Kris Krane, Co-founder and President of 4Front

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Kris Krane, Co-founder and President of 4Front

Kris Krane is co-founder and president of 4Front, a leading investment and operations firm in the legal cannabis industry. He has had the opportunity to work on regulatory and business strategy with cannabis business operators across the United States and globally, and is a frequent speaker at cannabis industry conferences and events around the world. Krane has spent 20+ years working in the cannabis industry.

Prior to his work at 4Front, Krane worked in Washington to reform our nation’s misguided drug and marijuana laws, first as Associate Director of the National Organization for the Reform of Marijuana Laws (NORML) and then as Executive Director of Students for Sensible Drug Policy, which he is proud to have helped build into the largest student organization in the United States. When he’s not helping end cannabis prohibition or building a new industry from its ashes, you’ll find him spending time with his family and young children. While outwardly exuding cannabis green, Kris bleeds New York Mets blue and orange.


[00:00:01] You're listening to Thinking Outside the Bud where we speak with entrepreneurs investors thought leaders researchers advocates and policymakers who are finding new and exciting ways for cannabis to positively impact business society and culture. And now here is your host Business Coach Bruce Eckfeldt.

[00:00:30] Welcome everyone. This is Thinking outside The Bud. I'm Bruce Eckfeldt. I'm your host and our guest today is Kris Krane. And Kris is co-founder and president of 4front. We're gonna learn a little bit more about that company on what they're doing in the cannabis space. Kris has a long background in cannabis and he has been involved and normal. The National Organization for the Reform of Marijuana Laws as an associate director. He's also been with the Students for Sensible Drug Policy as an executive director. We're gonna find out a little bit more about that. Kris I'm excited to have you on. Welcome to the program. Thanks for having me. So why don't we start. Just because you have a fairly long background in cannabis let's hear a little bit of the story. How did you get originally involved in cannabis and tell us about some of your earlier involvement in the industry. Sure.

[00:01:13] So you know this is an issue that I thought a lot about since I was fairly young. My father was a medical marijuana patient when when I was quite young you passed away when I was eight years old. And that was something it really sort of stuck with me as I got older particularly as I started going through what was basically New York City's version of the DARE program at the time. In the 80s and early 90s and sort of realizing that that did not did not comport with my experience and having seen the way that medical cannabis had helped my own father.

[00:01:42] And also just got me thinking a lot about the way that we the way that we approach drugs and drug use in this country. I had seen the really devastating impact of substance abuse you know in addition to the really beneficial impacts of medical cannabis. And so I just thought it was not about this issue a lot at a fairly young age. So when I got to college I became somewhat of an activist for drug policy reform. I got involved with the local normal chapter a sample chapter which became one of the first chapters of Students for Sensible Drug Policy. And that led to a job at normal basically right after college where I served as the associate director for six years or so worked my way up to that position over those six years and then was hired back at Students for Sensible Drug Policy in 2006. I ran that organization as executive director for four years helped grow it into what is now the largest. So we believe the largest student organization in the United States certainly largest single issue student organization the United States and it's become a real global force and really proud of what that organizations accomplished both while I was there and in the 10 years since I left. I still say still stay involved I'm still the treasurer of the organization at the board level. And so really it was it was it's always been this motivation to help bring about a more reasonable rational sensible drug policy that's kept me going professionally right versus an advocate. And now for the last 10 years as as a member of the industry and it was really that desire to help change our laws. That motivated me to get involved or move I should say from professional advocate to being in the industry. I started to see the way that the industry itself and this was very very early on in 2009 and in the early industry especially at that point in Northern California where you had some of the best run most professional retail dispensaries in the country.

[00:03:25] The way that that was really helping to change public perception about cannabis in particular and cannabis distribution and what that could and should look like you're breaking down stereotypes that people have had drilled into them from the time they were quite young about what cannabis distribution looks like into something that they can actually see feel touch tried as part of their community whether they whether they're a consumer or a patient or not. These are these are not operations that they're going to be ashamed to have in their communities in fact in many cases they're going to see real benefits in the community even if they don't directly interact with a store on a day to day basis. And just really dawned on me that what was happening with this early industry was going to do as much if not more to help advance our advocacy goals as the work I had been doing. That's professional policy advocate and that was really the motivation for making that jump from your full time advocacy to full time industry.

[00:04:12] Yeah and you really got involved early. I mean now that we're talking you know late 90s early 2000s you know California had its medical program which was pretty limited.

[00:04:21] But you know this was pre Colorado California going you know adult years I mean it was this did you imagine at that point you know in the early 2000s that we would be at this point or is this I guess how was this played out for you to in the early 2000s.

[00:04:35] No it would be hard to imagine that the conversations we'd be having 15 years later or so would be around you know the right we used to legalize would be around you know making legalization more inclusive of communities that had been destroyed fortunately harmed by marijuana prohibition about tax rates. Right what's the right way to tax things which the right licensing schemes and licensing structures. How do public markets properly value your multi-state cannabis operators.

[00:05:02] These were not conversations that were even fathomable at that point when we we were largely playing defense outside of passing the early medical marijuana medical marijuana laws at the state level which was all done through ballot initiatives much like these early legalization laws have also been done through ballot initiatives. You know we were winning ballot initiatives on medical marijuana around the country but outside of that we were largely playing defense. And so to think that we'd be having these conversations they just weren't really fathomable back then it was a. A very different time we're having very different discussions very different thoughts of the thoughts about how you regulated industry and the types of things that we're talking about now. All very important conversations were just it just was not part of the conversation back then.

[00:05:40] Yeah well I think that some of those at least some of the conversations I've had around the kind of legalization is that it's actually been a challenge for for folks that were involved in the industry previously that the new kind of the regulations the processes the the licensing and all that kind of stuff has actually in some respects hurt the earlier cannabis industry cannabis market cannabis culture. I mean what is that. As someone who was around kind of in the earlier days you know involved with this with the industry with the community how have you seen that group kind of affected or impacted by this kind of wave of regulation changes and legalization.

[00:06:18] Well I think it depends on who we're talking about too. You know if you're talking about the the activists the advocates or the people who've been around for a long time you I would argue that the the emergent the industry has been a net benefit. There's a lot more there's a lot more capital or a lot more money in cannabis today than there was 10 15 years ago largely because of legalization. We brought people into the movement who many of whom got in because they saw financial opportunity to get involved the industry. And you know in many cases those folks become advocates right because they're exposed to all this. They started meeting patients. They really said they really get the bigger picture and they become advocates because they genuinely start to care when it's not that they didn't necessarily care before it just wasn't really something they thought about. And they wind up supporting reform and donating money and donating time. And you also folks who get involved because they see it as a financial opportunity. They don't really get near the full breadth of the social justice implications and just just overall political implications it really is just to make money. But by and large those folks end up supporting reform efforts anyway because it's good for their bottom line because in order to open up more markets you've got to legalize in more states.

[00:07:26] And so they wind up donating or doing things that are supportive of reform. And we've got way more lobbyists in Washington D.C. working on cannabis issues which is I mean look it's a good thing. Do you want to get laws changed in D.C. You need powerful lobbying firms as you know now in addition to having a DP in normal an MPP and DPA and Americans for Safe Access but all the groups that had been there for four years but you also have groups like the National Cannabis Industry Association the cannabis trade federation. You've got some of the larger companies in the space to have their own lobbyists that are working in D.C. and by and large all of these groups and all these lobbyists are working with one another and coordinating with one another so that that wasn't possible before the industry itself the folks so that I do worry about and that have gotten kind of the raw end to this deal are a lot of the early pioneers of the early medical marijuana industry. Now while some have done quite well right. You could point to folks like Steve D'Angelo or the guys from Denver Relief. There definitely are some these early pioneers the guys from Spark and peace and medicine and Berkeley Patients Group who survived and done really well. So some of these earlier players have done quite well. A lot of the earlier players have really struggled because you know those are the early days of this industry were very gray market.

[00:08:36] And I would say fairly dark shade of gray in many cases and a lot of these folks I would say especially on the cultivation side and the sooner the smaller to medium sized growers in California in particular this has been a big issue. I have had a really hard time transitioning from the illicit market or the gray market into this new legal market. And you know some of that is is that these companies folks did not have the business acumen or the ability to navigate an increasingly complex regulatory environment. And some of it is the regulatory frameworks that have been put in place and a lot of these states have you know have basically made it so that these smaller players are going to really struggle right that they that they're particularly in some of these more eastern markets that are typically have we have really restrictive licensing structures in a small number of licenses and highly competitive application processes that cost a lot of money to go through and require a lot of expertise. It's just really hard for any smaller business operator or mom and pop type operator to come in and compete in one of those processes with you with some of these bigger money better financial position more sophisticated players.

[00:09:43] Yeah it really is a combination. Yeah and you know we're in this funny position on the state by state level it's kind of at some levels the ultimate American experiment with states kind of creating their own frameworks and rules and licensing systems and things like that. But it's also it's it creates a lot of inconsistency in diversity across the you know the legalized status.

[00:10:03] What do you see as being the trend right now with the kind of upcoming north east coast or Northeast states that are all kind of poised to go legal or poised to to pass various legislations. What is the big change that you're seeing as these states start to go legal from the earlier states particularly West and Colorado.

[00:10:22] What's what's the change in structure that you see them kind of implementing or the regulatory system you see them implementing.

[00:10:27] It's going to vary from state to state. We're entering a very different time period here than we've seen over the last few years whereas I mentioned all of them the full legalization laws that have been put in place today have have been passed by ballot initiative which means that the laws have largely been written by the activists by the advocates which in many ways I would say probably in most ways I would say has been a positive because people really care about these laws about the write. In some ways it's been kind of negative. I think you know in a lot of these particularly the earlier ballot initiatives there was a lot of fear about going too far in the language that that might turn out voters and causing initiative to lose. And so in most of these and most of the laws that have passed today or you don't have things like strong social equity provisions that I think you are going to see in the next wave because you're looking at a lot of states that have very diverse populations that are looking at passing these things the legislature you're just not going to be able to get the votes there.

[00:11:22] So explain and explain that a little bit more for folks it when you say social equity initiatives what what are we referring to.

[00:11:28] So we're talking about provisions within the laws that that provide a pathway for inclusion in the industry for people who have people in communities that have been disproportionately impacted by cannabis prohibition. And so in Massachusetts for example this was not in the law that was originally passed there were some there were some references to it in the law but was actually strengthened by the legislature and later by the new cannabis Control Commission. They knew that they give priority in licensing to people from people from from neighborhoods that have been disproportionately harmed by prohibition right where this dispersion number of arrests to anybody who has a prior conviction for cannabis offense and for people of color in general communities of color have been disproportionately impacted by marijuana enforcement. And so they're trying to provide pathways for you know for opportunities to get involved in the industry through these folks.

[00:12:17] Also things like expungement mysterious Wait wait what is your take on that. Do you think that's an effective way to remedy some of these social issues.

[00:12:24] I think it's absolutely necessary. And and I would say you know it's sort of a moral imperative that we know that we expungement in these in these laws if we're going to say look we're going to now license people to go out and make a living potentially make millions of dollars on a lot on this type of behavior. We can't have people who engage in similar behavior. Still you're still being hampered by also all of the negative things that come with having a criminal record and you know that was not me that was not included in a lot of these early initiatives because the you know the activists thought that it would scare off voters and that we would lose the entire thing. Right. And so those are the kind of things I think that we're gonna see more of especially this next wave because you look at the next wave of states that are going to pass legalization in states like Illinois New Jersey New York Connecticut. These are these are very diverse states with in many cases very strong legislative Black Caucuses and Latino caucuses that will just not pass legalization without these things included. On the flip side I think you're going to see much more restrictive regulatory regimes coming out of the state legislatures where they have to cut deals with more conservative members of their legislature in order to get these things passed. So I think unlike the states that we've seen so far you're likely to see more restrictive licensing so fewer licenses so far every legalization state has no cap on the number of licenses. It's more of a free market approach although I would say a state like Massachusetts has sort of an artificial cap because they give too much deference to the locals in the licensing process which allows a lot of local jurisdictions to opt out in a licensing process that takes a really long time and is really bureaucratic and challenging that's going to limit that will end up limiting the overall number.

[00:14:03] But it's not like there is a cap. But I think in some of these newer states if I look at states in particular like Illinois and New Jersey my guess is that the final legislation that comes out of that will have some kind of license cap those license cap caps do generally tend to favor the wealthier more well-connected companies that are then able to compete for these limited or these limited numbers of licenses and these processes that become inherently more political and companies that have better political contacts are generally better positioned to win licenses than those that don't. And so I think we're going to see more restrictive and more restrictive licensing we may see more restrictive regulations around things like edibles and packaging than you know than we've seen in some of the some of the earlier states. So there'll be a tradeoff between the way things have been done through ballot initiative states and these new this new wave that I think is going to kick off this year. I'd be very surprised if we don't have the first state fully legalized sometime this year. But I think those laws are going look a little different in some of the ways we talked. You just mentioned then that we saw in the in that first wave that were done through the initiative process.

[00:15:11] And when we sort of ponder this eventual hopefully eventual federal federal change in law to legalize Oh is this going to cause a kind of a revamp you know across the states or do you think states will continue to have their own kind of processes in place even even with a federal legalization.

[00:15:30] Well that's I mean that's a that's a million dollar question. I don't think anybody really knows the answer to that yet because it depends on what federal legalization looks like. I don't. I don't think we really know at this point what federal legalization is likely to look like. I think there is a decent chance that it starts out as something like the states act. But I would not call the states act legalization if the states act is basically recognizing the status quo but leaving it as largely a state by state industry. So and I do think there is a good chance that whenever we we have eventual legalization the federal level that the that they may provide some serious deference to the states to determine how they want to regulate within those states. I don't think that I don't think we necessarily are going to see the system just open up massively to the point where there is you know all kinds of interstate commerce right away that may take time to roll out and let the states decide how they want to do that. And that gets really interesting if that's if that ends up being the case if they do defer to states at least in the earlier days because I think you're going to have different states that have very different concerns and priorities. So I can lay out sort of three like three different three different scenarios that you may see play out within that sort of state differential system you a state like Oregon or California Oregon Washington California and all the West Coast states I would say Oregon is sort of a poster child for this that has a massive excess of cannabis that barely. They can't really sell it on the domestic market. Domestically you know within this within the state they're desperate for export markets right.

[00:17:07] They're going to want to become an export or interstate exporter. Well you know and internationally I just look within within the country right like they're going to want to start sending their products everywhere. You could also see it could also see other states where there are a bunch of states that haven't even passed medical marijuana yet that are quite conservative that don't have ballot initiatives that will need to pass there. You know that we need to pass medical marijuana laws through the state legislature or even early legalization laws if they're if they're mandated to do so by Congress that probably are not going to want to regulate production and they're not really going to want it grown in their state. All right. That may scare them off and so I could see a state like you see states like say you know Utah or South Dakota. But they have a ballot initiative process coming up the best example but Utah or Kansas or Nebraska. Right. Kentucky right these states that don't have it yet there's like it. We were just rather get all of our stuff Morgan. We don't want to deal with any of this. We do want to deal with regulating and overseeing it. And so you may have states that become quote unquote export or states within or within interstate commerce you may have some that become importer states and then you may have a state. I would look at a state like Illinois where you've got currently 19 cultivators for a state of almost 13 million people. They are made up of some of the largest multi-state companies in the. In the industry.

[00:18:21] All right. You've got companies like like grassroots and GCI and Crisco and Columbia care and madmen farm can wreck all of those are here and you want to. We're currently living that are lobbying really hard to not expand the number of cultivators in the state once legalization. And a lot of these folks are very well-connected within the state because they're domiciled here. They have experience here before legalization have a lot of money have a lot of power and may convince the legislature to give them some kind of limited or oligopoly overproduction within the state. I could see a state like that saying you know what. We're not allowing anything from out of state into our into our state borders. It's got to stay 100 percent within the state of Illinois everything produced here grown here sold here right because they may be looking out for the interests of some of these larger companies. I'm not predicting that's exactly how it will go but I can absolutely foresee a scenario where a state like Illinois or maybe in New York that has a more restrictive licensing program in Minnesota that really has more restrictive licensing program kind of keep them that way and want to keep everything in house who don't want to provide competition to their existing you know very well off businesses. You could have a whole range of ways in which the states deal with these deal with this issue of just just this issue of import export.

[00:19:35] And I think that's what makes this industry so you know both challenging as well as compelling for entrepreneurs and business folks is that knowing the kind of intricacies and the ins and outs of regulation and state by state kind of politics creates these kind of noises on these is opportunities to create businesses or establish businesses grow businesses and even with federal legalization it doesn't mean that it's going to create this universal playing field.

[00:19:59] You're still think you're right you're still going to have this kind of state by state nuance you know either in subtle forms or not so subtle forms in terms of what's allowed and what the policies and processes are going to be. Let's talk a little bit about this kind of multistate operator. You know a little about what we're doing the forefront.

[00:20:15] I mean I guess just for folks to kind of baseline them a little bit you know right now all all of the cannabis production processing and dispensing needs to happen within a state because of federal laws you can't have an interstate commerce on these things. But. Then you can kind of develop business models and operational models that can go from state to state. And that's the idea behind these multi-state operators. What give us a little more insight in terms of what a multistate operator is and how they kind of approach the business. Given this kind of legal framework.

[00:20:44] Yeah. So you have seen over the last couple of years really the emergence of what are now commonly referred to as multi-state operators MSO. We're seeing that term largely adopted in particular within the finance community then and these are the companies that have managed to successfully navigate the state by state regulatory environment and go out and either win licenses in multiple states or require licenses in multiple states and in most cases it's a combination of companies have won some and some states have gone out acquired in other states. You've seen what I would call the first wave of industry consolidation where you have a lot of these multi-state operators that have been buying up mom and pops all over the country and expanding their footprint that way. And these companies typically have access to capital that you know that most operators in the space don't have ready to date. They started out that way or they grew large enough that they were able to attract more capital. These are also the companies that by and large are going public all up in Canada or almost all up in Canada on the Securities Exchange. And so they have access to public currency the valuations on the public markets for multi-state operators tends to be tend to be pretty high.

[00:21:53] And that that gives them access to cheaper currency and less dilutive capital when they go out raise money. And so you're you're starting to see really are you know a dozen or so a little bit more than a dozen or so companies that have really emerged as the dominant players in the United States that are going to be I think really difficult for smaller operators to compete with moving forward because they have they just have they have so much more capital and access so much more capital and they've proven an operating model. They've been able to go into very different regulatory environments and different states and operate successfully or in some cases successfully in some cases they just have the licenses and that's been enough. So really I mean it runs the gamut. But I mean that's really been the trend I think over the last couple of years has been this emergence of multi-state operators. I mean my company forefront is kind of in the middle of that. We shifted from being just a consultant when we started for our first five years to doing direct operations ourselves. We still do some consulting work but we have a large division that focuses on operations and we're in the middle of our own fairly large merger right now where we're merging with a company called KNX which is the parent to the largest operator wholesaler in the state of Washington.

[00:22:59] And we think that's going to massively accelerate our our executional capabilities on the growth process side of things where we've been traditionally very strong on retail license expansion and license acquisition capital markets and they have absolutely dominated in a very very competitive market. In Washington one of the most competitive in the country and they have something like 8 percent market share in the Washington market. On the on the wholesale market we think that's what we think that that's really going to help our capability in some of the other states. So when this merger is done which it will be in the next four to six weeks we'll be we'll be final and complete. We will be in nine states operational in seven and license to nine possibly even 10 at that point. And and so fitting ourselves into that sort of universe of of multi-state operators.

[00:23:47] Most of the multistate operators vertically integrated as well. I mean and meaning that you know you're focused on the cultivation and the processing and the dispensing the retail side of things or they're multi-state operators that are you know just focusing on on certain parts of that supply chain by and large they are all vertically integrated.

[00:24:05] You know there are some that have been more focused on retail. I would put us in that category. Surely has also been probably led with retail most have kind of led with cultivation production and I think they see their retail stores as distribution channels for their products more than they see retail as what they lead with. And so is a little bit of a difference there but by and large everyone kind of does everything at this point and it just kind of how you have to operate and a lot of these states particularly some of the larger states mandate vertical integration in states like New York cycle Florida New Jersey Illinois doesn't mandate it but you know there are states that mandate in Massachusetts up until just recently and they still technically do on the medical side of things. So everybody's kind of had to get good at both sides of things. One thing that I have found interesting though on this and on that note is you've seen that this emergence of these larger multi-state operators. And when I met all the companies that I've mentioned are basically all out of the Eastern Market. The limited license markets right I mean the one big exception is madmen. They came out of California as a really more California based company but almost all these other ones come out of the the more limited license largely east of the Mississippi market it's even a company like harvest right which is Arizona based Arizona's regulatory environment looks a lot smaller.

[00:25:21] Associates Yeah. It's a lot more in scope so you've got companies like harvest GCI and Crisco and pharma can now as I mentioned middlemen sort of the exception. Columbia care. Doing that is just forefront. Almost all of them are based out east. But when you look at what are the most or who are the most successful product companies it's almost all companies coming out of California Colorado and Washington. And I think part of it is because they've had to succeed in hyper competitive markets these larger multi-state operators have not because they have largely been protected in their markets and so they have to produce well and they can produce efficiently. They don't have to be great. They have to be super efficient there to be better than everybody else in their states because there's more than enough room in the market for everybody with a limited number of licenses but you want to be a successful product manufacturer in California Colorado Washington writing these states these western states you got to be able to compete in hyper competitive markets. And so I think one of the trends that we're we're starting to see and I think we'll accelerate over the course of the next couple of years. And frankly this is this was the forefront 10x merger that I was just talking about are these these better capitalized East Coast domiciled companies that are really good at navigating public markets and really good at winning and acquiring licenses acquiring brands from the West Coast that have been able to operate really efficiently and win out in those markets and then bringing those brands to these other more limited markets.

[00:26:45] That was you know that was our impetus behind the 10x merger. It was a little different than some of the other mergers we've seen in the space where it's been sort of matching dots on a map. So I'd look at like you know the farmer can madmen merger or the antis MP X merger both of which make a lot of sense. And it's not to denigrate what they were doing. I totally get why they did it where you have this asset portfolio plus this asset portfolio makes us way bigger and a bigger force that makes sense. But this for us was really about executional capabilities and these guys out in Washington are executing better than anybody we've seen in United States period certainly better than than our counterparts in the multi-state operator game. And we think that eventually the way that these companies are evaluated and valued is going to be less on how many licenses do you have and more on how are you executing and how are those licenses performing.

[00:27:32] And you know ultimately we you know we like to play risk versus playing Monopoly. I think I think I think a lot of a lot of what you're seeing in the multi-state most multi-state operators has been this game of Monopoly. It's like collect this and put as many dots on the map as you possibly can. And by and large that's what the public markets and the public market investors have valued the most. It's how many dots in the map do you have. And which states rights some states are valued much more highly than other states. So you adopt in Florida or New York is valued a lot more highly than dot in Oregon and Washington. But I think that's only going to shift to when I talk about the risk right and risk geography. Right dots in the mountain matter but so does your strategy and so does your ability to execute. And I think that's the next wave we're going to see here is. OK yeah you've got all these assets but what are you doing with them and how are you executing those. And what percentage of the market share do you have in your state. And what kind of growth are you seeing. And so we're trying to set ourselves up for that even if it comes a little bit at the expense of adding more dots on the map.

[00:28:28] Yeah that's interesting. I mean some of this is just sort of this general kind of market industry dynamics you know in a growing market where product or product capabilities of solutions are under customer expectations or kind of the market needs you know a vertically integrated process tends to work very well because you can optimize that whole process.

[00:28:46] But the moment that your products outstrip really what the market kind of demands or needs then it becomes a much more around brand and differentiation. And it feels like that's kind of what's happening at some level like the market is maturing a little bit. And so this brand side can you develop recognizable trusted brand on the retail side is really going to drive this next this next wave of growth because it is one of the interesting dynamics in industry is as we get more and more kind of expansion of the market we're bringing in new and potentially very different types of segments and populations and personas. How do you see. How do you see this playing out as the market kind of matures from kind of these early adopters to.

[00:29:23] I'll call it the early early majority kind of wave of demand.

[00:29:27] How do you think that's going to change the actual the development of the market on the brands and or the company is going to be successful in this next generation. That's a good question.

[00:29:36] You know I think we are seeing a shift in the overall consumer base right. I mean the newest entrants into the consumer market are largely in their 30s and 40s. It's not the 20 something year old a 20 year old that people typically associate with cannabis consumers. It's an older crowd. It's a more sophisticated crowd. It's a crowd that is much less interested in smoking. And by and large more interested in other types of administration methods of administration they're more interested in lower dose products than than getting dabbed out of your mind. There's always gonna be a market for that. And it's like you know it's like like this is where market segmentation is going to is going to really come into play like there are gonna be companies out there. And I'll give a shout out to company like field field extracts out of California and my brother happens to be the CMO there.

[00:30:24] And your field focuses on really really high end extract right. Source pens that are super strong and expensive and they can sell 120 million gram of sauce. And you know in a heavily competitive market in California and those are always going to exist. But companies like that are playing to about 5 percent of the market right now. That's that now that 5 percent of the market is willing to spend a lot more money than the other 95 percent market. And so those this is the businesses that can capture that market effectively are going to do really really well. But that's not where the majority of the industry is going. The majority of industry is selling a lower dose products and other modes of administration not dabbing. So I think you'll see an increase in you know things like tinctures and edibles and certainly bait pens. We've already seen a big increase in those. I think now things like compound formulations are going to be part of this next wave where once you can do extraction on a much larger level then you can really isolate down to individual cannabinoids and individual Turpin and reconstitute those compound formulations to create very specific effects which U.S. see companies like Abu. Just sold for what six hundred million dollars. Right. To kind of be without having it like really any sales right it's because of the IP that they created around how you create compound formulations. I think a company like canopy saw that's the wave of the future and these guys clearly have done more to try and figure out how you do that effectively than others in the space they're willing to pay that much money for them. And then that's surprise a lot of people but I think it's a recognition of partly where the market's going.

[00:31:49] And I think on the retail side I think the retail experience really matters. This is where many not all but many of I think particularly multi-state operators who as I mentioned earlier are they see retail as an outlet for their products. And so they haven't necessarily put a ton of time in to developing that retail experience. And I would say you know most of them would want to sit would you ask them would say you know we want about 70 percent of the products on our shelves to be our own products.

[00:32:14] We kind of take the opposite approach. We would rather about 30 percent of the products on our shelves be our own products because people want a wide array of products and then customers sell you that routinely. They want a wide variety of different kinds of products. There are products out there that are really popular if that's what the customer wants. We want to have that in our store. And so that's part of it right is making sure you have a product variety at the store. But really it's about the overall experience that people have when they come into that store that they feel really good. And I think that's especially important for these newer adopters because you know a lot of us would say they maybe they need used a little bit here and there in the black market. But most these folks are folks that we're not comfortable going to a quote unquote dealer. So even if they liked cannabis they probably used it every once in a while when you know their cannabis consuming friend had some but they weren't only comfortable going to a black market to get their own. They want to come into an environment that feels. I would say almost overly welcoming and almost goes out of its way to to make sure that folks know that they're not doing anything wrong when they walk into one of these stores and in fact they should feel welcome and they should feel valued feel respected.

[00:33:18] I think that's important. We really we kind of lead with retail as I mentioned. And this has been a big part of our sort of guiding philosophy is everybody that walks into these stores should feel great. And so it impacts the way that we hire. We said when we interview folks they have to be happy humble and hardworking. They can't check those three boxes like they don't make it through the first interview. They've got to love talking about candidates to people they've got to be willing to commit to be part of a family type environment in the store itself where everybody who works there feels they love each other and they feel like I mean it sounds corny but it's true. And the culture almost like a family unit. Absolutely because that reflects on the people who come into the stores and then the aesthetic. Right. Like we go with a higher and higher and aesthetic not super high end that it's off putting but really nice clean fixtures right clean type environment close it on this point is the one thing that we do is in most of these states particularly in the eastern half of the country they require to have a separate waiting room for your dispensary floor. And so you know people come in and you got to wait in the area you've got to get buzzed through a secure door before you go to the dispensary floor. And with that winds up with as are a lot of dispensaries that kind of feel clinical and part of that is that they're trying to appease the regulators in a medical environment but also just the idea of you wait in a waiting room you get buzzed in to go make your purchase. It just lends itself to more clinical type feel. And our philosophy on this is that you know first of all people don't like going to the doctor right. Generally Yeah I mean we don't have something to look forward to.

[00:34:44] That's not an association you want to make.

[00:34:46] Right. So we want people to feel like they're in a medical clinic when they come into the stores. We want them to feel really good. And I also really dislike this idea that you have to get buzzed in through a secure door to make your purchase. It's kind of like the wait here the drug deals going on. Exactly. We want to see what's happening back there. And so to comply with the regulations we do a giant glass wall that separates the dispensary floor from the waiting room area. So there's no visual separation at all. There's a physical separation and it's you know it's reinforced glass it's basically bulletproof glass. These are unfortunately quite extensive walls. But it's but also it's worth it because when somebody walks in it feels like an open floor. And psychologically it's psychologically it gives off the the effect that there's nothing to hide here. Right when someone gets buzzed in through that door they're not hiding anything back there. Everything is out in the open now. Somebody has an issue that's very personal and they want to have the private conversations we have a private consultation room. They approach you with it with a trained staff member but other than that everything's out in the open. And we think that that creates an environment that people enjoy being a part of. And I think that you know that's going to really help drive the retail experience and I think we see that in the performance of our stores and in particular how far people are willing to drive and how many dispensaries they're willing to pass to come to a mission branded dispensary which is our retail brand.

[00:36:08] No. And I think that's smart.

[00:36:09] I think that that's kind of the next generation of you know the cannabis industry is really kind of focusing on the different customer segments on the personas and creating experiences you know. But both brand and in and customer experiences that are going to tailor to these different parts. And I think you're going to see a lot of segmentation and kind of bifurcation of the industry.

[00:36:27] The successes have been great we're going to hit time here. If people want to find out more about you about forefront about the work you're doing. What's the best way to get that information.

[00:36:34] Yeah. So to find out about us you can go to . The numbers for a numeral 4 in that forefront ventures dot com to find out if there's a mission store in your area. You can go to We're currently open in Illinois Massachusetts Maryland Pennsylvania with stores coming soon in Arkansas Michigan and Arizona and probably some others probably not. Not officially not official yet but if I find out where about us there I would also say if folks are interested in the advocacy side of things that I've talked about go to for Students for Sensible Drug Policy thought and check out the really important work that the this new generation of young activists is doing to help bring about further reform and and to protect all of the gains that we've made over the last 20 years or so.

[00:37:24] Awesome and I will make sure that all those links are in the shadows so people can click through and get those. I mean a pleasure. Great conversation. I've learned a lot. I really appreciate the time. Absolutely. Thanks so much.

[00:37:35] You've been listening to Thinking Outside the Bud with Business Coach Bruce Eckfeldt to find a full list of podcast episodes. Download the tools and worksheets and access other great content. Visit the Web site at And don't forget to sign up for the free newsletter at