NCIA Keynote: July 2018

A little over two years ago I was asked to deliver one of the keynote speeches at a National Cannabis Industry Association conference in San Jose on cannabis market expansion and the growth trends and considerations for the future. It was a time of great change in my life. I wanted to capture those words here. I said it then, and mean it more even now, the most important part of my life is my relationship with my loved ones, which includes family, friends and my community at large. I want to see those I love, healthy, happy, and live fulfilled lives. I care deeply about these people, and that gives me meaning. We don’t have to fight to beat someone out to “win,” we have to fight to help each other out and lift each other up; that is what unifies us and what makes us stronger as a community. As an industry we’re built on the back of a plant given to us by Nature, and its gift is one that needs to be accessible to all unreservedly. We haven’t even begun to explore its possibilities — we haven’t researched it enough, consumed it enough, or explored the vast boundaries of what it will enable our society to become.

I may sometimes worry about the social consequences of my actions. I also have a responsibility to act, to come together with different perspectives, to gain clarity on what is needed to help reshape the cannabis landscape and our society at large. We need to model and inspire more appropriate behavior, a more egalitarian approach to community. We need to focus on actions that change culture through positive behaviors and reinforcing the collective good. I will not be afraid to speak my mind when I see an injustice. I will work tirelessly to give voice to those that do not have it and give hope to those that have had their light dimmed.

“Good afternoon! I hope you have all had a productive and informative conference. I first want to thank the National Cannabis Industry Association for pushing the conversation and leading the way to advocate on behalf of our community and industry.

It’s great to see everyone here to share in a common goal: to improve the world through a plant. We have a lot at stake, a lot to lose, and even more to gain; this is an exceptionally exciting time for all of us!

Over the past several years we’ve seen division sewn through American and global politics and rhetoric, discussion around what are true domestic and global threats, and what we can do to change things. Because let’s face it — something needs to be done. It’s not hard to see where we are in society and understand people are struggling: more stress and anxiety, higher rates of depression and suicide, drug abuse, increase in income inequality and incarceration rates… the list goes on. So it’s important to understand the underlying challenges. Is it capitalism? Greed? Consumerism…? I don’t know if we have an answer yet. What I do know is that we need to understand what it is we need.

An article earlier this year highlighted that the top 8 wealthiest people have as much wealth as the poorest 4 BILLION people. There are currently over 1,500 billionaires in the world, 1/3 in the US. How many people here are billionaires? Better, how many people here need to be a billionaire? How much is enough for people to live a happy, healthy and fulfilling existence? For me, the most important part of life is my relationship with my loved ones, which includes family, friends and my community at large. I want to see them healthy, happy, and live fulfilled lives. I care about these people, and that gives me meaning. Now, what if I included all of you as my family? See, we don’t have to fight to beat someone out to “win,” we have to fight to help each other out and lift each other up; that is what unifies us and what makes us stronger as a community. As an industry we’re built on the back of a plant given to us by Mother Earth, one that needs to be accessible to all unreservedly. we haven’t even begun to explore its possibilities — we haven’t researched it enough, consumed it enough, or explored the vast boundaries of what it will enable our society to become.

We have a long way to go to challenge the fundamental core of who we really are, but the good news is that we now have a real fighting chance to shift the paradigm. And here’s why —

Our recent geopolitical environment has brought uncertainty about the future and daily nightmares to the general public. It also brought a slew of positive reactions. Millennials, for example, have never been more invested in politics, actively seeking information about their representatives, making sure they vote in every upcoming election and educating themselves about political platforms. This is to say that we have an incredibly powerful subsection of our population who is, and I quote Howard Beale in Network here, “mad as hell and isn’t going to take it anymore.” We’re officially driven to do the work and change things, be it politically, socially, or both. And this constitutes a phenomenal opportunity for the cannabis industry to effectively address and work to change the myriad of problems we’re facing.

In just a few minutes I’ll highlight some of these issues, but let me make one point absolutely clear — cannabis is not a panacea. However, it is a proxy. It takes time to change peoples’ minds, to provide space for information to be digested. And we’re merely at the infancy of fostering that education, and doing so with an open mind.

That’s exactly why I’m here, to continue to advance the conversation.

Let’s get a quick snapshot of where we stand today, both nationally and internationally. As you know, cannabis is the fastest growing industry in North America and one of the fastest growing in some parts of the world. California, of course, is always at the beginning of any conversation, and there are great reasons for that: we’re a hub of innovators, artists, craftspeople, creators, storytellers, makers and doers; we’re innovation and entrepreneurship; we create movements, and define trends in products and culture through storytelling and connections, and these messages will carry through the rest of the country and the world.

Nevertheless, as I say this, we still seem to be stagnated at the federal level and slowly watching Canada, our friendly and now fearless neighbors, begin to take the lead. They’re an example of how to implement a program across an advanced nation, slowly, intelligently and immediately, both from a capital markets standpoint and a legal and regulatory point of view. Canada, alongside Israel, Germany and others, are leading the way in R&D to develop new cannabinoid drugs and delivery methods, experimenting with the specific properties, compositions and combinations of the cannabis compounds that are best suited to alleviate specific ailments with specific and controlled consistencies. As of today, there are over 120 clinical trials under way in Israel to test the medicinal benefits of cannabis — more than any other country. Due to current limitations in the U.S., at least 50 American cannabis companies — and counting — have established R&D operations in Israel.

From a global standpoint, spending on legal cannabis is anticipated to grow significantly over the next few years, expected to reach $32 billion by 2020 as compared to $9.5 billion in 2017 and sales in North America alone could grow to more than $47 billion by 2027. At the same time, the cannabis industry is expected to deliver 340,000 full-time jobs by 2022, double the number of full-time jobs currently supported by the industry.

Of course, these numbers are closely associated with the evolution in public opinion — between 93–96% of Americans believe that medical cannabis should be legal, and over 60% feel that adult use should be legal — as well as an increasing awareness of the benefits of cannabis legalization. Framing it as a ‘harm reduction strategy’ seems to supplement gains from new revenues. States may see decreased public safety costs, including reduced arrests, prosecutions, and jail-time. Public health costs may also be positively impacted, notably by a decline in opioid abuse and other adverse effects from traditional prescription pharmaceuticals like anti-anxiety meds and antidepressants. As more research is conducted, it’s inherent that certain issues may emerge and secondary adverse outcomes may become more apparent over time; however, these outcomes may potentially still be less consequential than impacts from other legal substances, such as alcohol, tobacco or pharmaceuticals. We have a safe adult use alternative and, more importantly, a safe holistic wellness product. This is to say… the exploration has begun!

For the financial rewards, there are many new “millionaires” minted almost daily, municipalities benefiting from increased tax revenue and public funds for education, parks and other community services. This benefit is most significant in states that have legalized non-medical cannabis, but this trend will surely reverse as more R&D is conducted for pharmaceutical replacements and overall wellness products.

Growth Trends and Considerations for the Future

What growth trends are we seeing and what do we see in our future?

The future is female. I mean this both literally and figuratively. We all know that women are responsible for roughly 80% of all household spending, and we see the same trends in cannabis. Women are looking for alternative non-toxic, plant-based, holistic remedies for health, wellness and beauty, and who’s to stand in their way? As per Vogue’s Eviana Hartman: “perhaps the most promising use for the plant is in a form that doesn’t even get you high. Cannabis is turning up in a host of new skin balms, lotions, oils, and bath salts, promising body benefits ranging from pain relief to better orgasms.” We’re also seeing it in the executive ranks, a very welcomed and needed change from traditional industries.

We’re also seeing greater brand and product segmentation as consumers explore new preferences and interests. This is happening while there’s a simultaneous convergence and divergence of what is defined as health and wellness, medical, or an adult-use product or use case. This may cause confusion, but at the same time the evaporating separation between medical and adult-use may bring a greater acceptance for cannabis use.

Then there’s the aging population, which is one of the fastest growing segments of cannabis consumers. Be it pain management, anti-inflammation or a return to youthful experiences, the 50+ generation seems to have an insatiable appetite and the discretionary income to support the trend.

Simultaneously, we’re seeing tremendous agricultural technology advancements to drive down costs and increase yields. From fully automated greenhouses to remote management, energy efficiency driven by regulations and cost containment, and the ability to tightly control operations to produce scalable, reliable, consistent products, immune from the nuances of nature.

We’re also seeing medical device advancements, modifying cannabinoid profiles and collecting important detailed data at the point of delivery and to provide that data in real time to doctors. The impact of these innovations and understanding the ability to personalize medicine may be profound.

Furthermore, there’s the clear international expansion aspirations for many U.S. and Canadian operators. Is it overly ambitious, or just a way to get to scale and define market share ahead of demand? Canadian LP’s are setting up international subsidiaries to acquire licenses in markets like Colombia and Jamaica. We’ll see where that all shakes out, but it’s clear, capital markets are a target for many operators today. Another way to frame this, is regulatory arbitrage, that is, given the international nature of topic, one can be a multinational operator so you can do research where it’s legal; produce in favorable markets; and consciously be multinational to leverage the country specific and import/export opportunities.

Mainstream brands are getting into the mix too, a clear sign of where we are going. We have to look no further than California’s own Lagunitas and other global brand powerhouses such as Constellation entering the space through direct investment and partnerships, recognizing the direction of consumer sentiment and preferences. This trend will accelerate in many forms.

We also have “Cannabis +”, which entails “cannabis + a myriad of items”, for instances, cannabis + machine learning, Artificial Intelligence, virtual reality, blockchain, etc. These combinations could lead to breakthrough novel treatments for ailments, data to drive industry growth or immersive experiences for brands and consumers.

And those are just a few to start.

Despite all that’s just been said around growth and expansion, there’s a greater narrative to think of, beyond just consuming cannabis and the economic benefits. In bringing the industry to the fore, we have a responsibility to address the issues of and act with moral guidance and ethical strength.

It’s all too evident that the future can be bright, and the numbers to back it up are certainly encouraging. Still, growth needs to be sustainable, and positive for everyone, not just the select few. And there are a few topics that we need to talk about that desperately require our attention and proactivity. Such issues relate to the failed War on Drugs and current inability to right said wrong — Criminal Justice Reform, Restorative Justice, the existence but limitation of the Social Equity programs. These are just a few topics that seem as if we have moved on, as if they are resolved; we need to continue to raise this concern. We need to regain focus towards ethical power without repeating the sins of the oppressors. This is a path laid by the great civil rights leaders of history and those people who have put their faith, hope, dignity and name on the line.

Many confuse force with strength. Certain communities have been forced to be subservient, to be disadvantaged because of our nations’ history. However, strength is quiet, confident, flexible, and about the good. Force is self-will, bent to obey. It will always break, and we will break it. Institutions hold a certain level of strength and influence inherent in their function. Institutions must embody the strength we desire, they are nothing more than the raw ability to enact.

The leader of one of the most influential institutions in the global cannabis landscape is here with us today, that is Cat Packer. Cat had previously fought tirelessly to address the injustice caused by the failed war on drugs. We’ll have her join us in a little bit, but first let’s talk about some of the challenges with criminal justice and prison reform.

I think most if not all of us here can agree on one thing, as so eloquently stated by Sam Harris, the American author, philosopher, neuroscientist and podcaster, the “criminalization of any drug is just a bad idea regardless of how harmful certain drugs are.” It is abundantly clear that “the worst effects of drugs are the effects of their criminalization: organized crime and violence, the profit motive of a black market and the inability to provide for safe formulations and dosing of such drugs. The concern and problem of drug dependency, of people abusing drugs or taking bad drugs versus more benign drugs, is really a matter of education and social support that people need, and importantly, people finding meaningful lives.”

It’s been over a year since the passage of Prop 64 in California and according to the Judicial Council over 2,600 petitions have been filed to reduce sentences for people convicted of cannabis-related offenses. At least another 1,500 petitions have been filed to re-classify old felony cannabis convictions as misdemeanors or to dismiss them altogether. This is progress, but more resources are needed to process petitions and conduct outreach to people who may be eligible to clear their records and just don’t know it. Most importantly, the proposition doesn’t address the root cause or rewrite the past. Cannabis convictions still bring life-altering consequences, making it difficult to, for example, find and keep a job, get a professional license, obtain a student loan or adopt a child.

Not only that, but as it’s been well documented, this issue gains outdated and socially unacceptable contours when we bring race into the conversation. A 2013 American Civil Liberties Union (ACLU) report concluded that, despite roughly equal usage rates, African-Americans are four times more likely than whites to be arrested for use and possession, and Hispanics more than three times.

These policies and practices have been setting us back $3.6 billion. Every single year. The government’s budget balloons even more when we realize that we’re spending between $30,000 and $70,000 per year to house each prisoner, even in states where cannabis has been legalized. We can all agree that this needs to change.

We need to start talking about radical reparative justice and community reinvestment, starting in places like Los Angeles and Oakland. In the glitzy Green Rush era, it’s easy to get carried away by high-end cannabis-infused dinners, networking conferences and industry parties that rival even the chicest Hollywood affairs, but they offer quite a contrast to the realities of communities and incarcerated individuals still reeling from the War on Drugs. Have we allocated enough thought, time and resources to these efforts? Maybe the community reinvestment should be proportional to the size of our industry? Do we have the right programs to support social equity and to provide jobs, healthcare, legal care, re-entry care, housing and educational scholarships to individuals and marginalized communities. There are a few bills proposed here in California, AB 1793 and the Reform L.A. Jails and Community Reinvestment Initiative, which can really move the needle in terms of tangible social justice policy change.

Here’s the deal — in the end of the day, working towards sustainably solving these issues comes down to three essential concepts: perspective, perception and education. Perspective to stand back and understand where we are and what we can do, Perception to determine what should be and how it can be defined, and Education to explain and teach what is and influence based on what it should be.

Let’s take a moment to remember how cannabis has been portrayed in movies over time. Who can forget Jeff Bridges as The Dude in The Big Lebowski? Or any Harold and Kumar film? Or, even, the classic Sean Penn as Spicoli in Fast Times at Ridgement High? Great entertainment, no doubt, and we know The Dude was right — that rug really did tie the room together.

But the time has passed to perpetuate the misrepresentation in entertainment about the type of people who smoke or consume, as well as their ambitions in characters that are aloof, unmotivated, slow and incapable. This isn’t any different in literature, music and generalized arts, and therefore, perceived in reality. In fact, many people still only associate cannabis use in its various forms with “artistic types.” We know very well this is not only untrue, but also highly toxic to our industry and the outcomes of this plant. So, we need to push to reverse that damage and show exactly who people who consume cannabis are and what they can achieve. This includes repeating cannabis-positive messages across various platforms in order to start de-stigmatizing usage. Nevertheless, I should mention that we’re already witnessing the beginning of cannabis-positive content. Perhaps because of this rising awareness, we now know that around 70% of Americans agree that it’s less risky to smoke cannabis than cigarettes, drinking alcohol or taking painkillers and opioids. Good news, for sure, and part of it has to do with the undeniable fact that cannabis culture has evolved its humor, etiquette, art, literature, music and business. However, a Washington Post study also revealed that 42% of our population still thinks that smoking cannabis is not socially acceptable. Seems like no matter what scenario, there’s always 40% that are reluctant to accept anything that is new, real or factual.

In order to achieve the future we envision, we need to put more focus on changing the language we use. The terms ‘stoner,’ ‘pothead,’ ‘blazer,’ and countless others come with a lot of baggage and should be the first to go, although we need balance. What we want is to create distance from old-school terminology and make the culture more diverse and inclusive while not alienating anyone in the process. We want to reach out in a positive manner to the women, the health conscious, the depressed and anxious, the foodie, the wine connoisseur, the conservative mother, the professional athlete, you name it… Our ultimate goal should be to normalize consumption and habits to the point it’s not even a thing. It’s not part of a class or a sect of people and it’s not unique to one country, it just… is!

So how can we achieve that? It all boils down to one idea: “responsible use.” We all know of the incredible benefits of cannabis, and as patients or consumers we’re also very aware that it’s not without its side effects. So why hide it, or avoid it? The same way we learn about the side effects of things people use in mass every day — such as over-the-counter drugs, alcohol and natural herbs — people should be aware of how cannabis and its derivatives affect our body chemistry, if for no other reason, than to simply know what we can expect and adjust accordingly. We need more research and development, guidelines and completion of safety and product quality testing. And again, this is where the importance of education comes in. You see? This is an industry in its infancy, we all have to be stewards of good practices and maintain our moral compass and fair-mindedness.

When it comes to the future and long-term reputation of cannabis, we have an “ace in the hole,” hemp. Although not our direct focus here today, it too will have a pervasive impact on the conversation and acceptance of this industry while cementing the plant’s overall image.

As many of us know, hemp will be a true game changer.

Hemp can be used to manufacture goods. It is the strongest and most long-lasting natural fiber in the world, with the added bonus of being resistant to rot and abrasion. It can be used to make anything from skateboard decks to car and stealth fighter bodies.

Environmentally and sustainably, we now know that in the span of a single year one acre of hemp will produce, for example, as much paper as two to four acres of trees. Hemp paper has the added benefit of being recyclable more times and requiring less toxic chemicals in the manufacturing process. Of course, you can also eat hemp seeds, a fantastic and more economical source of protein than soybeans. The real kicker, though, is that because hemp produces more biomass than any plant species (including corn) it can be grown in a wide range of climates and locations. This means that hemp has the potential to not only be converted into clean-burning ethanol fuel, but also become the go-to source.

In 2017, total sales for the U.S. Hemp Industry was $820 million, including Hemp-Derived CBD products, personal care products and hemp food products. In total, the industry grew 16% in 2017 even amidst continued regulatory challenges. Research firms estimate that the U.S. market for hemp products will swell to nearly $2 billion by 2021. That may even underestimate the impact now that we have passed the Hemp Farming Act of 2018 (under the Farm Bill). But don’t forget, this bill still maintains a lifetime ban on anyone with a prior drug conviction.

Science and robust research and development is the future of cannabis, inclusive of hemp.

This includes and highlights the usage of cannabis and all of its compounds in the healthcare industry. Medical cannabis patients still outspend adult-use consumers nearly 3 to 1, demonstrating the effectiveness that many patients see when using cannabis. Increased enrollment and sales in state medical cannabis programs last year also hint toward continued growth in the future. In fact, if medical cannabis were legal in all 50 states, it could cut into the pharmaceutical industry by $4 billion annually. Additionally, some companies are developing cannabis-based pharmaceutical drugs, further expanding the role of cannabinoids in healthcare. Market analysts now project that the U.S. medical cannabis market will be valued at $19.48 billion by 2024, meaning the growth trends listed above are likely to further increase in the second half of 2018 and beyond.

What this all tells us is that the path forward is clear. We must recognize that we’re not the minority and should not be ruled by one. This is a bipartisan issue. But given those statements, it’s still true that bad ideas need to be contained. As Harry Truman stated before Congress in 1947, “I believe it must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” Those outside pressures today remain the powerful interests of industry and lobbying groups, those who don’t want to see cannabis fully represented in our society. It’s our obligation to be the arbiter of good ideas, to spread freedom of the plant around the U.S. and the world.

One of the fundamental things we need to learn, is how to communicate. We could resolve nearly half the challenges we have in bad faith relationships if we actually have intelligent, empathetic conversations with someone who can facilitate better communication between two parties, or groups of differing interests. We can’t underestimate the possibility of us changing others’ perspective quite markedly and decisively, more or less permanently, if we have the conviction to do so.

Interestingly enough for me that came as a benefit from engaging in couples therapy prior to my marriage, to ensure we were working towards the same goals, invested in the same purpose and future. My wife Meredith isn’t only my life partner, she’s also an active participant in this caring community. Learning how to communicate with someone I love, not because we don’t agree on many of the same things, but because we’re human and will have disagreements. After all, we come from different backgrounds and have different experiences, and the only way to bridge those differences and focus on the uniqueness and similarities we have, is to communicate openly and honestly. So when we think about the future of this industry and where our focus should lie, it is on communication.

So as we look ahead and think about trends, international expansion from large multinational organizations, upshot brands who can go from obscurity to multi-million dollar revenue in less than a year, to politicians, athletes, physicians, scientists, and entrepreneurs alike, the future is in our collective ability to harness a brand new industry to bring forth a more positive future for society. We stand on the precipice of not just an evolutionary change, but a revolutionary change. One that comes on the backs of many advocates and activists who fought for this plant for years and the new entrants, the scientists and researchers, the physicians and nurses, and the policymakers who will help to usher in a new future of cannabis.

As I close I want to leave you with the following, these are the questions we must ask of ourselves:

How do we advocate for the industry?

What should be accomplished with this profound plant?

How does it all work geopolitically?

What innovation do we need to achieve our objectives?

What are the uses of cannabis for medical and wellness, industrial use of hemp, and adult-use products?

How do we enlighten the public as to the benefits?

How do we approach the greater moral and ethical narrative for justice for those that came before and those who are yet to come?

And how can we monitor that we are all good honest players in the infancy of a new industry?

I want to thank you all very much for enduring as many minutes of my voice alone as you possibly could, and with that, I’d like to introduce our guests Cat Packer and Dr. Robert Flannery.”