I am in a library here in Traverse City, Michigan.
Yeah, it's nice up there. You chose well.
So we just luck of the dice. So I was expecting maybe just a rural town.
And it turns out it's maybe a bit of a vacation destination.
Yeah, yeah. So in in southeast Michigan, especially everybody talks about going up north.
And up north means going to vacation homes and stuff like that.
And Traverse City is a big vacation spot for folks in the summertime.
Yes. So I picked that up pretty quick.
Hey, Charles.
So I'm here for work. Everyone else is here for vacation.
So there are a couple laboratories in Traverse City, Michigan that I'll be visiting.
And then I'll be working my way down.
We'll go to Bay City real quick.
And then we'll be seeing each other tonight for pizza or Middle Eastern food or whatever.
Whatever you choose, whatever you choose.
I just threw that out there because I knew that one pretty well.
But if there's anything else that you want, we'll find it.
We'll probably stick close to the Sterling Heights area.
Where else? Shelby Township area. That kind of stuff.
There's a lot of stuff to choose from. So anything you can think of, we can find it.
Yeah, there's really good Middle Eastern food in Detroit.
Yeah.
Well, that's on the table. And so basically I'm just getting a lay of the land of Michigan,
learning a bit about the market industry while I'm here.
And then tomorrow I'll finish it out going westwards towards Kalamazoo.
Stay away from Grand Rapids. That's got to be the most conservative place in Michigan.
I don't know the first thing about Michigan. Unfortunately, so that's why I'm here.
That's why I'm learning.
But yeah, Travis City is really nice.
It's become a real affluent part of the state where before it was just kind of a cherry farm area.
Yeah, there's a lot of kind of really...
So we did one vacation up there where my aunt rented a house up there.
And there's a lot of money in Travis City, a lot of very nice homes and all that kind of stuff.
Well, that actually kind of leads into the material. Welcome, Heather, by the way.
But that leads into the material I prepared for today.
So kind of touching off of what we've been talking about, about, oh, you know, retailers, they tend to...
There's clusters in lower to medium income neighborhoods.
You don't see as many with high sales in the high income areas.
So it got me to thinking about Michigan and I thought, OK, well, maybe a similar thing's going on here.
And so what it's...
We've got a new guest.
So what it seems that, you know, so of course, you know...
Welcome, Christopher.
So what we're discussing is, yes, you know, Michigan has permitted adult use and medicinal marijuana,
but a lot of the different municipalities have opted out.
So whether that's just through zoning or they've just, you know, put their own ordinances in place.
And so what you see is, so for example, Travis City, they have allowed medicinal use and they've opted out of adult use.
And so it got me thinking that maybe places, they don't get to locate in sort of their ideal location, one.
And then two, maybe places with, you know, where they, you know, they don't have the highest median income
or they're not like a vacation destination.
They need other mechanisms for tax revenue.
So they're more open to permitting cannabis businesses as a source for income.
So...
Yeah, that seems to track, doesn't it?
Where it's almost like for the higher income areas, they want to kind of push it under the rug a little bit, it seems like.
Well, they have other options, right?
So like for Traverse City, right, they can rely a lot on tax revenue from people coming from vacation.
So like they have like substitutes, essentially.
If you want to think about it as a production function, they've got like substitutes in how they produce tax revenue.
Yeah.
So is that one of your, from being here in Michigan, that's kind of one of your big takeaways is just kind of this patchwork of acceptance just based on some of these mechanisms that you noticed.
So the biggest thing I've taken away is Michigan has smart rules. So you've got a lot of rules in place that are just were just well thought out and they just make sense.
You're not tying your hands behind your back.
But it seems that, you know, some people have opted out of those rules.
So they like in Traverse City, they've opted out of the adult use.
And so I think that made sort of throw a monkey wrench into people's plans.
And so it seems that
location, like location, location, location, and like property is the name of the game here in Michigan.
It seems that a lot of people do own property. So that's what they were saying is different about the Michigan market versus the Colorado market is in Colorado, you see a lot of people renting.
Welcome, Christine, by the way.
And then in Michigan, you see a lot of, you know, property owners.
My sneaking suspicion is they may not necessarily be located, you know, in the ideal locations.
So, you know, you may have property owners.
But it's just from what I'm gathering.
Some of these places are quite valuable. So it's almost like to what they were saying was some people may they may own like a $20,000 plot of land.
And then all of a sudden, their municipality, they call it green zoned it. So they permitted, you know, a cannabis business.
And then like overnight, their property value was worth like two million.
And so basically people want to find out, are there going to be any changes in municipalities that are opting out, because if somebody all of a sudden it opts in, that's going to make all that land much more valuable.
It's interesting because I almost thought, I mean, this is just, you know, speculation on my part, but I almost thought it might be the other way around because, you know, my narrow perspective of Michigan, I live in southeast Michigan.
I'm attached to the automotive industry, which drives a lot of southeast Michigan.
And the kind of stereotypical existence is you work for, you know, these are mostly college grads, engineers, that type of thing, and they work for this company for a long period of time, they build their wealth.
They invest in property outside, you know, maybe have a vacation home or something like that.
And they build up to that over the years. And actually it's the blue collar workers as well because in the plants, especially for the older folks that have been with the automotive industry for a long time, they actually start building up pretty good salaries.
So you can make those investments. My feeling would be that if you, you know, make an investment in a property outside of southeast Michigan in the northern parts where the vacation homes are.
I would think that life people will be trying to protect the value of their property thinking that if they were having a cannabis industry in their neck of the woods, it might bring down the property values.
But you're suggesting that the the the opposite is happening.
Oh, quite so. So it's a mixed bag. So remember, there's almost two different types. There's the retailers and then there's the, you know, the cultivators processors.
So I don't think a lot of people want to be located. Like, I don't think you want a retailer near your like neighborhood. And I think that was something that was brought up is you have, you know, parents will petition against retailers.
The cultivations tend to be in more rural locations, and then the major complaint there is smell. But from my understanding, people kind of can get smell under control and they just operate like your typical production facility.
Oftentimes you can't even tell what's in the warehouse, it just looks like another warehouse.
So what they're saying is, people are trying to not let on that they're buying property for cannabis, because it will inflate the price.
Okay, interesting. For a couple reasons. One, there's the risk involved in.
So there's sort of a premium or the cannabis property.
But also because it's sort of in high demand. So if all of a sudden you're in a green zone.
And let's say they're only going to permit.
And so they can be limited by default. So they say, okay, we're going to permit it in this narrow area. But yeah, there's already a bunch of established businesses there and there's only like three vacant lots.
So it's basically going to be down to three.
And so now everybody wants those, you know, three parcels of land.
And basically what they're saying is some people kind of get insider knowledge that oh this municipalities thinking about permitting it.
And then all of a sudden there's basically saying if you're a Michigan property owner, and all of a sudden you start getting like bids on your property, then you know you may be well positioned as far as the cannabis.
Well, having lived there for two years, I can tell you that there's some, you know, there's very liberal parts of the state but I mean huge.
You know the majority of the state is very, very conservative.
And I can see, you know, a lot of community opposition to.
Well, I mean, geez, where my mom lives, I mean they fought recycling.
So, yeah, I'm sure they're going to fight any sort of cannabis industry.
So, yeah.
And I think about the area where I live in Romeo, Washington township is very very conservative and I was just kind of as Keegan was talking running through my mind of there's so many different areas that could be developed here for the industry, and there's
already a lot of agriculture up here already.
But I, I guarantee that it would not get past any of those types of like green zone.
Yeah, it would never happen here or at least it wouldn't happen right now.
There are other municipalities just up the road from here that have allowed it. So, you know, our made a township for the town of our made a just north of Romeo where I am.
They they have approved it for like basement grows and stuff like that so.
Yeah, it's just, I think over time though, as, as, as the financial incentives continue to grow is going to change.
Your, your anecdotal example is sort of touch on exactly sort of what I think is the case where it's sort of everybody wants to be in. What was the first time you mentioned.
There's Washington township.
Yeah, there's our meat over there do permitted. Yeah.
It would be ideal for the retail. So if you look at like, say, in economics there's like a straight line and they call it like the hoteling model, where there's like two retailers and they're trying to decide where on the line to locate.
And so, for example, maybe the ideal place is the Washington township for the retailer like given transportation costs everything else equal, but it's not permitted for them to be there.
So they have to go to the next best option, which is the armida.
So basically, they're, you know, they're going to have a slightly higher transportation costs and maybe not even slightly like, and that's what I was actually going to get that today is, you know, transportation costs may actually be of concern.
And, and I think that's sort of a counter counteracting the growth in Michigan so you see you're basically you're seeing a growth in sales.
It's
we'll look at this here in a second. And don't know the actual percentage, but I think they may be kind of counter balanced by transportation costs, where you're basically seeing municipalities opting out or limiting, or maybe they've already opted out and
there's only limited room for growth. And so basically, you're seeing
high transportation costs which are kind of curtailing some of the growth here in Michigan, but
but that's my conjecture. So I think I'll go ahead and start presenting and show you some of this data.
So are you going, did you go to Ann Arbor or are you going to Ann Arbor.
I will be visiting in our room tomorrow. Okay yeah that's a probably a really good spot. Yeah.
Yeah, I mean, it would marijuana was decriminalized there for hiring, I don't know how long we walked for years. And that's the most interesting thing about
Michigan is basically they've had medicinal since 2008.
So, in their own way, you know Michigan's a leader in the cannabis industry.
So,
they're like, they just got adult use in 2018 or so, which is, I mean I think they're only like, there's only 10 or 11 states that have adult use so they're still an early mover there.
But,
but yes nonetheless I'm learning that it's quite the interesting state here.
Yes. So, let's make sure we're looking at the
so to just go ahead and start showing you some of the data sources here.
Michigan publishes monthly reports. So they have them published through May, so hopefully we should be looking for the June report pretty soon.
And just to go ahead and show you what you would expect out of this report. So it's going to be a PDF.
And they're going to be publishing a lot of these data points from metric.
So you have nice monthly totals,
albeit you have to
get them from this PDF yourself. So,
I've gone ahead and
just grabbed some of the more interesting data points here. So,
or not more interesting but just some of the totals just for
it's just to be succinct. So basically, I've got the pounds sold, fluid ounces sold, which would be the liquids,
as well as total sales.
So,
you've got total sales from
October 2019 through
May of 2021.
And then,
as transportation costs have been
on my mind, I went ahead and restarted to look at what data points do we have here.
I think it would be interesting looking at the pounds shipped. So you can actually see a breakdown of
why things are being transferred. So are they being transferred from growers, from processors?
Are they using transportation companies? So I think that's interesting, but that's going to be future work.
Today, I just grabbed the number of completed transfers.
So, basically with this analysis, the key data points are total sales
and completed transfers. So I was going to see,
given these two data points, sales and transfers,
can we make any sort of interpretations or do any sort of analysis on transportation costs?
So,
I'll walk you through the analysis that
I started here.
So, first things first,
we'll get the data and then we'll look at the data.
So, just to show you what data points we have here.
Principally, total sales, completed transfers. So,
first step, look at the data.
So, here are sales.
And also, let me preface that I was just collecting these and I realized that
I'm not certain if these are medicinal or medicinal plus adult use,
or perhaps just adult use sales. So, I think we still need to get to the bottom of that.
My hunch is that it's total medicinal plus adult use.
However,
just be warned. And so afterwards, we'll need to read the fine print and find out for certain.
So,
I think there's some seasonality here. So, what it looks like to me is
things were coming on board, people were getting used to working with the metric system.
So,
given that they just permitted adult use in late 2018, people are just beginning to use metric in 2019. So, there could even be sort of a learning curve here where people are starting to use the traceability system.
Then I think you see seasonality, you see a spike in July. So, that's sort of now, June and July, everybody's going to
Trevor City and getting their medicinal cannabis and enjoying their vacation or what have you.
And so,
let's just chalk this up to seasonality. However,
you don't see this exponential growth like you would see in say, Oklahoma, but you wouldn't expect that because as we were just noting, Michigan has had medicinal cannabis since 2008.
So,
potentially, a lot of people have sort of already become
acclimated. They're already used to the cannabis industry being around.
Yeah, and I think there's also, I mean, such a substantial black market aspect right now in Michigan that it's probably, I think it would be dampening a lot, any kind of big fluctuations. I think there's a huge black market mechanism here.
You know, you say that, so someone at CannaCon essentially posed that question to one of the regulators. So, someone who works at the MRA spoke and
I just, I don't think they have much of an answer. I think, you know, they're basically trying to make the rules approachable so that people can enter the permitted industry.
So,
but you're right, it would be interesting if there's any way to measure that because they may be sort of substitutes, right? So, if you're a consumer, you know, you could probably substitute the permitted for the non permitted.
The suppliers.
Yeah, I think it's something to think about.
Just keeping curious when you're listening to the regulators at CannaCon. Did they mention anything about making the raw data publicly available? Did any of that come up in conversation?
That's an interesting question. So, that didn't come up, however, we could potentially ask. And one thing that I was seeing here is, I just saw up at the top, there's a FOIA request.
It has me wondering what Michigan's laws are about FOIAs and what data they collect because they're doing their summary report here.
But ultimately, this is coming from, you know, data points and metric. So I don't know if they'll just give you a data dump of those like they do in, like, in Washington State.
I doubt they would produce like statistics any more granular than this. Like, this is probably the report that they have set up.
But I think it would be worth investigating to see like, yes, like, could you actually get like these transfer data points?
Yeah, all the transactions behind it.
So, good question, Paul. And the answer is, it will take further investigation, but this looks like a promising lead.
Yeah, I'll take a look. Maybe I'll just fish around and send them an email and just ask the question.
And see what they say. Exactly. And then I think Colorado has a similar thing where they do Freedom of Information, but there may be like a cost.
So the cost may get exorbitant if you ask for too much.
But it's always worth asking. Yeah, I can also see that that cost could be considered almost a barrier to the spirit of the FOIA request, right?
I mean, if it gets too ridiculous, because a dump out of that, out of this metric system, although it's a lot of data, I can't imagine it being very complex to do that.
Well, that's what they do in Oregon, at least in Portland, and I think in Oregon, too.
I mean, they just, you know, the cost of getting the data is just, you know, they put it in place so they don't have to provide you with the data.
Right, right. And that's, yeah, that kind of defeats the spirit of what this whole thing's about.
So I'll put this on my list of things to investigate, because, because like you said, like this, this total just really leaves you wanting, because like I said, I'm just, I'm going to do my best to estimate transportation costs.
But like, like in Washington, you can do a much better job. We can actually find point A to point B. So we could actually, you know, we can use like a direction service.
So like, like a Google direction API. So you could actually estimate the time it takes to drive from point A to point B.
So you could actually estimate the total amount of time on the road in models driven.
Yeah, I mean, you could even provide optimization routing based on that information, right? I mean, unless they're already doing that, but I have a feeling they probably don't.
Or sort of look for the, like the Silk Road of cannabis. So I think that could make an interesting plot if you could somehow just plot all the transfers on a map and see if, you know, there's probably a bunch going up the I-5.
But it's real, real interesting because it kind of gets to the zoning.
And so, so here are like basically the counties that have opted in, in Michigan, well the municipalities. And the point I want to hit on is
So the cultivations and the retailers need to be in different places, right? So naturally a cultivator wants to be a little outside of the city, not too rural, but maybe slightly rural.
Like that would be ideal, but they don't want to have to transport their products too, too far to the retailers. The retailers want to be in the urban areas.
Different municipalities permit different types of licensees. So, like, for example, like Bay City is looks like it's wide open and they've allowed 50 retailers and maybe 25 growers.
But, you know, maybe 25 growers, they don't want to be in Bay City. They would prefer to be a little outside.
I actually just had a list of all the ones that opted out. Let's see if we can find that real quick.
You know, I looked at that list. You must have shared it with me. I looked at it because I kind of went through, I mean, I lived in Michigan a long time and I knew, like I know all those counties.
And I'm just thinking about, but there were places like, like where my grandparents lived, which was out like in the middle of nowhere. It's like four hours from Detroit.
And they have a facility there, you know, and it's like, I mean, like that was a town where the, you know, the biggest thing to ever happen to them was they got a McDonald's.
But, you know, it's kind of interesting.
And so here essentially like the municipalities that have opted out. And as you can see, the ones that have opted out is a lot longer of a list than the ones that have opted in.
So, you know, it's one of those things where, so let's say you're in the Elmira township and they've opted out, you know, you're going to have to find like the next closest municipality that's also permitting your license type.
So that's sort of what's at play here. So I'll just keep moving through the data.
So you're seeing sales doing their seasonality.
And then I plotted transfers. So what are you seeing going on with transfers? So you're seeing a lot more transfers.
Well, more sales, more transfers.
So I was curious, what, you know, what are the sales per transfer?
Because simple, simple economics, right? If the marginal cost is greater than the marginal benefit, don't do it.
So the marginal cost, the transportation cost has to be less than the marginal benefit. So the transportation cost has to be less than the sales per transfer on average.
So this gives us at least an upper bound, albeit, you know, a steep upper bound.
You know, we at least, we at least now know like, okay, how many like sales are being generated per transfer?
And what we're seeing is it's slightly going down. So at first transfers were incredibly valuable. So like if you did one transfer that could, and of course, keep in mind,
these are total transfers. This is transfer from grower to processor from the potentially processor to lab. I'm not certain if those are included. And then of course from grower to retailer.
So on average, one transfer is netting around 12,000 in sales in the beginning of 2019.
Then you see it falling off to around 8,000 sales per transfer. And now it's actually declining, I would say noticeably.
And now it's below 6,000 in sales per transfer.
So I was thinking, well, I was thinking, okay, well, maybe,
maybe just the price of cannabis is going down. So they're still shipping just as much, but they're just not making as much from it.
So I also just plotted the pounds per transfer.
It looks a bit more consistent, but I still see, you know, a bit of a decline in the latest months.
So at their peak, they were transferring about eight and a half pounds per transfer.
And so now they're down to around five, five and a half pounds per transfer.
So this is most of this data is during the pandemic.
And so you have this area that's, you know, things are increasing, but people are locked up inside.
And now people are being able to go out and do more things. And I wonder if that has some effect on these numbers.
So interesting thing. So the pandemic had a big effect on
cannabis transportation. So speaking as someone who worked at a lab that had couriers,
you had an interesting thing going on. So one, at first, there's no one on the roads.
So there's there's little traffic.
I guess there is slightly increased transportation costs. So you're they had to, you know, get there.
You know, their their face masks and gloves and they just needed to, you know,
maybe spend five minutes longer each facility just going through the safety protocol.
So slight increase in that type of cost.
So but maybe I'm missing something. So I was.
So I wonder if the so during the pandemic, people are locked up.
I noticed that some of the courier services for the dispensaries,
they're advertising a lot of these delivered to your door kind of services.
I wonder if the price drop is reflected in the number,
really the number of I guess trips made.
So instead of doing like a wholesale shipment from like a producer to a retailer
where you've got a lot of product per journey or per trip that now there's more trips
made by the total amount of product.
Well, exactly, Paul. And that's that's what I'm getting.
That's what I'm sort of settling on. It looks like people are just doing more smaller transfers.
They're whether that's because of like you said, delivery or.
But I mean, that could even raise a thing where reason factor where
there you're kind of competing for delivery drivers.
So the delivery drivers going to doing what maximizes their benefit rate.
So it may be may be optimal to have your courier out doing deliveries versus doing these bulk transfers.
But now I'm just kind of conjecturing. But one one thing certain is we're seeing more transfers and.
You know, the total amount of sales per transfer that each one's reaping is is less.
Yeah. So it's interesting.
So. Something's going on there. So you're going to keep digging a bit.
So. This is where I'm going to start getting going to be a bit of an economist and just start estimating with a number I pull out of my hat.
And so keep in mind that this number is.
Real critical and is just my complete hypothesis.
So this is, you know, this is real critical.
So basically, anecdotally, there is a transportation company in Washington state.
And I think they may have gotten out of business. But basically, their claim was, OK, for fifty dollars, we'll transport your.
I think it was fifty, maybe seventy five, so we can adjust that here in a bit, but I'm fairly certain it was fifty for fifty dollars.
We'll transport your cannabis anywhere in the state that it needs to go.
And so, you know, if that's right next door, fifty bucks, it's all the way across the state.
Fifty bucks. So that was their business model. As I said, they may still be in business, but I've got a sneaking suspicion they may have gone out of business.
So fifty dollars a transfer may not actually be.
Profitable, so we'll play with that number, but we'll.
And also keep in mind, transportation costs are probably variable. So if you're doing it internally or even if you're getting an external service,
I would suspect that you would have variable transportation costs.
But for a simple, quick analysis, we're going to assume a fixed cost of transportation of fifty dollars per transfer.
And just know that that may be a little low.
But we can.
Start to estimate what transportation costs may be.
We can see they're rising, but that's, of course, because transfers are rising. So I was thinking, OK, so let's.
Ground this cost. So I was basically saying, OK, what is cost relative to total sales?
So what's the, you know, the percent of total sales that end up being spent on transportation costs?
And this is this is estimated.
These are my estimated. Transportation costs to sales.
So I'm estimating the transportation costs are maybe between half a percent to one percent of total sales.
And that may be a low estimate, but I'm just trying to get a number here.
And the other interesting thing is just, OK, let's say I'm wildly off on like the number.
We can at least still gauge the direction of the costs.
And so let's say I am off on the percentage of total sales. Maybe it's higher.
From my estimate, it looks like. You know, transportation costs as a percent of total sales are increasing.
And so when essentially what I'm thinking is. I think maybe municipalities are opting out or.
Or perhaps transportation costs are rising for other reasons, maybe maybe new, maybe new licenses, maybe the markets kind of all the good locations are taken.
So if you you get your license right, you've been waiting for two years to get your license.
You've raised all this capital. It's time to break ground on your cultivation.
And then, you know, the, you know, the best spot you can get is.
I'm just pulling one of these out of my head. So maybe the best spot you can get is in Iron Mountain.
And maybe that's not ideal for you or like I said, I don't know that much about Michigan.
So. But long story short, you find yourself.
With a parcel of land, you know, in a municipality that may not be ideal because all the other locations, they're already capped out.
Maybe you wanted to be in Bay City, but they already have reached their cap. So you have to locate in Benton Harbor.
And that's that's not ideal for you. And now you have to do a lot more transfers to.
To. To meet the needs of the market.
I wonder if the number of transfer licenses has increased.
The reason I'm wondering if there's just a higher demand for local couriers, like a pizza delivery business, right?
So you have to have more of those couriers to deliver.
And they're basically just, you know, reaching a demand level that the customers want.
So you get growth in the number of couriers.
You're also getting a larger share of the overall sales costs because there's more courier delivery services being employed.
I don't know.
So you spent time in the industry.
Basically, I mean, what I'll say is.
If they're not growing, like there's room for growth because I mean, think about it. Every single licensee has to do transfers, right?
So if you're a cultivator, you've got to get your products transferred to a lab, potentially to a processor, and then potentially to a retailer.
Same with processors.
If you're a retailer, you potentially have to work out the logistics to get delivery. Potentially, you can go pick things up.
I'm not certain.
And then the labs, I think that varies state by state.
But one way or the other, the lab, the sample has to get to the lab.
So there's a lot of moving of cannabis and it needs to be done safely, securely with manifests.
And there's a lot of economies of scale here, right?
So like if you're a if you're just one wholesaler, then, you know, if you do a trip to a retailer, you're just going to be bringing like your box.
But if you're a transportation company, because of zoning, this one city may have 25 cultivators.
They're all selling to this city, which has three retailers.
So the transportation company can just go there, you know, visit all of the cultivators, which are all right beside each other, and then go and take all of their boxes to the retailer.
So, yeah.
And this is the Silk Road idea that you're talking about.
Essentially, because from what I've observed, you get clustering.
So you just like you're going to have the big cluster in Bay City.
So, well, this is just going to be the labs, but I've plotted the labs here in Michigan.
And the labs kind of reflect where retail happens versus, well, and a little bit of cultivation.
But so basically what you're seeing here is, you know, you've got a couple labs in Traverse City, a couple in Bay City, and then, you know, the southern part of the state looks fairly well distributed, but I'm sure there's I'm sure there's pockets where
this is not permitted.
So, you know, so there's going to be
municipalities that have just completely opted out.
And so what you'll see, I mean, you even see with the labs right so you'll see like, you know, clustering of like so here's like four labs, you know, within like a five mile radius.
Yeah, so, right where we say war, see where it says Warren.
All right, so that's where the General Motors tech center is where, where I'm located out of.
But all those dots around.
Yeah, so those guys. I'm not surprised at all to see them around there because there's, I know.
There's a lot of, you know, off, I guess black market growth that's going all through that area.
But there's also premiums that there's there's premiums for getting your getting your crop tested right you can actually charge more for that.
Oh, Commerce Township.
I used to live there.
That's funny that there's one right there and the. Can you zoom in a little bit on Commerce Township.
Yeah, I know.
Like to know, oh my gosh, that is.
Yeah, it can get rid of the pop up there.
There's not as many restrictions on laboratories right because, for example, the town, the lab I worked at in Washington, they permitted laboratories they did not permit cultivation or retail.
And it's, you know, because, I mean, what city wouldn't want to laboratory.
I mean some may not but you know what city would it want a laboratory operating there and exactly where that is.
So, so long story short.
I think because of the clustering. I think there's a, you know, good opportunity for transportation companies right because I mean even the labs are kind of clustered. And so,
if you're a transportation company and say, say you're, you know, you're going to go take samples to, you know, to, to these labs, including iron labs right it would make sense for you to, you know, just say all the cultivations happening, maybe more rural Michigan.
So it would make sense to just go pick up all the samples.
Go take them to the respective labs and just try to
transport the products with the lowest possible costs versus say all of these labs, they all send out their careers, they all go to the farms, then all five careers then come back to their respective labs.
Yeah, for sure.
So, so long story short,
transportation costs are rising. And so I think that opens the door for even more growth if there's not, if there's not already growth, then growth in transportation companies, because, you know, these, you've got to remember what you're in business for.
So that was something our lab owner stresses you know we were in business to test to do lab testing, not to be like a courier service.
So, I'm sure a lot of, I'm sure a lot of the edible producers a lot of the cultivators, they're winding up basically as delivery companies, and they're in the business to make edibles, they're in the business to cultivate cannabis.
And if all of a sudden they're half of their staff or delivery drivers.
That's not what they're in business for. And, you know, that's not what they, that's not their competitive advantage necessarily.
So,
just to go.
And there's not much more here but just to go ahead and finish it off.
Basically just prepared forecasts for the rest of the year.
So, just forecasted sales.
So, pardon the gap. I think this line should be scooted over one month.
So, what I'm forecasting is for sales to rise in June, and then sort of dip down in the rest of the year.
I'm predicting transfers to just continue their steady rise to just going to keep seeing more and more transfers, while sales are dipping down.
I'm predicting you're going to see, you know, a lot less sales per transfer. So, as we were talking about, even more transfers of even smaller value.
And because of that, you'll see transportation costs increase even more.
So, from 1% to one and a half percent. So, I mean, they, I mean, that's a 50% increase in transportation costs.
Keep in mind this is back at the envelope conjectures.
And I'm basing it off of an anecdotal $50 net $50 a transfer cost.
So, you know, you could bump that up to $75 and redo the net. In fact, why don't we just try that.
So, how much of the rising price in transportation is being is, you know, involves rising fuel costs because remember, again in 2020.
You had a, you know, basically fuel prices crashed. And now they're going way back up.
And so, this wouldn't even factor in fuel prices like directly I mean, like indirectly that will have an effect on the total number of transfers but this model does not capture that effect.
But the way you could begin to incorporate that is get the gasoline price per month.
And right so right we've got our data here.
If you just add another price, you know,
let's say you went and collected the average gasoline price which you can probably find.
Well, in Michigan too. So you can get specific.
You could, I don't know how you could incorporate it right off the bat but you could start to see okay. You can maybe run a regression of transfers on gasoline price and see if price goes up and down.
Transfers go up and down.
So,
so long story short,
I would keep an eye on transportation costs in the cannabis industry in specific in Michigan.
I think, I mean, just to be frank, I think they're kind of holding back a bit of the potential growth. And so maybe if you see some transportation companies come online that may lower transportation costs and just make the market, just run a bit more smoothly.
So, those are my forecasts for for the future for Michigan.
But any thoughts, questions, concerns?
It's very interesting. What if we just get the raw data? Right. And we kind of need to see how your results here at the summary level line up if we had the transactional data.
Of course there we'd get a look at all the mileage driven and everything else but no it's cool. I think at the very least, you know, it's directionally correct, right.
That for whatever reason, we don't have to necessarily have to know the reasons it could be a black box but there's growth in this sector of the of the market here at Michigan.
Exactly. Like I said, it's going to take a bit more digging because we need to figure out like why things are being shipped. And so I think that'll be a fruitful next analysis is okay, let's just break this down by by pound shipped for purpose.
So just in here, we can actually even see the pounds shipped by secure transporters. So we can actually find out if that's increasing or decreasing.
So that would actually be maybe the next place to look.
Okay. We've got a couple things on the agenda for next week so I will poke my nose at the Michigan's.
For you, rules and see if there's any, you know, any luck or any fruit that we can find there.
I'll also submit a request as well just to poke around see what I can find out just an FYI though on Sunday I'm going on vacation.
I'll be on the car springs for a week.
Yeah, leaving on the fourth to head out there would be gone for a week so I won't be able to make next week's meeting but I'll circle back around you guys the following week.
Well also, and that that brings us to great before we conclude that for today that brings me to the final thing that I was going to share with the group.
So, I'm starting to get these.
These meetups uploaded. It's a hot minute.
Just because it takes a couple steps in each one like you kind of have to wait for this, these files to upload and whatnot, but starting to get the historic
campus data science meetups uploaded so feel free to check in on some of these. I caught myself rewatching some of these because we've done some pretty interesting analysis over the ways.
So,
well worth the review because there's definitely some promising research topics that that can be further researched here.
Yeah, that's great. Even working hard.
Just keep at it.
I'm a I've got the tortoise in the tortoise in the hair mentality.
So I just got it.
Yeah, I was hoping to have some analysis to share with you on the market basket analysis but I've had to buckle down this week on my literature review for the paper so hopefully, you know, not next week obviously but maybe the week after.
Whenever I get some initial results so I'll be sharing them with you guys.
Awesome.
Yeah, good things take time so I'll be excited to see when you have it. So, yeah. Okay. Yeah, being trapped in the basement with my laptop for three days I, I would have been working on, you know, predicting whether you know if this ahead of time of a sample failed
or not.
I'm not on that.
Yes, it was unbelievably hot. The hottest place I've ever been before was and Boyd California where it was 111.
But it topped that here 116, it was oh my gosh.
Is it any better. Is it getting any better.
This morning the marine layer came in from the ocean so it's cloudy there's sort of cool moist air.
It's this kind of back to normal. Okay. Oh my gosh. Yeah, when you said last week that is going to get up to, you know, 110 112 something like that I just, I've never heard temperatures out that way, being that hot, and they still remember.
Basically everywhere I go that the rain follows me.
We've had like, we've had almost two weeks of rain on and off here in Michigan and it doesn't usually rain as much as it has been so yeah you mess the product with you.
You follow me.
Come back we need it here.
Awesome crew until next week. It's been productive. I think it's been a good analysis, and we've got some good leads for next week, and the week after for you Paul so we'll be in touch.
Okay, guys, good talking with you. Oh, and Heather.
Heather.
Thanks for being on the wall.
Awesome to have you.
Yeah, it's wonderful being here. Thank you for being so welcoming. Thank you.
Anytime.
Have a good week. Have an awesome week.
Bye.