Lead-Lag Live

Kyle Kazan on Cannabis Industry Evolution, Strategic Real Estate Insights, and Overcoming Federal Challenges

• Michael A. Gayed, CFA

Share episode

From the football field to the boardroom, discover how Kyle Kazan's journey from college athlete to real estate mogul reshaped his vision for the cannabis industry. Listen to Kyle as he reveals how he navigated the worlds of law enforcement, special education, and real estate investing before becoming a pivotal player in cannabis. His insights offer a masterclass in resilience and strategic acumen, shedding light on his success despite the daunting challenges of federal illegality and complex taxation in this emerging market. 

Join us as we explore the evolution of the cannabis industry, where strategic alliances and political shifts define its future. Kyle shares how collaboration with experts like Graham Farrar is essential for mastering the intricacies of cost-effective cannabis cultivation. The conversation touches on the potential impact of political dynamics, especially under the Trump administration, and how states' rights and deregulation could unfold a new era of growth. Through these insights, we uncover a landscape ripe with opportunity, yet in dire need of federal support, particularly in banking.

Delve into the stories that illuminate the cannabis reform movement, such as that of Weldon Angelos, whose case highlights the urgency for justice system reform. As we discuss the broader implications of political actions by Presidents Biden and Trump regarding cannabis-related convictions, we also explore the promising future of the California cannabis market. From building consumer trust to understanding the parallels with early tech giants, this episode offers a comprehensive look at the dynamic forces shaping the cannabis sector. Plus, get a taste of personal stories that resonate beyond the industry, like the unexpected benefits of fasting inspired by social media.

The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

Today's sponsor is Deftform, the simplified form builder you've been waiting for. Stop using overpriced and bloated alternatives. Deftform gives you everything you need to create unlimited forms and collect unlimited responses.

Visit deftform.com and use the code LEADLAG to get 20% off the Lifetime package.

 Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.


Foodies unite…with HowUdish!

It’s social media with a secret sauce: FOOD! The world’s first network for food enthusiasts. HowUdish connects foodies across the world!

Share kitchen tips and recipe hacks. Discover hidden gem food joints and street food. Find foodies like you, connect, chat and organize meet-ups!

HowUdish makes it simple to connect through food anywhere in the world.

So, how do YOU dish? Download HowUdish on the Apple App Store today: Support the show

Speaker 1:

when Hunter Biden was convicted and then basically pled guilty. Nobody does that. If he did that, we knew he had to deal with his dad and, by the way, I'm a dad, I get it. I'm not even railing on him for pardoning his son. I think, if we're honest, every dad would do the same thing. That said, what a piece of shit move to only pardon your son, and you knew you were going to do it. We all knew he was going to do it and again, no issues with that. But when you're communicating with these folks, you're like what the fuck? We have parents too.

Speaker 2:

Talk to me about just your own personal journey to even figure out how to be a proper person to execute in this particular field. Because, to your point, it's like I think a lot of people see potential in cannabis but they have no idea just how bumpy it is.

Speaker 1:

One of my strikes is grittiness, and gritty means. You know, when I started buying apartments, I didn't know what the hell I was doing, and my girlfriend now wife and I would go down there. I didn't know how to paint, I didn't know how to change a toilet, but I figured it out, I learned, and then I started surrounding myself with people that knew more about these things than I do. I always try and hire.

Speaker 2:

My name is Michael Dye. I'm publisher of the Lead Lag Report. Joining me here is Kyle Kazan of Glasshouse. Kyle, introduce yourself for those who are not familiar with your background. Who are you? Have you done the right of your career and exactly how many pieces of artwork do you have?

Speaker 1:

You're off.

Speaker 1:

So, thank you, michael, it's great to be on the show again. Uh, I do enjoy following you. Um, I like to think that people that invest with us are not fucked um, and right now I think, uh, since we're on the otc it's it's sort of few um, but uh, so I I'm a I'm an active follower of yours and I've enjoyed your journey, especially health wise, cause that's something I consider, uh, hugely important. Um, in regards to to my personal background, I was a college athlete, born and raised out here. When I was in college, I stayed in Southern California, went to the university of Southern California, um, so, as a young athlete, way back in the day, all the way to today, I tried to keep myself in shape and I'm constantly reading, following people like yourself and trying to learn across the way. After that, I'm on the older side, so I was an inner city special ed school teacher for the Los Angeles Unified School District down an area called Watts that many of you guys have probably heard about, during the Rodney King riots. So we came around. My school burned down. After that, for five years, I was in law enforcement, mainly working gangs and drugs, and was a city police officer for five years During careers, I started buying real estate during times where people said it was stupid, um, california was going to implode, um and people were going to continue the white flight, if you will, to oregon and washington.

Speaker 1:

And we had a savings loan blow up and and the resolution trust company, basically, was blowing out apartments and I started buying from the rtc and and um didn't really know much because my uh undergraduate is in history, although as an athlete I took some business classes because I could take anything I wanted and uh, my my graduate work is in special ed and early childhood development. That said, I had a penchant for buying low and being a decent operator. And in 1996, again while police officer work in graveyard, a private equity hedge fund guy who was semi-retired came to me, said God, the numbers are jumping off the charts of what you're doing. And he and I formed a fund together in 96. And we started buying some assets at the exact right time. We still own a lot of them. They are just ATM machines and we provide really good housing for people here in Southern California. And I left Police Department in 99. I started a firm, literally in a storage room of a large apartment complex. We had 250 units under management. Now that company has over 13,000 and about half a million or more square feet of commercial property, so I know what it's like to grow a company from a shoestring. Same time, I've been lucky enough that all my private equity investments, which have spanned in Southern California, throughout the country and in Asia and in Europe, have never lost money on any of my deals and through all that started.

Speaker 1:

Some private equity funds to invest in cannabis Did a lot of research, did a lot of research. A lot of research was in Colorado throughout 2014, just visiting there trying to figure out what a burgeoning industry will look like. And timing is always the most difficult thing. As a value investor, which is what I consider myself I've been labeled a vulture investor by Bloomberg and some others at different points, but I look at it as just pure value and if you do that, timing sort of is unpredictable. But if you buy right and you are smart with your money, I often tell people they should.

Speaker 1:

Instead of reading the book. The Outsiders talks about how to invest capital, and we did private equity funds. We rolled them in to one company, which became Glasshouse Group. We then saw the unicorn facility that we were coveting from 2018 and 2021, the opportunity came. I had no desire to be on the public markets whatsoever, because it's a whole different ballgame.

Speaker 1:

I like private equity, I like the ability to speak openly without any kind of a filter.

Speaker 1:

But the only way to raise the money we needed to buy this unicorn facility, which insurance proceeds or insurance valuation was $250 million not including the 165 acres of Southern California land just to rebuild it, and we bought it in cash for 95 plus some stock to the auction holder.

Speaker 1:

So we got it well under market and we've been able to execute in a very difficult landscape where money is expensive, federal illegality, 280e on the tax which doesn't allow us to write off all of our income although we have found some good ways to tackle that and we've been built for the post-prohibitionary world which we know will come. But again back to the, the, the theme of when, uh, we don't know what. We can certainly discuss it and as we sit here today, I think we are, of all the publicly traded us canvas companies, we trade at the highest EBITDA multiple Um, and so oftentimes we're sort of in that top four valued companies, even though our revenue is not, uh, where the top three MSOs and even some below us. So people, I think, are understanding our story and are seeing the value in what we do. Ben Graham, I think, would choose Glasshouse.

Speaker 2:

Ben Graham would not choose a lot of stocks. Now Use that term execution and it's like anything else, right, every industry has companies that are involved, that are inefficient, companies that are efficient, and cannabis is as unique as a guess, given to your point, all the sort of um hurdles, um talk to me about, uh, just your own personal journey to even figure out how to be a proper uh person to execute in this particular field. Because, to your point, it's like I think a lot of people see potential cannabis but they have no idea just how bumpy it is yeah.

Speaker 1:

So if, if I have, um, I look at myself on a personal basis and say what are my strengths and what are my weaknesses, one of my strikes is grittiness, and gritty means you know, when I started buying apartments, I didn't know what the hell I was doing, and my girlfriend now wife and I would go down there. I didn't know how to paint, I didn't know how to change a toilet, but I figured it out. I learned Um and so um, and then I started surrounding myself with people that knew more about these things that I did. That I do. I always try and hire up.

Speaker 1:

So when we got into cannabis, uh, you know it's it's a much longer story about some of the you know felons and other people that were sort of involved at the beginning that I had to deal with and I had to sort of move aside. But the bottom line is I found a guy named Graham Farrar who, who had been growing cannabis for many, many years, was a tech guy, and he impressed me as someone who will forget more about growing this plant than I'll ever know. So I learned a lot from him. But the main thing was I made our partnership, I aligned our interests, which I think is always key, and he had a team of growers and he also, as a tech guy, believes in Moore's law, which I think is just critical that you are always pushing those cogs down.

Speaker 1:

Read the Elon Musk book. It's the same kind of thing. You just go to first principles and you push on it. And so I'd love to say that, hey, I'm the genius behind growing award-winning plants. At our last quarter we grew at $103 a pound. But if I'm a genius for anything, it's finding the genius.

Speaker 2:

Well, he's not talking. One of the geniuses is not talking to you right now. Let's talk about how the company broadly is different. Obviously, the experience and the point getting to this point is very different than a lot of cannabis companies. Is it fair to say that, like when I hear you and talk to you, I think that you're a visionary in terms of thinking very big picture and going big right? Is it fair to say that a lot of the competition in the cannabis space does not have this sort of big picture thinking? It's much more about being very local and that's it.

Speaker 1:

So there's the smaller players and the bigger players. If we're going to talk about, like, the large multi-state operators, what I would tell you is the game that they were playing and that they're still playing. And I want to be deferential because a lot of the CEOs there are my friends, um, but just in watching and observing the, what they decide to do was they were doing a land grab in a prohibitionary market, which means that you're going to acquire as many stores as you can in quote limited license States and quote um, and you're going to be have to vertically integrate in all of those States which, and you're going to be have to vertically integrate in all of those states, which means you're going to have to grow the plant where it doesn't want to grow. And think about, if you think about wine, you know cause wine comes from California, oregon and Washington, or at least the best wine. I mean there's other places in the country that grow it, but the award winning wines come from those three states. And it's not because there's better farmers, it's because it's better weather and that's where the grapes want to grow. And so if you go on a land grab and you decide that you're going to be growing in Massachusetts and Illinois and Ohio and Pennsylvania. I think that's great.

Speaker 1:

In the prohibitionary market, you're probably growing between six to $900 a pound and I think, at the end of the day, the way I looked at this was okay that this, everything in regards to cannabis, starts with the plant. It's an ag product, so if you're growing grapes in any of the states I just mentioned, inside warehouses, the bottle of wines would cost an absolute fortune and the quality wouldn't be that great, and I would say the same is true for cannabis. So to me, I just thought, as opposed to having to write off my investments at whenever that when happens, I would rather build for something that works. Today I won't be able to grow it. As you know, we own 10 stores, so maybe we end up writing down dispensaries. I'm just not a long term believer in little little mini Bevmos for cannabis.

Speaker 2:

I guess the big question is will we see the when for the cannabis space in the next four years? All right, so let's talk about how you know, under a Trump administration, the industry could be shifting. Obviously, the big talking point there is deregulation, deregulation, deregulation. I want to hear your thoughts on how Trump administration might shake things up.

Speaker 1:

Yeah, so you know, when, during the election, vice President Harris is from my state here in California. I'm very politically connected in the state, so we had we know people that really know her well. Unfortunately, during her campaign it was very insulated and she wasn't talking to a lot of the people here in California other than donors, so we didn't really have great access or visibility into what she was thinking. The folks around Donald Trump actually made themselves available to you know some quiet discussions and these are people that we know are very close to him, and we were told in no uncertain terms that he sees this as a state's rights issue. We were told he was going to come out in favor of Amendment 3, which he did which, that's the Florida adult use. That failed to get to the 60%, but it got 56%, and so we saw that as a really good thing.

Speaker 1:

And just watching things and you know you take the hints you can from the tea leads what we saw from the Trump administration the first round was, you know, in most things, what he said he would do. He pretty much did, and so here where he was able to no matter how you feel about the abortion discussion he basically turned the Republican Party into the state's rights. So some of the far right might say we want an abortion ban nationwide and do say that. But he has gotten the Republican platform on board with his vision, which is states' rights, and that's exactly what we were told his vision was for cannabis, and we would take that as a massive win, because then that really just opens up the playing field.

Speaker 2:

Yes, but you still want to have the federal support right, Because you need the banking industry to really kind of open things up.

Speaker 1:

You know, I think, just making a state's rights and and de-scheduling, de-scheduling this, that opens it up for the stock exchanges. You know that the major exchanges, uh, they're watching this closely. I would tell you they're not sure what schedule three which we're all sort of expecting into the first quarter of next year. And I would tell you that there's active discussions, not just with Glasshouse but others and those major exchanges, and so there's a bit of a wait and see. And also the market, as you know, doesn't like it when there's, it doesn't like uncertainty. And you know everybody's saying, oh, trump nominated Matt Gates.

Speaker 1:

Well, matt Gates would have been banal for cannabis, guess what. So in January we see who actually gets seated, then we'll start seeing what the priorities are. We know cannabis is not one of his top three. It is pretty low hanging fruit. And there is, there are the train tracks are moving towards a schedule three at least. So, um, but you know I'm hopeful that a deschedule will happen. Um, safe banking there's talk about that happening even before, uh, president biden leaves and and, um, you know that chuck schumer supposedly has the bows. It's hard to speculate with him because I think he's had opportunities to get that passed and he has chosen not to. I'm not saying there's a correlation, but he is the largest recipient of money from the pharmaceutical industry. But sometimes just a weird coincidence.

Speaker 2:

The older I get, the more I realize there are no coincidences in general a lot of things, the more I realize there are no coincidences in general a lot of things. Speaking about you know maybe a pivot on that I think we should talk about how cannabis helps with living healthier. I've been very public, obviously, about my fasting journey and if I fast and I have an edible to break it, I'm done probably for two, three days. But I want to get your sort of thoughts on recent research around cannabis anxiety, how it helps longer term, because the medicinal uses are to me it seems to be. It's a shame that it's not more put out there. There's still sort of stigma put out there.

Speaker 1:

There's still sort of a stigma. Yeah, so there was a, the head of pharmacology at the University of California, irvine, which is about 40 minutes down the road from me. He and I met in 2016. His name is Dr Piamelli and even back then he was quoting research from Israel and other areas where they have actually done good studies and he was saying it's great for pain, it's great for inflammation.

Speaker 1:

So many of us, if you read the End of Illness, they talk about that being one of the killers and cause of cancer and other ailments and also pain. And I would tell you we have this. We rebranded under the Mama Sue brand, but it's basically a strain called jellyfish and it's very high CBD, very low THC, and so you don't want no THC and CBD. You want the ultrason factor to actually boost the CBD and I can tell you anecdotally, we've had this strain for quite some time and it's smokable, vapeable, but I like the tincture where you put drops on your tongue and you do it as a sub-label.

Speaker 1:

And my wife had both her knees partially replaced separate times. This was the only thing she used for major surgery. They wanted to put an opioid pump on her major surgery. They wanted to put an opioid pump on her and you don't get constipated. There's not really an addiction. I guess everything's that you could get addicted, but this is not an opioid. And so I could tell you people with cancer that the chemo was getting too hard for them and they were just like ready to say this this is worse. The cure is worse than the disease.

Speaker 1:

Um, one of my very good friends, her mom, had pancreatic cancer and she was at city of hope and she was about to give up. And my friend is a prohibitionist. She came to me out of desperation and, um, she tried this and it literally took away the pain and she had normal days when she had been in excruciating pain. So I use this all the time. You can take it at a level that does not um cause the psychoactive to kick in. And then I also take it where I like the psychoactive to kick in, because not only do I get my body relaxation but I get my um. I get my um kind of slows my brain down, because during the week I'm like this, like, just like this, and so I I like that a lot and it's a very nice relaxing um state that it, that it puts me in. But I would tell you 99% of the NFL and 99% of the NBA, they use cannabis.

Speaker 1:

Back when I was a USC athlete, doctors would routinely give you shots and painkillers and they just gave you all kinds of stuff just to get you back on the court. None of it was natural. We were all pretty stupid to take it, you know, at least I was one of those that would you know, just a bit back on the court Today. I mean, this is really golden. And I'll give you a couple other quick uses.

Speaker 1:

I've had people come up to me so lots of anecdotal, because it's not widespread out in society, because it's still a schedule and drug. And also people of my generation heard the just say no, just say no over and over. But I've had people say, look, I've worked in my sixties, I want to golf every day, but my hands swell, I can only golf twice a week. They take this and they're golfing every day because it does really work on an inflammation. So, um, I I think that ultimately we're going to see some formulations you know, hint, hint, we're kind of working on stuff like this, but you're going to see some formulations not just from us that will be like kind of a daily regimen that won't get you high but you're going to really feel your body and you're not going to have that feeling of what am I taking here, you know.

Speaker 1:

Then the other one is sleep. A lot of my friends they have difficulty sleeping and with cbn and cbd and thc, our sleep gummies I mean my wife and I have the tin on our nightstand and we just did a 10-10-10 gummy that I tried, which is 10, the THC 10, cbd, 10 CDN Very powerful, we call it deep sleep. I took some of those and, man, it put me out like a rock.

Speaker 2:

By the way, I've used CBD in the past for sleeping as well, and I always feel phenomenal afterwards. I used to joke all the time. It's like you know, the best sleep is a NyQuil sleep. No, no, no, best sleep is a CBD sleep.

Speaker 1:

And Michael, I would tell you when I would get sick. I would take NyQuil and I'd be on it for like seven, eight days. I'd even go a couple of days extra. But I knew the night that I stopped I was going to be awake, that it just. It was like kicking it off and I hated that. And a lot of times I'll go to LAX, you know, and I'll fly internationally. So I'll put some sleep gummies in my pocket, I'll take it, sleep beautifully on the plane and I don't want to travel internationally with cannabis not inside my belly, so I won't take any for the flight back and I have Ambien for that and it sucks.

Speaker 2:

Somebody watching on YouTube giving me some kudos, ben saying welldon Angelos, the Presidential Pardon Act, bravo, bravo, bravo in fulfilling the order of the day. Weldon Angelos, you and I, I think we've connected, I think, over that in the past Full Court Presidential Pardons. Thank you, sir. For those who don't know the story of Weldon Angelos and exactly what happened and why it's consequential, maybe do a recap here. Sure.

Speaker 1:

And Ben, thank you for the comment. Absolutely, absolutely right. Great call out Weldon was an aspiring rapper from the state of Utah and he became close with Tupac Shakur and Snoop Dogg and his career was really starting to go places and he was excited and he um got cut up in a sting. Um, there's a documentary out. When you see it you'll be blown away. Um, and basically I think he sold I mean it was very like personally used kind of thing to somebody that he knew that that was in the sting. Anyway, bottom line is very small amount. They arrested him, they wanted him to flip on Snoop and then he said no, he said I could do it. It was so small I couldn't imagine that this is a big deal.

Speaker 1:

And then they turned into a federal case. Well, anything that goes federal from a state case, I can tell you, is a whole different ballgame. And he was sentenced to 55 years in prison and so he got put into maximum security prison. His sister was a huge advocate. When the judge realized that under the 94 crime bill this was the mandatory sentence, the judge called out from the stand. This is ridiculous, this is. And he called for George W Bush to you know, let him out. It took 13 years of his life to get out and um, under the uh and that was under the Obama administration Um, it was basically Mike Lee and a bunch of folks in Utah that helped make that happen, uh, to end the nonsense. And then president Trump uh, pardoned him and the kind of guy Weldon is, he wanted to get back on with his life, but he didn't want to um turn his back on the 3000 or so current federal nonviolent cannabis prisoners. So he's a connector. I he's gotten Charles Koch as you know, he's pretty uh libertarian, right and snoop dog who is not uh and he got them on uh, zoom together and so he's quite the connector.

Speaker 1:

I stood on the board of the of mission grain, which is his, uh, his non-profit, and also, uh, we've, we've assisted him with his brand, which is called reform, because I'd like to see him and he'd like to make some money in the cannabis space and it's, it's really good cannabis. So he is very politically active. There is this new act uh, that's out there that we're, we're, we're excited about. Um, I would say, you know, just go to Weldon Angelos on Twitter and you'll see um, all the good stuff that's going on and he's he's phenomenal and how he has moved on with his life and how he's. You know, I'm amazed that he's not angry.

Speaker 1:

And so the other thing is, it's kind of a because we're strange bedfellows given my background in law enforcement and his background from being wronged by law enforcement and the system, we both have the common goal to land on getting these 3,000 prisoners released. And then you're released, and then you overlay the fact that I'm the largest cultivator on the planet, which means I have grown far more and my company grows far more than any of those 3,000 prisoners have been convicted of by far. And so us standing together I think just the two of us and our stories show how wrong the current system is. Now we need to get these people released the current system is.

Speaker 2:

Now we need to get these people released. You think there's a higher likelihood under Trump or under a Republican president than a Democrat? For that, I mean, I'm curious sort of why it hadn't already happened.

Speaker 1:

So if you want to look at our current president in 1994, just Google up or go to YouTube and look up Joe Biden, senator Biden or let's see it was the Biden hatch bill, but just Senator Biden, senator um nightstand for Crandall and it was about 10 minute clip and you'll see how he feels about I mean he, he had. He said, if you have one rock of crack cocaine, five years, five years for a rock, now obviously powder cocaine not the same. Now I understand 1994 was a different time. I understand there was a lot of fear and if he didn't take a harder line, he might not have been still in the Senate and off to the presidency later. So I want to make sure I don't take him too far out of his era. But at the same time, I was in law enforcement. I was part of the drug war during that same time and I am not there. It didn't work. It's a complete failure. Drugs won the war on drugs and so my frustration with him is during the debates in 2020, he said that he would release their records, should be expunged, and so far he's released zero, zero people, and so what he's done is he's just and I'm not saying it wasn't a good thing.

Speaker 1:

But he pardoned people for simple possession. None of them were in prison. It was people that were smoking pot in the 1980s in the national park, for was britney grinder, and that was because president putin was holding her and that felt almost more political to you know, to go after putin and also miss grinder and her wife, for you know her wife uh, grand mr grinder's wife was on all the talk shows saying he's not doing anything. So he felt political pressure. But if he, if you have to trade away the so-called merchant of debt to get a cannabis frisbee back, why can't you just take out your own pen and release the $3,000? Now we thought when Hunter Biden was convicted and then basically pled guilty, nobody does that.

Speaker 1:

If he did that, we knew he had to deal with his dad and, by the way, I'm a dad, I get it. I'm not even railing on him for pardoning his son. I think, if we're honest, every dad would do the same thing. That said, what a piece of shit move to only pardon your son. And you knew you were going to do it. We all knew he was going to do it. And again, no issues with that. But when you're communicating with these folks. They're like what the fuck? We have parents too and we served real time, and look at what you're doing, kyle. And so that's the difficulty.

Speaker 1:

Your other question is President Trump actually did pardon Weldon Angeles, actually did get Alice Williams out of prison, actually did do some things, and so I'm hoping President Biden does the right thing. If he does, I'll be the first to stop criticizing him on X. He's a complete piece of shit and that legacy will be tainted from this. We are hopeful that whatever President Biden doesn't do, president Trump will do, and he's appointing people at least he's nominated people that we think will do some good stuff. So I'm hopeful. Either way, parker Coleman, jose Valero Jr, jerry Heyman and 20, you know 29, 97 others will be coming home.

Speaker 2:

We need. We need more people to do real talk like that. Kyle, I appreciate that a lot and I was nodding the whole time while being off screen here.

Speaker 1:

Michael, you tell my mom and dad because they hate when I say what I, and my wife too, they don't like, and I've been saying this for years. They don't like that. I'm pointing out the dichotomy which I'm involved in. But I, you know, I'm the one who has to look myself in the mirror when I shave. Yeah, and you know how can you not say something when it's just. It rips the illusion of a fair justice system off. That's not what we need here, 100%.

Speaker 2:

I agree, switching gears a a bit. I want to, um, hear your thoughts on, uh, hemp derived cannabis. I know you've got a big, obviously business, business initiative around that, um, but let's talk about hemp derived cannabis, the interstate dynamic, the, the legalese around that, anything that, yeah, might be interesting here yeah.

Speaker 1:

so, um, I think everybody watching this is probably getting hit with some ads and, as you know, you click on one ad, you're going to get hit on lots, so I get lots of these ads and basically you see hemp, hemp, flower hemp, and it's it's basically hemp drive cannabis. Um, both hemp and cannabis are the same plant, called Cannabis Dativa L Same plant Under the 2018 Farm Bill. What it did was, instead of testing it like we do, which is dried, and THC after the fact, against a dried plant, so the percentage goes up with THC. What they said was that up to 30 days prior to harvest. So it's like, wait a minute, what you can take, you can test the THC while it's still on the, you know, while it's still growing, as a part of the whole plant, instead of just the bud that we test against, we get to test against the stalks, the leaves, everything else, and so right now we are expanding into, of our six greenhouses, greenhouse two. Each one of these greenhouses, just in a magnitude, could play every single NFL game at the same time, wind up field to field inside one of the greenhouses. So when we do something, it's a very large endeavor Because it's the same plant.

Speaker 1:

The capital improvements to this greenhouse are the exact same, no matter whether we say, hey, we're going to do cannabis for California or whether we're going to do hemp drive cannabis which we could ship direct to consumer. We can also put it in many of the smoke shops and liquor stores and gas stations throughout Florida, texas, tennessee and many other states. So to us, the biggest thing is that when they see the Glasshouse label, they know it came from California, which is where cannabis wants to be, whether it's hemp-dried cannabis or California cannabis. And it's going to be tested because right now under the Farm Bill there is no testing regimen. I can take credit cards. If we completely switch to hemp-dried cannabis, I could go public on NASDAQ or NYC tomorrow. All the stuff that I deal with would go away.

Speaker 1:

Now our plans are not to leave the California market. Our plans are to continue to do what we're doing here. We like our positioning here, but I like the idea that it opens up interstate commerce and people can then enjoy our great California cannabis, our great glasshouse, and then, unlike where you're buying it glasshouse and then you know, unlike where you're buying it now, where you don't know where you're sourcing the material you could actually come out to california investor day and say, hey, I really enjoyed it. I'd love to see where it's grown. I'd love to meet the farmers and, though, like a winery, when you drink our wine you can come to our winery and visit. So we're we haven't announced that that's the direction we're going in, but right now I would tell you we have our hemp license in for greenhouse too, and we have hemp plants that we're growing and testing, because everything we do we are very much forgive the pun in the weeds to make sure that we can get everything just right before it put in the consumer's hands.

Speaker 2:

Earlier you had mentioned valuation. We all know that the stock investing side has been brutally difficult, obviously for the last several years for a lot of obvious reasons. But how do you think investors should think about valuing cannabis companies on the public side? I mean, it's not going to be the traditional metrics, it's like you said. It's like you know Graham and Dodd might choose Glass house, but maybe not exactly the old metrics from that book.

Speaker 1:

Yeah, yeah, I don't see us as a cigar, but what I would tell you is this I was debating with some of my friends who have been longtime investors and have you know written checks when I'm in China or I'm in Germany, or I bought pecan farms in southern Georgia, so they'd taken the tour with me Again, always made them money, and they're sitting there giving me the adjust. Even on his bullshit, I agree. You know what. What are we to argue with Charlie Munger? Of course he's right, but at the end of the day, that is one of the measurements.

Speaker 1:

And I, what I did was I sent them the stock growth of Amazon all the way back to the late nineties and I said if you'd invested where they were sitting there bouncing along, you know, at $3 and $2, you know they basically stayed below $5 for a long time as they were building their moat. Now there was execution risks and things like that, and the internet needed to grow and everything. But if you read the Wall Street Journal back then, it was like Jeff Bezos is insane. And I think if you invested at Amazon stock and even if you held it for a long time and it was under five bucks, you're probably pretty happy today, and what I would tell you is like the dot-com days, which I remember well, this industry will be massive. The younger people prefer cannabis to alcohol. The data out there. If someone does, does you know an hour's worth of research you'll realize this is going to be a monster industry. And then you just do your deep dive to say, okay, what makes sense? And if you can find the I hate to compare this to Walmart, but you know value wins and if, in this product, value wins and we can continue to execute, I've got an amazing C-suite that I'd be happy in any industry with.

Speaker 1:

So I guess I look at it. As you know, it took a while for Amazon to build their vote and it's going to take. It may be no time before Trump does something. Could be that he doesn't do anything in the next four years. I mean, the possibilities are both on the table.

Speaker 1:

But I would tell you, I like to align myself with founders. I like to align myself with founders that have stock in the company and real after-tax cash. In fact, I won't even invest in a private equity investment unless I know that the operators, founders, the ones that are doing it have skin in the game, and so I think we have a good alignment of interests. I think that we've got the right team and we've got the right assets and we've shown that we can execute in this business, and so I think, long-term, my hope is that the people that decide that they go through the trouble of investing in an illegal industry right now will be handsomely rewarded, and I'm cheering for all the other companies, but I'm most focused and solely invested, really, in cannabis and my company Kyle.

Speaker 2:

For those who want to track more of your unfiltered thoughts and also learn more about Glasshouse. Where do you point them to? So I'm on Twitter. I will tell you more of your unfiltered thoughts and also learn more about glasshouse.

Speaker 1:

Uh, words, appointment. So I'm on, I'm on twitter. I will tell you, social media is not my favorite thing. I'd much rather read yours and unusual whales and a couple others, but, uh, kyle kazan, um, is it kyle, underscore kazan? You just type in my name. There's not a lot of kyle kazans out there. I think there's me, uh, but yeah, I, I I do comment on Twitter, um, and yeah, please, please, follow me and, um, you know, ask questions, whatever I. I like to be interactive when I go on. I like answer questions and chat, um, and I don't really care if people you know are haters and they want to throw that out there. That's okay as well.

Speaker 2:

Well, I certainly am not a hater and I don't think Kyle Kazan is fucked like everybody else. It never hurts a puff. I appreciate those that watch this Again. This is being edited podcast. And, Kyle, if I don't get a chance to talk to you, happy holidays.

Speaker 1:

Hey Michael, happy holidays to you and please know that you know so some things catch my eye and I've always. I appreciate your just really quick, little, you know fucked and few, and I mean I, I, it gives a chuckle and I always. I also want to know why you're saying that.

Speaker 2:

So I'd be surprised, man, some people legitimately don't get that it's. It's an act and it's comedic, right, yeah, but usually there's some.

Speaker 1:

There's a point you're trying to make yes, there is always a point I'm trying to make.

Speaker 1:

So then I want to see what is the all right? What's fucked? Who? What's the few that they, you know. But the other one is I I will tell you, um, from when we first met to today, uh, the transformation. Truly few have the discipline to actually do that. Now, that said, everybody can do it and everybody wants to do it, so I'm hoping that you're inspiring by saying I can do it and I did it. Why aren't you? And so I really I appreciate that and I was. I enjoyed your journey. It's probably my favorite thing on Twitter over the last year and a half. So please keep up. Keep that up. Um, I've done some fasting, really because of you, and I've read about fasting and how good it is. So please keep up your great work. Fucked few. I love it and I know a lot of other people do too.

Speaker 2:

It's all exquisite. Appreciate everything they watched and I'll see you on the next episode of.

Speaker 1:

Star Wars. Yeah, thank you.

People on this episode

Head Shot

Michael A. Gayed, CFA

Host