we look at those, you know, compared to the classic cannabis industries. Foreign. If you're an independent content creator or you're building any kind of community oriented business like I am just making great videos or awesome websites. It's not enough. You need to spend real time with your community and you need to do that with tools that allow you to see what's going on and communicate smoothly and crisply with your community members. That's why I'm so happy to partner with Circle, the complete community platform for creators and brands. With Circle, you're going to get an easy way to build branded websites, sites that help you with email marketing strategies that's super clutch and AI agents that can help you design, manage data and even do the branding. We use Circle here at Launch to keep up with our founder university community. We've done 14 founder universities around the world and they've helped us grow that from this tiny little program out of our office in Austin to this bonafide international movement. And they can do the same for your startup. Twist listeners can get $1,000 off Circle's professional plan by going to Circle. So twist. That's C I R C L E. So Twist. Socrates, your Jane is in the business of retail essentially, right? Delivering cannabis to people. There's this category. You can explain it to the audience. It's kind of like a trope now that, hey, weed today is not like the weed you smoked in high school in the 80s. It's like much more potent. Okay, we get it. Be careful. Pace yourself. You can always take more edibles, you can't take less. A lot of rules of the road. But then there's this new category and I don't know too much about it. I have never tried it. But there are shards, there are resins, there are dapping. Explain to us what all this is and how it compares to taking, you know, a 3 or 4 milligram gummy or taking a hit off of a, you know, join at a party or hitting a vape, you know, one or two times.

Socrates Rosenfeld (35:14)

Full disclosure, I. I've been in the cannabis world for a minute. I've never heard of shards. So unless Andrew or for. If you've heard of it, let me know. I have heard of resin and rosin.

Jason (35:26)

I think people refer to the resins as shards as well. Like they're like a hard version of it that cracks. From my research.

Socrates Rosenfeld (35:33)

Yeah, shatter.

Andrew Duffy (35:33)

Shatter.

Jason (35:34)

Oh, shatter. Okay, I said shards.

Socrates Rosenfeld (35:38)

Either way, it's not. It's not the best marketing because I don't think anybody wants to ingest anything called shatter or shards.

Andrew Duffy (35:45)

So there's.

Socrates Rosenfeld (35:46)

There's two things I want to highlight in that Question. It's a great question, Jason. One is potency and the other is form factor. Talking about potency first because it's a real one. I don't know if anybody's ever tried moonshine, but I had a roommate from West Point, from North North Carolina who used to like, grew up, his family grew up distilling moonshine. I tried it for the first time and I'm still getting my eyesight back. And the reason I, I say that is because moonshine was a result of prohibition from alcohol. If you think about it, you know, you, if you're going to go and take the risk of distributing and manufacturing and selling alcohol, or if you're going to take the risk of actually going and buying a, an illicit product, you want to make sure that you get the most. I think Ford, you said this bang for your so called buck. And we've seen that now where this was coming about a decade, two decades ago, people were talking less so about the strain itself and more so about one specific cannabinoid. There's over 100 cannabinoids. But the one that everybody talks about is THC, which is the psychoactive quote unquote, high feeling. And when you're paying $80 or taking the risk to go to the illicit market, you want to make sure that you're, you get high. And so the conversation went away from all these different beautiful terpenes and cannabinoids that go into the whole plant and more so of this specific variable called thc. And that's why you saw this out of the ordinary spike in products being genetically modified to get the highest THC percentage. What we've come to realize is that's like drinking wine based on alcohol percentage. Jason, I imagine you have a nice wine collection.

Jason (37:37)

I'm not, I'm not a big wine guy, but Chamath does and some other friends do, Vinnie does. And so I'll partake in a 1 ounce, but I would certainly not want to drink moonshine, which I think, think is probably 10 times, I don't know, five times more.

Socrates Rosenfeld (37:51)

But no one's basing their wine purchasing decision based on how much alcohol they have. Maybe back in prohibition they were doing that. So that's, that's what you're seeing. This is why legalization needs to happen.

Jason (38:04)

So tell me about this shards or shattering and resins, like what is the.

Socrates Rosenfeld (38:09)

Now we're shifting into form factor. Form factor is actually a beautiful thing if you, if you think about what alcohol is, is you can just consume it as a Social like, hey, I want to, you know, have a good time at the Super Bowl. I can drink it. Cannabis comes in hundreds of different form factors. Beverage, you can eat it, you can put in gummies, chocolates, you can have it as lotion, you can put bath salts and take a wonderful CBD bath. The products you're talking about, chatter rosin live resin is different ways to take the plant. Extract the medicinal benefits of that plant and present it to the customer in a way that they consume it. Dabbing and shatter is a result of prohibition, meaning how concentrated can I take this and put it in for it?

Jason (38:59)

Andrew, explain how people take this because I think that's what the audience is missing. We understand it's more potent, but how do people consume this? Andrew, if you can explain it, you.

Andrew Duffy (39:08)

Could probably think of it as quite similar to the mechanism that's happening inside of a juul or a nicotine vape. You're basically taking a concentrated liquid or in the case of dabs and shatter. It's more like a gel which is essentially 80 or 100% THC. You've, you've compressed the plant and taken out all of the THC content and turned it into this sort of gel. And so you take a very small amount and then you superheat it and you would smoke it similar to a bong or you know, the way that you would consume any other crystal flour based way.

Jason (39:43)

Yeah, I mean it sounds like smoking. Is it a way to say this for. It might be. This is the crack version of cannabis.

Ford Smith (39:50)

It is the crack of cannabis. Yes. You nailed it. Yes.

Jason (39:53)

And people take this and the ramification.

Socrates Rosenfeld (39:55)

It actually doesn't. I do in the spirit of not of not putting out misinformation. It is highly potent. But what is actually extracting is all the plant medicine from it. Now people are advertising it as like, hey, this is going to get you so high. But really what it's doing is it's extracting all the plant matter that when you consume it and smoke it, it smokes. Not good for your lungs. And it's actually pulling all that out. So it's a distilled version of the cannabinoid.

Jason (40:28)

Here's a look at what it looks like. Here's a, here's one of these pipes. You heat it up, I guess that little stick is the hot thing and then the resin is what's in the little bowl there. And I've seen this online. So this is five, ten times more powerful per hit than smoking a J or hitting a vape. Pen and this can cause a pretty serious psychosis. Kids are getting taken or adults are getting taken to the emergency room because they hit this too hard. That's I guess people's concern. So I'm not trying to demonize anything.

Andrew Duffy (40:57)

But this is, this is a really important part of the conversation because I think what people in the cannabis industry who have a responsible approach to cannabis don't believe that there are no consequences to widespread high dose cannabis consumption. I see those consequences and I believe in them, but I think that we should compare them to the things that we accept in our everyday life, amongst other substances, substances and how do these things actually work out when it pertains to personal liberty and personal decision making. So, you know, based on the ratios that we've just described, this is basically the difference in concentration between having a beer and having some vodka. You know, that that's a choice that people make when they're consuming. And there are a lot of problems that happen in our society as a result of over consumption of vodka, death by tract by overdosing on alcohol, alcoholism, all of these consequences that occur based on a substance that ostensibly doesn't have any medical benefit. And we accept because it's something that people want to consume and it enhances their life from their perspective. So I think that's where thinking about cannabis as something that is part of our trade offs as a society but also has many benefits. There is a ton of great research that you alluded to, Jason, that indicates that when you legalize cannabis in a state, opioid consumption and opioid deaths plummet precipitously by in some cases up to 30%. That is huge. If we're trying to handle the fentanyl crisis, if we're trying to handle the opiate addiction and deaths of despair crisis, cannabis is one of our best solutions. And I think we can probably do the math to show that the risks of cannabis and the consequences when not consumed responsibly are outweighed by the benefits of responsible consumption on personal lives as well as from an economic perspective, you know, for the entire country.

Ford Smith (42:50)

I want to say, Socrates, I completely agree. I appreciate what you said just about like not putting out misinformation. I think again, not to touch on the too much THC side or it's like it's just too potent. This is a product of prohibition and it's now a product of over regulation. We're being overregulated. And so when you're going to the consumer and you're trying to, you're still buying on a price per milligram dosage basis. And when you're getting the shit taxed out of you, you're going to make sure you're getting the highest potency THC out there. So prohibition and Gavin Newsom, I think, amongst many others are like the key. He does not have a really good record in anything busy. I would say that both of those are factors that are influencing this high potency market.

Jason (43:27)

And this is where you could have regulation, actually federal regulation, help sort this out, because Everclear, which is like 190 proof, which I guess means it's like 85% alcohol or 200% proof, 100% alcohol for industrial use. These things are banned. There are places where they say, hey, there's a certain potency where we're just not going to allow you to sell it. There might be a reasonable concept here as well as, you know, maybe don't sell gummies that are. What's the highest potency.

Andrew Duffy (43:56)

Gummy.

Socrates Rosenfeld (43:56)

You can buy Socrates before legalization, actually, in the state of California, you could buy like a 400 milligram candy bar that was unregulated. You could.

Jason (44:05)

Did you say 400 milligrams?

Socrates Rosenfeld (44:07)

400 milligram and it would actually, in the vice. The flip side of that, you could buy something that says it's 5 milligrams and it could actually really be 400 milligrams because there wasn't testing. Sure.

Jason (44:18)

But a 400 milligram just so people know, like, I think a reasonable dose is 5 or 10 milligrams.

Socrates Rosenfeld (44:25)

Correct? Yes.

Jason (44:27)

So this would be 40, maybe 100 times more, which you don't want laying around. That's the issue is like, if this stuff is laying around or kids get access to it, you know, it's always about protect the kids. But the same thing could be said about moonshine. Right. You just don't want the stuff laying around and then somebody taking a shot of it and winding up getting really sick or just underestimating the potency of it.

Andrew Duffy (44:48)

There's also a question here of core CPG principles, which is that the businesses in cannabis are responding to the market that they have. And because of the stigma around cannabis and the continued prohibition, there's a huge slate of the market that is not comfortable entering into it. So the classic unicorn consumer that every cannabis business is always talking about wanting is the soccer mom. The soccer mom who's having her vape. You know, she's watching the soccer game, she's having a great time. And she's having a, a low dose, high quality branded experience. Those consumers are a diminish a de minimis percentage of cannabis consumers by volume. Right now it's heavy. Consumers that are purchasing based on THC content are driving most of the revenue for cannabis businesses. And so yeah, they're going to respond to that and make those high dose products. But if you expand the network of consumers that feel comfortable entering into the space, which is slowly happening over time, then more diverse businesses with low dose or differently branded or different form factors can start to provide real reliable products to those people that can actually sustain their businesses rather than having to lean into some of these products that maybe don't feel as comfortable or familiar to the typical consumer.

Ford Smith (46:06)

And to touch on your point around the consumer safety beats and the psychosis piece, because I know that's what you jake out. You asked that earlier in California, a year and a half ago, the LA Times wrote an expose. They pulled pretty much all the top cannabis brands off the shelves in California. There's a set of pesticides, there were 66 pesticides that the regulators are supposed to be regulating for. They tested those products off the shelf against the California regulations and the FDA regulations for nicotine or for tobacco. There were seven pesticides that the FDA regulates for tobacco production that are not regulated by California for cannabis. That doesn't make any sense. Both are heated up with the flame. Both have the same type of risk profile. So we went in, we looked at the analysis, we looked at the data. Once the report came out about like 70% of all of the brands that there were, about 95% of the brands that were tested failed. And every single one of those brands got hit 50, 70% sales, I mean their sales declined. After that LA Times piece came out. There was a group, there's a coalition that came together, we set together, we put together something called Echo Certified, the environmental and consumer compliance organization. We said how could, because of this fragmentation regulation. The feds aren't talking to the state, the state's not talking to the Fed. So now we've got pesticides that are first off, the regulators are not regulating. So now you've got all of these pesticide laden products on all these shelves that are being that are you going to the consumer? You know, you feel like you should trust them. At the end of the day they're clearly not doing their job. The regulators aren't showing up like that. We built a set of standards and now there's an auditing process out there. We've got 30 of the top 30 brands in kind of California are all on the platform. It's a non profit. There's an independent technical advisory committee that's doing the job of the California regulators and the fda. When they should have oversight on this and they don't. They're coming up with the standards and then the brands that actually care, the good actors are coming in and they're saying, look, we're gonna, we're gonna pay monthly dues, we're gonna send out secret shoppers to do random audits, test the products and then they essentially run, you know, this, this, this pretty cohesive auditing process. What we found is, and I'm not, I'm speculating here and I've talked to a handful of doctors and they think that we're like somewhere on the right track. Yes, you are. There's a chance that you're seeing psychosis coming from this high dose THC intoxicating products, most of them coming from hemp markets or you know, 33%, kind of like shatter wax, etc. What we found was a really interesting correlation. The lab partners that were running these audits were looking through thousands and thousands of certificates of analysis under understanding the makeup of these genetics and the pesticides that are using these products, heavy metals, et cetera. And what they found was the prevalence amongst like 90% of the lab samples came back with neem oil. Now neem oil specifically is used in a lot of different pesticides. And neem, there's something called neem oil toxicity. Neem oil toxicity has the same exact symptoms as what we're seeing. And I can't remember the, there's, it's not, it's not causing psychosis, it flirts with psychosis. But specifically there's a, this cannabis induced nausea that will happen where people continuously vomit.

Jason (48:59)

So we might have a correlation, not a causation, 100%. We might be pointing at the wrong substance here, which means even more regulation. In fact, there was a bunch of hand wringing not long ago because people were selling caffeine, like actual caffeine drops or powders. To understand how powerful these were, I was just asking producer Claude. People were selling powdered caffeine that was the equivalent 1 teaspoon, not even a tablespoon, was 28 cups of coffee. A half a cup of the concentrated liquid was 20 cups of coffee. And there were deaths from this. There was also four loco, if you remember that, where you're just putting too much caffeine, too much alcohol in a serving can. So People will associate a certain serving or a chocolate bar, you know, whatever it happens to be, or a teaspoon of sugar, teaspoon of honey, you know, with an acceptable dose. It's almost like you can make any of these things into a fentanyl equivalent concentration if you are determined to. And that's where regulation, whether it's industry regulation or the government or some compromise of the two could really have a dramatic effect on protecting people because there is a, you know, harm can happen, I think. Andrew, you said it. You know, people get some personal freedom. But you know, young people, they see a can of soda, they're like, I drink cans of soda. I drink Arizona iced tea. So it's four local. It's got some alcohol and caffeine and it's just like having an Arizona iced tea. And they just don't know that it's four Arizona, it's four or eight. So they have two and they really having 16 and just. We had Jolt Cola, I think when I was in college and Jolt Cola was marketed as two times the caffeine. So it was like, hey, if you want to drink one Coca Cola instead of two, you know. But there's some reasonable. Yeah, there's some reasonable compromise here, I think. Socrates.

Socrates Rosenfeld (50:47)

Yeah, yeah, I, as you were talking, it's a great example. I don't know how many documented accounts there are, but I imagine people uneducated to the effects of what Four Loko was, was drinking it and could, you could call it, they went crazy that night. I've certainly had some run ins on 4 loco where I'm like, I think I might be going nuts. So I think that's what you're seeing, Jason, is largely kids or uneducated consumers going probably to the illicit market. So you're not buying a 400 milligram candy bar to dispensary. You're going, you're, you're saying, okay, I have $50, the person's going to give you the highest potency product. And you're going to think that you're going crazy because you have no expectation of what you're supposed to feel like. And you assume like, obviously I'm not going to, it's not going to send me to the moon. And this is why, just echoing what you're saying and what this group is saying, the way to solve that is let's legalize it, let's study it, let's research it and let's put smart regulations around the plant so that people aren't put in a position where they could be, you know, putting themselves in danger like we do with alcohol and sugar, etc.

Ford Smith (52:03)

100. If you're an operator right now, and this is more of a public service announcement, you the high. I can't. I consume cannabis. I have a cannabis beverage. We have 2 milligrams and a 5 milligrams and a 10 milligram. If you're selling anything above 10 milligram, you have no regard for like this market existing further than a few more years because you're actually the issue that's, that's happening right now to get the regulators up in arms and, and not really knowing what to do with this. There's brands in market right now. I can go to the gas station, the corner of South Congress. I can walk in and I can grab a hundred milligram dose beverage. What, a hundred percent? Yes, absolutely. That is the issue is that there's these fly by night operators that don't give a shit they're selling. And again, this is prohibition. This is regulation. These are all the issues already talked about. But there's. You got to have like some backbone out there and just do, you know, you know, this isn't right, you know, and so I think that, look, I hope I hear the regulations on the hemp side are going to settle between 3mg and 5mg per dose per unit of dosing. That's reasonable. That's, that's totally reasonable.

Jason (53:01)

Yeah. I mean, if you wanted to have more, you can have a second Skittles or breath mint or whatever the format is. There's some reasonable here. 4 loco. Just for background on this band beverage, it was the equivalent of like almost three cups of coffee and a bottle of wine. So, so now you think, hey, I drink three of these at a party. I've now had nine cups of coffee. Eight. Nine cups of coffee and three bottles of wine. That's not gonna go. That's not going well for you. There's no instance where a human being on planet earth has had eight or nine cups of coffee. Like, I love coffee. On my worst day, I had six cups. Five or six cups. I have friends who love wine. I think they might have had two bottles, like in, you know, a long night. Individually maybe, but never three. An individual three bottles. What would that be? Fifteen glasses of wine. It's insane. Now put them both together. I mean, you have to really love what you're having here. All right, listen, gentlemen, this has been amazing. Where, where can people find you online and just A little bit of plugs here at the end for what you're working on. Go ahead, Socrates.

Socrates Rosenfeld (54:08)

Yeah. Visit our site iheartjane.com and reach out to us anytime we'd love for hearing from the market. Infoheartchain.com and find me on LinkedIn if you want to connect, Andrew.

Andrew Duffy (54:17)

Likewise. I'm out there on LinkedIn. Andrew Duffy and Sparkplug app. That's Sparkplug app is where you can find us. And take a look at my podcast where we talk about something. Yes. The influence of cannabis. And it's really rare combination of retail traits on the future of retail. It's called High Touch with Jake.

Jason (54:38)

Love it. High Touch. Great. And Ford Smith, go ahead.

Ford Smith (54:42)

Yeah, Ford Smith, you find me on LinkedIn. You find me on X at Ford H. Smith. And then the venture firm is Ultranative. That's U L T R A N A T A V e dot com. And then if y' all are interested in the the consumer certification, we need a lot of support out there. So start looking for it. It's showing up on a lot of packages. It's echo ecco certified dot org.

Jason (55:03)

All right. And all of those links will be in the show notes or in the YouTube description. And we're going to start doing QR codes today. Our first QR code is for Spotify. Go ahead and take a picture of that and it'll be on the screen for about 60 seconds. And to the Cutler family, just bookending this, we're thinking about you and yeah, we're going to miss you, Herman. What a classic he was. Kid from Brooklyn. He did great. And Matt, what a son. All right, we'll see you all next time. Bye. Bye.