To Be Blunt: The Professional Cannabis Business Podcast

085 What a Legacy Tobacco and Accessories Company is Doing to Innovate in Cannabis with Scott Grossman of Turning Point Brands

January 31, 2022 Shayda Torabi Season 3 Episode 85
To Be Blunt: The Professional Cannabis Business Podcast
085 What a Legacy Tobacco and Accessories Company is Doing to Innovate in Cannabis with Scott Grossman of Turning Point Brands
Show Notes Transcript

“Using cannabis from a health and wellness perspective, that can cure and help ailments that are otherwise being treated with other drugs that may or may not be good for you. And so from much perspective, I think that's the way I approach it, right or wrong, it's being branded as the health and wellness drug of our generation.” -  Scott Grossman

Welcome back to the To Be Blunt podcast! In this episode, Shayda Torabi welcomes Scott Grossman of Turning Point Brands, as he shares the parallelisms between the tobacco and cannabis industries in the aspects of dealing with stigma and attached legalities. He emphasizes that taking the opportunity of being in the thriving cannabis industry is not one to miss as the question now turns to which brands would fill up the shelves.


[00:01 – 04:59] Opening Our Minds to the Power of Education

[05:00 – 13:19] Catalyzing Change and Recognizing the Thriving Cannabis Industry

[13:20 – 23:02] The Parallelisms Between Tobacco and Cannabis Industries

[23:03 – 31:38] Journey to Integrating Cannabinoids to Scale

[31:39 – 41:19] Determining the Winning Brands to Fill Out the Shelf

[41:20 – 51:29] Latching on to Favorable Legalization Processes

[51:30 – 52:59] Food for Thought: How do you feel about big corporations operating in cannabis?


Scott Grossman joined Turning Point Brands in 2021 and is focused on strategic initiatives and acquisitions. Prior to joining, Scott spent over 15 years as an investor and Board-level advisor managing investments across the capital structure in both public and private companies. Scott founded Vindico Capital after working nearly a decade at Magnetar Capital, and previously worked at Soros Fund Management in its private equity division. Scott started his career at Merrill Lynch in its investment banking group.

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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

Key Quote:

“I really wanted to be a part of an industry that had clear societal benefits, you know, job creation, that's largely protected from offshoring. We're helping unwind 50 plus years of systemic racism, and an endless and reckless war on drugs. We're providing a real solution to the opioid crisis, PTSD, and other health issues like Gervais syndrome, and, you know, candidly, we're helping raising much needed funds for our government.” -  Scott Grossman

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Scott Grossman  0:00  
Zigzag is 150 year old legacy brand. So we've been around especially in cannabis, there are no brands that have that nostalgia, that iconic relationship to the industry. It was always something, you know, precede a turning point. But it was always something that the rolling paper was always viewed as in, you know, we call it OTP, which is an other tobacco product. But the reality is that it's been used historically as a cannabis accessory, whether it's a paper or a blog, or a wrap, and, you know, with the stigma of being removed with this industry, you know, 90% of Americans today believe cannabis should be legalized in some form. 68% It's probably one of the only issues in America today that we seem to all agree on.

Announcer  1:07  
You're listening to to be blunt, be podcast for cannabis marketers. Were 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  1:30  
Hello, and welcome back to another episode of The to be blunt podcast. I'm your host Shayda Torabi, cannabis business owner and brand marketer. And I hope you've been enjoying the podcast, whether it's your first time or you're a dedicated fan. I really truly appreciate you being here and tuning in. So thank you. Sincerely, though, my hope is you'll learn something new, feel inspired and put that empowerment back into your cannabis community. Whether you're local here in Texas, navigating the hemp industry, or you find yourself in one of the emerging legal adult use markets. There's so much we can learn when we open our minds to the power of education. And so that's what I hope you walk away with from these episodes, a mind full of inspiration. Now, today, my guest reflects a legacy tobacco and accessories brand. And I know some of you are like what does this have to do with cannabis business and marketing, but trust my friends, there's always something to be learned. I don't say this to be controversial, okay, sometimes I do. But in this instance, I'm also trying to set the stage that whether we like it or not, big industries like tobacco, absolutely have their eyes on cannabis. You can villainize them, or you can thank them for paving the way when it comes to smokeable products. But nonetheless, there is a lot we can learn when we invite these brands to the table, which is why getting to sit down with Scott Grossman, the VP of Corporate Development at Turning Point brands was such an impactful conversation. So much so that I'm looking forward to presenting it to you today. And I encourage you to share your feedback and insights that you gleaned from tuning into this episode. You might not be familiar with turning point brands as an Umbrella Corporation. But you might be more familiar with some of their branded consumer products like the legacy brand zigzag, and Stoker's all at all. They're a manufacturer marketer and distributor of branded consumer products. And what I found most interesting was, of course, the parallels that the tobacco industry goes through that cannabis is equally experiencing now. But in addition to that, also the culture of consumer who is buying, let's say they're buying a pack of rolling papers, of course marketed as not for cannabis. And really you and I both know what that person is going home and using those papers for. So again, there's this air of relatability we're essentially selling to the same consumer. We're fighting the same fight from a regulatory standpoint. And now that cannabis is coming into the light, we're able to speak more directly to that same consumer and bring products and accessories to market that make their experience more enjoyable. And Scott's particular role. He's focused on strategic initiatives and acquisitions, which I know is a hot topic in the cannabis industry. Prior to joining Turning Point brands, he spent over 15 years as an investor, so we certainly speak to that background as well and how it plays a role as turning point brands looks towards the future of cannabis. So with that said, let's get right to the episode please join me by lining one up and let's welcome Scott to the show.

Unknown Speaker  4:59  
My name is Got Grossman the head of corporate development at a publicly traded company called Turning Point brands, where approximately a $450 million business on the revenue side, we own zigzag, which is the number one rolling paper and raps business. We also have MST business called Stoker's. And we also have a new gen portfolio, which is a combination of vape and vape distribution assets I joined turning point approximately, you know, seven months ago. And just to give some context, I've been an active investor, and advisor for over 20 years, I started out as a banker on Wall Street, and then moved over to the buy side investing throughout the private equity and hedge fund world focused on both public and private companies, what I call undergoing transformative change from startup companies to legacy turnarounds that are really at the intersection of both internal change influenced typically by rapid and relentless secular change. And while my roles have luckily changed over the years, the consistent thread is that I've been focused on, you know, partnering with management teams, mostly in the consumer industry to help catalyze this change, you know, specific to cannabis. Unless you've been living under a rock for the past decade, it's been a hot topic for many of the companies that I was invested with. And for me personally, it's something that I've always been passionate about. And I years ago, I quickly grasped the generational opportunity for many companies and operators, and investors like me, like I mentioned, I joined turning point this year, I decided to leverage my background to join turning point to head up their corporate development efforts. And it was a very unique opportunity to work alongside a great team with a very unique portfolio of world class assets like zig zag and Stoker's. And, you know, specific to cannabinoids. So this is for me personally, it just allowed me to have a real seat at a very small table to really move the needle about turning point, but also our culture at large. And, you know, it's just really, truly exciting to be on the front lines as this industry evolves.

Shayda Torabi  7:17  
I really appreciate that introduction, one, just obviously getting to understand a little bit more about you and your role, as well as the company and companies that we'll be diving into today. But also to frame up, I think a really interesting conversation that you mentioned, obviously wanting to be a part of brands that are creating change, and having a background with investment. I'd love to kind of kick off the discussion to get a better, you know, just kind of a pulse. From your perspective on what is so interesting about cannabis. Obviously, there's the financial market opportunity with it. There's definitely the medicinal, you know, healing aspect of it. But it's a very challenging industry. And not that challenges aren't, you know, exciting. I think we're drawn to sometimes the chaos because we want to fix it, we want to help it, we want to resolve it. But cannabis is a big undertaking to some extent. And so knowing that you have, you know, kind of this prior life of making very strategic investments, kind of what is it about the cannabis industry that you've observed or see opportunity to want to be, you know, a part of that risk reward scenario?

Unknown Speaker  8:26  
That yes, sure. That's a great question. You know, from a personal perspective, I think that's the easier side to answer. Besides what I mentioned about moving culture, you know, I really wanted to be a part of an industry that had clear societal benefits, you know, job creation, that's largely protected from offshoring. We're helping unwind 50 plus years of systemic racism, and an endless and reckless war on drugs. We're providing a real solution to the opioid crisis, PTSD, and other health issues like Gervais syndrome. And, you know, candidly, we're helping raising much needed funds for our government. So while it may still be a little taboo, and Garner, garner a chuckle from the parents in the in laws, you know, I'm very confident that what we're doing in this industry is really a good thing. You know, professionally, you know, I mentioned, this is a generational opportunity. And, you know, I think a lot has been said, and I don't necessarily think I'm a huge outlier here, but the but maybe if I can add, you know, what's so interesting about cannabis is that it's been effectively living in the shadows for 50 plus years. And so whether you think it's an $80 billion market or $100 billion market, some people think it's a $250 billion market globally. The reality is that this industry is effectively growing from turning on illicit users into the legal cannabis industry. And so that is just an enormous opportunity for, like I mentioned, operators, investors, and companies like turning point, you know, not to beat a dead horse, but clearly one of the fastest growing industries in the world, we're on track to surpass $25 billion this year. And from my seat, and from my perspective, you know, I think this industry is going to require significant capital investment, and consolidation, which I believe will be, you know, really exciting to work on where I'm sure we're going to touch on some of the things that turning point is done. But that type of opportunity, since we're in a very small sandbox, particularly with respect to publicly traded companies, you know, we're really, again, moving the needle forward, and there aren't that many people trying to do it, at least in my seat. And that's really exciting.

Shayda Torabi  10:53  
Yeah, just kind of on that note, you mentioned publicly traded, help us just kind of frame that up for the listeners a little bit, because I think there are some, you know, unclear, I think knowledge and understanding around where the cannabis industry is allowed to play in. And so understanding that some of your products are not specific to cannabis. And we can maybe even go back into kind of like the inception of the company, you know, when was zigzag founded kind of what does that linear timeline look like, but to understand the unique position that your company does get to exist in being publicly traded, and what I think that is maybe different than some other companies or just the landscape in general, when it comes to cannabis, if you can kind of break that down and give us some insight into that as well, please? Yeah, sure.

Unknown Speaker  11:41  
So turning point, like I mentioned, is a publicly traded company, we went public in 2016. To be very clear, we consider ourselves, you know, a tobacco and actives accessories company. So zigzag today is the number one rolling paper and wraps business, like I mentioned, but we're non plant touching. So that is why we are allowed to trade on the New York Stock Exchange, to answer your original question. You know, because of, you know, the federal regulation, it's illegal for publicly traded for companies in the United States that touch the plant to trade on us exchanges, like the NASDAQ and New York Stock Exchange. And so most of these companies, if they're based in the US, or operate in the US have to be either traded on pink, you know, called the pink list, or on the Canadian exchange, or you're a Canadian LP that allows you to trade in the United States. And so, for many of the reasons, you are kind of highlighting, this is a very nascent industry, there are, there's a lot of red tape, I'm sure we'll get into it from but from turning points perspective, we've been expressing our thesis and cannabinoids in a way that strengthens and improves what we call, you know, the house of brands. And so everything that we're doing in cannabinoids in some way, shape or form has to be a creative to our existing portfolio. So everything we've done so far is been, you know, very thought, you know, thoughtfully constructed to help the zigzag brands.

Shayda Torabi  13:19  
I mean, thank you for that, but also want to kind of, you know, maybe be a little controversial in the sense that, you know, I mentioned when we were recording, I think tobacco and cannabis very much go hand in hand. I mean, you talk about the ancillary not touching the plant, obviously, the accessory side of things. I mean, just growing up being a cannabis consumer myself, like, obviously, you're gonna go buy like cigars, or rolling papers, and they say they're not for cannabis consumption. But, you know, it's like, you know, what to do with those products, right. And so, there's very much kind of playing in the gray area of kind of what people are expected to use the product for. Now getting into little bit of a controversy. I think there is obviously also some hesitation I think from the industry maybe from like the smaller players of well, you know, is too big tobacco gonna get into the cannabis industry and what does that look like? And I think from a business perspective, you know, coming from business background, professionally speaking, like of course, why would tobacco not be in the cannabis industry because there's so much parallel not just from you know, kind of how you consume the product, but also I think, coming from the Vice kind of quote unquote, stigma around consumption and and things like that categories that I think tobacco and cannabis both like parallel play in. And so kind of walk us through a little bit maybe kind of like, Let's dip our toe in the water of understanding, you know, how tobacco kind of parallels cannabis or maybe where you've seen some differences as you've seen Turning Point brands start to get into the cannabis industry. Do you find that kind of overcoming a lot of the hurdles that because tobacco is not easy by any means. I'm not trying to be like, Oh, cannabis is like the hardest thing in the world, obviously going through. And you know, I've never really shared this publicly, but I'll say it on the podcast, I used to be a cigarette smoker for, you know, six 710 years of my life, man, it's been a while now, I think personally, I've stopped consuming tobacco, very much consumed cannabis. But to me, I kind of watched the evolution, I think of a little bit of the tobacco industry. When I first started smoking, you know, there were flavored cigarettes. And I saw the rise and the decline of that because it was targeting to children. And so I think a lot of the hurdles, again, that you see from the tobacco industry, you're now seeing projected into the cannabis industry, you know, you can't have cartoons, reflecting, you know, your brands, you can't have certain flavors and things like that, obviously, Candy has to edibles have to be very explicitly that there's THC in the product and can't just be like an unmarked, gummy to be, you know, confused by a child. And so kind of taking all that that I've just shared. You know, again, what have been some of your observations, getting into both Turning Point brands as an employee, but also as the company is starting to evolve into the cannabis industry, kind of what has that looked like for y'all? Yeah. So

Unknown Speaker  16:09  
just going back to your previous question, what I didn't mention zigzags is 150 year old legacy brand. So we've been around, especially in cannabis, there are no brands that have that nostalgia, that iconic relationship to the industry. It was always something, you know, precede a turning point. But it was always something that the rolling paper was always viewed as in we call an OTP, which is an other tobacco product. But the reality to your point is that it's been used historically as a cannabis accessory, whether it's a paper or a blunt or a rap. And, you know, with the stigma of being removed with this industry, you know, 90% of Americans today believe cannabis should be legalized in some form of 68%. It's probably one of the only issues in America today that we seem to all agree on. But to answer your specific question, a turning point we consider ourselves a leading manufacturer and distributor of branded consumer products in actives. So today, largely like I mentioned, we're in zigzag Stoker's, which is an MST business, we don't sell cigarettes, thankfully, we are in the vape business and the nicotine vape business. But, you know, from our perspective, you know, big tobacco is no different than big alcohol, which is no different from big pharma. Everyone and every board across the world is either thinking about their cannabinoid strategy of when to get in how to get in. And you know, that presents a unique number of challenges for both incumbent cannabis players. But also, you know, other companies that are trying to figure out ways to, you know, think about the next 50 years of their portfolio just to give a real time example, you know, the sleep market is a $65 billion market. Okay, so if you're big pharma who's selling, you know, I don't want to get brand names, but there are a number of consumers, myself included, who no longer need, you know, an XYZ sleep drug. And I think that conversation is healthy, where consumers are now figuring out that this plant has been used for over 10,000 years. And for a variety of reasons in the early 1920s and 30s. It became just a devil's drug, if you believe if you understand that, and I think we're just unwinding that. And using cannabis from a health and wellness perspective, that can cure and help ailments that are otherwise being treated with other drugs that may or may not be good for you. And so from much perspective, I think that's the way I approach it right or wrong. It's being branded as the health and wellness drug of our generation. You know, it used to be a cannabis consumer looked like Bob Marley or Cheech and Chong, or the dude from Big Lebowski. And now they look like ultra marathoners and weight lifters and grandmas who are looking for solutions to solve problems that hasn't been addressed in the past. That's healthier, potentially. And I think that's a really good thing.

Shayda Torabi  19:38  
I really appreciate the transparency and the way that you answer that question, because I think that it's inevitable, right? And I think the way that you can look at the industry's evolution, you can either be afraid of it or you can be prepared for it. And I think that's what I try to always structure this podcast with is just to prepare everybody to inspire everybody as well. Also realize, hey, maybe the industry is evolving in a way that is taking its own shape and form, but also trying to find the opportunity in the way that it is evolving. And so I do appreciate you highlighting just the the reality that these big industries are consciously thinking about cannabis one because it is the new trend, I think not necessarily to use the word trend as like a fad. But a trend as this is something like you said with the stats, I also appreciate you highlighting everybody from your grandma to your next door neighbor is looking at cannabis. And I think from my perspective operating in the CBD world. And kind of prior to getting into CBD being a cannabis consumer, you know, I was originally just exposed to, we're going to get high, we're going to smoke this weed and we're going to you know, maybe roll in a zigzag and I'm going to feel something and I personally do enjoy the psychotropic effects of what my naive Shayda thought was just THC, you know, versus now me and 2021 understands, wow, it's a multiple cannabinoid approach. If I smoke it, I'll feel it different than if I take a tincture versus an edible, and really getting into that health and wellness application of, okay, well, now I'm being educated on these different cannabinoids, this consumption method, these different, you know, ratios, percentages to ultimately drive my health and wellness. And, and yeah, you you have to understand, I mean, for listeners, right, you know, these industries are paying attention to that. But I think another key thing, which I think is really interesting to highlight as well. And you kind of touched on it, from your perspective, the finances, you know, I think there is a big undertaking when you're trying to make change and legalize something. And it's not just legalized. Again, when I was just a consumer, of course, I was like pro legalization. Sure, but as a business owner, now I see legalization has good and bad aspects to it. And we obviously want to fight for it to be legalized in the right way, in the safe way. We're selling consumer packaged goods products now. And so it can't just be a flip a light switch, we're gonna legalize, there has to be some sort of thought and consideration. And I do understand that these companies, these legacy brands, like turning point brands, in particular, has financial weight that can help influence, you know, obviously, we all hope for the better, right. And so I think that's another point that I wanted to highlight representing, you know, just where you're coming from in the market, is being able to actually take the growth that you're seeing with your business and actually apply it to make change. So kind of getting into that a little bit. It is my understanding. I mean, you touched on some of the brands in the portfolio. But I know that y'all have done some pretty massive, especially in the cannabis space. I mean, really well known brands, not just investment, but some that you've actually acquired and brought in house. And so if you could just kind of kind of bring us more on that timeline journey. You know, you were talking about accessories, and obviously, zigzag being these pillar brands. But now, you know, we're in 2021. And sure, and you've got some really great, you know, name brands under your portfolio.

Unknown Speaker  23:02  
Yeah, thank you for that. So the journey of turning point in cannabinoids has probably, it's three years old at this point. Today we have roughly four will be called investments. We're actively involved in the growth of this business. The latest one, which you've mentioned before, is old pal. We made an investment earlier this year old pal, I don't know how much your you or your listeners know, but it was founded in 2018 in Venice, and it's it's a branded cannabis licensing company focused on, you know, what I call affordable, approachable, branded products primarily in the value flour category. It's a really unique team run by Jason Ozzy and rusty Well, I can. And their original mission, which is still true today is trying to build the PBR of cannabis. So great cannabis at a great price that's inclusive, that shareable that brings people together. And I think that's really important, because as we think about legalization, and trying to turn either new users into the industry, but also existing users who have been predominantly us buying in on the illicit market, there needs to be a place where you don't have to spend your entire paycheck to buy your cannabis and I think old pal, rightly fits that vector with respect to old pal, you know, right off the bat, we were intrigued by their nostalgic, authentic branding. That's very consistent with how we think about zigzag and Stoker's and from an investment standpoint, you know, some of your listeners just the way I thought about it, we think it's a very strong strategic fit. It's very consistent with how we're thinking about our branded cannabinoid strategy. And you know, we were attracted to, you know, a the brand equity which is remarkably strong. We did several studies and consumer surveys and remark All Powell is that its brand equity was really strong, even in states that it actually hasn't even entered yet. So from our perspective, that's, that's fascinating. Number one. Number two, as we think about continued state legalization and potentially federal legalization, all pow has the ability, and the potential to really roll out across the country and potentially across the world. From a turning point perspective, you talked about the economics of all of these cannabis businesses, which is obviously very important. All powers asset light, it doesn't touch the plant. So it allows for easier state expansion. And it's really one of the very few select brands that's proven its ability to enter new states outside its core state, which is California all power today's up to eight states, which, if you think about it, there's old pal, there's wanna, there's cookies, they're not that many states that have actually been able to do that. And from an investment perspective, that's something that clearly piqued our interest. Last thing I would mention is, they're just immediate synergies with zigzags. old pal today comes with an A make your own or roll your own pouch, and embedded in the pouch is rolling papers. So it allows zigzag and turning point to really put our product inside of theirs, which allows us to gain new access to distribution points that were not in today. So this dispensaries, cultivation, grow sites, this allows zigzag to really get in front of Today's new consumer. And, you know, we're really excited about, you know, the partnership that we made with old pal and excited about the other coming in the future years with them. Other investments we have an investment in dosis, which is a higher end mostly vape and gummy business. We also have an investment at dark light brands, which owns the Bob Marley license and CBD and potential THC products. And we also have a small investment in a company called Wild hemp, which makes hemp cigarettes mostly in the C Store channel.

Shayda Torabi  27:19  
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 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 and use code to be blunt for $5 off your next purchase. Thanks. And let's go back to the show. That's great. I am familiar with all those brands. And they do represent different aspects of the market. But specifically with old pal, I thought it was really interesting when you were highlighting just the obviously their market share their brand awareness, they are one of those brands that when I saw them immediately, you know, hit the market, I was intrigued. I was like, Ooh, what is this, and I want to know more about it. And I want to be a part of it. And so to see them continue to find growth and success in how they've rolled out which you touched on a little bit, I'm curious if you can kind of just like reiterate and maybe go a little bit deeper. My understanding is so they're all kinda like a franchise model in the sense that they're operating in independent states, which, for listeners, maybe who are new who don't understand this, you can't cross state lines with your product. So to be able to operate, you have to go set up manufacturing in that new state. Obviously, like you mentioned, wanna being a kind of a leader in my eyes of someone who's kind of started in Colorado and has done a really great job of going multi state, but every state you have to go operate. From my understanding, I think Juana is more consistent in their formulation. I don't know if old Powell, is it? Do they use local cultivars, and then they highlight that local flower? Like how does that kind of operation work? And then obviously, you touched on it as well, just the integration of being able to incorporate zigzag into the actual product and how that's been able to extend your brand into new consumers, I thought was a really smart aspect of again, the investment for them. Yeah,

Unknown Speaker  29:39  
sure. So there's a lot there. So let me let me try and break that down. So old Powell, again, does non plant touching and they are in eight states. And so effectively, what they're doing is that they're licensing their brand to state operators, who uses the old pal packaging that they sell to the distributor. So So to get to the heart of your question, which I think is, you know, one has done a phenomenal job, in order to have a brand, you have to have a product that's enormously consistent, right. So when you go to McDonald's and get a hamburger, it's the exact same hamburger as it was five states down the road, Budweiser, Great, another great example and old pals really the same. And so they have a sop or a standard operating protocol that they then give to the grower, it has to meet a certain type of of cannabis spectrum. On the THC side, they also have cultivars, like you mentioned in CS, and that's down the line. But you know, mostly, depending on the state, it's all powered tries to use tries to find growers that are looking to fill the shelves of a dispensary that's more value focused. And what we've seen is it's a relatively easy to have consistency. And I think one of the things that not many people think about, we certainly do is, as you see the industrialization of the cannabis industry, evolve, the actual growth sites, and the technology that's going into these cultivation assets, just allows the flour to be that much more consistent. So for a brand like old Powell that trying to get flour that looks feels and experiences the same in every state, it becomes that much easier. As these multi state operators, single state operators continue to enhance their operations.

Shayda Torabi  31:38  
Well, I think another aspect of that, that just kind of came to mind, which I think we experience in Texas from a hemp perspective, you had a lot of people who wanted to grow hemp, because they saw I always talk about, you know, green in their eyes, which is not a bad thing. I mean, it's great to be opportunistic, but I think we're I always try to exist in the market. And again, obviously, this podcast is very brand focused. And branding is my passion. Branding is My professional background. So I understand the value of a brand. But you know, for kind of the general, let's say person who sees opportunity with cannabis, we saw a lot of people go to market growing hemp in Texas, but they didn't actually have a go to market plan. And I think that's where having that brand output is so critical. And yes, I think the marketplace is dynamic, unfortunately sometimes to the extent that you know, I think everything is a little bit on a roller coaster what is the price per pound, you know, kind of what is what are the legal especially in the hemp world certain cannabinoids are being pulled from the market, it seems like on the regular. Yeah. But going back to kind of your experience with old pal in particular, it seems like they've kind of helped enable a point in that seed to sale of hey, you grow really great flower, you don't have a brand, how are you going to go to market with your brand, you can white label it or wholesale it to the dispensary. Or maybe you can use the old pal brand to kind of create more of that partnership, which in turn actually helps that grower that cultivator to have an output for you know, maybe they just love growing, they're like, I don't want to go create a brand. Is that a fair observation to make around kind of a little bit of their setup or?

Unknown Speaker  33:20  
Yeah, no doubt. I mean, I think at the at a very high level, whether it's cannabis or hemp, or rye for whiskey and corn for whiskey or tobacco for you know, the tobacco industry. At the end of the day. Cannabis is a commodity. And it's a it's a it's an ingredient, particularly in what I call cannabis 2.0 where we're seeing the emergence of CPG and consumer packaged goods of cannabis products. And so what that means is, I believe, again, this is very, very early, and I'll go back and touch upon why I think it's so early. But there's no question in my mind that there will be brands that win in this industry. The trick is figuring out, you know, what are those brands? Are there too many brands today? I firmly believe that the brands of tomorrow have yet to be discovered. And so that's challenging, not only from, you know, from my seat, because, you know, we just don't know what that landscape looks like. The other thing that I would mention is, you know, predominantly, in particular on the east of the Mississippi, whether it's or you know, Massachusetts, Florida, soon to be New York, New Jersey, Connecticut, Pennsylvania, a lot of these limited license states have been so supply constrained, that the operators have really no incentive to put brands on the shelves that are not their own. And so these larger MSOs are now figuring out how How to enhance their portfolio either with internal generated brands, you know, I'm thinking like a rhythm of green thumb or verano, we're trying to take other brands and put it into their channel, whether it's again, using green thumb example, using can or your air buying, you know, beverage companies, you know, that is something that we expect to see more of, and we're going to see more of the shelf space, being commanded by you know, nationally recognized brands over time. However, you know, if you think about going to your CVS or your Walmart or your whole foods, there is no without question going to be part of the shelf space dedicated to you know, private label, right? You walk into a Kroger today 20 to 30% of each category is Kroger branded, or 360 in Whole Foods. And that is, you know, in the in the dispensary. Without question, you're going to see that as well. But the reality is today, a majority, if not all of it is effectively dispensary, private label brands. And the question is, can they build those brands into something bigger? Or are they going to need other brands like old pal to fill out that shelf? And that's really an interesting debate.

Shayda Torabi  36:20  
Yeah, you made me think of something that is something that I asked myself and just kind of, you know, dwell on a little bit here, just from my position, operating a CBD brand in a state like Texas where we are not able to play but I mean, you touched on limited licensure, you know, I'm very aware, you have Oklahoma to our north, there's Wild Wild West, you're seeing a lot of brands from California, and outside of you know, Oklahoma come and see opportunity. But on the flip side, I think, you know, from what I've heard so far, some of those brands are not doing so well just because there's so many, you know, brands and things operating in the space adversely, you have states like Florida, where they're truly limited licensure their vertical, integrated required, and so unless you have one of those licenses, you're not really able to play. Now, later on that kind of my thought, which is, you know, as a CBD brand, we get a lot of customers who are like, Oh, are you going to, you know, turn into a marijuana dispensary. And I always have to kind of shoot the idea down because I'm a realist. Unfortunately, I'm a realist. And I know, depending on how Texas legalizes and from my understanding at a federal level, then they'll may be legalized federally, but then still leave it up to the states, Texas could decide limited licensure, vertical integration require they could do a free for all. And so just without having an understanding of what Texas will do, it's hard to kind of map out what I could do. But you layer on top of that, as a CBD brand. I can sell my own products. But when you look at dispensary models, presently, the dispensary is predominantly selling other people's products. I mean, like you said, there's a percentage where the shelf space might be private label or is that brand. Med men being you know, a good example where they've built a really great brand for their dispensary, and they have their own products, but obviously also carry other people's products. It's just an interesting transition as we move from hemp, which you can ship across state lines, you can own more of your brand, to when Texas does open up, you know, what are those products that are going to have to play within that dispensary market going to be made up of? And are they going to be kind of like you highlighted brands that have been in the game kind of building their brand ownership, perhaps like a wanna perhaps like an old pal because we're already seeing it. They're already saturating this multi state operation? Or is it maybe perhaps brands to come? Which I think is very, you know, again, realistic perspective of I think it's a mixture of both. But what that will look like when we see legalization is still I think a big unknown. So I'm just curious, from your perspective, what are some of the things that you're observing as the industry is unfolding, that are kind of, you know, maybe challenges or just a ha moments that you're navigating through as the industry continues to go towards legalization at a federal level? Yeah.

Unknown Speaker  39:01  
So considering that this is mostly a brand and marketing focus, you know, what I, what I consistently see our brands, you know, going outside of their lines and trying to be a brand for everyone. And I think that's a challenge. You know, what I loved about old power and a few others is that they know who their consumer is, and they're going after that customer and over time, you know, that can extend to you know, other consumers and that's no different from you know, when Nike was created, it was specifically a running shoe for an elite runner, and over time it it got out into other different sneakers and different athletes and apparel, and they were a they earned the right to acquire new customers outside of the customer that was in their original lane. And so what I see a lot of today, whether it's trying to be in two In many form factors from edibles to vape, to flower to prerolls, what you see today is that they're trying to serve everyone without really knowing who they want to be when they grow up. And so I think that's a real challenge today, because at the end of the day, there's just a lot of competition. And so the advice that I typically give to companies that we look at is, you know, own your space, it's okay if it's a niche space, but own at first, and then you may or may not have the right to go bigger and beyond that core customer. So in my opinion, that's, that's a huge challenge for the industry. And it kind of speaks to what we've talked about before where, you know, cannabis is comprised of, you know, over 180 cannabinoids, and it's not necessarily you're selling cannabis, you're selling an experience, you're selling something that's in a nice looking CPG box, at the end of the day, you have to treat what's inside the plant is an ingredient. And you have to create an ethos and a brand using that as a pillar, and to establish yourself in a very crowded market.

Shayda Torabi  41:19  
No, I love that I love that you talked about establishing and earning your right to kind of expand and evolve as you've kind of earned the consumers trust in your particular niche. And, and again, kind of reflecting from the hemp to the marijuana side, I think, you know, unfortunately, the hemp arena, you're able to play a little bit more and owning a lot of things, which I think you're seeing brands kind of glob on to as a means of staying in the game. I certainly see it here in Texas, just in terms of you know, even people's just expectations and understanding of perhaps when legalization is coming, you know, so there's a little bit of a kind of latch on and hang tight as you're riding the roller coaster and hope that you can be there in the next, you know, iteration and the next year and the next step of legalization. But it is an interesting, you know, which is what I think this podcast for me is so fun to kind of dive into these topics, because we can talk about these things. But the reality is, we just really don't know what's going to happen when federal legalization happens, or when these certain states, you know, flip because every state is operating differently. And so kind of a follow up to that, from your experience with turning point brands and the brands that are under your portfolio. You know, how has that evolution been navigating it in terms of different states, you know, market and different consumers? I think there's, you know, a very clear conversation around legacy customers and zig zag, for sure, probably represents a large amount of legacy customers who were like, Yeah, you know, screw this is a quote unquote, tobacco, you know, accessory brand, like, I'm gonna roll my weed up in this. So you have these people who obviously know what they want out of these brands, but then you have the grandmas, the neighbors, who are the ultra marathon runners who are now able to come forward and actually say that they're using these products, but knowing that the market receptiveness I think still does vary state to state, and that's reflected even in these, you know, product skews that you're seeing certain products that are the top products in California are not the top products and, you know, Washington State. And so I just think there's still some settling that needs to happen in the industry. So now from yalls perspective with these brands, kind of what have you observed as you've gone into these new markets, anything kind of surprising or

Unknown Speaker  43:47  
not too surprising? Like I mentioned, we touched upon an old pal, just the brand equity traveling to other states that it's not in. I mean, that's, that's enormously hard to do. And for sure, and so you mentioned about how quickly the industry is evolving. I think we as operators and investors, and just frankly, people we underestimate, and really under appreciate how far we've come while potentially overestimating or, or getting frustrated by what's ahead of us. So I think what I like to do is is kind of remind people and take stock of where we are. So 25 years ago, prop 215 was passed in California, as you know, legalizing medical cannabis and when 1996. So over the next 16 years, and 2012 we had 16 additional medical states. And importantly, we had Colorado and Washington become the first wreck markets in 2012. Since 2012, so less than 10 years, we've had over 30 states go medical, we've had 17 markets open up for recreational and it's looking like you know six or so Oh, slated for the next, you know, one or two years. And so if you think about that dramatic cascading of States over the last 10 years, it just reinforces how nascent this industry is. And I think we take for granted, everyone wants federal legalization tomorrow, we want, you know, supermarkets for cannabis. And the reality is, is that that's going to take an enormous amount of time capital effort from a variety of constituents. And so what I would suggest, and certainly we try and think about it over here, turning point is, you know, this industry has tremendous variability, and it's, again, rapidly evolving, we simply can't predict the probability or the timing of these outcomes. And what I like to say is, you know, when progress happens, and it crystallizes, it usually leads to kind of like a step function, where certain hurdles are achieved, ie, a state goes legal, or another state goes medical. And so the key to, you know, from a business perspective, or an investment perspective is, is really trying to back in a world class management teams who have been there done that, who have a real viable business model that can survive under various scenarios. And so they have the duration, to muddle through factors that are simply out of their control. So if you're a company that's relying on the ability to survive, that's strictly predicated on federal legalization. That's, that's a risk. And so as long as you own that risk, and know exactly what you're, you know, what you're actually setting yourself up for, you know, we're fine with that. But the reality is that you have to have a business model that works. And, you know, we're, we see a lot of companies that, that simply don't, and, you know, what we're, I think with the increased sophistication, and of course, regulation, those rules will become clearer. And hopefully, we're gonna see some great brands and companies emerge that are doing good and, and certainly helping the industry grow in the right way, but doing in a way that allows it to survive and creates value for all stakeholders.

Shayda Torabi  47:26  
No very sage advice. I think that's the best, you know, piece of information that people can kind of walk away from this episode, I think, really, truly understanding the opportunity that exists. But the very raw reality of playing in the game, the way that I think the game is today versus anticipating the way the game is being played tomorrow or in years to come. It is evolving. And I think anybody who, you know, interesting point just to touch on I was at MJ biz and MJ unpacked, and I got a chance to listen to one of the executives have wanna speak and someone was asking him about, you know, proprietary information around formulations like, oh, you know, if you create this really great formulation, you know, how do you protect it? How do you create intellectual property around it, and he was like, man, if that's your problem, you know, you're doing the wrong thing, you need to always be iterating. Ready for the next combination of cannabinoids, the next delivery method, the next you know, technology that's being implemented in the industry and to kind of hear such a well known brand kind of acknowledge and really humbly kind of position themselves with like, man, we haven't made it, we're still like working on the next thing because the industry is catching up. And I think that goes very hand in hand to with what you were saying earlier on, especially around you know, the best brands I think are yet to come still. And it is taking what some of these original players have established learning the game obviously paying attention to their wins and losses. I think that's just business practice, right? You want to kind of see how people are operating and how you can perhaps do it better. We have the challenge of navigating against regulations against the legalities and illegalities of the industry. But you know, that is that is the game of cannabis. So you're going to be there welcome Matt Are you you know you go to the next project so it's it's not for the faint of heart but I would love to kind of wrap up just to hear from you. Any last thoughts and really just projections for where you know, I guess Turning Point brands is going what are some exciting things that are maybe in the works and and what we can kind of expect to see as y'all continue to use your influence to help advance the industry forward.

Unknown Speaker  49:40  
Yeah, sure. It's a very exciting time to be part of turning point the future is very bright and I think they're really two parts. Probably a touch on zigzag just given your your listener base, particularly as it relates to cannabinoids, you know, we have a strong you know, like everyone we have a strong secular tailwind with To increase cannabis consumption, changing public perception and you know, we operate one of the best brands in the space. And, you know, every day that goes by, we acknowledge that we're very lucky. And every day we try and make this brand better. And there are a number of exciting things on the rise. And I'm not exactly sure when this will air but zigzag on their Instagram yesterday highlighted that something really exciting is coming down the pike, I'm not going to certainly talk about that now. But there's a number of ways that zigzag can really personify its brand and own a number of initiatives in the space to really be reinforce the brand that we are. And along that we're gonna see enormous amount of innovation in our product portfolio, from traditional rolling paper to raps as you I didn't touch upon it, but we made an investment in a cigar asset. So we're going to be doing some exciting things in that in that market. And, you know, look for that as we go forward in the next couple of years. Other than that, you know, we're constantly meeting with executives across the space and influencers and really trying to find like minded individuals that are really again, trying to push the industry forward and move the needle and I'm excited to meet more of them and again, just trying to do my part.

Shayda Torabi  51:29  
Like I mentioned in my introduction, there is a lot we can learn from Legacy tobacco brands and the influence they have over the cannabis consumer, especially as culture plays a major role in the continued enjoyment of cannabis. Where to brands like turning point brands provide value and a platform to stand upon. I know what's unpopular opinion and sometimes I battle with how I feel about big corporations operating in cannabis and how it stifles small and independent brands from succeeding. But the flip side of that coin is the innovation financial investment and opportunity they can provide just due to the sheer size of their operation. I hope this conversation shed some light into how Turning Point brands views the cannabis industry, what is exciting them the most about the future and perhaps how you can be a part of it. As always, thanks for keeping it blunt with me. I'll be back with another episode of The to be blunt podcast next Monday, and encourage you to keep championing cannabis in your community. Thank you and bye y'all.

Announcer  52:31  
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