00:00President Trump this weekend. Let's discuss another drug industry in the administration's crosshairs and that is cannabis. In December President
00:08Trump signed an order to expedite the rescheduling of marijuana. It's currently classified among this horrible drugs like heroin and
00:17fentanyl. Joining us is Green Thumb Industries founder and CEO Ben Kovler. He's also chairman and interim CEO of the
00:24Rhythm brand. Great to get some time with you Ben. First of all how am
00:29much has this helped the president you know trying to help reschedule reclassify marijuana. How far away are we from
00:38that. Well we think it's coming. It's a positive step with the executive order and we're waiting on the Department
00:44of Justice to reclassify. But what we're really seeing is you know the executive branch and D.C. trail consumers.
00:50Consumers have chosen this product. It's a 30 billion dollar plus industry and things are really moving from a jobs
00:56and a tax perspective at the state level. There is
00:59to I mean a lot of weed companies did pop up especially states made this more legal. But still there
01:05is this big barrier to entry because of this issue with federal regulation. Ben I wonder if there is full
01:11federal legalization. Does what's
01:15the line between that helping you versus you kind of have an advantage as an incumbent in this space right
01:21now because of all the hurdles to becoming a company.
01:24Oh it's a big positive. Consumers want this product and the more access they can have the better. We recently
01:30signed a deal with the United Center to offer THC drinks at special events there. You're seeing the product show
01:35up at liquor stores and other places as well as dispensary channel medical and otherwise. So it's a really big
01:41industry and the more positive steps we can have especially going to schedule three which is obviously a common sense
01:46move to allow research that could help vets in many many ways is all a positive step. We focus on
01:53the federal
01:54legislation Ben obviously. But on a state level there are a lot of challenges as well. For example here in
02:01New York I think in order to open a dispensary you had to have a previous brush with the law
02:07meaning everyone who's operating those businesses has had you know has been in some ways a scoff law. Right.
02:13What kind of changes do you want to see at the state level.
02:17Well every state's its own story but we've seen many many states positively move in the right direction even New
02:22York which stumbled a little bit out of the block but now has a booming industry. But in the last
02:27year you've seen legalization in Ohio and then Minnesota with Virginia hopefully coming up. That's all very positive. You're seeing
02:33consumers choose this product. You're seeing a lot of tax revenue at the states often state tax revenue higher than
02:38alcohol tax revenue and a ton of jobs.
02:40So those are very positive externalities that come from this industry and we see more of that to go.
02:46Also when it comes to cannabis banking reforms it feels like something that Congress has been talking about for years.
02:52Ben what difference does it make what is your cost of capital look like versus a typical consumer packaged goods
02:58company.
03:00Yeah. We're in a good position. We're lucky and we have a low cost of capital. That's been one of
03:04the ways we've been able to win in the industry. But no access to American capital markets without the ability
03:09to list the core business on the U.S. markets. We've had Rhythm Inc. that you mentioned in the intro
03:14which owns the brands RYM on the NASDAQ. But right now the operating businesses can't be listed on the NASDAQ
03:20or the New York Stock Exchange. So that's preventing a lot of access to capital and a lot of American
03:25economy in there. Instead the Canadian companies are listed in the U.S.
03:28which is a little oxymoronic. Talk to me about the big trends. When I think about Rhythm I think about
03:33live rosin, live resin and a move away from like the chemical distillates that are the mainstream sellers.
03:41Sure. When you think of Rhythm you should think high quality indoor premium flour. Flour is the largest category in
03:45the space and last year Rhythm's animal face was the largest selling skew across the country. We're seeing consumers choose
03:51high quality indoor cannabis flour. It's providing a lot of relief and it's very strong as well as innovation. The
03:57Rhythm Remix joints are going very well as well as some of the vape product you mentioned.
04:00Is some of this stuff too strong Ben? I mean for you know older people who aren't used to 80%,
04:0690% THC. Does this industry need to offer different products?
04:12Yes and it does. And so similar to the alcohol space you know having a glass of tequila doesn't make
04:17sense for a lot of people. So knowing what you're buying, talking to the bartender, getting educated, starting slow especially
04:23on the edibles is a great way to go.
04:25And we're seeing a lot less uncertainty and miseducation in that space.
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