While still categorized as a Schedule 1 substance—and not approved by the FDA—some form of cannabis is legal in more than 60% of the country. In this week’s episode, we speak with Anthony Noto from Benzinga, where he gets into the weeds of this multi-billion dollar industry and the issues it faces.


Jeffrey Freedman: Hello and welcome to the RP HealthCast by Rooney Partners. I am your host Jeffrey Freedman.

Jeffrey: A very controversial yet almost mainstream subject over the past couple of years has been around cannabis. Whether it is from the potential medical benefits of CBD, which was tattered almost as a miracle cure for all elements, to medical marijuana dispensaries in certain States, or to approving cannabis for recreational use like they did throughout Canada last year. The bottom line is pots become big business. Cannabis, CBD, and medical marijuana have become large tax generators for the certain states that have legalized its use.

One of the interesting things about all of this is the lack of federal guidance and the actual powers that the state government has here. You see, eleven states have fully legalized recreational use of marijuana. Some states fully rejected sale and others have more of a wait-and-see approach. Why this is fascinating to me is because the federal government still classifies cannabis as a schedule one controlled substance. What does that mean? This is the highest level. This puts cannabis in the same category as heroin. To further the irony, thirty-three states plus Washington D.C. have approved medical marijuana for medicinal purposes under a doctor’s supervision and prescription. It is more than half the country, but the FDA whose sole purpose is to ensure the safety, efficacy, and security of all our approved medical drugs, does not even approve the use of medical marijuana, nor does it control any aspect of its distribution and sale. To try and make some sense of this and to break it down for us is our guest today, Anthony Noto. Anthony is an editor for Benzinga, and he covers the cannabis industry.

Anthony, thank you so much for joining us today.

Anthony Noto: Thank you so much for having me. It is an honor for me to be here. Usually, I am the one asking the questions and hosting folks for podcast episodes, so it is kind of a relief to be the one in the hot seat.

Jeffrey: Yes, so we are going to put the spotlight on you, but before we dive into your reporting on the cannabis industry, let us keep that spotlight. Let us talk about your career as a journalist and how you started even covering this industry.

Anthony: Yes, it actually started pretty recently last year. I actually did not write too much about it, but last year I met Tiki Barber of all people, and I have recorded a podcast with him. He launched a company called Grove Group, which is an investment firm that works with a lot of cannabis startups and CBD startups, and entrepreneurs in that space. I just found it fascinating. I realized that there was so much left to learn about the industry that I started looking into it more. I developed a lot of stories in that space on my own when I was with New York Business Journal. So when I saw that Benzinga was on the hunt for a cannabis editor, I basically said to them, I am your man. Then they were warm enough to welcome me on to their team. It has been great coverage ever since. I have learned a lot. Yes, it has been wonderful.

Jeffrey: Yes, I mean, the industry itself has gone through such an evolution in that time period. As you are saying, you are learning a lot and you are living in the industry, but for those of us that are kind of outside, there is a ton of confusion, misunderstanding, misinformation about all of these. So that is what I am hoping we could do right now on this podcast is talk about the facts. To do that, I want to start with some of the basics.Throw around some buzz words about the marijuana industry that people do not really get what is the difference between CBD and cannabis?

Anthony: Yes. This is a conversation that happens with a lot of folks especially those who are, no offense to seniors out there who might be listening, but a lot of folks do not know the difference, so that is a great place to start. I have had this conversation with my aunts and my mom. They have their aches and pains, and they do not want to take CBD because they are under the impression that it gets you high. That is the difference right there, CBD does not get you high. It is short for cannabidiol, which is not a fun word to say or it is for some folks, so they abbreviated to CBD. That high or that state of euphoria that so many people enjoy comes from the cannabis plant, but that has THC. CBD is extracted from that. It is put into a bunch of fun products like creams and gummies and such. You will hear about it from all over, from various celebrities, and former athletes who opt [?] in products that they say helps them feel better. It is true because it does make people feel better. It is used to alleviate anxiety and inflammation with little to no side effects. I actually do not know of any side effects that come with CBD products. Personally, I do not use them because I do not have aches and pains, thank goodness, but for the folks who do, like soccer stars Rachael Rapinoe and Brett Favre are into it now, and pro wrestlers promoted it on their podcast. It works, and it is not a an addictive substance like some prescription anxiety medications can be.

Jeffrey: Yes, it is interesting. So your statement of, so it works and there is a lot of people that use it. I think one thing we have to point out is, CBD is an unregulated supplement. Right? It is not approved per se by the FDA. It is touted as a miracle cure though for everything, from arthritis to depression to sleep disorders. Now the FDA, I will not say now, but over the past several months the FDA stepped in and started penalizing companies for making these health claims. All right, so can you talk a little bit about that in how we feel, in a lot of people that have taken CBD and believe in it, how we feel so strongly it has its benefits.

Anthony: Yes. Well if anybody touts anything as a miracle cure, it should be suspect because that is something that people have been doing for so long with the the snake oil salesman, that whole thing. You should be cautious. It should not be promoted as such. So when it comes to being a miracle cure, it is not but it certainly is a supplement. It is an in addition to the traditional things that could help that are as serious as cancer.

Jeffrey: Have there been any FDA trials or peer-reviewed reports about the benefits of CBD?

Anthony: No, they just started. I think like this year, they talked about it. So there are currently no, although there is one we talked about. There are no FDA approved drugs that contains CBD other than the epidiolex which was approved. That was when they had like zero other options for this particular type of condition. It is an oral solution for the treatment of seizures. There are literally no other options, so that is when the FDA was like, okay. They looked at GW pharma and they were like, you know, sixteen week trial went well, let us approve it. There are other things that CBD is used for, that FDA -well let me take it back a little bit because there was an announcement in March where the FDA said they just started to advance work in CBD related products. So, great they had to wait until 2020. I mean it is been years now that people have been using it to self-medicate. That is what people wants. They want just more studies done. They want more federal oversight. They want it legal. It is something that both conservatives and liberals on both sides really want according to polls. So it just kind of baffles me that, they had to wait until the middle of a pandemic when these businesses were deemed essential businesses, and people were flocking to their local dispensaries to stock up because they knew that they would lose it. They would not be there. The lines would be really long I guess. So yes, it is just bizarre that it just took this long.

Jeffrey: Yes, okay. So GW Pharmaceuticals and epidiolex that was FDA approved, I think in 2018 or 2019 for one small indication for seizures. I think they have expanded that indication. I think there are also three other synthetic cannabis related drugs that have been approved, but again all for very very small indications like for nausea with chemotherapy, and there was one for anorexia.

Anthony: Yes. I looked into it, and it seems like they were looking for options, healthy options to boost appetites. So the science of it, I will be honest I have not looked into it too much, but the science of why they approved those particular products that kind of escapes me. Whatever they did to disentangle the THC from the treatment, I think that is what helped the FDA process along, but to do that takes a tremendous amount of research in time. That is the key here medical marijuana is medical because you medicate with it. It is as simple as that. People self-medicate with a lot of things. The FDA does not approve medical marijuana because of the euphoria it brings about. It is baffling because there is so many other legal medications that make us feel weird. It is just this whole – they are still hung up on the War on Drugs pretty much. Until that changes, the stigma is till going to be with it, but I think we are headed in the right direction.

Jeffrey: Yes. I find that fascinating the term medical marijuana. It is approved in thirty-three states in the country, medical marijuana, yet the FDA, who is in charge of everything medical does not approve this. It is a class one drug along with heroin, so it is a bit of a hypocrisy .

Anthony: Yes. I have spoken to so many folks who are in the industry. They are doctors. They are investors. They are lawyers. They are financial advisors. They are accountants. They are food and culinary specialists. It is just every title you can imagine that you would find in other industries. All the regular players you see crop up in other types of spaces, and it is just like anything else. They drop various types of deals with each other, merger agreements, venture capital deals. In other industries no one bats an eye, but because these folks are in cannabis, they are left at a serious disadvantage in this. It is a long list of things that they cannot do because of this particular industry that they chose to work in. Even if you are not a user, I am not a user in my own right, but the folks that I have spoken to and our coverage in Benzinga, you just learn a lot and just from the perspective of someone who lives in America, where we dump our chest at the beauty of capitalism and how anyone can create any business here without anyone holding them back. It is just not true because some states have come around, like you said that thirty-three states plus Washington D.C., but only eleven of those states allow recreational use. A lot of those states, the social equity programs that are in place are faulty. In some areas it work, in some areas it does not, so a lot of folks have trouble getting licenses and that sort of thing. It is not fair, just from that perspective alone. I mean considering, America is supposed to be about. It is just incredibly difficult to get involved in an industry like this where our viewpoints are just so different depending on what state you live in.

Jeffrey: Our neighbors to the north, up in Canada, year and a half two years ago, full legalization, correct, of marijuana.

Anthony: Yes.

Jeffrey: Of the flower, I should say.

Anthony: Yes.

Jeffrey: Now, what are some of the things that we have been seeing from there? How has it been working? Has it increased crime? Have all these devastating effects that the non legalization people here in the states are foreboding, foretelling? Have we seen that happen in Canada due to their legalization?

Anthony: I do not think of anything about crime. I have not seen that. I think that if anything that was probably less crime because legalizing drugs is just probably the best way to get rid of crime. It is funny you mentioned CanEx. We just posted something today that throughout August the cannabis industry added forty-six stores across Canada. So they have I think close to one thousand one hundred stores across Canada. Since the start of 2020 Canada welcomed like four hundred and thirty new stores and that is a pretty big growth rate.

Jeffrey: It is big growth rate. It helps out the local economies based on the taxes that those stores pay and the retail.

Anthony: Yes. The interesting thing about it is that there is no one dominant player. Okay. So when you think of something like e-commerce, there are a lot of companies that do e-commerce, but Amazon is the champ in that respect. So that comes to mind when people think of ordering stuff on demand and when you think of streaming platforms. There are so many, there is literally a streaming – everybody has a streaming platform, but people Netflix and chill and people do not Hulu and chill, you know what I mean? So there are these names that stick out in every industry, but with cannabis there really is not. It really is a level playing field. A lot of mom-and-pop companies are just trying to hustle in their own right and get access to capital just like any other business.

Jeffrey: Because of the diversity of the states and the state laws, everything is different here in the United States versus Canada, where it is federally approved everywhere. We have other issues such as banking and finance issues, such as taking product across states and across state lines for your supply chain. Can you talk about these things, especially the banking or finance issues?

Anthony: Yes, that is something that actually drew me into the space to begin with. That was something that Tiki Barber was talking about, that is why he started Grove Group because these entrepreneurs do not have access to traditional financing. He has done some VC deals. He has done a couple of private equity type deals. It is tough for folks to break into this space, and that is beginning to change over the past year. I interviewed someone who is involved in lending, and her pipeline is tremendous. She has got a lot of activity in the works. So when you disadvantaged people like that in terms of entrepreneurs and in any other industry, they have the ability to seek financing from traditional banking, and in cannabis it is a lot tougher.

Jeffrey: A lot tougher. Maybe the industry is changing or coming back again, but if we take a look at over the past year with some of these cannabis stocks and cannabis companies – like one company that I followed for a while was company called Medmen. Medmen owned retail stores, as you were talking about. Walking into these types of new cannabis stores, it is like walking into an Apple Store as opposed to like an old-fashioned head shop or the back of a Spencer’s Store. Right? Now Medmen had an incredible rise and also an incredible fall which has been very well documented. Can you talk a little bit about companies like this that were such high flyers and kind of how that is paralleling the industry a little bit and what is going on now?

Anthony: Yes. One of the other companies that I started writing about last year before I joined Benzinga was a company called Anthus. I forget the exact debt number but I think that they are pretty saddled with that unless they find a financier or maybe they just filed for chapter eleven, who knows, but that will really hurt a company. So it varies in every situation, but the situation with Medmen, it is not something that is exclusive to the cannabis industry. I think it is a parallel to just industries in general. The mistakes that they made are very familiar. You get a company that is new. It is flashy. They brag. They scale very quickly. Then they go, well wait a minute. They start cutting costs, laying people off, and shutting down production facilities. That happens with a lot of companies in all types of industries. Every industry has that story. So WeWork was the, like I said, like every industry has like this dominant player, like Uber is the biggest on demand taxi service. WeWork wanted to be like the Uber of workspaces and a flexible work environment. They had a lot of competition, but everybody knew WeWork because it grew like it was on steroids. You had somebody like Adam Newman who spent money like a fool to be honest, and the people who had faith in him and ran those office spaces for him suffer the consequences. He gets paid. He splits. In the end you look at a narrative like that, and you learn what not to do. I think that was the situation, I am not saying it was exactly like that with Medmen, but it was very sour.

Jeffrey: So the early mover to an industry that makes a heck of a lot of sense may not have done the right things but had started the revolution?

Anthony: Yes, exactly.

Jeffrey: Thank you, that makes sense. Switching topics, before we laughed when I mentioned the word flower up in Canada. There is a number of consumer brands and spokespeople, right? You have mentioned a couple. Some spokespeople you kind of expect to be in the space like Snoop Dogg, Willie Nelson, Bob Riley’s family, but as I was doing my research, there are other names that surprised me a bit. You mentioned Tiki Barber. I saw Whoopi Goldberg, Montel Williams even Martha Stewart, right? So you mentioned Tommy Chong. What did he have to say? What was he like? Most of your interview like?

Anthony: Yes. Well, to just preface that with not every situation is the same. Different products are geared toward different things because the truth is not everybody wants the high and that is okay. Senior citizens want something for example that helps them with arthritis or an athlete might want a cream that helps them recover quickly. That is where you see folks like Rachael Rapinoe and Brett Favre and Tiki Barber. That is what pulls them into this space as well. Celebrities will hack anything but when it comes from an athlete where they are saying, look we use this because this will help prevent athletes who get injured from getting addicted to dangerous drugs. I mean my ears perk up a little bit differently than I would with the average celebrity. With Tommy Chong that conversation number one was easy. As soon as he got on the mic, he broke news that he had welcome the grandchild into the world. So that type of spontaneity makes a conversation, when you are a journalist, it is so easy to work with that and just to warm up the crowd a little bit, so we do not get so businessy right away. It was so much fun to just start it off with that. Then from there, he goes into just how much it has helped him. I should say that it is genuine with Tommy Chong. I think he is the truest ambassador of the space because like I said, celebrities will hack anything, but he is not just another celebrity. He strikes me more as like the way Stan Lee was with Marvel Comics. Just the true ambassador of the space where you just get a different feeling hearing him talk and hearing his voice – there is a genuine aspect to it. Like I said, he went to jail for it. He relied on it when he was beating cancer twice. He is sharp as attacking, and he says, he has not get high off of it. He does not get big to whatever, that was all part of the comedy act and whatnot. He describes himself as a one-hit type of guy, that the only bad weed is no weed. He was just a lot of fun. I think that when people look for the types of products or the brands that they –  There is a lot of posers out there, and they want something true that has a genuine quality behind it

Jeffrey: Awesome. What do you see going on in the US market? Do you think cannabis is going to have any role? Do you think it is one side positive, more positive than the other side for cannabis legislation?

Anthony: Yes, because Joe Biden put forward a plan. He has one but as far as I am concern, I do not think the other side has one. I think you will not hear much talk of it going into November, on the presidential election. If you zero in on certain ballots, you will see it. I started paying close attention to what they are doing in New Jersey. I think that is on the ballot for this year. I think what happens in Jersey might influence New York, where I am based in the years to come hopefully 2021. The current administration is not going to vocalize a plan. I do not think, I do not know if it fits into their nativist agenda. If you are looking for that conversation to happen, you are probably going to want to lean the other way. It was clear to me when this poll came out that, this might not be exact I can look it up and correct it for you, but most Republicans want cannabis reform on both the right and the left. So if by me as your president, that bodes well for the folks who want that. It is just as simple as that.

Jeffrey: Well, thank you. This has been both educational as well as fun. So I appreciate you coming on, Anthony. Thank you so much for your time today.

Anthony: Thank you so much for having me.

Jeffrey: We hope you enjoyed this week’s podcast. If you have any questions, comments, or future story suggestions, please reach out to us on social media. Thank you, and we hope you enjoyed the RP HealthCast.

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