1
00:00:00,000 --> 00:00:12,000
It's good to see you today.

2
00:00:12,000 --> 00:00:14,000
Good to see you.

3
00:00:14,000 --> 00:00:19,000
So, just to fill you in on everything that's happened.

4
00:00:19,000 --> 00:00:29,000
So, we have a small crowd we had one week where there's a bit of a snafu, and I'll have to attract back the audience.

5
00:00:29,000 --> 00:00:33,000
Essentially, went on this wild and crazy trip.

6
00:00:33,000 --> 00:00:44,000
So, I had like plans to sort of do this and I decided to go ahead and see the plans through.

7
00:00:44,000 --> 00:00:54,000
So, basically the plan was that this summer that Cantilidx was going to, you know, attend the Cannicon conferences.

8
00:00:54,000 --> 00:01:06,000
And I ended out with this grand finale in Las Vegas for this cannabis conference where there's a lot of big companies attending.

9
00:01:06,000 --> 00:01:14,000
So, I decided I was leaning towards it all, but then I was like, you know, let's just see this through.

10
00:01:14,000 --> 00:01:16,000
So, decided to go ahead and attend.

11
00:01:16,000 --> 00:01:22,000
So, attended just to, you know, keep spreading the Cantilidx word, keep, you know, trying to meet people.

12
00:01:22,000 --> 00:01:25,000
So, better to be out there than not.

13
00:01:25,000 --> 00:01:36,000
So, took a trip, went to the cannabis conference in Las Vegas, and then there was a little snafu with actually hosting that week.

14
00:01:36,000 --> 00:01:45,000
So, we had to postpone it until Thursday, but still crunch some numbers nonetheless.

15
00:01:45,000 --> 00:01:52,000
And so, then my plan was to, you know, go back up, you know, back up to Washington.

16
00:01:52,000 --> 00:01:55,000
And because there's some action going on there.

17
00:01:55,000 --> 00:02:08,000
So, they're migrating from their traceability system, leaf data systems, to apparently an in-house traceability system.

18
00:02:08,000 --> 00:02:10,000
Oh, my gosh.

19
00:02:10,000 --> 00:02:23,000
So, it's making news because, you know, oh, this is the first, you know, state developed and operated traceability system.

20
00:02:23,000 --> 00:02:29,000
And so, I think the motivation was behind that.

21
00:02:29,000 --> 00:02:33,000
I think they just want data.

22
00:02:33,000 --> 00:02:37,000
I think the driving driving factors, they just want the data.

23
00:02:37,000 --> 00:02:45,000
They want it because some of these states like Oregon, they have almost real-time data.

24
00:02:45,000 --> 00:02:50,000
You know, they publish almost yesterday's data publicly.

25
00:02:50,000 --> 00:02:55,000
So, that means they probably have a real good measure there.

26
00:02:55,000 --> 00:03:00,000
And so, maybe Washington's thinking like, oh, this is not acceptable.

27
00:03:00,000 --> 00:03:03,000
Just getting intermittent.

28
00:03:03,000 --> 00:03:05,000
Here's how their reports.

29
00:03:05,000 --> 00:03:10,000
So, I think they just want a good measure of the data.

30
00:03:10,000 --> 00:03:14,000
Heather, just explaining what's going on in Washington.

31
00:03:14,000 --> 00:03:23,000
So, you know, I think data systems, you know, could prepare their reports, but maybe it doesn't have real-time data.

32
00:03:23,000 --> 00:03:32,000
So, now the whole system is basically, from what I've briefly heard, there's actually a meeting.

33
00:03:32,000 --> 00:03:38,000
I think today's the eighth, so there may even be a meeting today that I'll listen into for more details.

34
00:03:38,000 --> 00:03:40,000
Interesting.

35
00:03:40,000 --> 00:03:53,000
It sounds like you can at least, like, so if you don't have a sophisticated software system, you can at least just upload a CSV, it sounds like, to their system.

36
00:03:53,000 --> 00:04:05,000
So, it sounds like it's just a more direct way to upload data straight to, you know, a Washington State database.

37
00:04:05,000 --> 00:04:14,000
And, you know, apparently, maybe have some developers in-house, probably even built some internal dashboards or whatnot.

38
00:04:14,000 --> 00:04:15,000
Right. Right.

39
00:04:15,000 --> 00:04:25,000
So, it just gives them more flexibility, it sounds like, it probably quite a bit of, well, maybe not a lot over our head, but I mean, that's a pretty large endeavor, right?

40
00:04:25,000 --> 00:04:30,000
I wonder if they're leveraging, like, a cloud environment, what their architecture is.

41
00:04:30,000 --> 00:04:39,000
Well, this is going to be the great question, right, because it's like the grass is always greener on the other side, right?

42
00:04:39,000 --> 00:04:50,000
And so, I thought Leaf Data Systems was okay. So, I didn't have experience with Biotrack, but basically they migrated from Biotrack to Leaf Data Systems.

43
00:04:50,000 --> 00:05:06,000
And there was a bunch of hubbub in the industry and, you know, people were quite grumpy and, you know, all the way to the present, you know, people just, you know, there's, you know, people quite vocal about their

44
00:05:06,000 --> 00:05:11,000
dissatisfaction with the system.

45
00:05:11,000 --> 00:05:15,000
And so, that may be warranted.

46
00:05:15,000 --> 00:05:27,000
And so, who knows, that's not for me to decide. Like I said, I'm the type of person where I make it suffice. So, they have an API, I can make that suffice.

47
00:05:27,000 --> 00:05:29,000
But maybe there's room for improvement.

48
00:05:29,000 --> 00:05:43,000
So, they're going to try something new. And like you said, it's basically like, okay, I could see, you know, they could get it developed for maybe not that expensive, that much.

49
00:05:43,000 --> 00:05:56,000
And then maybe they have a small team to see that it runs. But yes, like you said, what did they take on as far as like data warehousing goes? So, it'll be...

50
00:05:56,000 --> 00:06:10,000
Yeah. Yeah, when, you know, when I first looked at that data, I started from zero and know nothing, right? It's not actually that sophisticated as far as the data structure underneath it, right?

51
00:06:10,000 --> 00:06:22,000
I mean, it's pretty simple. So, if they're going to collect it in the same kind of way or store it in the same kind of way, it's not that big of a challenge, I wouldn't think.

52
00:06:22,000 --> 00:06:28,000
So, yeah, hats off to them. Hopefully, they'll get some good benefits out of this.

53
00:06:28,000 --> 00:06:38,000
It's an interesting step forward. And so, they're calling it the Cannabis 2.0 movement. And I've got a friend up there, David Busby at OpenTHC.

54
00:06:38,000 --> 00:06:56,000
And he's spearheading his movement for, you know, these open, you know, more open source systems. So, we'll see how this one pans out. I know he's been quite vocal in this process.

55
00:06:56,000 --> 00:07:14,000
I think people will still use software integrators. I don't think you have to. So, I'll fill you in next week with more details. So, I'm curious about that, how everything unfolds as well.

56
00:07:14,000 --> 00:07:32,000
Yeah, it sounds like if there's more of this movement to kind of like this Cannabis 2.0 and states having their own systems in place and giving them more flexibility and freedom and hopefully that means sharing more data with the public, which is good for us.

57
00:07:32,000 --> 00:07:48,000
Exactly. And, you know, Washington wants to provide that data. So, really until the adoption of leaked data systems, they had a nice public dashboard and they were trying to provide data available through an API.

58
00:07:48,000 --> 00:07:57,000
So, I think they want to get back to that. So, it will be exciting to see. And so, we'll tap in right away.

59
00:07:57,000 --> 00:08:02,000
Yeah. Awesome. Well, thanks for the update on that.

60
00:08:02,000 --> 00:08:06,000
And so, that's pending.

61
00:08:06,000 --> 00:08:11,000
And so,

62
00:08:11,000 --> 00:08:13,000
so,

63
00:08:13,000 --> 00:08:17,000
some wild ventures so

64
00:08:17,000 --> 00:08:36,000
I'll go to Oklahoma real quick just to put out a few fires. And then, as I said, basically, the plan is now to head to the Cannabis Science Conference in Baltimore.

65
00:08:36,000 --> 00:08:41,000
And that's on the 14th and 15th.

66
00:08:41,000 --> 00:09:00,000
And I want to shout out to the Cannabis Science Conference. So, I've been to the one on the East Coast before, and I think it's an awesome place to learn. It's an awesome place to be. So, this is a good place for people in the testing space to go.

67
00:09:00,000 --> 00:09:14,000
Lots of experts there. You got to hear about the latest science that's been being done, the people using the latest and greatest testing techniques.

68
00:09:14,000 --> 00:09:17,000
Isn't that where Heather is based?

69
00:09:17,000 --> 00:09:33,000
Yeah, I was going to say, well, Heather, we may have to say hey because, you know, I somehow wound up in Paul's neck of the woods and somehow I'll end up in your neck of the woods. So, maybe you could grab.

70
00:09:33,000 --> 00:09:40,000
Well, maybe you could join me for the meetup next week because it will be about that same time in person.

71
00:09:40,000 --> 00:09:48,000
Is it too late to like, can you not join virtually? So, I'm an hour and a half from Baltimore.

72
00:09:48,000 --> 00:09:52,000
We definitely will have there. I'm just saying that I'll be in your neck of the woods.

73
00:09:52,000 --> 00:09:56,000
Oh, okay, great. Yeah, no, that's nice. Yeah, have fun.

74
00:09:56,000 --> 00:10:12,000
I would like to get to Baltimore soon. They have the aquarium I think is free at some points during the week. So, you know, if you have time to for leisure activities, I would recommend that.

75
00:10:12,000 --> 00:10:30,000
Well, trying to stay focused on work.

76
00:10:30,000 --> 00:10:50,000
I'm curious to visit a few handful of laboratories along the way. So, I haven't had the best luck yet here in basically going through Missouri. So, there are technically medical cannabis dispensaries here and medical testing laboratories here.

77
00:10:50,000 --> 00:11:06,000
One was closed when I got there yesterday, but like I said, a few have been shut down. So, maybe they had ambitions for opening and running, but just never got things set up.

78
00:11:06,000 --> 00:11:23,000
And so, you know, that's why, you know, PNLytics is really here because, you know, it's like a shame, right, because, you know, someone's got these ambitions to set up a lab, but then it just, you know, falls through because they don't have all the know how.

79
00:11:23,000 --> 00:11:43,000
It's a real shame. So, you know, we're just trying to, you know, help where we can. So, we're, you know, seeing, you know, okay, well, what are laboratories like, you know, here in Missouri that are predominantly testing for CBD and medical.

80
00:11:43,000 --> 00:12:01,000
So, I'll visit a few more laboratories today and fill you back in. And then I'll be curious to stop at ones, I think, on the way, it may as well just essentially that's the data that I was planning to perhaps look at today with you.

81
00:12:01,000 --> 00:12:15,000
So, it's essentially Illinois, which we talked about is, you know, quite regulated, only a handful of cultivators. Honestly, it's actually kind of funny.

82
00:12:15,000 --> 00:12:35,000
Now that I think about it, I think there's maybe 21 or so provincial licenses, but there may be almost 11 or so laboratories. So there's almost, you know, so there's one laboratory for every two cultivators.

83
00:12:35,000 --> 00:12:45,000
So that's, that's a really interesting dynamic. So,

84
00:12:45,000 --> 00:13:06,000
any theories behind echo here, sorry, any theory behind why that the ratio is like that? So it's an ex ante, so some prior, some prior release.

85
00:13:06,000 --> 00:13:26,000
Well, perhaps, my guess is they still need to produce the, you know, the quantity that's demanded. So these, you know, 21 cultivators are probably producing a staggering amount.

86
00:13:26,000 --> 00:13:51,000
So that would basically be, maybe they're not all giant, but I imagine it's almost like you just took, you know, the top producers in, say, Washington or Oregon, what have you, you just took all the top producers and you just had, say, 20 of them in one state.

87
00:13:51,000 --> 00:14:01,000
I know they're just issuing some craft growing licenses, so you should see some craft growers coming online. So,

88
00:14:01,000 --> 00:14:22,000
so back to the testing. So they're probably still producing a large scale of cannabis. And so depending, I need to dig deep into the Illinois testing requirements. But if they're still having to test every,

89
00:14:22,000 --> 00:14:31,000
say, five pounds like they do in Washington and what have you, that's still a lot of testing to be done.

90
00:14:31,000 --> 00:14:49,000
So, there could still be a lot of testing by the laboratories. But actually, just to be frank, the Canacon in Chicago, it sounded like

91
00:14:49,000 --> 00:15:01,000
one of the speakers, he was a little vague about it. So it wasn't certain like, oh, which state this is in, but it sounds like perhaps, and I don't want to make any assertions or anything.

92
00:15:01,000 --> 00:15:20,000
But it sounds like maybe that sometimes some cultivations, maybe like, you know, one step away, somebody owns a licensee. So like somebody's, you know, uncle's brother owns a license, owns a testing license.

93
00:15:20,000 --> 00:15:36,000
Yeah, when you see, I mean, any kind of system where you see kind of like these, I want to say what I'm looking for, a situation where you don't have a long tail, right? And it seems like there's not much of a long tail in Illinois.

94
00:15:36,000 --> 00:15:51,000
How are you describing it? It sounds like there's other things at play in what is supposed to be a natural system, right? There's influences being probably exerted in some way or another.

95
00:15:51,000 --> 00:16:10,000
Just a small number of players. When you look at, so if you study like industrial organization, which is sort of when economics sort of takes a look at, you know, market competitiveness and okay, like, what's the, how do things shake out in a market?

96
00:16:10,000 --> 00:16:25,000
How many firms are there? How do the, does the government regulate those firms? This and that. One of the main factors you just look at is, okay, how many firms are there? You know, how many producers are there?

97
00:16:25,000 --> 00:16:44,000
And so that's essentially my measure is, okay, there's how many licensees are there? And then you can kind of try to control for the population to say, how many licensees per capita?

98
00:16:44,000 --> 00:17:10,000
So, you know, that, and I think that's almost kind of what we're here to do with the group is try to sort of measure, okay, what are some of the effects of this? So, okay, you know, just anecdotally, prices seem higher in Illinois, but can we measure that?

99
00:17:10,000 --> 00:17:20,000
Or does it, you know, does it have an effect on sales? So,

100
00:17:20,000 --> 00:17:28,000
I'm not really sure what the effects are. It's just, just really at this stage of just sort of making observations, because-

101
00:17:28,000 --> 00:17:43,000
Yeah, that's exactly what this is, right? An observation. It's just, you know, depending on what, what angle you're coming from, though, for me, I like to see healthy competition, especially in like a new industry like this, right? Because it,

102
00:17:43,000 --> 00:18:03,000
that churn and competition ends up serving the community better, I think, over the long term. So, you know, it's just something to think about. It's interesting that you brought that up, and I'll probably be sitting in the back of my mind now, why, you know, Illinois seems to have this kind of,

103
00:18:03,000 --> 00:18:13,000
I don't know, again, it's just an observation, but just sort of this low number and high ratio of, you know, labs to producers.

104
00:18:13,000 --> 00:18:42,000
Well, a couple factors. I think one, you know, it's sometimes like in economics, like the unintended consequences. So, so it's like, okay, maybe they intended, okay, we're going to really break some real fine grained, you know, rules, so to really keep people safe.

105
00:18:42,000 --> 00:19:02,000
But maybe, maybe the rules are too so stringent, that only, like, they say, we need to make sure that they can pay if something goes wrong. So let's make sure they have like, like $5 million in funding, or something like that.

106
00:19:02,000 --> 00:19:18,000
And so it's like, oh, you know, maybe there's a good intention behind that. But then that cuts off a bunch of people. And so, you know, the unintended consequence may be, oh, you ended up with a really concentrated market.

107
00:19:18,000 --> 00:19:32,000
And, you know, when things are, you know, concentrated, they may not necessarily end up best for the consumer. But this is early.

108
00:19:32,000 --> 00:19:49,000
No, it's just interesting to think about. I'm glad you brought that up. It's just one of those things to just to sort of kind of keep in mind, you know, which states tend to be more competitive or have a more vibrant market, right with, you know, thinking with the consumer

109
00:19:49,000 --> 00:20:03,000
in mind, maybe there's opportunities there to look at states and have some sort of normalized baseline on competitiveness, whatever that metric could be right.

110
00:20:03,000 --> 00:20:06,000
Which states seem to be more competitive than others.

111
00:20:06,000 --> 00:20:23,000
But it's funny you bring that up to, that's essentially my proposed measure and like I said, it was basically okay, licensees per capita. I think, I think we can do better.

112
00:20:23,000 --> 00:20:27,000
But that's, you know, that's a start.

113
00:20:27,000 --> 00:20:33,000
Right.

114
00:20:33,000 --> 00:20:36,000
Yeah, being.

115
00:20:36,000 --> 00:20:38,000
Oh, about competition.

116
00:20:38,000 --> 00:20:56,000
So, I think that with places like Maryland, the competition is not going to be very high, just because we have medical. So, like if you end up going to Baltimore to visit, you'll find that eights are.

117
00:20:56,000 --> 00:21:10,000
$65 $60. So we have some large, really large companies here they're able to thrive in a very non competitive environment.

118
00:21:10,000 --> 00:21:19,000
That's my only input for Maryland and I know it's maybe very dour, but I'm being very realistic. Thank you.

119
00:21:19,000 --> 00:21:40,000
And that sort of raises a point. And so it's, you know, so say we were just looking at prices, you know, that's tricky as well because, you know, there's different effects that affect prices so like, you know, it's just in Las Vegas, and like, you know, the prices were high, but that's because you know demand is really high.

120
00:21:40,000 --> 00:22:01,000
So, as soon as you like you know you leave the city, you know, the prices kind of think that we start to fall, because, you know, just looking kind of at reviews online and they said oh yeah as soon as you get outside of the, you know, the Las Vegas strip, you know,

121
00:22:01,000 --> 00:22:16,000
if all of a sudden the prices plummet, because you know demand plummets you know everybody's right there just walking around. So, so yeah it's going to be tricky to part, just real tricky to parse out because

122
00:22:16,000 --> 00:22:35,000
maybe demand is just extra, and it actually probably is really high in Illinois, because you have a lot of out of, you know, you know they think they admittedly saying that they've got a lot of out of state traffic right because I think they may be tax residents

123
00:22:35,000 --> 00:22:46,000
and so that pushes prices up because you just have all this demand.

124
00:22:46,000 --> 00:22:59,000
You know, if they restrict supply that will also raise prices as well.

125
00:22:59,000 --> 00:23:12,000
So prices, you know that's that's just arguing over surplus. My main thing is, how does that affect testing, you know,

126
00:23:12,000 --> 00:23:33,000
like, so for example, like California's got pretty strict limits and so it's like, that's really pushed that that's made products clean. So, a couple weeks ago we were looking at like residual solvents and concentrates in Washington.

127
00:23:33,000 --> 00:23:46,000
And they wouldn't have sold, they wouldn't, they would have failed quality assurance or quality control testing in California.

128
00:23:46,000 --> 00:24:04,000
And so, so that's that's my wonder is okay. Like how does maybe a state like Illinois compared to Oklahoma as far as like, you know, testing and contamination of the products and whatnot, because.

129
00:24:04,000 --> 00:24:22,000
For example, you know, just to rag on Oklahoma, but I know I've been real pro Oklahoma, there's been an article out recently and say okay, you know a lot of this flowers actually quite high and heavy metals and and processors, because

130
00:24:22,000 --> 00:24:35,000
you know, the cultivators go through and you know now you've got the processors and what happens is things like heavy metals microbes, believe it or not.

131
00:24:35,000 --> 00:24:55,000
And, yeah, so they're pretty pesticides. All of those get concentrated down as well. So when you're concentrating the, you know, you're extracting all the THC you're extracting all the pesticides and potentially heavy metals as well.

132
00:24:55,000 --> 00:25:16,000
So if you take borderline passing flower, a lot of it, and then you concentrate it down your your concentrated product may fail pesticides or heavy metal testing, even though the flower didn't.

133
00:25:16,000 --> 00:25:36,000
And so what processors in Oklahoma are finding is okay well this is a big problem, because now we're having trouble sourcing flower for our production process, because not not only do we now need to make sure that people have passed their quality

134
00:25:36,000 --> 00:26:01,000
tests, but also that they've passed them, you know with enough with with limits low in, or I mean with even if, say they had something detected that it was detected low enough that if it's concentrated it's not going to be, you know,

135
00:26:01,000 --> 00:26:10,000
an unacceptably high limit. Yeah, it's like they're looking for a buffer, right.

136
00:26:10,000 --> 00:26:16,000
Exactly. And so,

137
00:26:16,000 --> 00:26:28,000
I guess there's not really that much to do, except just did just spread knowledge just say okay in that and you know that's where you can let us to try and help so something we're going to try to do.

138
00:26:28,000 --> 00:26:44,000
What we would love to do is essentially, you know, try to start measuring some of, you know, if we can partner with labs to provide anonymous data to essentially try to say, you know, try to provide some you know distributions of some of these compounds

139
00:26:44,000 --> 00:26:59,000
that way you kind of can know what to expect. So that way, you know, say you did get hit for just, you know, say, say, you know,

140
00:26:59,000 --> 00:27:14,000
what are some of these pesticides, I don't know.

141
00:27:14,000 --> 00:27:30,000
If you get hit through some, you know, relatively, you know, obscure, you know, heavy metal or pesticide and a small, what you think is a small concentration, you know, it'd be helpful to know what exactly is a small concentration.

142
00:27:30,000 --> 00:27:35,000
So just to kind of look at, you know, the distribution out there.

143
00:27:35,000 --> 00:27:48,000
It's interesting because quality is going to be a competitive differentiator, right, it seems like especially if these, these processes just consolidating get larger and larger.

144
00:27:48,000 --> 00:27:51,000
And they're more under the microscope.

145
00:27:51,000 --> 00:27:59,000
They're going to be pushing on their producers right to give me something that's high quality, or they'll just not survive in the market.

146
00:27:59,000 --> 00:28:02,000
You would work on black market.

147
00:28:02,000 --> 00:28:14,000
And I talked to dispensary owners I asked them like, okay, you know, it. Do you care about, you know, pesticide testing, or this or that.

148
00:28:14,000 --> 00:28:35,000
And oftentimes, they're just, you know, looking to make sure that things you know got the state mandated testing, and just to, you know, make sure that they're, you know, you know, following the traceability system in the regulations.

149
00:28:35,000 --> 00:28:58,000
But I don't think they, they really promote it, and I don't actually have evidence to back this up. But anecdotally I've heard that okay you know once consumers know about pesticide testing, then they, you know, care about it at that point.

150
00:28:58,000 --> 00:29:13,000
So, I guess that predominantly matters and I say Washington State where it's not mandated yet. So, so some people try to advertise like oh you know we're pesticide free.

151
00:29:13,000 --> 00:29:18,000
But I don't. I think that's under advertised.

152
00:29:18,000 --> 00:29:21,000
So,

153
00:29:21,000 --> 00:29:30,000
but just a hunch that,

154
00:29:30,000 --> 00:29:45,000
you know, and it could be one of those things or maybe, maybe the companies have done the market research, and they've said okay you know the segment that actually cares about their products being clean may actually be a small segment of the market.

155
00:29:45,000 --> 00:29:55,000
Maybe they've already done their homework. Yeah. What do you think the probability is that they've actually done their homework.

156
00:29:55,000 --> 00:30:05,000
That's a really good question. So, I bet you some people have tried to answer that question so maybe there have been some surveys done.

157
00:30:05,000 --> 00:30:19,000
But I don't know because I really feel like they're, you know, people doing market research are just so focused on other questions that stuff like, Oh, do you care about pesticide testing, I just don't think that.

158
00:30:19,000 --> 00:30:26,000
Yeah, like say they have 10 10 survey questions like I just can't see them.

159
00:30:26,000 --> 00:30:44,000
Right, they're trying to sling products right they're trying to, you know, increase their margins and they have their financial drivers until it becomes a thing, an awareness thing then it's probably right, it's probably not going to be a forefront top of mind for some of these

160
00:30:44,000 --> 00:30:49,000
companies.

161
00:30:49,000 --> 00:31:00,000
I think they're, I think people who are doing it, who are doing it right and doing it at scale or taking it into consideration whether they kind of realize it or not.

162
00:31:00,000 --> 00:31:11,000
So, like, so that was one thing I saw it like you know Las Vegas conference so like people in like California that they were running these, you know, really immaculate facilities.

163
00:31:11,000 --> 00:31:24,000
And I talked to a lab that were some people that work at a lab in California, and they say yes it's, it's really hard for cultivators to pass the testing.

164
00:31:24,000 --> 00:31:31,000
And so that's actually one of the reasons why it's hard for people to come into California.

165
00:31:31,000 --> 00:31:47,000
And they're they're saying oh yeah so you think you're good in your state, you know, and so a lot of cultivators so say you make it big in Michigan, you think oh I'll just go set up a, you know, a grow in California somewhere and try to enter that market.

166
00:31:47,000 --> 00:32:01,000
And then apparently it's just ridiculously hard to pass their quality control testing, because probably you know it's California maybe there's pesticide drift from here or there.

167
00:32:01,000 --> 00:32:22,000
So you know you really have to have these, you know, you know, like, like clean rooms you know like these real, real clean facilities to, you know, to, you know, to make sure you're passing quality control.

168
00:32:22,000 --> 00:32:38,000
Yeah, such a such a interesting balance has to take place because if you have a California, that's really strict, and they're trying to do the right thing but then how much are they driving the market into the black market.

169
00:32:38,000 --> 00:32:41,000
You know, and then, I don't know.

170
00:32:41,000 --> 00:32:58,000
The thing you always have to sort of wonder is whenever, you know, whenever there's hot, there's high finances at stake right like there's a lot of money at stake like, especially in the California market.

171
00:32:58,000 --> 00:33:12,000
And then you know you see things kind of getting restricted, you know, it's just, just, it just never seems to end well. So, yeah.

172
00:33:12,000 --> 00:33:29,000
That's just sort of the way it is, is just a lot of like competing interests right because, you know, the existing producers, maybe they spend all their money and they've got a nice clean room like they don't want to see, you know, a lot of entrance come in,

173
00:33:29,000 --> 00:33:43,000
so you know they have their incentives and, you know, I'm sure people from out of state are trying to loosen up the regulation so that they can come in.

174
00:33:43,000 --> 00:34:00,000
And it's just, it's just kind of battering back and forth.

175
00:34:00,000 --> 00:34:23,000
And essentially battle it out for, you know, and just kind of how things shake out and you know the public's part of it. And so, like so for example in Michigan, right, the public has been pretty strong right because they've kind of held up, right, like home

176
00:34:23,000 --> 00:34:27,000
for a while, not for quite a while.

177
00:34:27,000 --> 00:34:34,000
Sounds like kind of fought off some of the bigger interests for for a while.

178
00:34:34,000 --> 00:34:44,000
Yeah, there's a lot of it's, there's a lot of local municipalities that have their column the shots for for the producers.

179
00:34:44,000 --> 00:34:58,000
And you have some towns that want nothing to do with it, and you have other towns that are totally great with it, you know, it just says there's an interesting mix in Michigan, in that respect, as far as like big players I don't really know too much about that

180
00:34:58,000 --> 00:35:10,000
have you have you heard of any big companies trying to, I know that there's several large grow facilities that are well financed but I haven't heard of any like big name corporate players.

181
00:35:10,000 --> 00:35:26,000
Yeah, one of the things interesting about the Midwest is that's where people are really starting to like really dabble and experiment with what's called you know multi state, they call them multi state operators in the industry, MSN.

182
00:35:26,000 --> 00:35:41,000
And the Midwest sort of opens itself up naturally to that. So it's like okay, since, say you're one of the people that are lucky enough to operate in Illinois. Well then you can probably also operate in.

183
00:35:41,000 --> 00:35:59,000
Michigan sounds like you could potentially operate in Ohio.

184
00:35:59,000 --> 00:36:11,000
What, what, what, do you have any idea what drives that be the propensity for MSN.

185
00:36:11,000 --> 00:36:23,000
To expand into different states. Yeah, so what is it about the economics in the Midwest that makes it more. I think they're just looking for for new markets.

186
00:36:23,000 --> 00:36:39,000
And just like the geographic closeness right so if you are selling in like Chicago, you know, it's not like that far to Michigan and Detroit.

187
00:36:39,000 --> 00:36:55,000
So, you know, you could have your, you could have your cultivator like your head cultivator could almost go back and forth. So that's what that's what a lot of places do so say you have multiple cultivation sites.

188
00:36:55,000 --> 00:37:09,000
Well you're going to have you know your local employees at each one. However, like the head grower and the people who install things they're sort of going to go from cultivation to cultivation.

189
00:37:09,000 --> 00:37:25,000
So, like your head grower will come in and set, you know, set up shop and say okay this is how we're going to do things. Your standard operating procedures, you know, and they see to it that everything gets installed correctly.

190
00:37:25,000 --> 00:37:46,000
And then they probably hire, you know, a local manager, so to speak, to oversee things, but then they'll, they'll probably definitely come in it's like oh like there's mold or, oh, we've got some test, you know, they'll probably oh they'll zip, you know, they'll just zip

191
00:37:46,000 --> 00:37:56,000
and they'll probably say right away, you know, probably identify what's going on and try to fix it, you know, just kind of putting out fires. Right.

192
00:37:56,000 --> 00:38:17,000
So, it would make so that's that's my hypothesis, or maybe it's similar dispensaries to like maybe a cash register and that is experience in the dispensary world but, but essentially you have your, you know, your executives just sort of putting out fires here and there,

193
00:38:17,000 --> 00:38:25,000
and then you've got you know you look your local talent, you know, running the operations. Yeah.

194
00:38:25,000 --> 00:38:28,000
That's interesting.

195
00:38:28,000 --> 00:38:40,000
And it's also a big thing that okay well with each state you operate in, you have to jump through all the rules and you have to operate under all of those rules in that state.

196
00:38:40,000 --> 00:38:44,000
And so that's a big cost.

197
00:38:44,000 --> 00:38:49,000
And so, you have to sort of strategically enter markets.

198
00:38:49,000 --> 00:39:00,000
And so, if you're in California, you can expand a lot in in California.

199
00:39:00,000 --> 00:39:12,000
So it's like okay, do I do I even really want to go try to set up shop in Colorado and worry about all Colorado's rules.

200
00:39:12,000 --> 00:39:24,000
A lot do. And then some say, Oh, well, maybe I'll just go to set up shop in Northern California, or something like that.

201
00:39:24,000 --> 00:39:27,000
So, interesting.

202
00:39:27,000 --> 00:39:45,000
Oh, I don't know if this is common sense, please pardon me but steep hill analytics is a multi state cannabis testing lab. So when you're asking about state, multi state businesses.

203
00:39:45,000 --> 00:39:54,000
That would be one of them that covers Maryland, Maryland, Massachusetts and now to a small degree, New Jersey. Thank you.

204
00:39:54,000 --> 00:40:08,000
Exactly. In fact, almost every state I look at their steep hill. And so they're, they're awesome they were they were one of, they were probably the first cannabis testing lab that I heard about,

205
00:40:08,000 --> 00:40:20,000
you know, probably saw some documentary or something some show that mentioned steep hill and it was. So that was my first exposure to cannabis testing

206
00:40:20,000 --> 00:40:40,000
was just hearing about them. And it's so they're sort of a great story right because they've shown that okay you know, not certain they may franchise and some of the states, but they've shown that okay, it's possible to do laboratory testing multi state.

207
00:40:40,000 --> 00:40:51,000
And there's been a couple others that have cropped up, but they don't have quite quite the widespread, you know, they're not quite all over.

208
00:40:51,000 --> 00:41:01,000
And like I said I'm fairly certain steep hills just sort of franchising so maybe there may just be a lab that wants to open and they maybe work out some field there.

209
00:41:01,000 --> 00:41:05,000
So,

210
00:41:05,000 --> 00:41:11,000
so I think these are interesting to look at because this is something that I'm trying to figure out to is, okay.

211
00:41:11,000 --> 00:41:20,000
How can you have laboratories operated multiple states, what does it take. How can they pull it off successfully.

212
00:41:20,000 --> 00:41:27,000
Because, you know, I've talked with a lot of laboratories and a lot to have you know ambitions to do it.

213
00:41:27,000 --> 00:41:35,000
And it's just, it's, it's a tricky fee, because,

214
00:41:35,000 --> 00:41:39,000
believe it or not, you know,

215
00:41:39,000 --> 00:41:46,000
you know laboratories don't really.

216
00:41:46,000 --> 00:42:06,000
They don't really scale, like geographically that well, because you have such high capital costs. And so,

217
00:42:06,000 --> 00:42:19,000
Hello, DeBelle, we're talking about how laboratories can scale at the moment. So, welcome to the conversation. Hi, I'm just going to sit back and observe for now just see what's up about.

218
00:42:19,000 --> 00:42:24,000
Hi everyone.

219
00:42:24,000 --> 00:42:37,000
So essentially we're talking about, okay, how can cannabis licensees expand to multiple states. And then we started talking about, okay, well, how can laboratories expand to multiple states.

220
00:42:37,000 --> 00:42:47,000
And in fact, how could, you know, how could they even expand within their states, they set up what's called like a satellite lab. And so basically,

221
00:42:47,000 --> 00:43:04,000
this is the problem right at a given laboratory, you may have about a million dollars plus worth of scientific equipment, you know, so that's just capital that has to be at that physical location.

222
00:43:04,000 --> 00:43:21,000
And so this is your pesticide testing instrument, your LCMS, you need to test for heavy metals, perhaps an ICPMS, cannabinoids, HPLC.

223
00:43:21,000 --> 00:43:32,000
If you're testing micro, you're going to have to have this whole micro station, which is, you know, you want this nice clean room and all, you know, they need all their lab supplies.

224
00:43:32,000 --> 00:43:37,000
So,

225
00:43:37,000 --> 00:43:46,000
if you're going to set up like a whole other lab, then you're going to need to get all these other instruments.

226
00:43:46,000 --> 00:44:04,000
And so that's going to be a whole other capital expense. And in fact, that's like the primary hurdle of opening a laboratory is okay, you know, I need one to $2 million and you don't actually need this, by the way.

227
00:44:04,000 --> 00:44:11,000
But a lot of people think, oh, you know, I need one to $2 million worth of funding to open a lab.

228
00:44:11,000 --> 00:44:23,000
And the reason I say you don't necessarily need this is I've heard people in the lab space speak and they say, hey, if you're looking to enter, just do what you can do.

229
00:44:23,000 --> 00:44:31,000
You know, I don't actually know how this would work out as a business model, but this is what some people argue is just, you know, just start out with a micro lab.

230
00:44:31,000 --> 00:44:37,000
So that may cost, you know, $10,000 to $15,000.

231
00:44:37,000 --> 00:44:51,000
I personally, coming from an economics point of view, I'm not certain that would work out economically to to provide just micro testing.

232
00:44:51,000 --> 00:45:00,000
Yeah, because if I want to get my test, I don't want to have to shop around and get different parts of the test accomplished in different places, right?

233
00:45:00,000 --> 00:45:05,000
That's a real sap in my productivity and getting things out the door.

234
00:45:05,000 --> 00:45:17,000
Exactly. And so maybe you could work up some odd contracts or perhaps you may even have to start not in the cannabis space.

235
00:45:17,000 --> 00:45:28,000
So say, oh, I'm just going to do micro testing and try to find like some food company or some sort of do some odd micro tasks.

236
00:45:28,000 --> 00:45:35,000
So that's that's a route like I said, I'm not the biggest proponent there.

237
00:45:35,000 --> 00:45:38,000
The most successful way that I saw it was done.

238
00:45:38,000 --> 00:45:42,000
And like I said, you have to be early in the game.

239
00:45:42,000 --> 00:45:49,000
So there is Jeff Dowdy at Capital Labs, and I probably told this story, but I'll tell it again real quick.

240
00:45:49,000 --> 00:45:54,000
But there's Jeff Dowdy at Capital Analysis in Olympia, Washington.

241
00:45:54,000 --> 00:46:06,000
And early on, he was I think he was a cultivator, perhaps he just bought an HPLC to test the cannabinoids of his own products.

242
00:46:06,000 --> 00:46:14,000
And then, you know, he started talking and, you know, other cultivators wanted him to test their products.

243
00:46:14,000 --> 00:46:21,000
And so, you know, he essentially turned into a laboratory, just starting with an HPLC testing cannabinoids.

244
00:46:21,000 --> 00:46:27,000
And then sent you. So this is if you were starting in a brand new state, this may be doable.

245
00:46:27,000 --> 00:46:30,000
So this would be like the rags to riches stories.

246
00:46:30,000 --> 00:46:35,000
You get the HPLC scrounged up enough to get the HPLC, which is not cheap.

247
00:46:35,000 --> 00:46:38,000
Like, that's the price of a nice car.

248
00:46:38,000 --> 00:46:55,000
So that's going to be thirty five, forty, forty thousand dollars for an old, old HPLC that, you know, comes from some, you know, it's a hand me down from from some school.

249
00:46:55,000 --> 00:47:04,000
And it's probably got a bunch of creaks and cracks. And it's like not going to be operating.

250
00:47:04,000 --> 00:47:09,000
It's going to be wonky for sure. Well, not for sure.

251
00:47:09,000 --> 00:47:21,000
But I'm sure you can get it dialed in. But, you know, there's going to be like there'll probably be little pieces that may break or you may have to do some repairs here and there.

252
00:47:21,000 --> 00:47:23,000
So.

253
00:47:23,000 --> 00:47:34,000
That's the laboratory space. And so then you worked out and you got like a GC so you can start testing residual solvents and terpenes.

254
00:47:34,000 --> 00:47:42,000
And then, you know, then you set up your micro station and then you in Washington state, you can almost do everything at that point.

255
00:47:42,000 --> 00:47:56,000
And then you can save up enough money to get the LCMSMS, which is like three hundred plus thousand and all the other fancy equipment for doing heavy metal.

256
00:47:56,000 --> 00:48:13,000
You can't really do that in like California or probably not in a lot of these states. You probably can't really do it in Washington state anymore, just because testing fairly competitive there in these days.

257
00:48:13,000 --> 00:48:19,000
You know, I don't know about Colorado, but I mean, like I said, you could almost do it in Oklahoma.

258
00:48:19,000 --> 00:48:31,000
They do require the pesticide and heavy metal testing. But I bet there's a bunch of people there that just need cannabinoid tests.

259
00:48:31,000 --> 00:48:45,000
Just, you know, just to measure their products and do terpene testing. So you could probably do that story in Oklahoma.

260
00:48:45,000 --> 00:48:52,000
It's a little difficult because they do have mandated pesticide and heavy metal testing.

261
00:48:52,000 --> 00:48:57,000
You're saying that the lab, the lab environment doesn't scale very well.

262
00:48:57,000 --> 00:49:09,000
Yes. So when you look across the industry from seed to sale, would you say that the lab is probably the.

263
00:49:09,000 --> 00:49:21,000
I don't know what the right term to use is. It's not a choke point, but it seems like it might be the most restrictive part of the entire value chain.

264
00:49:21,000 --> 00:49:29,000
Well, going back to, you know, industrial organization where we're just looking at the number of firms like that's the first thing I look at.

265
00:49:29,000 --> 00:49:40,000
So if you just look at the number of firms, okay, the most is typically cultivation, maybe dispensary, but typically cultivation.

266
00:49:40,000 --> 00:49:44,000
Then you have actually we were just looking at this in Oklahoma.

267
00:49:44,000 --> 00:49:59,000
It was about like 60, 70 percent were cultivation. And then there's about an equal number, about 15 percent or so, or dispensary about 15 percent are processing.

268
00:49:59,000 --> 00:50:14,000
And then in Oklahoma, I think it was less than one percent for everyone else. So you have, you know, and it's typically smaller than that. So yes, so really small number of labs.

269
00:50:14,000 --> 00:50:21,000
And so industrial organization tries to explain that. Why is that?

270
00:50:21,000 --> 00:50:37,000
Well, there's a couple of factors going on. One, there's regulations. So like in Missouri, they said, OK, we're only going to give out 10 cannabis, cannabis testing licenses.

271
00:50:37,000 --> 00:50:43,000
So that's just a, you know, a regulation limit.

272
00:50:43,000 --> 00:51:02,000
So maybe there maybe there was going to be a thousand, but there's only a little bit. But there probably wasn't going to be a limit of it. There's probably not going to be a thousand because the other thing that's going on is you have high barriers to entry, which are high capital costs.

273
00:51:02,000 --> 00:51:17,000
But I just don't want to say, OK, and I think there's other things going on because I can't I want to say the capital costs are lower than they call.

274
00:51:17,000 --> 00:51:35,000
Well, there's a couple of things going on, I guess, with cultivations is you have a lot of small producers that are maybe entering with smaller amounts of funds. But I think like the large producers mean even the medium.

275
00:51:35,000 --> 00:51:51,000
Like, like, like, just at the conference, they were saying, oh, yeah, if you want to open a dispensary, you know, you need like two to five million. And I'm thinking like that's more than you really need to start a laboratory.

276
00:51:51,000 --> 00:52:07,000
And cultivation, they're also spending, you know, several million. Like I said, you can start for cheaper, but there are people doing that. So I want to say it may not even be the high capital costs.

277
00:52:07,000 --> 00:52:13,000
It could be these other things. So I'm kind of just about.

278
00:52:13,000 --> 00:52:27,000
Sorry to interrupt your train of thought, but you just made me think of something. I mean, human capital, right? I mean, the specialized technical expertise that you have to have to run a lab is different than, you know, the cultivators obviously have to know what they're doing.

279
00:52:27,000 --> 00:52:33,000
But there's a different, I think, depth of knowledge that probably has to be there for the lab.

280
00:52:33,000 --> 00:52:47,000
And I think I'm going to have to hit the industrial org book after this, because I think you're right, because essentially that's what it comes down to. And that's what I was saying, like, okay, so say you did set up a satellite lab.

281
00:52:47,000 --> 00:53:09,000
Well, it will say you set up a lab in a way across the country. Well, now you're going to have to get the local, you know, the local talent, which in this case is a handful of chemists and a handful of microbiologists and the quality assurance manager and the scientific director.

282
00:53:09,000 --> 00:53:36,000
And those are all like really from really from the entry level all the way up are fairly skilled positions I mean, comparing like an analyst, you know, not to be mean to anyone, but you know, comparing analysts to like, just someone doing you know like say trimming at a cultivation or someone just doing sales at a dispensary.

283
00:53:36,000 --> 00:53:48,000
And you don't necessarily need like a, like a scientific degree to do, you know, sales or just, just do like, you know, maintenance at a cultivation.

284
00:53:48,000 --> 00:54:09,000
So it's really preferable to have somebody, like I said, they're in short demand, but it's really preferable to have somebody with, you know, a degree in, you know, say biology or chemistry or something similar, working at your laboratory.

285
00:54:09,000 --> 00:54:31,000
Because it's when you're when you have your analysts there you want to, you know, get them trained up and doing cool things so that that's kind of what's going on at the laboratory so yes you know your analysts are, you know, doing routine sample extractions, but you kind of want them

286
00:54:31,000 --> 00:54:46,000
to be able to do that they could ideally you know do troubleshooting they could would be in an awesome world they could you know do minor maintenance on your instruments like minor routine.

287
00:54:46,000 --> 00:54:49,000
Yeah.

288
00:54:49,000 --> 00:55:07,000
Interesting. I keep saying that word interesting and all of us interesting but when you're looking at it systemically right across, keep seeing the value chain but across the industry is, it's kind of cool to point out where some of these like high value parts of the

289
00:55:07,000 --> 00:55:25,000
value chain are and it's in our conversations it seems like I know the lab is your thing, but it just seems like, and you talked to a lot of people across the country and all different parts of the industry but it just seems like lab is that place that

290
00:55:25,000 --> 00:55:51,000
without it.

291
00:55:51,000 --> 00:56:04,000
Well, exactly because it's, you know, it's just a just another measure right, you got to be measuring the, the kind of an audience and like what's actually in the products, just like the labels and then you know the quality controls and important aspect right we're

292
00:56:04,000 --> 00:56:06,000
trying to.

293
00:56:06,000 --> 00:56:16,000
We're trying to have a, like a well functioning industry here you know we're trying to show you like yeah like the cannabis industry like we're doing it, we're doing it right here.

294
00:56:16,000 --> 00:56:29,000
So, you're right, it's a big, it's a big part, and people are a big part. So it just, it comes down to people and just

295
00:56:29,000 --> 00:56:46,000
kind of bringing the community together right so as you know the cannabis industry comes more into the mainstream right there's going to be more scientists in more chemists and more microbiologists who are willing to say, yeah, I'll be part of the industry.

296
00:56:46,000 --> 00:57:00,000
So, I, I could see there being a lot more talent available in the future. And I think it's just sort of, you know, just sort of bringing people into the space, you know, showing them what it's about.

297
00:57:00,000 --> 00:57:06,000
You know, it's, it's just, it's just testing like any other product.

298
00:57:06,000 --> 00:57:25,000
And it provides a lot of value, especially to do it right, you know, to do testing right provides a lot of value. So, you know, we need everyone we can get so come on scientific community like let's join together on this one, and do a great job.

299
00:57:25,000 --> 00:57:27,000
Yeah.

300
00:57:27,000 --> 00:57:31,000
So, that's my feel, but that's what analytics is about.

301
00:57:31,000 --> 00:57:34,000
So good conversation.

302
00:57:34,000 --> 00:57:37,000
So,

303
00:57:37,000 --> 00:57:48,000
we didn't quite break out the data today but that's okay because the data can can wait till next week and it's always awesome to have good conversations that's what that's what we're here for.

304
00:57:48,000 --> 00:58:03,000
So, so, anyways, I think me go ahead and concluded a couple minutes early today unless anyone's got more thoughts on the table for today.

305
00:58:03,000 --> 00:58:18,000
Thanks for the good conversation and the education, as always. Oh yes definitely well thanks for coming into Bell will have to hear from you and in your interests, your background and help.

306
00:58:18,000 --> 00:58:34,000
Well, actually, develop. If you not to put you on the spot but you wouldn't mind sharing real quick just like, like, what your background maybe like so just like what angle, are you coming at the group from.

307
00:58:34,000 --> 00:58:48,000
So, at this point, okay just a bit about myself, I am a data scientist now, and I pretty much.

308
00:58:48,000 --> 00:58:57,000
I mean, I'm intrigued about cannabis, and I never thought of like combining the two of them. So I was looking up tech groups and meetups.

309
00:58:57,000 --> 00:59:06,000
And I was like, yeah, that's interesting. So at this point I'm coming from an educational part of like point of view. I do not know a lot about kind of late six.

310
00:59:06,000 --> 00:59:22,000
And so it's just a very interesting topic for me so I'm just like, pretty much let us do what's about a like to have like, yeah, I can't necessarily have an opinion and just like learning at this moment.

311
00:59:22,000 --> 00:59:29,000
So that's why I was very quiet through the conversation because I was like, yeah, what's going on.

312
00:59:29,000 --> 00:59:33,000
You're in, you're in the right place. So that's where we're all here.

313
00:59:33,000 --> 00:59:46,000
I'm learning just like everyone else just just here serving like everyone else and so yeah, you're in the right place and cut the heart's on what we were just talking about so we're just trying to bring more people into the space.

314
00:59:46,000 --> 01:00:00,000
Yeah, just show you know show what it's about show some of the science and just have fun while we're doing it because we're trying to help them today so, and you.

315
01:00:00,000 --> 01:00:05,000
Yeah, it doesn't sound like it's fun like it's like, just a quick conversation and I'm sorry I was late.

316
01:00:05,000 --> 01:00:21,000
I literally, I tried to join and then my internet connection went off. I went if I came back on I completely forgot. Until it was that later I'm like okay just join but I'll be early next week, like, right on time.

317
01:00:21,000 --> 01:00:32,000
You're always welcome to join to be in the bow and I'll try to get the recording up just if you if you want to revisit.

318
01:00:32,000 --> 01:00:43,000
I absolutely would actually just like get a more of a strong idea what what's going on yeah absolutely would but thank you for being so welcoming.

319
01:00:43,000 --> 01:00:53,000
Yes, so thank you all to thank you all for coming and I will go ahead and wrap it up now. So, okay. Have a good week everybody until next week.

320
01:00:53,000 --> 01:01:02,000
Have an awesome week and share any interesting cannabis data that you may find always interesting.

321
01:01:02,000 --> 01:01:26,000
Bye. Bye.