In this not-to-be missed episode, Guillermo connects with George Jage, Co-Founder and CEO of MJ Unpacked—one of the industry’s most well-known and best-attended conferences. George discusses complexities of the cannabis industry, including pricing, profitability, and branding. The conversation details the evolution of cannabis consumption, the emergence of fast-acting products, and the significance of social settings in product development. Guillermo and George conclude with the challenges of advertising, the need for industry collaboration, and the potential effects of regulatory changes on investment and interstate commerce—highlighting the importance of advocacy in influencing political decisions and creating a level playing field in the market.
The finer details of this episode:
Episode resources:
Timestamps:
The challenges in the cannabis industry (00:00:38)
Discussion about pricing, profitability, and industry connections.
Transition from the tea industry to cannabis (00:01:30)
George's background in the tea industry and parallels with the cannabis industry.
Evolution of branding in the cannabis industry (00:03:19)
Comparisons between branding in the tea and cannabis industries, focusing on quality and storytelling.
Impact of regulatory changes on the cannabis industry (00:08:06)
Discussion about the impact of regulatory changes and the need for a regulated market.
Shift toward a consumer packaged goods industry (00:11:01)
Transition from a supply-focused industry to a consumer packaged goods industry.
The potential impact of regulatory changes on the industry (00:14:30)
Discussion about the potential impact of regulatory changes on the industry and the need for access to capital.
Evolution of cannabis branding and consumer connections (00:16:42)
Discussion about the evolution of cannabis branding and creating value with consumers through storytelling and authenticity.
The beverage category and consumption lounges (00:19:42)
Discussion on the innovation in cannabis products, particularly in the beverage category, and the emergence of consumption lounges.
Retail and branding relationships (00:21:50)
Exploration of the importance of retailers and brands working together for a successful industry, with examples of successful partnerships.
Challenges in different state markets (00:22:58)
Insights into the challenges faced by cannabis businesses in different state markets, including the impact of market control and competition.
Potential impact of regulatory changes (00:26:12)
Discussion on the potential effects of rescheduling cannabis on marketing, investment, and research in the industry.
Advocacy and industry support (00:28:36)
Insights into the advocacy efforts and the need for industry support to influence regulatory decisions and ensure the industry's sustainability.
Psychedelic renaissance and legislative influence (00:35:13)
Exploration of the parallels between the cannabis and psychedelic communities and the influence of legislative decisions on industry dynamics.
State market dynamics and hemp-derived products (00:37:47)
Consideration of the market dynamics in different states, particularly the potential impact of hemp-derived cannabis products on the traditional cannabis industry.
MJ Impact Conference (00:41:16)
George discusses the unique qualifications for attendees at the MJ Impact conference and its focus on brands and licensed operators.
National CPG Show for Cannabis (00:41:40)
George explains how MJ Unpacked aims to create a national CPG show for cannabis, bringing together the investment community, CPG brands, and retailers.
Expansion of MJ Impact (00:43:40)
George details the expansion of MJ Unpacked to include three functional areas: the garden, brand central, and the lab, catering to different aspects of the cannabis industry.
Future of MJ Impact (00:46:04)
George discusses the shift in focus for MJ Unpacked to become the definitive spring event for the cannabis community, with plans for a different product for the fall.
Location and Date of Future Event (00:47:18)
George announces the move of the event from New York to Atlantic City and provides details on the date and location of the upcoming conference.
Registration and Network Building (00:48:50)
George encourages early registration for the conference and emphasizes the opportunity to build networks with industry players.
Conclusion and Thanks (00:49:59)
The conversation concludes with thanks and appreciation for the opportunity to discuss the MJ Unpacked conference.
Intro (00:00:00) - Welcome to the Cannabis Success Show. If you're a cannabis company owner or operator who's ready to scale your business, grow your profits and plant the seeds to take your business to new heights. This show is for you. We'll share expert insights, industry trends, and actionable strategies to help you blaze a trail of success in the cannabis industry.
Guillermo (00:00:25) - Welcome to the Cannabis Success Show. Today we're talking with George Jage. George, good to have you here.
George (00:00:34) - Hey, thank you so much. Really appreciate the opportunity.
Guillermo (00:00:38) - So we're gonna to dive right in, before we get into your, like into your background, I'd like to just start off with, your what brings us together is this plant. We call it cannabis. I'm really excited about our conversation today because there's a lot of challenges in cannabis around, pricing, profitability margins have been impacted over the years. And I think, you know, a lot of what we need in the industry is, is connections and sharing what is working and what's not.
Guillermo (00:01:09) - And, branding has a lot to do with that. And so, I'm happy to kind of dive more into that. But first, I think just to start off at what brings us together as cannabis. Right? And I wanted to just start the conversation, with was there a moment when you had your first experience with, with cannabis and what got you started here?
George (00:01:30) - So it was really back in 2014 after I had, exited one of the trade shows I built for the tea industry and was approached by the publishers of then MJ Business Daily that had, you know, one full time employee and, you know, had plans to build out a newsletter that, you know, you know, built up a business subscription and then eventually sold that off for a million bucks. I was able to come in and take a lot of trade show experience and community building experience. There was a lot of parallels to where the tea industry was when I launched that show, and where the cannabis industry was, and really kind of take, you know, some of my skills and insight and, you know, rebrand everything that they had over at MJ Business Daily two MJ Biz Daily, MJ bisschen MJ biz magazine, and scale that up and you know grew the company very successfully for them wrote their exit strategy and unfortunately the owners and I had executive divorce over some promises made that was settled outside of court.
George (00:02:28) - But everything happens for a reason. And, and I did find that, you know, at that time to like, you know, the vape cartridges that were starting to come out and I'm like, oh, this is great because I can dose control, right? Like I can, you know, take a little hit and I can feel a little, you know, feel the effects. I can feel the benefits. but I wasn't getting in kind of what I refer to as that stupid hole where I just, like, have to sit in the corner by myself.
Guillermo (00:02:53) - Yeah. And that's where the industry, really takes a turn right into where we're seeing different form factors, different customer segments that appeal more to, to all these different ways. And where the growth is really happening is in more in the in the educated consumer. But we're seeing a, a big good portion of sales still, you know, happening in the flower category. There's still a lot of consumers that are that are choosing on price.
Guillermo (00:03:19) - Right/ And that's where maybe some of the branding and some of the things that you do come into play. I did want to ask question there on your story is what about cannabis and the tea industry. What were those parallels that that you brought into cannabis from your past experience?
George (00:03:36) - So, when I started the tea, I didn't really know a lot about tea at the time, but, you know, it's the second most drank beverage in the world next to water. So it's got an inherent market. in the US, who was seventh? It was a little over $1 billion in sales. When I started the event. It was closer to 9 billion when I left. but, you know, it was really, you know, our focus was really around, especially in premium and like, when I got in the tea industry and you've got an industry where, you know, 80% of the market is controlled by 4 or 5 companies the Lipton's, the Tetley's, the Twinings, the Bigelow's, and most of what they sell, you know, at scale is going you know, usually there's a kind of an inverse correlation between scale and quality.
George (00:04:17) - Right? You know, and I saw that these companies, well, we started the show hoping to bring the entire industry together under a tent. They, you know, a lot of these bigger companies, you know, really were resistant to what we were doing because what we're doing is creating a level playing field for companies to compete, you know, not on price but on quality and really, you know, supported. And I think, you know, we're a huge factor in the growth of the specialty tea market in the United States. the guy that, you know, started Teavana that ended up selling that for, you know, ridiculous amount of billions to Starbucks, I mean, you know, started his business by coming to our show. you know, we saw, you know, Starbucks would come to our show to find talent to hire for their tea division. Steve Smith, who founded multiple tea companies, including Tazo, which he sold to Starbucks as well. So, I mean, I think, you know, when we started the show, we recognized that there was a relative lack of knowledge in and around how to create successful tea retailer retail.
George (00:05:16) - You know, there's a lot of people who want to start a tea shop and tea was, you know, kind of going through this renaissance in the United States, but they didn't know how to kind of monetize it and make money around it. there's, you know, a supply chain issues, that there was just kind of a lack of suppliers in the United States to provide. Premium products, and we were able to go out and work with the Tea Board of India, the Tea Board of Sri Lanka, the Kenya Tea Development Agency, groups in Taiwan, China, Japan and bring those groups over to the United States so that, you know, small and independent businesses had access to premium products that was available in most places in the world except for the United States. the most fascinating thing that was similar between the two is that actually, there's, gentleman named Emperor Shenyang who is, allegedly had a transparent stomach and is considered the father of modern herbal medicine, out of China that we, you know, was able to take plant medicine and would see how it acted with his body.
George (00:06:14) - I mean, obviously that's lower and legend, but he actually is attributed to discovering tea as a medicinal botanical, and he's also attributed to discovering cannabis. And there's actually writings going back thousands of years in China, talking about cannabis as plant medicine.
Guillermo (00:06:30) - So then you brought, take me to when you switched over to the to the cannabis world from the tea trade show shows that you were doing, sounds similar in that, you know, something sounds very similar in that brands, especially the smaller players are having a hard time getting in and knowing how to market, sell their product price or product, as are those some of the same things you were seeing in cannabis and then saw the need?
George (00:07:00) - It is. And you know when you I think you know, for rhyme, reason, luck, chance, whatever. I mean, I think a lot of my experience has been in building trade events in around early-stage communities and really being able to provide kind of that catalyst.
George (00:07:13) - Like we're not going to drive necessarily a success, but we're going to do is provide the platform for them to be successful, to go to market, to meet with the right people, to learn the right information and make sure that, you know, as kind of, you know, the event producer, like our role and responsibility is to make sure that we curate the content so that it meets the needs of the market at the moment. you know, like we don't sell our stage at unpacked, we don't, you know, have classes on how to open up a cannabis retail because you can't teach that in an hour. You need to spend years in this industry to figure that out. What we want is to have licensed, seasoned operators with proven success stories that can share that wisdom with other senior people in this industry to help us, you know, move the industry forward. but when I came into this space and, and just saw that there was this huge opportunity and I think, you know, the tea industry while, you know, I think we made huge impacts in that, you know, it was still it was a tough business model.
George (00:08:06) - It wasn't the type of economic engine behind it that cannabis has. Right. And you know, here you have cannabis that was estimated to be a $50 billion illicit market. So, there's already an existing, you know, consumer out there. There's already existing suppliers out there. And now we want to kind of bring that out of the shadows and create a tax regulated and product safety, you know, to the forefront. Also keeping it out of the hands of minors. And you can do that in a regulated market. You know, the old saying is that, you know, the drug dealer down the alley isn't going to check your ID. and listen, I mean, I started, you know, experimenting with marijuana, you know, much younger than being an adult. and I think a lot of people have that experience as well. But, you know, it's still not the best for kids. It's not, you know, we've got teenage kids in our house. And, you know, it's something that's very, you know, conversation that we have at our dinner tables about that.
George (00:08:58) - But that being said is that, you know, when I took over and was able to kind of reformulate and kind of rebrand really position MJ bisschen, I mean, you know, that time and point in time was Colorado is just that just legalized Washington had Oregon was coming online, there was a lot of exuberance that this is finally going to happen like that. We're going to see a have a sea change of, of kind of policy in and around cannabis that, you know, had been kind of denied and obfuscated by government for a long time based on false pretenses. And so, you know, people needed to figure out how to what is a legal cannabis retail look like? What do I need? I need a POS system. I'm going to need, shelving displays. I'm going to need marketing software. I'm going to need security systems. I'm going to need insurance things that you wouldn't need if you were operating an illicit market business. and same thing for the manufacturing of products. I mean, you know, prior to, you know, federal legalization, if you wanted to eat a cannabis brownie, it was made at your friend's house or you made it in your kitchen.
George (00:10:06) - It wasn't something that was a commercial product that was, you know, following the guidelines of food safety. And the same thing with cultivation, with the requirement in Colorado that this needed to be indoor, cultivated, the need for equipment, for lights, for air conditioning systems, humidity control systems, trimming systems, automation, all sorts of stuff. You know, what was the need? And that was a really exciting time. And I think that really allowed us to accelerate MJ biz into a leadership position for the market. But but you talked about the changes that happened in this industry. And we've had several changes and several kind of paradigm shifts. Unfortunately, I don't think MJ biz is adjusted to the market. I don't think a lot of the other shows that started then continue to kind of focus on that supply side of the industry, you know, and, and dependent on that when this is really at the end of the day and I saw it very early, is a consumer packaged goods industry. I mean, there's, there's, there's facets.
George (00:11:01) - I don't want to ignore the fact that this is first and foremost a, you know, a medical product, a, you know, and patients should be at the, at the top of that pyramid you know, there's obviously other applications for cannabis and it's, you know, sister plant hemp to disrupt the textile, the energy industries, the plastics industries and everything else. But focusing on cannabis as a consumer packaged goods industry, like the end game for the tradeshow industry, is going to look a lot more like a natural product. Or a fancy food show than it is going to look like, you know, a bad Home Depot shopping experience that a lot of these shows have kind of evolved into it.
Guillermo (00:11:38) - And was there a particular moment when, you know, you were MJ biz that you that you realized that we needed? It was, you know, very much in the beginning, driven by the availability of the product. Right? There was a healthy supply and demand. And then at some point there was an evolution that said, that's not going to that's not going to carry things forward.
Guillermo (00:12:01) - Was there a moment when you when you realize that and you said, you know, we need a we need a conference that really brings people together, that allows them to showcase their brands and connect to the right folks and move more towards a CPG brand, more towards a CPG industry, which is more about really, you know, driving value for the for the.
George (00:12:19) - New products to come to market, like the Consumer Electronics Show, which is, I think, going on or just ended in Las Vegas. I mean, you know, that's such a powerhouse show. And, you know, there's a story about Comdex, which was, you know, kind of the initial computer show in the industry that was focused very much on kind of that corporate industrial, you know, segment of the industry. And then when computers became personal computers and it became a consumer packaged goods product, and you and I could go buy a computer and have a desktop computer and dial up modem back in the day, you know, the entire industry shifted focus and Comdex disappeared completely off the face of the Earth as a result of that and other factors.
George (00:12:57) - You know, but, you know, yeah, I mean, you know, I think the first show I was able to get, you know, Dixie elixirs to exhibit at the show, you know, for a brand that was based in Colorado to have a presence on our show floor and kind of, like, really kind of watching and measuring the success they had. And at that time, you know, Tripp was. And his team and Joe, I mean, I think they were, you know, ahead of their time and probably, you know, maybe before their time. But, you know, he recognized like he needs to be able to build partnerships in other states and be able to have this brand in multiple states and anticipate that national market. you know, ten years later, I mean, we're still kind of trying to get there, right? And I think people have figured out some models in and around that. But, you know, at that time they were trying to do that.
George (00:13:42) - And I just I didn't know if that was, you know, that format and that event format was going to really, you know, create the success that they needed, in that space. So, I again, it's it just depends. I mean, this is kind of what I do and kind of why I do what I do is, you know, I go to bed thinking about it, and I wake up thinking about it like, what's what's going to happen next? What does it mean if we go to schedule three? And obviously we know that two eight is going to go away, but more importantly, does that have an impact on on on infusing capital into the industry which is in short supply now? It's like, you know, not watering your plants. They're going to die. And this is a growth industry not getting any access to capital. So does the accelerate or re reignite the infusions of capital into a growth industry that's, you know, probably at 10% of its full potential right now.
George (00:14:30) - Just in the United States. you know, but that's the easy thing that the 280 tax code goes away and a lot of operators will be able to start becoming profitable or increase their profitability, maybe create some successful exits for them. you know, schedule three as kind of a lily pad, two D scheduling, not dismissing how important it is for us to expunge the records of people that have been busted, you know, typically with some type of racial bias in and around cannabis needs to go away, and we need to right those wrongs. But this lily pad of schedule three, I mean, it's also going to keep the federal government from setting up a taxation on the industry. They won't set that up until it's fully scheduled, and it'll probably look a lot like alcohol. it'll keep the bigger alcohol and tobacco companies and other CPG companies that already have marketing plans, brands, business plans in and around the space, like when they come in, the amount of capital that they have because of the profits they've created from their other businesses, and the operational efficiency and their ability to kind of pot bully the market.
George (00:15:32) - It's going to be a tsunami. And a lot of these operators, if they're in a weakened state, are going to get washed out to sea. So this gives us an opportunity to kind of have a pause period for these, you know, a lot of the brands and the people and the operators that, you know, put the blood, sweat and tears into, you know, creating a successful product, an opportunity to maybe get healthy and, and stronger before that tsunami comes in.
Guillermo (00:15:55) - Yeah. Yeah. And it's, it's a, it's a big challenge. Like one of the, one of the questions I'd like to ask you is the de scheduling. Well, before we get into that, like let's talk about branding. You've, you've been in the industry so long and you've seen an evolution in, in branding from, from 2014 and your first kind of years in Colorado. What, what have you seen in terms of how brands have improved in terms of how they've positioned their brands and created that, that value with consumers or maybe how have they been able to be successful? Because, as we know, brands, you know, I talked to a lot of people and many people can't name five cannabis brands, right? Just because of the limited marketing.
Guillermo (00:16:42) - And so it's very kind of regional based, you know, anecdotally, as I, as I talked to folks. So, what are what's maybe been the evolution, how has the industry grown from a. From a branding standpoint and being able to connect with consumers. Sure. Over the last few years.
George (00:16:59) - Yeah, I mean, it's that's a great question. And again, you know, it's, you know, these big companies that are sitting on the sidelines right now, they understand brand. They have they put together focus groups. They do all sorts of, you know, kind of processes around creating, you know, brands that are going to resonate with customers. You know, when you look at brand, you know, it's it is about how I feel when I see your product. Right. Like, so how does your product make me feel is what is going to define brand in the marketplace. And I would argue that there's probably not a more powerful product than cannabis to create an emotional response or a psychotropic response in the consumer, that they're desiring.
George (00:17:44) - That creates a tremendous amount of loyalty to that product. Right. you know, we've seen an evolution like, I think the people copying, you know, Fruity Pebbles and Skittles and, you know, the good dank bar back in the day. You know, they're basically borrowing other people's intellectual property and kind of creating this kind of almost comic Joe Camel type of mentality around. Brands are starting to filter away, and brands are, you know, the really important part about brands is storytelling and authenticity. You brought up a really interesting point a minute ago about, you know, a lot of people are still, you know, consumers are based on price and on flour. you know, and there's always been this conversation about how do we go get, you know, the Chardonnay, you know, mom to, you know, eat an edible or smoke a joint at the end of the day and everything else. There's stigma around smoking and combusting cannabis versus, you know, eating an edible or, you know, putting on a cannabis patch or, you know, Martha butter cake, who I love, you know, has got her little Listerine strips.
George (00:18:49) - Dissolvable Listerine strips is a great, you know, another function, you know, form function. It. It is. You know, I think there's a lot of the people and a majority of the consumption is in and around people who have already had a relationship with cannabis. the kind of curious are coming in. It's really important we manage that experience for them as an industry and as kind of defenders of the plant. You know, it's finding those right products. And one of the things that I've, you know, going back to the brand question, you know, you need to be authentic and you need to be a storyteller. like old Pal does a really good job. They own zero licenses. They've gone out and said, this is, you know, this is shareable. We this is, you know, kind of the everyman everywoman kind of weed. It's not super potent. It's not, you know, super expensive. It's something you bring to a party and you hand out joints.
George (00:19:42) - You smoke joints with people as opposed to, you know, you wouldn't bring your bottle of Camus to a party where you end up having two sips of it. You want to drink that at home? So, I think that, you know, people have done a really good job around that. You know, companies like Juana and Wilde and others that have really kind of, you know, been on the forefront of innovation through partners like Azuka to create fast form, you know, fast acting and kind of changing that intoxication profile that we used to have with any type of edible. Like, I think that having those products that that can kind of match that intoxication profile and kind of also serve into the kind of existing social lubrication that we have around having a drink at a bar, having a drink with your dinner at a restaurant. you know, when I get done, at the end of the day, it's, you know, it's always easier to, you know, grab a beer or poor pour a bourbon than, you know, load up a bong full of ice and, and, you know, grind my weed and smoke it.
George (00:20:37) - But not to say I don't do both, but, it's I think that, you know, we are going to continue to see that beverage category drive forward. I think that, you know, the consumption lounges and we see, you know, massive advances on that and of a lot of states that have legalized for a while, we're seeing really innovative people coming online. there's a gentleman up in Michigan that's creating a it's called the Cannery. It's going to have a production facility. It's going to have a tasting lounge. It's going to have like a little bed and breakfast associated with it where you can go in and you can kind of see the whole process from start to finish. They opened up a dispensary inside of the golf shop up the road from my house. It's, native nation land. So, Squamish tribe. it's not legal to smoke on the golf course, technically, but nobody's, you know, nobody's giving you a, you know, a second look, if you are, and then, you know, one of our other, friends is opening up a dispensary at a hotel on Atlantic City.
George (00:21:35) - And their expectation, their plan with the hotel property is that you're going to be able to order weed, you know, through room service. and they'll have a consumption lounge on property so you can go down instead of going down to the hotel bar, you can go down to the hotel consumption lounge and smoke a joint.
Guillermo (00:21:50) - Yeah.
Guillermo (00:21:50) - So we're getting into the retail side. Right. And we're talking about we're talking about brands. What I really loved about MJ impact and we were there in Detroit last fall is that, you know, it brings the retailers and the brands together. Right. And because in order to have a successful industry, the supply side and the retail side just really need to work together. So, the brands are aware of how the products are selling and what's creating the value out there. And there was a lot of success stories on the retail side of how to be successful, and a lot of that had to do with those relationships with the vendors and the brands.
Guillermo (00:22:35) - And, and I saw, you know, firsthand that's what a lot of what was happening in the conference, as well as sharing some of those, success stories. And so, can you maybe talk a little bit about the difference between the retail side and the branding side, and have you been able to bring that together, those relationships in the conference?
George (00:22:58) - Yeah, I think that that's really what we're what we have and what we are going to continue to create with MJ unpacked is that we want this to be that CPG style show, which is the last kind of interchange, industry interchange, or, you know, before we reached the ultimate hero in the journey, which is a consumer. Right? So, this is where retailers can find new products. This is where brands can launch new products, where retailers and brands can see what's happening across the entire country, who's innovating products, what new form factors are coming up next? and, and build those relationships in that networking? I mean, on the retail side, I mean, you know, we're still in the early stages and you've got, you know, certainly the vertically, you know, integrated operators and you've got states like Illinois where, you know, again, 4 or 5 companies are controlling 70, 80% of the market.
George (00:23:48) - They're motivation to create really high quality product is low because they have an oligarchy to some extent. Right. Whereas you have a highly competitive market like Michigan, where you have a lot of people that have product and, you know, so how do you differentiate? So, it creates that, that that competitive need for innovation and really kind of, you know, creating a unique value proposition or a unique product into the market to be successful, not just kind of getting like, hey, I've got flour, I'm going to sell cheaper than anybody else with a higher THC content. That's not a winning formula for the retailer or the brand or the cultivator.
Guillermo (00:24:25) - Yeah, it hasn't worked. And, and, and I think, you know, many are still using that, that strategy, but it's, it's just not helpful to the retailer. But it hurts the industry. Just overall.
George (00:24:38) - Well there's a couple a couple layers. We can talk about that in a second. But you know it is it is important for you know, the brands and the retailers to build those, you know, partnerships.
George (00:24:47) - And I've seen, you know, a lot of companies do that very successfully. Like when one was rolling out one of its new products in the Colorado market, it specifically partnered with one of the bigger dispensary chains, their native roots, to roll that product out exclusively there, to create an opportunity for them to really promote that at a retail level, to reach the consumer. And, you know, the brands are, you know, having a brand, especially in states that have a two-tier system like Washington in New York, where, you know, a product can't, you know, also have any interest in the retail. It's not, you know, any type of vertical integration or any type of cross-pollination there. You know, those brands need to rely on the retailer to sell their product. In most of the cases, there's been a lot of investment early on into bud tender training for brands. So that, you know, when I walk into a store that that Bud Tender knows a lot about product XYZ and is going to tell me why this is a better product.
George (00:25:40) - I think that that's a short term or at least shortsighted in the sense that brands need to be able to educate the consumer further upstream so that they are going in and buying their product and have that kind of idea of what product they want to buy before they go in there.
Guillermo (00:25:58) - Before they even step.
George (00:25:58) - In. And if it's not available at that dispensary, they might tell the people like, hey, how come you don't carry product XYZ? That's what I want to buy, because I'm going to drive ten miles down the road to your competitor and go buy it from them because they sell it there.
Guillermo (00:26:11) - Yeah. So yeah.
Guillermo (00:26:12) - Yeah, I think many don't realize what a what a difficult industry it can be from that standpoint because you brought up to 80 earlier or didn't say 280 but federal taxation and that has been a big burden on the industry just from an investment standpoint, because, say training employees, a lot of those costs aren't deductibles. And so that'll be a big opportunity for the industry or just not as high a cost because of the deductibility of some of those things.
Guillermo (00:26:43) - If we see the reschedule, and some other things that are that are kind of going on in that world, many companies taking on a different position, a tax position, so we can talk from a tax standpoint. But what I'd really like to get into is what are your thoughts on how a reschedule would affect anything from a, from a marketing standpoint, or maybe even the de schedule at some point? Would we see brands that can cross states more easily, a little bit more national recognition? Once we get to a full reschedule, a full de scheduling.
George (00:27:21) - Yeah. I think going back to my last point, you know, that the brands, you know, really need to be able to create pull demand for their product from the consumer at the retail level. And they don't have access to those advertising channels to do that. So, they are relying on the retailer need to create those partnerships. Right. And again, meeting the needs of the market at the moment, it's really important for those relationships and those networks to develop.
George (00:27:43) - And they happen in real life and in person. And, you know, by creating an event that really curates to make sure that the people in the room are decision makers and can, you know, actually influence the outcome of those businesses. You know, as far as, you know, rescheduling and scheduling, I'm actually going to be probably posting something here shortly, but I just had a really great conversation with Andrew Klein, from Perkins Coie and him and Shane, another attorney partners with, you know, are kind of like in the thick of it, right? I mean, we've got a lot of advocacy groups and some of them are doing great work. Some of them are kind of struggling internally to get funding because, again, this is an industry that is lacking access to capital. So, the ability for our industry to support these organizations financially, they're probably one of the first things to get caught, like, I'm going to cancel my membership to all these associations because I can't afford it right now, right?
George (00:28:36) - So going back to Andrew, like, you know, right now, I mean, there's a little bit of a wall between the Department of Justice and the white House, even though it does report in the executive branch and the DEA reports into the Department of Justice, and there's been some fodder online about, you know, Blumenthal, you know, saying, hey, guys, let's get this together. and the DEA coming back saying, hey, it's our decision. We'll take as much time as we need and don't try to, you know, influence us. And it was a little bit of political posturing. Now, there's also was 19 former DEA agents and attorney generals that went and testified to the DEA of why cannabis is horrific and is going to cause people to lose their mind and, you know, sell their children into slavery or whatever other bullshit that they came up with, and said that they should not be moved off of schedule one. So, Andrew and Shane are the two people that are out there right now making sure that that as this goes in, the DEA comes back with their evaluation of the scheduling.
George (00:29:36) - This is going to go to the DOJ for review, and they're going to have to they're only going to be able to look at the information that was entered into evidence. And that evidence is going to basically be the HHS report that said, move it to schedule three, whatever the DEA comes back with, which is still kind of a little bit of a black hole to know where their heads at. And then public comments and make no mistake, there are lots of groups that are well funded. Possibly for alternative reasons because they you know, we've seen alcohol sales dip where cannabis sales have spiked. we know the pharmaceutical industry wants you to be on opioids, not smoking weed. and there's other groups that see cannabis as a threat, as being giving human beings access to plant medicine that Mother Nature created for us. Pretty common-sense stuff. So, they need support. They need support of the industry because they're going to have to hire more and more attorneys. And they themselves, I think, have about 500 pages of testimony that they're going to enter into evidence.
George (00:30:36) - But, you know, there's going to be a lot of research papers that are going to be entered in that aren't accurate and need to be contested either by scientists and or lawyers, so that when this gets reviewed, that those do not get any traction. I again, working in the tea industry. We also launched a show called the Healthy Beverage Expo and met a lot of amazing people in and around that space. And, you know, again, beverage industry very, very much buttoned up. There are four companies that control 80% of the market. and there was always this talk about, you know, high fructose corn, high fructose corn syrup. there was stuff happening where they were, you know, creating corn based plastics that are biodegradable, which they weren't they were basically chemically altered corn, you know, molecules that took ten years to biodegrade in industrial composting, which nobody has access to. But make no mistake, the point I was bringing back to this is that. Well, while there were really smart people who are really passionate and honest and good researchers, it went out and said high fructose corn syrup has the same impact on your biological system and will incur diabetes, weight gain and inflammation in your system, which is terrible for your heart and other organs.
George (00:31:53) - Coke and Pepsi would indirectly fund studies by other research scientists to say, no, this is all good for you. Right. So. The Mark, Twain said there's three types of lies white lies, big lies and statistics. Like, I mean, so like there's going to be a lot of research. There's been over 3000 research papers that have been or, you know, studies that have been done since 2016. There's a lot of them that are scientifically sound. There's others that were done with a set purpose at the end of it and as an industry, you will probably be hearing from me on some social media really calling to action the industry to support, to make sure that this is this potentially could be our last chance, if this industry continues to get choked out from the middle because the lack of access to capital, the private investors have gone away, they've taken on too many losses. They're not jumping in the space. The VCs have kind of put out all their dry powder, and if they have any left, they're saving it to bail out companies that are struggling through this kind of economic contraction.
George (00:32:57) - And the private equity guys in the institutional capital aren't here yet. So, if we don't see some type of movement on schedule three to move this, to schedule three, that I do believe in. Going back to your original question, I think that this does increase the investment interest in the industry. because this is a kind of a stopping point that not everybody's like the institutional guys might not be able to get in on this, but it also will kind of bring valuations up, but it won't pop them to the full level that they could be for the billion dollar companies and brands are going to be out there in 5 or 10 years from now. They're all still maybe, you know, some of the bigger brands are doing, what, ten, $20 million a year? There will be billion-dollar brands born in this country and they will be exported globally. and we're at that birthing of giant stage. So, this could potentially open up the conversation around interstate commerce that the states themselves can enter into compacts. that's been there's precedent for I'm hoping that this does facilitate maybe some uplifting I know that, you know, publicly traded cannabis stocks aren't everybody's, you know, favorite.
George (00:34:01) - But it creates an overall wellness of capital interest in the market and can help the whole ecosystem completely. It's going to massively open up the research community to doing more research on cannabis as medicine. And, you know, again, talking to some people that are way smarter than me, you know, we're adding a science and research component because the science and academia, you know, kind of, institute has really stalled out where they can't connect with the commercial side of the industry. And we need that academia to discover products and, and, and create, you know, innovation that can be applied into a commercial setting that can then turn around and feed back into the research community, you know, funds and whether it's a university or private research, you know, facility.
Guillermo (00:34:47) - Yeah. One of the things you mentioned there was that just the common sense. And I think all of us in the, in the industry know that a lot of this isn't based on common sense, and there's a lot of factors at play to me, it's just frustrating when we have to do scientific studies for a medicine that's just been used for, for thousands of years. Right. And this is like, it's like we woke up yesterday and starting from scratch when there's so much history on this.
George (00:35:13) - Yeah. Listen, I mean, and especially these days, like, if you go to, cannabis event, I'd probably say three out of the four, three out of the ten people you speak to either have shrooms or are on shrooms at the moment. But you're seeing the same type of renaissance with the psychedelic community. And if you kind of go back and, you know, you read Michael Pollan's book and you understand, like, you know, what happened there. And again, the whole Nixon administration of creating this kind of false narrative, you know, to vilify the black and the hippie communities on TV so that he could win the election. But, you know, the hope and promise in and around the academic and research communities, around psychedelics, around LSD, around, you know, MDMA.
George (00:35:55) - I don't even know if MDMA was around that, around psilocybin, around some of these other, you know, ethno genic, you know, mushrooms, that that can actually have incredibly powerful results on people. I mean, I've talked to, you know, Maps, which is a multidisciplinary association of psychedelic studies. As a nonprofit. There's a subsidiary that's a basically a pharmaceutical research company that's working on the clinical trials for MDMA. And like, I don't want to share specifics, but I mean, like the level of success and the impact for somebody, especially a military person with PTSD, getting a therapy assisted MDMA session and being episode free for months at a time is so massively powerful for these people to be able to restore their lives after, you know, seeing horrific things in the world as a result of being of service to our country. Right. again, common sense stuff. And, and, you know, we can take this all the way back to Citizens United, basically putting our government up for sale.
George (00:36:58) - And the fact that, you know, any type of legislation needs to be bought and paid for, and the companies that make the most money are going to buy the best rules, and we need to level that playing field and make sure we have better people in office and get rid of Citizens United.
Guillermo (00:37:12) - Yeah. And I'm in Texas. So, we're in a really in a really tough market. You know, one of the one of the comments that I've heard from the reschedule is that it could prompt some conservative states, like Texas, to have the schedule to have start having the conversations, at the state levels to, to reschedule at the state level. Do you see some of that potentially happening in some states don't want to be behind the federal government where it could really open up some big markets, the biggest one probably being Texas that's still on tapping back.
George (00:37:47) - Well I mean Florida is obviously going to be you know is expecting to come online as adult use. Pennsylvania, Ohio is already moving in that direction.
George (00:37:57) - And so we have some pretty good chunks of the population. Like I don't think anybody's, you know, going to wait till South to North Dakota, figure it out because there's, you know, ten people live between the two states. You know, but Texas is interesting. I mean, like, you know, if with the competition, the unfair business competition that the regulated cannabis market is currently facing as a result of the hemp bill. And I'm not saying that hemp derived cannabinoids aren't valuable, but it's not regulated. It's not taxed in the same way, and they're selling against the same consumer, and they're able to sell across the internet and ship to all 50 states. And like as you see, Minnesota is kind of adopted. This thing where, you know, you've got liquor stores that have it and end cap of THC beverages. Right. And these are all hemp derived, cannabinoid infused. They're not THC infused. So, you know, I think that the industry we need to level the playing field to, you know, and honestly reduce the tax and regulatory burden so that the cannabis industry can successfully in itself, deliver a better value and a safer product to the consumer than the illicit market.
George (00:39:07) - But it also it can't compete against the hemp drive market and the illicit market and not have the economies of scale for interstate commerce and have no access to capital and expect to survive.
Guillermo (00:39:18) - Right. And I have a hard time, you know, commenting when I when, you know, I'm asked about the hemp derived market because it's like it's not the bad guy. It's what you said is that the playing field just needs to be, even, from a taxation standpoint, from a regulatory standpoint and allow consumers to, to choose. Right. I think that's more along the lines of what you're saying. Well, and.
George (00:39:43) - Going back to Texas for is just that. I mean, I think that, you know, you're going to see the state explode with, you know, hemp derived cannabis products and that will be available at the corner gas station and at the liquor store and everything else. we're recording this, you know, podcast on January 11th. And I know that when this actually airs, you know, a lot of your fans down in Texas can be very upset when my Packers beat Dallas this weekend.
George (00:40:12) - But that being said, like, I mean, like, we, you know, it could limit the opportunity for, you know, the typical kind of block and tackle, you know, tax and regulated and tested cannabis industry in that market. Unless there's either a federal program or there is some type of convergence and or equilibrium created between the hemp derived cannabis markets and the THC derived, you know, the traditional cannabis markets in the hemp drive markets.
Guillermo (00:40:42) - Yeah, it'll be interesting to watch. And first of all, I do believe with your comment, that the Cowboys may blow it up this weekend. So, we'll see on that.
George (00:40:55) - Well they're definitely the favorite. But I think most of my fellow Packer nation wants to see, us take down Mike McCarthy. So we'll see how it goes.
Guillermo (00:41:06) - We'll see. We'll see.
George (00:41:08) - Best team wins.
Guillermo (00:41:09) - So as we're getting, closer to the end, George. So, you have a I think we're going to air this episode before your conference.
Guillermo (00:41:16) - So can you tell us a little bit about the next, MJ impact dates? MJ impact is unique in the sense that it's mainly brands and licensed operators. So can you tell us, how to join the conference? Whether you're a brand or a licensed operator, when it's going to take place and what we can expect to see there.
George (00:41:40) - Yeah you know, when we started this company, I mean, you know, a big part of our kind of, you know, business development, obviously, we knew where the market was going to go. We want to play the end game. but we did things so differently. We really kind of deconstructed what everybody hates about trade shows and got rid of it. And, you know, so we really focus, you know, MJ unpacked what really sets it apart from every other event in the industry is that we qualify every single attendee that comes in as being a licensed operator with the title of manager hire, or an accredited investor actively investing in cannabis.
George (00:42:12) - I know the Hall of Flowers is a great job of qualifying its attendees as a state focused show out in California, and other shows. It's really just based on price, right? That's the only qualifying factors. If you're willing to buy a ticket, then you can get in. And the reason that we restrict this is that it increases the return on objectives to everybody in the room, that everybody's a decision maker. You're not trying to filter through, you know, ten people to find the one person that's actually at the same playing level that you are and playing in the same arena that you are. It's also preventing suppliers from buying a ticket to attend a show and selling from the aisles to undermine an investment that a company might make into exhibiting. In our show, we limit the number of companies that can participate by kind of category, like, you know, some of the bigger shows I've seen, you know, 120 packaging companies, but there's nobody doing the math to see that they're going to have a successful ROI.
George (00:43:02) - So we know packaging is important to brands. So, we are, we have been, you know, traditionally focused. And a lot of people like, refer to us as an investor conference or this conference and everything else. I mean, at the end of the day, it's, you know, we're creating the national CPG show for cannabis. We don't have a national market yet. So, we're kind of meeting the needs of the market at the moment. We're bringing together the investment community, the CPG brands and the retailers. Traditionally this year we're expanding, so we're going to have three functionaries in our floor of the garden. We've always kind of considered the we've always not kind of we've always considered cultivators as a brand because at the end of the day, as soon as they put their label on their product and put it in a jar or bag, it's a CPG brand. But cultivation is unique, right? So there's a cultivation side, there's a food manufacturing side, then there's a kind of retail side.
George (00:43:52) - So we have the garden, we have Brand Central, which is about 60% of our show. And then we're also adding, the lab, which is going to focus on the science and research and how important that is for the science and research community to be able to connect with the brands and the product innovation and also the cultivation of genetics and, you know, crop optimization standpoint, the cultivators want to connect with the brands as a raw material product and the retailers as a finished product. And this is the apex of the ecosystem. Right. you know, we don't want. It's not that we don't. We know that there's hundreds of thousands of people that are going to be coming in this industry over the next couple of years if we continue to expand and grow, if we get that schedule three going and we get, you know, some common sense legislation, right? but in the meantime, like bringing together those operators, not giving a class on how to open up a cannabis store in an hour, that's usually taught by consultants that have never actually operated a retail store.
George (00:44:47) - You know, not having people come up to you and saying, I'd like to, you know, pick your brain for an hour because I'm thinking, get in the cannabis industry because that's exhausting. It takes years to really understand and navigate this space. So, you know, we want the pioneers, the people that are leading the charge in this industry and bringing them together in the most meaningful way to concentrate and create efficiency around their time, to have the most meaningful conversations in the shortest period of time and have a great time, like we do a lot of very experiential stuff. I mean, we've done everything from mechanical bulls to oxygen bars and our show floor. I think I might have somebody that's going to be doing the puppy petting zone at this show. So, we might have the adoption center there, and you can adopt a puppy at impact. But the nucleus around this is bringing together senior level people that are decision makers, operating licensed businesses, investing in licensed businesses, or driving the research that's going to help us all get further forward faster.
Guillermo (00:45:44) - Yeah, I saw the mechanical bull at the last one. I didn't say I wasn't brave enough to get on that. but I did attend the after parties. Also, a great way to network. And if anybody happens to miss this next conference. MJ impact, traditionally has been twice a year. Is that the same, cadence that you're looking for in 2024?
Guillermo (00:46:04) - No, actually, that's a great question. And Wendy, I know is going to be on your program as well. You know, we're talking a lot of people. It's like, when's our fall show? Like we did our fall show in Detroit last year. The market is desperately seeking consolidation. And the companies that are supporting these events by, you know, through their event marketing spend is going to continue to contract. We saw most of the shows on the West Coast go down 50%. MJ biz I think was down 30 or 40% by some estimates, etc. So, you know, what we're doing is we're saying we're going to focus on being the definitive spring event for the cannabis community.
George (00:46:40) - Right? This isn't an investment conference. This isn't a state focused event. This is the spring event. It is on the East Coast as well, where all of the growth and the investment opportunities are coming from. It is also focused on licensed operators, which is the apex of the industry, and we think it's one of the funnest events to go to in the industry, so...
Guillermo (00:47:01) - I agree so.
George (00:47:04) - And so we've got some fall plans, we've got some fall plans, but it's not going to be an MJ unpacked event. It's going to be a different product. we'll be rolling that out here shortly.
Guillermo (00:47:13) - Yeah. And that's going to be can you give us the city and date?
George (00:47:18) - Yeah. So we made the move out of New York to Atlantic City and, and, you know, there was a lot of internal discussion about making that move. You know, people are concerned. Well, you know, it takes longer to get to Atlantic City. Well, most of our audience is flying in.
George (00:47:31) - If you're flying in New York, you're probably an hour and a half to two hours, depending on traffic. To get to Midtown Manhattan, you can fly into Philadelphia and, you know, be in Atlantic City at the hotel in an hour ish. And, if you're really brave, you can fly Spirit Airlines and fly directly into Atlantic City. Which I recommend to nobody. The, you know, so, you know, we're going to Atlantic City. The event is going to be April 9th, 10th and 11th. It's at the hard Rock Hotel and Casino. Beautiful property. We've got $89 room rates for our attendees to come versus, you know, spending $350 a night in New York. the economics around this, it's right on the boardwalk. Atlantic City has made a hell of a comeback, and it's really kind of a fun city. And I think what I like about it the most is it's like it's kind of reminds me of older Las Vegas before it got super crowded, super expensive and overwhelming.
George (00:48:20) - Right? And kind of brings us back to the Rio days when I was riding MJ bisschen, of having that type of close knit community that's really driving the industry forward in, in a single place that's not, you know, kind of spread out all over town now.
Guillermo (00:48:34) - Now. Thanks for that. And I won't. I won't ask where to find you because you can just Google MJ unpacked and learn more about the conference. Is there any way, to find you or learn more about the conference for those who are interested other than website?
Guillermo (00:48:49) - Or is that.
George (00:48:50) - Yeah. Website is the best place to start if you're interested in exhibiting attending the registration is live. And, you know, we have a couple of tiers where we increase the prices the longer you wait. We want to get commitments early. Actually, this year's registration, we just opened up at the first of the year. We've seen more people register in the first week of our show than we've ever had in the history of the event.
George (00:49:12) - And it's a lot of really powerful retailers coming from all over the country, from Connecticut and New Jersey and New York and California and Colorado. So, you know, we expect Michigan to actually, I think somebody just registered from so, you know, this is an opportunity to really see the market as it will be in the future. It's also an opportunity to build your network, which is your net worth, with people that are playing at the same level you are.
Guillermo (00:49:37) - Yeah, lots to come. It's going to be a big year. Probably the biggest year from a from a policy standpoint. I think we're all just waiting to find out. So, looking forward to the conference and, and to the connections and all the conversations that are going to happen. But George, thanks for being on the show today. And I think we'll put a pin on it right there.
George (00:49:59) - Guillermo, thank you so much for the opportunity again. And thank you again for your support.
Guillermo (00:50:05) - You bet.
Outro (00:50:07) - Enjoy this podcast? Visit our website Anderscpa.com/virtual-CFO-cannabis to get more tips and strategy for achieving business success in the cannabis industry.