This is Jesse Pujji and today we are breaking down the emerging industry of cannabis. After spending decades as an illegal drug, US states have begun to make regulatory changes and build legalized marijuana marketplaces. To help me break down this market, I am joined by Jeff Hoffman of Marathon Partners Equity Management. Jeff is co-portfolio manager of a fund, which invests in US public cannabis companies. We discuss exactly what those regulatory changes look like, the difference between federal and state laws, and companies across the value chain that are showing up in public markets. I hope you enjoy this breakdown.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Show Notes
[00:03:40] - [First question] - What is cannabis and the current size of the industry today
[00:05:44] - Differentiating between THC and CBD
[00:06:46] - Whether or not the whole market is growing writ large
[00:08:08] - The history of cannabis, the changing legal landscape, and key players today
[00:10:51] - What the argument was for making cannabis a schedule 1 narcotic
[00:11:48] - Is cannabis addictive, objectively speaking?
[00:13:27] - The differing levels of when cannabis is or isn’t legal
[00:14:05] - Overview of the value chain involved in getting cannabis to a dispensary
[00:15:18] - What an MSO is, how their operations work, and the marketplace today
[00:20:31] - Regulatory catalysts that would allow this market to thrive
[00:23:19] - The income statement of an MSO, their expenses, and how they differ from traditional businesses
[00:26:44] - Different business models for MSOs depending on their geography
[00:29:31] - How the economics of MSOs compare to mom and pop shops
[00:31:30] - Normalizing margins and incentives to compete on price or participate in discount wars
[00:33:48] - D2C, mobile-first, and delivery trends influencing distribution
[00:35:53] - Whether or not cannabis is considered perishable
[00:36:43] - How the finance industry is evolving around cannabis
[00:38:44] - The role COVID played in helping the cannabis industry grow
[00:41:03] - Will cannabis see a pullback in public interest as the world returns to normal
[00:42:25] - Form factors to consider as the industry shifts from medical to mature markets
[00:44:20] - What will have to happen for the cannabis market to excel in the coming decade
[00:47:07] - How M&A might play out as the market continues to evolve
[00:49:06] - Lessons for builders when it comes to the cannabis industry
[00:51:54] - Learn more about the cannabis industry; marijuanamoment.net
