“The majority of people that qualify for social equity didn't qualify like myself. And one of these licenses, they didn't qualify because they were arrested for cannabis or their immediate family members have and they qualify based on where they live. Now, there's some truth to that, that neighborhoods have been targeted and people suffer because of that.” - Mike Malcolm
Welcome back to the To Be Blunt podcast! In this episode, Shayda Torabi welcomes Mike Malcolm, founder of Weed Travel Food, to talk about the disorderly legalization processes, how the cannabis lottery system works, and how he equipped himself through the challenges.
[00:01 – 09:56] Mike Shares his Cannabis Journey
[09:57 – 24:09] The Mystifying Processes of Social Equity
[24:10 – 38:55] Inside the Cannabis Lottery System
[38:56 – 59:29] The Flawed Legalization Processes
[59:30 – 1:01:54] Food for Thought: Prepare for the highs and lows in the industry.
I'm Mike. I was born and raised on the south side of Chicago! I’m a real estate investor since I graduated high school in 2000 and a Realtor w/ @atproperties since 2012. I’ve always been passionate about cannabis, travel, and food so I founded the @weedtravelfood brand where I operate my media production company “WTF Media LLC” and my cannabis industry consulting firm “WTF Consulting LLC”, as featured in major media outlets like the Chicago Sun-Times, FOX News and ABC News. I work with cannabis companies and brands across the country on everything - product development, content creation, community engagement and outreach. I’m a social equity applicant and currently have 10 dispensary license applications under review by the state of Illinois. I’m an equity partner of the @cronjaculture cannabis brand. My partners have distribution, manufacturing, and delivery licenses based out of Los Angeles, California. We currently have ancillary products for sale online, dispensaries in LA and Chicago, and we’ll have cannabis products on California shelves in 2021. In March 2021, I created a syllabus and course about Cannabis Marketing and Branding for Olive Harvey College. I'm currently an Adjunct faculty member there, teaching my course weekly and I sit on the City of Chicago College's Cannabis Advisory Council. I’m a proud member of Chicago NORML, Cannabis Equity Illinois Coalition, and National Cannabis Industry Association.
Connect with Mike
Visit https://www.weedtravelfood.com/ and follow him on Facebook, Instagram, Twitter, and LinkedIn @weedtravelfood
Shayda Torabi has been called one of the most influential Women in WordPress and now she’s one of the women leading the cannabis reformation conversation building one of Texas’ premier CBD brands. She's currently the CEO and Co-Founder of RESTART CBD, a female-run education first CBD wellness brand. And has formerly held marketing positions at WP Engine and WebDevStudios. Shayda is the host of a podcast for cannabis marketers called To Be Blunt, where she interviews top cannabis brands on their most successful marketing initiatives. When Shayda's not building her cannabiz in Texas, you can find her on the road exploring the best hikes and spots for vegan ice cream. Follow Shayda at @theshaydatorabi
“Because we're in cannabis, a lot of it is really unclear on how to proceed and move forward. And so I think it's really cool to hear these kinds of new and interesting ways to navigate the system.” - Shayda Torabi
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Michael Malcolm 0:00
Illinois started its medical cannabis program in 2015. I believe the barriers of entry to get a license at that point were ridiculous you had to have it was a $50,000 application fee non refundable. You had to have $250,000 in a reserve account that was not to be used for operations. You have to just be able to show that you had $250,000 in an account that you weren't planning on using to run your business. I didn't even apply for that one. Fast forward to 2019 when the state of Illinois released their adult use or recreational licenses as they're also called. They released that under what they called social equity guidelines. So Illinois, every state in the nation has had a failed war on drugs, cannabis being only one of the many drugs that have been criminalized over the years.
You're listening to two B one B podcast for cannabis marketers, where your host Shayda Torabi and her guests are trailblazing the path to marketing, educating and professionalizing cannabis light one up and listen up. Here's your host Shayda Torabi.
Shayda Torabi 1:31
Hello and welcome back to the doobie blonde podcast. I'm your host Shayda Torabi, cannabis business owner and brand marketer. And I'm so glad you're here with me for a another episode of the podcast. I think I'm on episode 68 which is super crazy. I'm so appreciative for this opportunity. You can't see my face right now, but I'm literally grinning ear to ear. I just think one step at a time as a model that I reflect on a lot and it really has been a joy to be producing this podcast for y'all. So I hope that these episodes have been informative and rewarding. So today we are tuning into one man's a story and journey of navigating his estates recreational adult use cannabis licensed lottery system. Wow, say that 10 times fast. I had come across Michael Malcolm in a few different circles. I first saw him hanging out in the early days of the cannabis clubhouse craze, and then started paying attention to his social media account, we'd travel food, and then about a month ago saw a blog post he had written on weed travel food that was gaining a lot of attention from the industry and our peers. He was sharing about his experience navigating the Illinois cannabis adult use license lottery system. And the content he wrote about had me literally gobsmacked. I was just like so distraught to hear how it was playing out in Illinois. And I think that's an aspect of the podcast that I personally appreciate. It's always good to get a good understanding of how other states are legalizing because we always hope our state does it in the quote unquote right way. But there's really just no telling how when what or why a state's going to do their roll out the way that they do. So of course, Illinois is one of those states that I personally haven't been to since recreation was legalized, but it's on my radar. And a lot of msos are coming out of Chicago like cresco Labs, verano holdings and green thumb industries to name a few. Due to COVID, Illinois had a delay in issuing their licenses. But when it came time to holding the lottery, things kind of spiraled and in terms of who they awarded licenses to, compared to the expectations required to even qualify to apply in the first place. There was just a lot of discrepancy. And basically, you know, all that Mike tell his story, but it's a crazy good one. And let me tell you, he stays so positive throughout all of the setbacks. I really hope you'll appreciate his approach because, again, these stories are meant to help prepare us, all of us to help shape the industry in whatever way we can. So that yes, there are rules and regulations but that we all have a fair chance at participating in an industry we love. So without further ado, let's welcome Mike to the show.
Unknown Speaker 4:27
My name is Michael Malcolm. I am from Chicago. And as my day job by day, I'm a realtor. I've been working in real estate on and off for over 20 years now since I was out of high school. But the way I got into the cannabis industry is kind of funny. So I've always had a long history with cannabis. always been a Canada sewer source. My name is Lord I like to use. So growing up here. I had a lot of friends that were in the traditional industry, let's call it and so like one thing about me is I've always really just About like my flavors, my terps I don't even know it was called, it was terpenes at the time, but I was always about the flavor. I was always about the freshness. And I was always about getting a really clean smoke. So like I was that guy, my neighborhood that stopped smoking blunts. At a young age, like I was like, papers only, like, and I was the first one like bringing vaporizers around my friend dry or vaporizer and stuff, people you know what the hell it was. So that was always kind of that was kind of like the background like I used to, for lack of better words, I used to pick packs for like my guys that were in a traditional industry. So they would get stuff and and I'll say, I don't like this. I do like that, that type of thing. So it's kind of like my man going way back to Kansas. But the way I got into the legal industry is again, I'm a realtor. And a few years ago, one of my longtime real estate clients got into the cannabis industry out in Colorado. And we were really great friends, we used to do a lot of deals together and smoke weed after we cut the checks, all the business was done. And so he was like, Man, you should come up to Colorado and let's make this move. And I was like, I don't have to go to Colorado to smoke weed. This is again, 2013 2012, something like that. But again, so he goes out to Colorado. And I always was into like traveling. I've always been into travel. I've always been a foodie. And so a lot of my friends and family were like, Oh, you should do like a travel blog, or you should do a food blog. And I'm like, Well, I'm not a blogger. I just like to do what I do. And some people like oh, maybe we should do a we blog. And I was like, No, but when I saw legalization on the horizon here in Illinois in 2018. I thought maybe I could do legal weed, travel and food blog. And I was like, Huh, that might be interesting. So I started doing research. And I was like, What is the food blog even look like and who's doing this already. And so I came across an article in GQ magazine. That was said Al Harrington wants to be MBAs first cannabis millionaire or something like that marijuana millionaire or something like that. And I was like, and so in the article he kept talking about Colorado is where the culture is. He's Colorado is where the culture is. Colorado is where the culture is. And I was like, Colorado, like, everybody knows this. California is where the culture is, right? But he kept saying Colorado on the article. And that made me think about my friend who had went out to Colorado a few years prior, and had got into the cannabis industry. And so I call up my friend right there on the spot, as I was reading the article, and I, you know, called him and I said, hey, how's business? And he said, Oh, everything's great. We're in Colorado. We're in Oregon. We're in California. We're in Michigan. We're down, bro. Like, how did you move so fast? Like what happened? And he was like, Oh, I don't know if I told you. But my business partner is Al Harrington. Now Shayda when he told me this, I still have the article up on my computer screen. Like I literally was reading the article, picked up my phone and call him, right and he just so happened to pick up right away. Sometimes he calls me laters. How serendipitous. Crazy. He picked up right away. And I'm looking at the screen. I said, Biola that's your company. Yeah. I said, I'm reading about you right now. Like what the hell? He's like, Oh, you must have seen the GQ magazine article. So that's like, what started everything. Because once I saw it, I was kind of like the push that I needed to. That's what I needed to know that this was the right direction that I was headed on. Alright, because I really was like, I had no clue what I was doing. I still don't know what I'm doing. But I don't think any of us do. Yeah.
Unknown Speaker 8:35
But so that's kind of like what kicked it off. And a lot of things happen from them. But long story short now on cannabis consultant I work with sent up to several companies across the country, both msos and small startups, people that are just getting, I work on everything from product development, to marketing and advertising, to license acquisitions, to community engagement and outreach initiatives. So I do that. I also the founder of the we travel food brand, and website, I can check that we travel food calm. I'm also a part owner of another cannabis brand out of California, which is kraja culture, my partners. We currently have product in what 22 stores in five states ancillary products, these leather rolling trays, and we are my partners also have manufacturing, distribution, delivery and co packing licenses in LA. So I have that going on. I also teach at Olive Harvey college, one of the City Colleges of Chicago here in Illinois. I teach cannabis marketing and branding for Olive Harvey and I am a social equity applicant here in Illinois. I currently have 10 applications and that's going through the process right now to determine who's going to get licenses here for dispensaries talking about a lot on my plate.
Shayda Torabi 9:58
You're doing a lot but it's really bad. To kind of hear your journey and your story, because again, I think the center of this podcast is just to find some people who are equally doing interesting things in cannabis, maybe it's not the same, but it's like, Man, it's really cool to just hear what you're up to and how you kind of got your feet wet in the industry and sort of compress into it a little bit more. When I was introducing myself before we were recording I kind of highlighted that we met kind of low key originally on clubhouse which shout out to clubhouse, I think it's kind of had its heyday, and maybe some lower days there and here. But I think that getting connected in the community is something that's like super important to me just to be able to build these bridges of understanding, again, what's going on in Illinois is definitely different than what's happening in Texas. But being able to reach over the aisle and get to hear someone's story and kind of learn from the lessons that they've gone through I think is really important and really powerful. And so that's where I first kind of you know, got connected to you and checked out your food blog and my background a little bit too is I used to be a food blogger, I still very much love of food, but definitely like Kismet in the same content creator kind of vein is just like I love these things in life traveling food very similar to you. And so an opportunity to start creating content with it now, again, I'm still in Texas, so I don't have legality behind her. But I like cannabis. It does. I mean, I talked about CBD and like their quote like cannabis, but it's definitely just kind of existing in that kind of factor. You're into like kind of that one arm opportunity or something. But there's like so many other things going on so many other like hands in the pot. And so the point is, I had been familiar with you checked out your stuff, obviously love your passion and spirit but didn't really stay connected to you until I saw some posts that you had made was getting a lot of traction. And that post was about kind of what was happening from your own personal experience. I know you just mentioned that you have 10 licenses in the kind of pool for Chicago licensing. And I wanted to kind of pick that apart a little bit because it got a lot of attention. I saw so many of my peers in the industry just kind of resharing it. And again, I think for the listeners sake, sometimes we live and exist in isolation. Maybe we're in a legal state, and we're like, oh, we're in California, like who cares what's happening in like Chicago, or Illinois or what's happening in Austin, Texas. But I do believe in kind of having a good understanding at at the market, like at a high level. And so when people come to me, they're always like, oh, you're gonna open up a marijuana dispensary when Texas legalizes or there may be in another state. They're listening to the podcast, and they're like, oh, man, I really want to get into the industry. Oh, I'm from Phoenix and Arizona just went legal. Like how do I get a license? Shayda. And I'm thinking it's really unfortunately not that easy. I think we see that happening with different states legalizing I think Arizona being a good one they legalize pretty quickly and open up their market pretty quickly versus like, New York legalized, but their program doesn't actually roll out, I think until 2022 2023. So legalization and getting to operate legally in an industry is a buzzword, I feel like a buzz term that gets thrown around. But like actually implementing it actually going through the process is something that is still really mystifying for a lot of people. And so again, when I saw your posts, I just saw the rallying of the community kind of behind your story and kind of what you were going through. And when I started reading other articles around what was happening in Chicago, specifically with licenses, I was just like, What the fuck, like I got to talk to Mike, I got to see from his perspective, kind of what's going on. So if you can share with us, obviously, your perspective of what the current situation is, to the degree that you feel comfortable sharing. Sure, but kind of in addition to that, I'd love to hear from your perspective to just what is going on with Illinois legalization. I mean, I know high level numbers, like you kind of mentioned it was legalized officially in like 2018 2019. But what did that look like? How long was medical before there was RAC? Just what is the pulse of Illinois cannabis? And then maybe dive into your experience going through the license process?
Unknown Speaker 14:21
Sure. No, and I appreciate you for the kind words to so yeah, for sure. Starting off, Illinois started its medical cannabis program and 2015 I believe the barriers of entry to get a license at that point were ridiculous you had to have it was a $50,000 application fee non refundable. You had to have $250,000 in a reserve account that was not to be used for operations. You have to just be able to show that you hit $250,000 in an account that you weren't planning on using to run your business. I didn't even apply for that one. Fast forward to 2019 when the state of Illinois released As their adult use or recreational licenses, as they're also called, they released that under what they called social equity guidelines. So, Illinois, every state in the nation has had a failed war on drugs, cannabis being only one of the many drugs that have been criminalized over the years. And so the way that Illinois qualifies people for social equity is three different ways you can qualify for social equity in Illinois. Number one, you either had to be arrested for cannabis, or one of your immediate family members, mother, father, brother sister has been arrested for cannabis, you qualify for social equity that way, that is how I qualify for social equity because I was actually arrested for cannabis and I have a cannabis conviction on my record. Alright, the second way that you can qualify for social equity is if you live in a certain area that has been determined by the state of Illinois to be disproportionately impacted by the war on drugs. The third way that you can qualify for social equity in Illinois, is if your company agrees to hire 51% of its employees from an area from those disproportionally impacted area. So we can start with the backups right there. Right? So let's go backwards and then go the other way, right? qualifying based off of who you claim that you're going to hire. Right. So that means that you say to that do not live in Illinois, you can create a company, apply for social equity, and promise that you're going to hire people that live in rough neighborhoods in Chicago. And now your company is considered social equity. just based off we call it the slave master class. Because just because you claim that you're going to hire somebody from these areas, Well, for one, it's like you're intentionally going after certain people, right? And then yet, there's no real connection there. So that's one that was like the first messed up. But the other thing is, and this is something that I'm seeing as I'm going through the process, is that the majority of people that qualify for social equity didn't qualify like myself. And one of these licenses, they didn't qualify because they were arrested for cannabis or their immediate family members have and they qualify based off of where they live. Now, there's some truth to that, that neighborhoods have been targeted and people suffer. Because of that. There's no doubt in my mind, because of that neighborhoods are over heavily policed over policed, there's a lack of resources, people are stigmatized and discriminated against based off of the neighborhoods that they live in and may or may not be harassed by the police, because they live in these neighborhoods, no doubt about that. But what's also true, I know this as a realtor, as is the majority of these neighborhoods, especially in Chicago, that were determined to be disproportionately impacted areas by the war on drugs. They've been heavily gentrified. So when people that qualify for social equity, because they live in those areas, don't look like the people who you would ideally think are the people that that law was meant to target, right, which are brown and black people, right? That's not really what happened. A lot of people qualify, because they live in these areas. And these areas have like million dollar condos and million dollar two Bay condos. And it's like, and again, I know this, because I saw the app. I mean, I saw the map that where the boundaries were defined by the state. And I also am a realtor. So I know what the property values are. I know how much money you have to make to live in those neighborhoods. Right? It's one of those things where hindsight is always 2020. But those are definitely things that I think needs to be prioritized. And then the first way I spoke about qualifying is based off of your criminal record. The flip side to that is that someone like me qualifies for social equity, because I had a small, small amount of cannabis on my arrest record. But if you have a large amount of cannabis on your arrest record, say like a felony, you don't qualify for social equity. So Illinois did this whole talk about how we were going to be progressive and all this other stuff like that. And because the state passed the social equity license program, without it being voted in, it's something that the governor did on his own, and just made it a part of law. So that was like, the good thing about it. The bad thing about it is that is all the fallout that's been happening since so one of the biggest issues with the program that I've seen, it's something I mentioned in the post that you were talking about, is that it was never really set up from the beginning for social equity as you would think of it right people who Maybe not don't have the most means they don't have a lot of money. Right. But they qualify. Right? It wasn't set up for those people. What the state did was the state allowed applicants to put in an unlimited amount of applications for a limited amount of licenses. And they also allow those companies to win multiple licenses. And that Limited License grant, say that one more time, the state allowed people to put in an unlimited amount of applications for a small number of licenses, and then allow those people to win multiple licenses. And that limited licensing round. So what happens is that you have companies that came in, and there were, a lot of things happen, but which keep it simple. The first lottery, there was a total of 55 licenses given out. And there were companies in that round, that won 12 licenses. Right. Now, of course, do you think that those are lower income, social equity, qualified social equity applicants? No, these are large, huge companies, they came and I had the list, because another thing that they did was they had lotteries, right before to do the license to award the licenses. And before the lotteries, we got the list of who was going to be in the lottery and how many slots they had, there were sheets where the entire sheet was one company, that mean like a lot many applications in. So what this really amounts to, is that this was the state is going to say that they tried to do something for equity for you know, social equity. This was a cash grant for the state of Illinois, they had no intention of true equity. They wanted money, which I can't blame them the state is broke, what they did was they played off of the hopes of people who thought they really had a chance, I'll be honest, I didn't think I had a chance from the very beginning. And I say that, because another thing that the state did, which was the only way to get 100% of the available points on the application is if your company is 51% owned, and controlled by a veteran. Now, that doesn't make sense for a couple of reasons. Number one, this is a social equity round, and I told you already how social equity was defined right? At no point in that conversation that our veterans talked about. Now, I hate that I have to say this, in every interview that I do have nothing against veterans that have nothing against veterans. My father, as a Marine, my business partner, is a Marine, lots of fans of friends and family of mine on active duty, have no problem with them being in the industry, I have no problem with them getting licenses. But the intent of this bill was not for veterans, and what we're seeing. So when the state has it so that the only way that you can get 100% of the available points is that 51% of your company, the majority is owned and controlled by a veteran. That means I knew from the time that I looked at the bill at the application that even though I was qualified, right, because I'm a social equity applicant. I qualify as a social equity applicant. And I know that I'm qualified based off of the everything that I've been doing around the industry, I knew that realistically, I had zero chance to win, because I'm not a veteran. And I didn't want to give 51% of my company and control over to a veteran just so that I could get a license. So those were kind of like the most obvious things from the very start to let me know that this wasn't really about social equity. The state wanted certain people to get licenses. And that's what we're seeing. If you just do just some quick statistics, the vast majority of veterans are white men.
Unknown Speaker 24:10
Just the truth, the vast majority of veterans are white man veterans comprise of I think total 12% of the black community are veterans only, but only 1% of the entire population are veterans. Right. So the numbers just don't add up. And here in Illinois, what's happened is the vast majority of the licenses have gone to veterans, the state issue 40 craft grow licenses, all 40 once a veteran owned companies. The funny thing about that today is that today, the judge is supposed to rule whether or not this is constitutional.
Unknown Speaker 24:50
Again, I just told you all 40 licenses went to veteran owned companies in no way should that ever even happen. Right and I'm sure the vast majority I don't know. Every single one of the 185 dispensary licenses that were given out, I don't know the makeup of every single team. But what I'm seeing from the people that I've talked to is the vast majority of those also want to veterans. So it's hard to say that this was, it's hard to call it constitutional, because I don't think you can give any one group. Anything, you can't make it so that any one group is a sign of reason that the state can't say, Oh, these licenses are for black people, or these licenses are for brown people, or these licenses are for women. You can't do that, because it's discrimination. Right. And to me, it's kind of clear click. But considering who won these licenses, which mostly are super, super well connected people and large corporations, considering those other people that one, I find it hard to believe that even though it's painfully obvious that it's discrimination that occurred, I doubt that the judge is going to reverse anything today. I just don't have I have zero faith in the system. So we had, okay, so because of the veteran point issue, there was a lot of protests and stuff that happened last year, because when the state initially announced the winners last year, because last year, the state was only going to give out 75 dispensary licenses. When they announced the winners for the lottery. For the 75 licenses. There were only 21 companies that qualified to go after 75 licenses. People went nuts. Like there's no way. So kudos to the state, I will say something nice about the state, the state said, Okay, this is wrong. This wasn't our intention, we're going to go back and we're going to try to address the issues. So what they did was they added more licenses and more lotteries. They added two new lotteries. One lottery was for people, oh, so they added another lottery. And so the first lottery was for as long as you scored 85%, then you got into the lottery. And because again, the only way that you that the those 21 companies that got into that first lottery, initially, they had perfect scores, they were all veteran owned companies and people like hey, all these licenses are going to go to veterans, and they're only going to 75 vices are going to go to 21 companies. How is that fair? Right? So the state said, Okay, we're going to reduce the threshold that you need to qualify for the lottery. Now, again, we were only talking about two points out of 250 to two points went to veteran where the veteran points, right, we're talking about two points, instead of dropping it down to say, okay, you still need to have a solid application, they dropped it down and say, okay, you still need to score 95% 96%, something like that, they dropped it down to 85%. So now, they flooded the licenses. So now all of a sudden, some of the things that I worked really closely on, like the community engagement aspect, and what I want to do for my community and how I plan on giving back, all of a sudden, those points don't really matter as much, because all you need to do is score 85% to get into the lottery. Right. So that was one lottery, and then you flooded with not just the top people, but also with like b minus people. Like like B scores, you got a bunch of b grade people in there. And then you have some a bunch of top scores in there. I just referenced my final score was a 95%. So as I'm saying, like, like a lot of people got into that lottery, who had no idea what they were doing. So anyway, so that was that. And then the second lottery that was added, they added that for what they call it true social equity, and true social equity are people who were either arrested for cannabis in the past, it was the first to that third category, based off of who you're going to hire qualifying based off of who you're going to hire. Those people were not included in the second lottery round. So there were two lottery rounds that were given out 55 licenses each. And then there was a third lottery round, that was still the original lottery round of the 75 licenses that were going to be given out. And the only way you're going to you qualify for that lottery round was still if you had the veteran points, and that lottery round had the largest pool of licenses as well 75 licenses available in that library around 55 and the first two lottery rounds. So okay, so now there's a whole lot, but I'm trying to get people to understand it because what's really important about this is that as I rail against the system, Rage Against the Machine, I want to acknowledge the fact that the state did they did address some of the issues. They tried because they still failed miserably. They address some of the issues. But again, the problem is One of my biggest problems were was that when they added these two additional lottery rounds, they still allowed all the companies the veteran owned companies in the first two lotteries. And then not only that, not only they allow them in it, they help the smaller lotteries first.
Shayda Torabi 30:25
Hello, just want to take a quick moment to thank my sponsor, and full disclosure, my company restart CBD, restart CBD is a brand that I built with my sister. So we are family owned and a women owned, we do operate a brick and mortar in Austin. So if you ever find yourself in Central Texas, we'd love for you to come say hi. But we also ship nationwide and we carry a wide range of CBD products, we really care about this plant, we really care about educating our customers, this show would not be possible without their support. So please go check us out at restart CBD calm and use code to be blunt for $5 off your next purchase. Thanks. And let's go back to the show.
Unknown Speaker 31:16
You had the absolute worst odds, if you were in that first lottery, that terrible. And then the odds for the second lottery were a little bit better. But not much the odds for the third lottery were better, they did expand it from 21 companies to maybe 100 or something like that, I don't know. But the odds were still a lot better in that third round, because there were a lot less people in that third round, and there were a lot more licenses available. So bottom line, I didn't win any right 185 licenses, give it out 10 applications I put in didn't win one. And that's where we are right now. So after the second lottery, and I saw I wasn't gonna win, I didn't win anything. That's when I wrote that article that I wrote that piece that you're talking about for my website. And I just basically said what I initially thought that I never really had a chance to win. That's why one of the ways that I the way that I decided to apply, I had a lot of friends and family that wanted to apply with me. And I just knew that I didn't want to spend their money on something that I just didn't think was realistic, I just didn't think that the state was going to do it. So I had a couple of msos here and state msos that were interested in working with me to be a brand ambassador for them. And this was again in 2019. And at the time, they were saying that they couldn't pay me because adult use market didn't happen until 2020. So it was 2019. They said, Hey, we can't pay you in cash right now. But we'll give you free we'd like you to be our brand ambassador for us. And we'll talk about payment in 2020. And I told them, I said, Well, since you can't pay me in cash, why don't you help me write my application and be my partner with me on this, you put the money up our do my thing. And we'll partner and go after these licenses together. They agreed. So I partnered with Columbia care, which is a large MSO and putting on 10 applications. And they know my attitude because I talked to them afterwards. And I talk to them, of course throughout this entire process. And I was like, the reason that I partner with you guys is because I didn't think I had a chance because I never thought it was going to be fair. But it's almost like voting. If you don't vote, you can't complain. So if you're not in the game, it's hard to talk about all the problems in the game if you're not in it, right. So I had to find a way to get myself in the game. with as little money out of my own pocket, I still spent a lot of money on my own out of my own pocket, just paying for my attorneys to help me negotiate the terms of my deal with what I spent a lot of time and two because initially, I thought that that was something that was going to really matter to the state of Illinois, what your operating agreement is like, right? What type of what are the terms that you have agreement with your partners, right? Do you really have control over your company? And who does what and who has this type of power. And as far as I can tell, none of that stuff matters. The state, again, the state just like whatever, they're just trying to rush this through as fast as they can possibly can right now. But just two things that are super odd about what happened. The state is doing everything we can right now to push this along and get these licenses out. The thing is that there were a lot of lawsuits throughout this process from different groups of people who were unhappy about certain things throughout the process. Every single person, every group that filed a lawsuit has now won a license. Right? So the odds of that happening and it just being random are really funny. I can say the state does not want any more hesitation. They don't want any more holdups with this stuff. They want these stuff, this stuff to go out. So like there were two companies that found losses because of the veteran suit. Both companies won licenses here, the lottery raffle. So just so happened. just coincidence. That was weird. And then the other thing that I think is just disgraceful on behalf of the state that the state did was that they held all the lotteries and in secrecy. So it was zero transparency, there's no video or audio of the lotteries actually being actually taking place. The lottery was ran by the Illinois lottery like that you would like buy lottery tickets from, like, that same lottery system is the lottery system that they gave out. Billions of dollars worth of licenses, right? Again, hundreds of millions, a billion dollars worth of licenses, it was all done in secret. We just got to live, we knew when the lottery was gonna be the day that the lottery was gonna happen. And then I think FDR just released a list of winners. You haven't. So I'm not going to claim that anything happened. And I don't have any proof of that. I also don't have any proof that I lost, or that anybody won either, though. So I will definitely say that for any state coming online, is that if you want people to have trust in your process, transparency is key. Because in January 2020, the msos got had a lottery for their second location, the state issue gave out licenses for msos. Before the social equity. This was in January 2020. When the state held that lottery for the msos. They did that in City Hall. People were allowed to come I was in the room for the MSL lottery, I was in the room, the people in the room, the balls were spline and drawn in front of everybody it was cameras there, the msos did not let the state play with them like that. Right? They went, they went for all the sneaky stuff, right? And for the state to treat its constituents worse than they treat these large, multinational multi state companies. To me, it's like I said, disgraceful. And then like, now, if you say something like, well, what lottery? Like, Oh, are you trying to talk down on our process? And are you trying to call us? And it's like, well, why would you do it a secret? Why would Why? How come these large companies get treated better than people like myself, I don't understand why they were holding their secret. So I just have zero faith in this entire process. here in Illinois, it was the I call it a scam. But I call it a scam more so not because of all the secrecy and stuff that was hidden. But just because it was never intended to be equitable. It was all about the state getting as much money out of people as they possibly could and promising some equity. And sure there's going to be there's a few true social equity people one there are definitely some I want to I'm not trying to rain on anybody's right. There's definitely some true social equity. It's just not many. It's just not many. And I know that there's very few people who want who actually have a criminal record for weed. I'm gonna go on a limb and I don't care. I'm sure they're gonna be mad. But I'm sure the vast majority of these people who want know nothing about we, and they were not part at all part of the traditional market. I know nothing about we I sold weed to people who won licenses. So we to people who want licenses, people who didn't know where to get it on their own. This is some years back. But some people I know some of you know a few other people that want some people don't want I sold them that week. Because they didn't know where to get it from. And now they have a license to sale. We they never had no record. And I had like I can't even know where to find it from and now that's who is going to be who the licenses went to. and ran.
Shayda Torabi 38:56
I mean, you shared so much. It's fucking one. I'm so sorry to hear that. That is the reality of licensing in the state of Illinois. Does it surprise me? Unfortunately, no. The more conversations I have with people like yourselves reflecting different states that have gone through different steps towards legalization, both medical and recreational adult use. It's very appalling and really heartbreaking that it's all unfortunately about money. And yes, I do think that there are some I like you. It's like I don't want to rain on anybody's parade. I don't want to say that there aren't good people who have succeeded to navigate, whether it's an individual brand or license or an MSO or just making headway in their state's process. But the reality is, there is no clear playbook for how this is supposed to go down and if you happen to be in a state or city that fucks it up for lack of a better word. You like you want to work in cannabis legitimately, legally, you're going through the process you're applying, you're doing the due diligence, I think it's really cool to hear how you kind of spun that opportunity with that MSO to get them to kind of support you, which again, I
think from a benefit to the listeners, I know that there's a lot of different, I always have a lot of different ways to the top. But I think that because we're in cannabis, a lot of it is really unclear and how to kind of proceed and move forward. And so I think it's really cool to hear these kind of new and interesting ways to navigate the system. And so kudos and credit to you, because I'm sure nobody had really done that before you to be like, Oh, this is a good idea, I should do it this way. It just kind of was an opportunistic, hey, let me take advantage of the situation to benefit me and benefit the brand because they were getting your ambassadorship. It wasn't like they lost out on you working with them. But it's like, Hey, you can't pay me, let me leverage this for my benefit when it comes time to me going through the process. But Holy shit, it just is so frustrating, because again, I think the podcast from my perspective is always try to speak about kind of the marketing aspects. But like I highlighted, you can't really market something if you don't have a business operating. And when we come down to the legality of being in the cannabis industry, getting a legitimate license is a part of that process. Maybe it's not, again, the straight narrow path that everybody takes, because I know in certain states and situations, maybe you don't need the license, but you're the partner or you can you know, tack on to someone else's license, let's say if you want to make edibles out of someone's flower, or blah, whatever the case may be. So the whole point is just to uncover different tactics and ways to navigate it. But man, it really blows when you hear the excitement of cannabis turning the page and coming into the limelight and trying to be legitimate. And then it's like, What the fuck is the point if I can't even legitimately be in the industry? And so that's where I then take that commentary of like, when people ask me about Texas, I'm like, Are you fucking kidding me? We don't even I can't even project to tell you when I think Texas I mean, I can't I can project I think Texas, maybe have an open medical market because we have baby medical marijuana, but it's definitely nothing like medical and some of these other states, but we're to your state. So we didn't have a lot of headway with this last legislative session, which just wrapped up in June. So now I have to wait a whole nother two years. And I believe you're not going to have recreation until you have a proper medical program. So to me, I'm looking at 468 years before you actually see medical marijuana in Texas to then even open the door for recreation adult use that I'm like, well, who's to say if they open it up? Are we gonna even have an opportunity? And then I had another guest on the show. Liz, she's from California. She currently is working with Canna craft but has done stuff with med men and some other brands prior. They said we were talking about Yeah, Lizzie doll. She's also Yeah, also from clubhouse. Yeah, he was telling me about how when California was medical, certain brands who had established medical licenses and medical dispensaries. Again, not that you need to like expect, and maybe it's our fault as the industry. Maybe it's the state's fault as the law coming down, but like, Hey, I got the medical license. I'm medical dispensary. I'd like to anticipate when recreation happens, I can get a recreation license. Yeah, I've put the goodwill and I'm in the community, I do all these programs. I'm this, that and the other and she's like, you wouldn't be surprised to hear half the companies that had medical licenses, couldn't go get recreation licenses because they didn't get them. And it's like, just because you are here presently today does not guarantee you to still be here tomorrow or the next year or three years from now. And so it's again, I always hate to be the bearer of some sort of truth on the podcast. But that is the impetus on To be blunt is like, let's talk about this shit because it's the reality of working and operating in the quote unquote, legal cannabis industry. So kind of a follow up question I have for you is, what was the licensing application like? Especially given how you said there were points associated to it. So it sounds like you had to not only invest like money in making sure like the agreements and the arrangements were set up appropriately. From my perspective, I don't really know what it's like to put an application together. And so considering that that's what you spent a lot of your time and energy doing to try to navigate this topic. Like what was the license application like what were they asking aside from obviously the social equity component of it, but knowing that like, Illinois has so many licenses out there, obviously operating today, people have those applications awarded to them, they have licenses, they're in business like these people have to say like, Hey, we're gonna do this, that and the other for The state to maybe get it other than money. Yeah.
Unknown Speaker 45:03
Well, so that's the funny part, right? Because I'll take. So let me ask you a question first. So what was the application process like? So there was several parts of the application process, it wasn't necessarily a simple process. The one good thing that the state of Illinois did was that, again, I want to try to be as fair as I possibly can. The one thing that the state of Illinois did that I liked, was that they did not tie the real estate to the dispensary application. So a lot of states, you actually have to have your real estate under contract, either to purchase or a lease for you to apply for the application. But what the state of Illinois recognize is that there's always delays, there's always lawsuits, and it's a drain on finances, if you have to hold on to real estate, especially through COVID. Now, no one saw COVID coming. But the state initially had it so that none of the dispensaries had to have their real estate under contract with which was great. That wasn't the case for Kraft grow. And for infusion, they did have to have the real estate on the contract on the lease. But the state is now allowing people to move those licenses because a lot of people lost those during the pandemic, they couldn't hold on to those properties through the year and a little over a year of delay from the time that the licenses were supposed to be issued. So that's the kind of like larger look at it. Now going into it. There were a lot of things in the application, everything from your floor plan, even though you didn't have to have the real estate, you did have to do a few deaths have a floor plan, you have to have a security plan, you have to have a marketing plan, you have to have a disposal plan. You have to imagine people don't work in cannabis right now. So how do you know how to properly dispose of it ended it, there's ways to do it. So when I was before I had, I had my deal with the MSO, I spoke to a couple different people about helping me write my application, I got quoted anywhere between I think I heard as low as 30,000. But that was like, at that point that was such a low number, I don't even think 30,000 would have been a quality. It was really more between 50 and $150,000 for most consultants to write applications, and the application fee was 20 $500. So there was $1 amount assigned to like what my application is, with the company that we had to like assign $1 amount just so we could figure out what things are worth and how much money was actually spent on writing my application. According to the my partner's my application, just the paperwork is worth $150,000 100 it's $150,000 to write and about 40 different people touched my application in some way shape, or form. 40 people about $150,000, again, security experts and all this other stuff. Now I'm sure this is a large MSO with dispensaries already operating in Illinois, I'm sure they just copied and pasted a lot of stuff. But that's the dollar amount. That's what it costs in cost me that, obviously, because I worked that out on my deal. But that's just what it costs in general. And then just like you said, do they have to do anything for the state one of the I didn't have to because I had large msos that were already operating here in Illinois, I'd have to focus on much as on the floor plan and the disposal plan and the security stuff because they had all that my main thing that I was, what that I was mainly mainly concerned was our community engagement, which we all thought that that was going to be like the big difference maker like what's your in community engagement. So I created a, an advisory board with some really big heavy hitters here in Illinois, who, again, this is ridiculous, because like the people who were like on my Advisory Committee, I like some really big names, who really could have done from Chicago from Illinois, are already doing big things in Illinois. So for me to say that, oh, this person is going to help advise me It wouldn't. It's not like some person I've never met before in my life. These are like people that not only do I know, personally, but also on a business level. I've done business with these people, real estate deals and things like that. I've just been knowing people for a really long time. So I had a really great plan on what I wanted to do for Chicago, and I thought that was gonna play a large part in the scoring system. And again, because they lowered it down to 85% ended up not really mattering at all, they gave 110 licenses out to people who only score 85% so again, that community engagement plan was maybe like two or four or five points, something like that. You could easily have gotten a zero and say you're gonna say a fuck the community. It's still got a license
Shayda Torabi 49:59
and then Who knows if it was even a lottery to get the license, it's like you think that you're trying to put your best foot forward to show some sort of initiative to giving back to being really considerate of like, Okay, if I'm the recipient of this License, this is what I can go do with this opportunity. And it's almost like the state's just like, well, we're gonna leave it up to chance, but also not really.
Unknown Speaker 50:23
Not really. No, not really. Yeah, exactly. Yeah. I mean, and there's like I said, there's a lot of people, I don't fault. Actually, I don't make this clear, too. I don't fault the winners, right? They took advantage of a flawed system. Right, I blame all of my heat is for the state. I will not support the most I don't plan on supporting the majority of the winners just because most I'm not even from here, right. And again, the people who won the vast majority and they don't really know what they're doing. And so and then, of course, it's all adult use cannabis. Anyway, and I'm a medical card holder, so I would never show up shopping in the adult use dispensary. Anyway, I don't use dispensary we started January 1 2020. With adult UCR and Illinois, I have not been in one dispensary since then over a year and a half. And it's not because of all this stuff. It's just because why would I pay we have ridiculous taxes here in Illinois when it comes to cannabis here. Yeah, medical versus adult use. I'm gonna pay 30% more for my trash from varano, which is a absolutely horrible company here. I would never pay 30% more, I wouldn't buy I wouldn't smoke away for free. I definitely wouldn't pay 30% more to smoke varano Lee like it's true.
Shayda Torabi 51:36
Well, the hard part too, is I mean, you're a hometown guy, I'm a hometown girl, you're representing your state, you want to believe that there's still some again, like opportunity to be in the legitimate business of cannabis in your state. And I think from where I sit, there is a lot of just like devastation, when things start to kind of unpack where you realize money does talk. And, again, no shade to people who have the money, who are maybe coming to it with, like good intentions to make these investments in the industry. But that's always my fear. I mean, right now, we don't really have, because we're only medical, we just got our first MSO in Texas. And it's just like, I never want to be like msos are the devil and I also don't want to glorify msos, because I do think that they can help push forward specifically in states that require legislation like in Texas, I see an MSO is having the resources to help kind of maybe help our medical program out, which is what I hope this MSO, who just moved into Texas does. But in the back of my mind, it's always that fear of like, will shed these msos are going to come in from out of state, and they're going to bring their resources and money. And then the people who actually represent this state who have been the stewards, maybe they come from the culture, maybe they come from the black market side of it, they now want to participate legally, and it's you and I know it's not like oh, I want to be an illegal contributor to the cannabis community. It's like, you still got to go through shit. I mean, it's a financial investment. It's an emotional investment. It's a it's very like risk heavy. And so anybody like people come in mice are like, Oh, my God looks like so much fun. You're working in cannabis. I'm like, Oh my god, you don't even know what that is that we're going through. And so you really have to have this passion to be a part of it. So it's like if you're passionate, but maybe you don't have the upper hand of the money or the resources as some of these bigger entities. It's like, man, it just is really frustrating to hear that. Again, I know it's not everybody, but seeing your state be taken over by these players who really don't care about the economy of putting that money back into your state, your community. The industry of cannabis in Chicago, Illinois. Yeah, it's like, we don't give a shit. We operate in six states and we just want to make some more money and the state's gonna give us this runway to go do it and kind of shit out of luck if you're not one of us. Yeah,
Unknown Speaker 54:13
I want to say something about the msos. Real quickly. One, I'm going to say something I want to say something good about the msos is where I don't think the msos are the boogeyman. We need to be the most concerned about the msos have given themselves a bad name. They with some of the practices and the things that they've done, but they're not the big bad wolf. Everybody needs to be the most afraid of those are the big pharma and the pharmaceutical companies that are and the really large corporate companies like Amazon, who kind of signaled earlier this year that they want to get into the space. That's right. If people think that it's hard dealing with these msos right now, wait until federal legalization figures itself out. And now all these large companies, these pharmacies, big farm, and companies like Amazon, once they get into, they can legally touch cannabis is over is going to be game over. So that's one thing I will say is that the msos, there is a role that the msos can play in this industry moving forward. And then the other thing I will say, should on msos. Real quick is that just because they are out of state, or just because they're in state, they can be in state msos and still be absolutely terrible. A lot of people don't realize this. But Illinois is actually the headquarters of the three or four largest msos and the entire country cresco, GTI, and pharmacann. Yep, those are all Illinois based msos. And we have other ones here like varano, that just went public a couple of months ago, and a few other ones Columbia cares. This is an MSO state, but it's really a haven and a lot of them. GTI is a Chicago based company. cresco is a Chicago based company. pharmacann is a Chicago based company. So don't think just because they are out of state or they're in state that they're necessarily going to have your best interest in mind. Because that's not necessarily the case. And then one last thing I will say is that when we talk about get into the cannabis industry, I want people to know also that even though the license to be a licensed operator is kind of like that Northstar something that you all you aim towards. You don't necessarily need a license to be in the legal industry. So a lot of that is told all the things on the right I got I got my own brand. I'm technically in the industry. Why? Because there's companies that want my brand and there still is dispensaries that want my brand and their stores. I don't grow weed. Currently, I'm gonna sell weed but yet they want we travel food products in their stores. Right? I teach cannabis marketing and branding. Technically, I'm teaching about I'm thinking about the legal I'm not telling teaching them how to sail illegally. I'm teaching about how to build their brands and the sale their products and the pitch and things like that. And same thing, building different brands and custom working in consulting. No, I don't have a license. But one of my partners does have a license, and they have me on a monthly retainer, right. So I get paid from the weed industry without having a license. And so I just wanted people to know that pep talk to myself right now, even though you don't have a license. That does not mean that you're not valued and that you are not in the industry. I told another friend of mine who had a podcast, and he interviewed me and one time and they interviewed me a few months later, and his podcast was really growing. He was interviewing all these people, you really want to get into the cannabis industry. I'm trying to figure out a way to get in the cannabis industry. And he told me I was his very first interview. And then everybody he interviewed after that we're all cannabis industry people. And I said, bro, you're in the industry, like you are in life, it is not like, you don't have to like work for somebody, you're not to be a budtender, no district budtenders. You don't have to be a budtender or a trimmer or grower or a license owner to be in the cannabis industry. There's a ton of opportunities. And I look at it almost like the car industry, or the real estate industry where I tell people all the time like Goodyear doesn't make or sale cars, yet they're in the car industry, right? There's no you can't tell somebody that can't tell them that they're not in the car industry, but they don't make or sale cars. So I always like to just put that out there a little encouragement for people that you don't need the state's permission. And that's one of the first things that I said, once I realized I didn't win was that I'm gonna keep doing what I'm doing. And at the end of the day, the state can't stop me from doing what I'm doing. And I don't need their permission to make money in this industry. I don't need the state's permission, I want to I need their permission for a license, but I don't need their permission to make money. And so that's the way I'm gonna move. I don't need them and they can't stop me.
Shayda Torabi 59:30
I just can't even fathom what that would be like to want to go through the steps and not only knowing all the work and effort it takes to compile an application, but to be in compliance with all the expectations to make sure that you qualify and hit all the different points, but also the financial implications of what it actually takes financially to be prepared and ready to actually apply for a license. I just think That was such an eye opening conversation. And really the takeaway and the food for thought for me is just to continue to frame up what to prepare for when it comes time to see my state open up. So when Texas decides to open up, I know I say it often on here that I don't think Texas will do it anytime soon. But again, being observant of what's happening in these other states, just to give you that foresight to have some sort of parameters for what legalization expectations are going to be. I just think it's really realistic. So, again, thank you so much to Mike for just speaking so transparently, I know it's not easy, and it's probably not the super popular opinion, to speak your truth because obviously there is a lot of other nuances involved. I don't want to discredit that with the state of Illinois, but I can understand the frustration that he is going through and just know that that's the takeaway, that's what we're here to learn is just to prepare ourselves better for the highs and the lows of what this industry is presenting. So that's all for this episode this week. Thanks for tuning in. And we will be back next Monday with a brand new episode. But if you enjoyed this one, please reach out on social media. Let me know your thoughts. I would love to hear what you thought about my story and connect with you more. So see you guys later. Bye.
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Transcribed by https://otter.ai