CBD 2.0: Why 2021 is the Dawn of a Promising New Era in the Hemp

CBD 2.0: Why 2021 is the Dawn of a Promising New Era in the Hemp

NOTE: ABRIDGED VERSION ABOVE PUBLISHED BY NASDAQ 2-18-21

In 2004, Tim O’Reilly popularized the term “Web 2.0.” According to Tim O’Reilly, “Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as a platform, and an attempt to understand the rules for success on that new platform.[3] He went on to say, “Web 2.0″refers to the historical context of web businesses “coming back” after the 2001 collapse of the dot-com bubble, in addition to the distinguishing characteristics of the projects that survived the bust or thrived thereafter.[4]As we enter year three of federally legal hemp CBD, I am calling CBD 2.0.

 I lived through the dot-com bubble having founded eSkye.com in 1999 as a B2B exchange for the alcohol industry. I then led through the transition from dot-com to Web 2.0 morphing eSkye.com into eSkye Solutions and shifting to become a SaaS software provider to the industry, at one point establishing it as the largest provider of dedicated software services to the wine industry. We also handled all the vendor managed pricing with Walmart, Walgreens, and other chains for many of the largest wine, spirits and beer companies in the world. I was also Chairman of Wine 2.0, which was a riff of the Web 2.0 movement to bringing technology and wine experiences together.

O’Reilly and Gary Vaynerchuk (winelibrary.tv and Vaynerchuk Media) joined us at the New York Wine 2.0 event that featured cutting edge wine start-ups and wineries, plus over 1,000 wine and tech lovers coinciding with O’Reilly Media’s Web 2.0 Expo.

This week, on Yahoo Finance, I characterized 2021 as “CBD 2.0.” as the beginning of a fundamental shift from the early “Wild West” days of the hemp CBD industry to a year that will lay foundation for national brands. Let me explain and see if you agree.  

Pablo Zuanic, the well-regarded research analyst at Cantor Fitzgerald, put out several reports this week on the Cannabis and CBD markets and companies. As he points out:

“Macro view: our projections remain bullish for the next five years. Despite lackluster trends in 2020, partly COVID-related, and a slowdown pre-COVID in 2H19 – as lack of regulatory guidelines from the FDA prevented the FDM channel from adapting CBD a widely as had been expected, across formats and by all major retailers – projections remain quite constructive. Most estimates by the industry’s trade shops continue to forecast US CBD $ sales of $15-20Bn by 2024. The Brightfield Group projects sales of $15Bn by 2024, up from $4.2Bn in 2019. BDS Analytics projects sales of $20Bn by 2024, more than 10x the $1.9Bn in sales generated by the industry in 2018 (~50% CAGR), as per their estimates. BDSA estimates 63% of the $20Bn 2024 figures would be hemp-derived CBD and 37% marijuana-derived CBD. The current market split is as follows, according to BDS Analytics: ingestibles 47%, topicals 26%, inhalables 21%, pet products 3%, and 4% other (including pharmaceuticals). But as discussed below, without clear FDA guidelines and formal classification of CDB as a dietary supplement, the bulk of the FDM channel will stay reluctant to stock CBD products, and this will limit growth, in our view.”

He goes on to point out that without a major FDA/regulatory catalyst, it’s hard to see things improving rapidly from 2020. While I agree with his general assessment of the handful of public CBD companies he covers – cbdMD (YCBD/Neutral), Charlotte’s Web (CWBHF/Neutral) and CV Sciences (CVSI/Neutral)— I think those companies’ biggest issues are more related to the rising tide of other serious brands from mostly private companies but also new entrants. This new onslaught is much more sophisticated and include larger scale CPG brands than what the early CBD companies are used to competing against. Two such examples are Martha Stewart’s CBD Gummies launched by Canopy Growth and Molson Coors announced launch of their CBD beverage, TRUSS CBD in Colorado. This new crop of brand focused companies is leading the way and initiating the dawn of CBD 2.0.

Hemp CBD Early Days

In 2014, after years of grassroots efforts, Congress included an experimental program that allowed hemp to be legally grown in the US for the first time since 1937, provided it was attached to a University. 14 states ended up participating in the program. It was quite restrictive but a huge step forward for the industry. This was pre-CBD 1.0, a period of primitive CBD industry and initial consumer trials of the cannabinoid. During this time, there was a volatile) gray/illegal market for CBD with shady operators popping up all over brokering CBD from China and putting it into products with no testing, no truth in labeling and zero reliability. It was truly the “Wild West” and was common to have “brokers” claiming to have for sale or want to buy millions of dollars or liters of CBD, only to have them disappear when one actually tried to make a deal. It was a close cousin to the illegal cannabis industry with many of the same players participating in both.

I went to Washington DC to meet with congressional leadership in March 2018 to gauge the likelihood of expanding the hemp program nationally and of cannabis prohibition repeal overall. My impression was that full-on cannabis prohibition repeal still had meaningful opposition, but that hemp legalization could move quickly with bipartisan support.

My team jumped into it in 2018 growing 115 acres with partner farmers in Kentucky and establishing a hemp processing facility there as well. Just about everything that could go wrong did. The seeds were not great, the weather was terrible (wet when we needed dry and dry when we needed wet – “Welcome to farming,” they told me), our equipment kept breaking as most was not designed for the hemp plant, etc. Despite these challenges, we learned quickly and were able to lay the groundwork for what was to come.

Hemp CBD 1.0

Enter the Farm bill, which passed on a bipartisan basis and was signed into law in December 2018. This laid the foundation for a truly national, legal hemp industry, provided that each state set up a system and apply with the USDA. The excitement was palpable. It was a bit like a mini dot-com in terms numbers of start-ups, money flowing into the space, and news coverage. We bet heavily that the market would expand dramatically with legalization and committed to growing more than 1,800 acres of hemp with partner farms in KY and TN. We plowed millions of dollars into the production side of the business while at the same time putting a portfolio of brands together. We successfully launched our first brands into nearly 1,000 convenience stores in late 2018. It was a CBD “Gold Rush” with 100s of new “brands” appearing out of nowhere. Farmers switched to hemp production in mass, and $100s of millions of investments pumped into hemp processing operations. Big retailers began taking meetings with the anticipation of rolling out CBD products in 2019.

Between the Fall harvest of 2018 and 2019, the hemp growing, processing, and CBD ingredient side of the industry collapsed. In retrospect, perhaps it seems obvious that a frenzy of new investment and market participants in a brand-new industry would cause over-supply. Also, the proliferation of start-ups, populated with inexperienced business operators, caused plenty of issues. However, in a twist unforeseen by anyone but perhaps big pharma, the regulatory headwinds led by the US FDA threw a wrench in the momentum towards retail adoption. Their position was that CBD ingestibles are unsafe until proven otherwise, and therefore not permitted. This declaration caused most of the major retail outlets to cancel plans to bring CBD onto their shelves. (See my article in the Denver Post on this here)

The resulting destruction of value in the industry was swift and massive. Seven of the largest hemp processors who had raised over $400 million failed by February 2020 (pre-COVID lockdown). The largest, GenCanna, had a reported $2 billion deal to go public in the Fall of 2019, only to collapse into bankruptcy months later. I was 36 hours from a $700 million+ merger into a SPAC on NASDAQ when it unraveled in October 2019. We faced a collapsing market and a flight of investment capital. My team at Vertical Wellness took immediate action by cutting our costs and pivoting to a services business to help recover investor/creditor dollars from all these failed companies. In the end, we landed contracts to dry or process over 18 million pounds of hemp, making us profitable in 2020 during the pandemic. Given the retail environment, our brand launches were pushed into 2021, but we used the time and cash flow to prepare and make strategic acquisitions to be ready for what was to come. I share our rare success during a dismal time in the industry not to boast, but simply to inspire other entrepreneurs and demonstrate that being resilient and never giving up are essential qualities.

Entering CBD 2.0

In five years, we can look back and see if I called this too early, but something feels different to me. To be clear, I’m not suggesting good times are here immediately, but rather, we will soon be able to clearly see the path forward for a thriving cannabinoid industry. Here is my case that 2021 is the turning point for CBD.

1.    Survivors: Only the strong survived the great destruction of CBD 1.0 – those of us remaining either pivoted, figured out how to make money, or emerged with new focus on execution.

2.    Execution and Funding: The extreme loss of value has scared away many investors. This makes it a lot harder for new entrants to attain funding and for existing folks who are not executing to stay in the business.

3.    State Permitted Ingestibles: In spite of the FDA inaccurate proclamation against the safety of CBD, consumer demand for health and wellness products has only grown. Fundamentally, consumers want natural alternative solutions (from Big Pharma drugs) to solve sleeplessness, anxiety, pain, and other ailments. Cannabinoids increasingly demonstrate their proper role in solving for this consumer demand. Just as in the overall THC-based Cannabis market, the States are leading the way in permitting ingestibles of CBD. This will accelerate in 2021. The states are driving permitted CBD consumption and consumer demand (it’s 47% of consumption nationally in spite of the FDA). Additionally, there are more studies coming out regularly, adding further lack of evidence of any harm caused by CBD. These factors and continued support from a growing bi-partisan group of lawmakers will eventually overcome big-Pharma’s grip over the FDA on this issue. I’m hopeful this can happen in 2021 but is not essential for my case for CBD 2.0.

4.    Retailers Need for Growth: Retailers who are coming out of a crazy year of focusing on essential supplies or in other cases being shut down are looking for new ways to grow. CBD is back on top of their list of growth categories in which many are not yet participating.

5.    Efficacy Matters: More and more companies and brands today are focused on the real impact CBD and other cannabinoids can have on people’s lives. Faster acting products with clear uses will lead the growth.

6.    Real Brands: More legitimate, credible brands, not named “CBD this” or “CBD that,” are emerging. That would be like naming my new beer brand “Beer.” CBD is simply one of about 150 cannabinoids in the Cannabis plant that, when combined with the right balance of other ingredients (e.g. melatonin), can have tremendous efficacy in solving or alleviating real health and wellness ailments. Consumers want it, but they don’t know who or what to trust because of the lack of workable regulations and proliferation of unknown, unproven, generic brands. That is starting to change as premium brands are being backed by credible companies and honest leaders with proven track records. Our kathy ireland Health & Wellness® CBD solutions is a great example of this. Kathy is a recognized leader and advocate for women’s health. Our acquisition of The Organic Candy Factory is another. We are very excited to bring these to market.

As Tim O’Reilly once said, “Pursue something so important that even if you fail, the world is better off with you having tried.” I believe “CBD 2.0” is a worthy endeavor and indeed will make the world better off. I recently had my whole team read the late Tony Hsieh’s (former Zappos CEO) book Delivering Happiness: A Path to Profits, Passion, and Purpose. In it, Tony shares a plethora of stories where Zappos was at the brink of going out of business but found a way to persevere despite the odds.  Had a small group of impassioned leaders not fought through those times, there never would have been a $1 billion exit. Many in the industry are in a similar moment. Those who show resilience and conviction will prevail. 2021 will prove to be the turning point in building a thriving, healthy industry that contributes to the societal good.

Vertical Wellness is Established

Vertical Wellness is Established

Catching up here, after the farm bill passed legalizing hemp Federally in the US, Vertical Companies created Vertical Wellness and named me as CEO. Effective April 1, Vertical Wellness will be spun off to the shareholders and be a completely stand alone company. We expect to attract institutional capital to this entity and pave the way for a public offering. Below are some of the media coverage of our move.

New Cannabis Ventures-Jan 24, 2019Exclusive Interview with Vertical’s Wellness CEO Smoke Wallin. Vertical is all about brands in both the cannabis and hemp spaces, and, right now, the …

Here is the recorded interview below:

And more at the NYSE on Cheddar: Cannabis is ‘Greatest Growth Opportunity in Our Lifetime,’ Vertical Wellness CEO Says

Smoke Wallin at the NYSE on Cheddar

2018 Farm Bill Legalizes Hemp In US

Last week the President signed the 2018 Farm Bill which legalizes Hemp in the US. This is a monumental step forward for the cannabis industry and for the US consumer.

Below is my interview on Midas Letter Raw last Friday. I was on the road visiting family for the holidays so the interview was done at a stop along the way (not the greatest quality, but great content).

Farm Bill Poised To Pass: Legalizing Hemp Across the Land

The Farm Bill of 2018 just passed the House and Senate and sits on the President’s Desk.  Here are some thoughts on its impact on the Hemp and CBD industries as well as information on our activities in the space, I have shared in a number of interviews.


Here is our Vertical Wellness operation getting started in KY in October

WHV: Vertical Hemp Company Cuts Ribbon To Cadiz Factory

Bloomberg: Hemp Companies Poised to List in U.S. as Farm Bill Goes to Vote

 

QUARTZ: Proposed hemp regulations continue the racist legacy of the US war on drugs

CSP: Instant CBD Strips Arrive in C-Stores Nationwide

WKMS: Hemp Company Vertical Celebrates Opening Of CBD Facility In West Kentucky

 

CNBC’s Fast Money with Smoke Wallin re Branding Cannabis, Wine & Spirits and Market Observations

CNBC’s Fast Money with Smoke Wallin re Branding Cannabis, Wine & Spirits and Market Observations

Thanks to CNBC and the Fast Money crew for a fun interview on the state of the cannabis industry.

Cannabis industry exploding with growth here, says top pot exec

The cannabis business is growing like a weed, even as pot stocks see wild swings. With Smoke Wallin, Vertical Companies, CNBC’s Scott Wapner and the Fast Money traders, Pete Najarian, Tim Seymour, Karen Finerman and Guy Adami…

Smoke Wallin on CNBC’s Fast Money

A few shots from the day at CNBC:
 

 

 

 

Tapping the Booze Business

Tapping the Booze Business

May, 2018

Tapping the Booze Business

Hemp, CBD and extraction companies can crack the infused alcoholic beverage market but must navigate a regulatory thicket

By Vicky Uhland

When Prohibition was repealed in 1933, small, local brewers and distillers were the first to get back into the alcohol business. Many either grew into national brands or were snapped up by larger companies looking to expand.

Today, the same scenario is occurring with beer, wine and spirits infused with hempseed oil, cannabidiol or cannabis terpenes. Colorado-based New Belgium Brewing, for example, recently unveiled a hemp beer, while California-based Lagunitas Brewing last year offered a brew infused with cannabis terpenes.

“We’re in a unique moment in time. There are no big hemp or CBD alcohol brands yet, so there’s a window – maybe for the next three to five years – to establish a brand,” said Smoke Wallin, chief marketing officer and president of distribution for Vertical, a company in Agoura Hills, California, that is developing a CBD oil that can be infused into alcohol.

Some big companies are wasting no time, especially with Canada poised to legalize recreational marijuana. Last October, New York-based Constellation Brands, which distributes more than 80 wine, beer and spirits brands, paid $190 million (CA$245 million) for a 9.9% stake in Canadian cannabis cultivator Canopy Growth Corp. Wallin and others believe more large beverage companies will follow.

 

Smoke Wallin, former WSWA Chairman and President of Vertical Companies

 

“I’m absolutely certain the Anheuser-Busches, the Bacardis, the Jack Daniel’s are going to get into this, but they will wait until marijuana is fully legal to do it,” said Wallin, who has more than 25 years of experience in the alcoholic beverage business. “Anyone that can get a brand established in the meantime, and show traction, is going to be very attractive to the big players.”

That translates into business opportunities for hemp growers, CBD producers and companies that extract oils such as cannabis terpenes. Those products don’t carry the same stigma in the United States as THC-laden marijuana, but it won’t be a slam dunk.

The marriage of alcohol and cannabis faces unique regulatory and legal hurdles, making it difficult for hemp, CBD and extraction companies to produce their own booze. The simpler option for those companies is to sell their products to alcoholic beverage manufacturers to get a foothold in what could become a lucrative product niche.

Striking a Partnership

That’s what Joe Pimentel did. In 2017, Pimentel, the owner of Luce Farm in Stockbridge, Vermont, decided to start producing CBD-infused honey to set his farm apart from other area hemp growers. He approached Long Trail Brewing in Bridgewater Corners, Vermont, about carrying the honey in the brewery’s restaurant and gift shop.

“The CBD hemp market is so immature, so our strategy is to align with a lot of Vermont brands that are better known than ours,” Pimentel said.
Long Trail decided not only to sell the honey, but also to make a beer with it. “We liked that the hemp gives us new flavors we can’t get anywhere else,” said Head Brewer Ian Harbage. But the honey played havoc with the beer’s consistency, so the brewers opted for Luce’s CBD extract and hemp terpenes instead.

Terpenes are separated out at the beginning of the hemp-extraction process, like an essential oil, and then the CBD extract remains. Pimentel used to do his own extractions, but “nothing we could create in our kitchen had consistent levels of THC,” he said.

He started researching the best extraction techniques and decided on a carbon dioxide method offered by the PhytoScience Institute in Waterbury, Vermont. PhytoScience now handles all of Luce Farm’s hemp extractions, and the terpenes are consistently documented at less than 1 part per million THC.

CBD has more health properties but not as much flavor and aroma as terpenes. “The main terpenoid in cannabis is the main flavor in hops, which makes terpenes and beer a good partnership,” said Andrew Follett, the owner of Philadelphia-based Keystone Canna Products, which was founded in 2014 to help hemp farmers distribute nationally.

Follett also said CBD, which has a slightly nutty flavor, is a better option for wine and spirits manufacturers that don’t want a distinct cannabis taste or smell in their products. But he noted that it takes time, effort and creativity to mix the oily product into beverages, which can deter some brewers and distillers.

Regulatory Headache

Like the cannabis sector, the alcohol industry faces a web of regulations – in this case from both the states and the feds. Consequently, hemp, CBD and extraction companies must be aware of the complicated regulatory process when wading into the alcohol business.

The U.S. Drug Enforcement Administration’s declaration in December 2016 that CBD is a Schedule I controlled substance – like marijuana and heroin – complicated matters. Last year, a Colorado craft beer producer, Dad & Dude’s Breweria, butted heads with the feds over the brewery’s production of a non-THC, CBD-infused beer. Dad & Dude’s had previously won approval for the brew from the federal Alcohol and Tobacco Tax and Trade Bureau (TTB). The brewery, which continues to sell the beer on its premises, is for now locked in a legal battle with the DEA as well as the agency.

The TTB, meanwhile, presents other hurdles. Any alcohol company that sells across state lines, for example, must secure approval from the agency. Back in 2000, the agency’s predecessor issued requirements covering formulas, processes and labels for domestic hemp products. The policy requires all alcoholic beverages that contain hemp or a hemp component to submit a lab report stating the amount of THC in the hemp, a move that dovetails with the DEA’s policy.

“It follows the DEA’s rules, and the intent of those rules are to ensure the product is THC-free or has trace amounts,” said Ryan Malkin of Malkin Law, a Miami Beach, Florida, firm that specializes in alcohol law.

In December 2017, Weatherford, Texas-based TVM Wines received TTB approval to manufacture and sell its hemp wine across state lines. The process took two years and 28 different paperwork submissions to the agency, said Elease Hill, TVM co-owner and vice president of sales and marketing.

Hill said the key was to supply the agency with lab tests showing the hempseed oil used in her sweet, citrus-based wines had less than 4 parts per million THC, and that the oil was derived from hemp stalks, roots or stems rather than flowers or resin, which is considered a Schedule I substance by the DEA.

“You have to be careful where you get your hempseed oil from,” Hill said. “I had one that was 3% THC, from mature hemp stalks, and the DEA said that was too high, so the oil must be coming from hemp resin.”

Hill found her suppliers through a list provided by the Texas Hemp Industries Association and by simply Googling hempseed oil companies. She read product reviews and then called the companies to check their references and lab work documentation.

Hill eventually partnered with Keystone Canna Products. Its hemp oil and food brand, Cannagenix, specializes in paper trails and lab testing, according to Follett, the owner.

“There are a lot of hemp and CBD products but not a lot of quality documentation,” he said, noting that growers and CBD companies that can’t produce a regulatory paper trail are likely to be shut out of the alcohol business.

Labeling Semantics

Hill said even though TVM’s wines contain CBD, they’re labeled as “hemp seed oil infused” because the TTB and DEA preferred the word “hemp” to “CBD.”

But, like most cannabis law, this is a gray area. The determining factor appears to be where the beer, wine or spirits are sold. Even if alcohol doesn’t cross state lines, regulations vary from state to state, just as they do with cannabis.

So far, Long Trail’s Medicator beer hasn’t run up against the TTB, even though the can says: “Vermont’s first CBD infused beer.” But the company has made only three small batches and has limited sales to the brewery’s pub.

In California, Petaluma-based Lagunitas Brewing uses cannabis terpenes in its SuperCritical Ale. CannaCraft, a vertically integrated medical cannabis producer and distributor in Santa Rosa, California, extracted terpenes for the beer using a carbon dioxide process.

“There is no THC in the beer, so we simply made the beer and did not ask for permission to do that which we do every day,” said Lagunitas founder and Executive Chairman Tony Magee. “However, the TTB became interested, and we are talking with them about it right now. I’m pretty confident they will understand what we intend to do, and we’re looking forward to making a whole lot more of it.”

 

Standing Up: A Personal Journey To The Legal Cannabis Industry

Standing Up: A Personal Journey To The Legal Cannabis Industry

I never imagined I’d be writing about this topic. For 25 years, I’ve enjoyed an amazing journey as a serial entrepreneur building companies and brands, leading companies in the beer, wine and spirits, distribution, and technology industries. The alcohol industry has been good to me and to my family.

Other than a little exposure in college, I have not been around marijuana. A few years ago, I met a bunch of U.S. Marines. Travis McVey created Heroes Vodka and I helped him launch the brand. His friend Stephen told me a story that has stayed with me. Stephen Cochran served as part of the 2nd (LAR) Light Armored Reconnaissance Battalion, 1st Marine Expeditionary Force. He served in Iraq and Afghanistan and was severely injured on patrol. Stephen spent nearly a year in hospitals paralyzed, unable to a walk. After undergoing an experimental procedure at Vanderbilt, he was miraculously able to walk again. Stephen said,

“In recovery, I suffered from extreme pain and Doctors prescribed me every prescription medicine you could imagine. The pain meds nearly killed me. That is when I turned to cannabis. Today I’m raising my family, writing, and performing music. I give back to veterans wherever and whenever I can ( Semper Fi Fund). Medical cannabis is the reason I can do these things today. It saved my life and the lives of many of my fellow veterans.”

This conversation opened my eyes to the many benefits of cannabis. There are more than 50 medical conditions for which cannabis is legally recognized as some form of therapy or medicine including Alzheimer’s, anorexia, arthritis, cancer, chronic pain, epilepsy, and post-traumatic stress disorder. I’ve come across people suffering with chronic pain and others going through cancer treatment. Cannabis allows them to live their lives without the destructive side effects of opioid based pain medicines. The more I learned about the benefits of cannabis to people suffering, the more research I did to understand the industry. Based on this, I’ve come to believe that its place in society needs to change.

BEVERLY HILLS, CA – FEBRUARY 15: Al Harrington (L) and Viola Harrington arrive at exNBA Star Al Harrington Launches New CBD Business at Wolfgang’s Steakhouse on February 15, 2018 in Beverly Hills, California. (Photo by FilmMagic/FilmMagic)

Al Harrington is a 16-year NBA great and cannabis entrepreneur. I used to watch Al at Pacer’s games. Al found his way into medicinal cannabis and CBD to treat his pain from a botched knee surgery. He tells a funny story about recommending medical marijuana to his grandmother Viola. She suffered from multiple ailments, and after some initial resistance, she tried it and immediately felt better. His cannabis brand, Viola, was soon born. He also has his Harrington Wellness line of CBD. Al’s story is genuine. In an interview with Al, former NBA commissioner David Stern pronounced that the laws and rules need to change around cannabis (See Al Harrington and David Stern). Al, and my friend, musician, and NFL great Kyle Turley, have been outspoken advocates for awareness and change. It’s clear, cannabis prohibition and the aggressive pursuit of its enforcement have also particularly ravaged the African American community.

The opioid epidemic is destroying lives, families, and devastating whole communities. I personally have more than one friend who has lost a (grown) child recently, due to accidental overdose or tainted product. We must do something to stop this epidemic. Doctors overprescribing opioids is one of the primary causes. Many patients start out with legal prescriptions and become addicted. They then turn to the illegal market to meet their addiction needs. Cannabis can be used to help wean people off these destructive drugs. Ideally, it could be prescribed to avoid opioid abuse in the first place. It is a legitimate part of the solution. Given this, I decided to find out how I could make a difference.

I attended the MJ Business conference in Las Vegas and networked with Young Presidents Organization (YPO) and other friends. I wanted to figure out how I could play a positive role in this emerging industry. I did some research to understand what led to the abrupt prohibition of cannabis in the US in 1937. I learned that Indianapolis pharmaceutical powerhouse, Eli Lilly was in the cannabis business until the prohibition. Cannabis prohibition seems to have been motivated by a combination of racism and the business interests of a few that had political influence (Why Is Marijuana Illegal). I learned that many feel the ratcheting up of cannabis to a Schedule I drug (the same as Heroin) in 1970 also had racist motivations. It was certainly not based on science.

The American public now overwhelmingly supports cannabis legalization, with over 64% in favor according to Gallop. It is more popular than any current politician. State by state, citizens have made local option the law of the land. There are now 30 states plus Washington DC where medical cannabis use is legal. There are 9 states where adult recreational use is now legal. This is a prime example of the importance of state’s rights leading the way.

As the industry has come out of the shadows of illegal activity and into the light of permitted activities in many states, incredible entrepreneurial spirits have been unleashed. I feel the excitement of being at the forefront of another Repeal of Prohibition. This time though, we have the added dimension of extraordinary medical benefits. Drawing from my 25+ years in the beverage alcohol business, I see many parallels to the industry I know well. The legal framework around local option, licensing and taxes are similar to alcohol beverage laws in many respects. Constellation Brands [STZ] recent $191 million investment into Canopy Growth [WEED] further convinced me that this developing industry is going mainstream.

Legal cannabis is likely to rival the Beer, Wine and Spirits categories and exceed $50 billion annually in the coming years. Some analysts predict the US industry over $100 billion. Regardless of the number, it is and will be massive.

I met my partners Todd Kaplan and Courtney Dorne through YPO last year. I joined the team at Vertical Companies as a partner, President of Distribution and Chief Marketing Officer in January 2018. I could not be more excited in this venture, building a large scale new enterprise in the emerging cannabis space. One of my objectives will be to play my part in bringing the right coalitions together to address and correct the State vs Federal conflict that exists today.

%d bloggers like this: