Cannabis 2.0 and the Industry’s Enterprise Future

Published on
October 8th, 2020
Duration
46 minutes


Cannabis 2.0 and the Industry’s Enterprise Future

The Interview ·
Featuring Jonathan Sandelman

Published on: October 8th, 2020 • Duration: 46 minutes

Is the cannabis sector turning a new leaf? Jonathan Sandelman, CEO of Ayr Strategies, a vertically integrated U.S. multi state operator (MSO), sees the industry growing rapidly as existing markets expand, new markets open, and more states legalize both medical and recreational cannabis. He shares his journey from Wall Street to leading a publicly traded cannabis company, launching as a SPAC and operating as a MSO today. He opens up about how cannabis ETFs have become centric to investing in the industry and how the sector has adapted due to the coronavirus pandemic. Filmed October 6, 2020.

Comments

Transcript

  • DT
    David T.
    15 October 2020 @ 15:02
    Sounds like Musk and would end up like Tesla. The Industry is only shrinking.
  • CD
    Christopher D.
    14 October 2020 @ 14:11
    Interesting, would like to see more about this industry. Content was good but was hard to stay engaged at times due to all the stuttering and “um’s” by Hayley. Needs practice. Raoul, Ash and Ed set the bar high 👍🏼
  • SB
    Stewart B.
    14 October 2020 @ 11:58
    it is hard to be optimistic when a legalised market could produce a dose of cannabis for cents. Given there is no patent, it is at best comparable to Asprin (which is out of patent).
    • MW
      Max W. | Real Vision
      14 October 2020 @ 13:39
      Beer is out of patent. In college I worked at a moderate sized craft brewery that had its own restaurant and also decent regional distribution and they were pouring beer in house for less than $0.25 cents a pint including labor and charging $5+. There are plenty of other competing breweries and other restaurants in the area too. I see industry leaders enjoying similar margins in the marijuana space.
  • DG
    David G.
    14 October 2020 @ 01:55
    Here in a weed legal state in the US the prices are high, and the customers still buy. I prefer SL drops. They are the most cost effective edible form. I prefer edibles because I don't want to smell like weed. If I didn't have kids and I would buy flower from the street. Some street dealers have the medical grade flower, sealed and everything, for less than half the retail price, and no added taxes. I don't know who the winners will be, I will keep my eye on YOLO and trade it, as my edge dictates to do so, for swing trades. I have to wait for a higher low(based on the daily chart) after it's recent activity. Long term this industry should be bullish, the chart will help you time trades, with the right trading set up or technical know how.
  • JU
    Jay U.
    8 October 2020 @ 23:38
    I'm glad there was a discussion about Section 280E. This seems to me the biggest issue... 280E means all companies are taxed on gross profits with no deductions allowed, which leads to an effective tax rate on pre-tax income of 80%-100%. If Cannabis is taxed on a gross profits level, no cannabis company can ever generate meaningful cash flow - they simply operate to pay out all profits to the government. As Jonathan points out, why would the government be incentivized to change this? Even if the federal government deschedules Cannabis, if they make a new tax to keep it "revenue neutral" cannabis will *never* generate profits for investors. Anyone else have thoughts on this?
    • JW
      J W.
      9 October 2020 @ 06:12
      This 280E is counter productive and anti-business. To see it's destructive effect at work, one only has to look at for example Trulieve, a company with a pre-tax income of 25.7M only to see that reduced to 6.6M due to tax. It was worse for GTI who ended up with a negative (pre-tax 3.6M, net income -11.8) ! This discussion has been going on for too long imho. Newcanabisventures offers an article from 2016 outlining how companies could reduce tax (see https://www.newcannabisventures.com/how-cannabis-companies-can-reduce-their-280e-tax-burdens/). I am not a tax expert an I sure CFO's in the industry are lookin at this all the time but it sure looks like the Cannabis industry could do with more lobbying in DC :-) because ultimately this is where this needs to be resolved. I also read there are state by state differences.
    • DG
      David G.
      14 October 2020 @ 01:37
      In my experience as a customer, all of that tax is paid by the customer.
  • ND
    Nicole D.
    10 October 2020 @ 00:15
    Contrary to what Mr Sandelman says in the interview full legalization of Cannabis and it's retail industry rolled out and is doing well in Canada. There are many retailers everywhere in Canada selling. Compare that to the U.S. where legalization is convoluted to say the least. In addition, two class action lawsuits filed against Charlotte's Web, the largest U.S. online CBD retailer and recent calls by the FDA for more science in regard to Cannabis are hints that U.S. Big Pharma is undermining Cannabis. Canada and Australia don't have to contend with the big pharma and also have good relationships with the rest of the world as future suppliers.
    • DG
      David G.
      14 October 2020 @ 01:34
      Maybe you are thinking about this as a consumer and not an investor. Too much supply of a product, or overproduction is always a problem for a business, and an ideal situation for a consumer. The opposite is also true. Canada can have Ice cream shops on every corner, that doesn't mean they will turn a profit in January. I don't know if he is right or wrong, I'm just speaking to his point, and your rationale as to why you feel he is wrong.
  • VR
    Vladimir R.
    12 October 2020 @ 14:44
    This was great. In terms of other nascent industries, what about alternative energy such as fuel cell? Or solar? These industries will greatly benefit if the Dems win. Might as well cover them now!
    • HD
      Haley D. | Real Vision
      13 October 2020 @ 14:35
      Great idea. Will start looking for some voices on these topics.
  • EH
    Edward H. | Real Vision
    8 October 2020 @ 14:23
    Ed Harrison here. I wanted to give a shout out to Haley Draznin in the comments here because I believe this is the first full-length interview she has done on the platform. And I am happy to see it. Going forward, she has a few other industry interviews lined up too. And I think this is a good mix for RV because we are heavy on financial markets but have been somewhat light on digging into nascent industries and industry trends. Join me in congratulating here on getting her first interview under her belt. Cheers.
    • HD
      Haley D. | Real Vision
      8 October 2020 @ 15:58
      Thank you, Ed! Grateful to have you as our fearless leader on the Real Vision editorial team. I appreciate the support and feedback from all Real Vision members. I would also love to learn from all of you more about the industries and guests you'd like to hear from on the platform.
    • CB
      Chris B.
      8 October 2020 @ 19:53
      This was a very informative interview and I learned a lot about the industry. Haley, congrats on your first interview. I was going to write this comment after scanning the comments but Ed beat me too it!
    • AG
      Adrian G.
      9 October 2020 @ 04:43
      This was a great interview and well-timed with the Cannabis sector rally today (I'm guessing it was in part due to Harris' decriminalization comments at the debate.) As a growth equities guy I love the coverage of nascent industries.
    • PG
      Philippe G.
      9 October 2020 @ 12:57
      Excellent. Yes, the sprinkle of content on nascent industries, industries trends, and other topics (demographics, technology, society, etc...) are a great addition I think.
    • HD
      Hem D.
      10 October 2020 @ 23:42
      @ Ed === Haley did a very good job setting the stage before the interview... That context of giving a sense on the size of the cannabis market today, anticipated market size in next few years, etc. was extremely helpful, it helped frame everything about Ayr's roll-up strategy, regulatory framework, etc..... The set-up was very good for folks who see these Cannabis stocks in the top 10 moving (up & down) on any given day.... Thank you Haley on investing that time in studying the space and framing it!
    • RS
      Robin S.
      13 October 2020 @ 07:32
      Yeah good job Hayley. V interesting space.
  • bm
    bill m.
    13 October 2020 @ 02:30
    I though this video was about cannabis. He drones on endless about capital.
  • MC
    Mark C.
    13 October 2020 @ 00:34
    Great Interview! Without question it is a commodity just like the wine. However, there are big differences in Vinticulture and Enology which can produce a higher prized and priced wine. The same comparison goes for Cannabis for strain, growing and curing. Some brands in our local dispensaries never stay stocked. I haven't invested in cannabis industry yet but this has got my thinking cap on. Thanks again.
  • FG
    Frazer G.
    9 October 2020 @ 08:37
    Fantastic interview! The cannabis space is fascinating.
  • CM
    Cory M.
    8 October 2020 @ 23:04
    Not excited about the Cannabis space (nor the alcohol space for that matter), but I wanted to watch Haley step up. Turns out, Jonathan's approach to the industry was super-interesting! Wonderful content. Thanks, Haley and Jonathan.
  • JV
    Jaco V.
    8 October 2020 @ 21:36
    Little Green Pharma, (LGP) in Australia is the one to watch. They are doing some incredible things
  • JW
    J W.
    8 October 2020 @ 18:02
    I am interested in some more views on what the next catalyst for the industry might be. My view is that tat would have to be a regulatory breakthrough, but that may not happen and then it's back to branding and perhaps a medical breakthrough (perception or real). At this time the industry as a whole seems to be treading water - I know this does not do justice to the many fantastic initiatives that are taking place - but judging from the price action on my Cannabis portfolio, it seems to be stuck in a range. It looks like it bottomed, but one cannot be sure. Long term I am certainly bullish. AYR Strategies has done very well (and still is) and so have a few others, but as a whole it ssems that this industry is looking for a catalyst.
    • MW
      Max W. | Real Vision
      8 October 2020 @ 18:27
      I actually see it as a potential blue wave trade. National legalization in the US is the catalyst. I personally believe is happening in the next decade because other countries are going to move and I can't see the US ceding control to other countries in an industry the rightly should be dominated by the US considering we are far and away the largest consumer market. I have been bullish on the space for a while but hadn't yet found an operator that I liked. Jonathan was the first cannabis CEO who was really speaking my language. I'll be watching closely.
    • CW
      Chris W.
      8 October 2020 @ 18:40
      next catalyst is federal legalization... that and progress on the banking front
    • JW
      J W.
      8 October 2020 @ 18:50
      If legalization takes as long as 10 years to play out, a lot of these companies will go bust. This has to happen sooner imho (<2023).
    • MW
      Max W. | Real Vision
      8 October 2020 @ 19:59
      @J W. 10 years is my long end projection. I truly believe it will be sooner and that the payoff could make up for multiple shots at the trade. It is the perfect way to cross the aisle on both sides. It is deregulation but also tax revenue positive and without "raising taxes". With the deficit issues we have that can't be overlooked. It can be sold as creating jobs, but also good for criminal justice reform. There is an anti opioid epidemic angle too. I agree about companies going out of business and not knowing how long it will take, which is why I mentioned not having found an operator that I liked. Money looks to be virtually free for a while and the way Jonathan spoke as an operator was the first time I've gotten excited about a name in the space in a while. I could be wrong about the blue wave or the blue wave meaning anything for cannabis regulations but I think the potential is worth exploring. Growth is scarce out there and this seems like a growth sector I can wrap my head around with reasonable catalysts.
    • JW
      J W.
      8 October 2020 @ 21:13
      Thanks for the responses Max. Like you, I also recognized in the Cannabis sector a wide range of understandable and investable use cases, from purely recreational to medical and everything in between. It takes a while to play out and I am certainly looking to increase my exposure again so I am looking and learning :-)
  • DS
    David S.
    8 October 2020 @ 19:04
    The 80/20 rule is stated in modern times as the Pareto Principle. It is a great focusing tool. I cannot find a reference now, but I have seen it going back to a Renaissance business rule from Venice or Florence. Getting old. DLS
  • JL
    Jason L.
    8 October 2020 @ 18:52
    Great interview. I learned a lot about the investment side of the cannabis industry. This is helpful as I have been adjusting my IRA holdings during this pandemic-ravaged economy. Haley is a great interviewer and asked insightful questions. Looking forward to more from her.
  • DS
    David S.
    8 October 2020 @ 18:52
    Ms. Draznin and Mr. Sandelman: Well done synopsis and interview. The stock was up a lot this morning, but I bought some in my Roth anyway. I would not mind if it went down, so I can dollar average a little. I now have time to do some research. If it holds up, I will buy more at a higher price if necessary. A cannabis stock with an experienced investment orientated CEO at the top looks good. That is about as much of an indorsement as I can give for the presentation. Thanks. DLS
  • RM
    Richard M.
    8 October 2020 @ 15:09
    Great interview. Mr. Sandelman is very persuasive in his presentation - I will definitely put AYRSF on my watch list! Hayley (spelling???), great job of interviewing (you are progressing nicely at RV). Side note: not sure why you have a graph of the price of Oil show up in the middle of the interview though! :-)
    • HD
      Haley D. | Real Vision
      8 October 2020 @ 16:00
      Thanks, Richard. We have updated the graphic to be a chart of the AdvisorShare Cannabis ETF that AYR Strategies is included in. As you can see, it is higher than the S&P for all of its existence, and follows the same pattern, roughly, of going up in March due to the coronavirus pandemic, but going down once the markets have calmed down.
    • RM
      Richard M.
      8 October 2020 @ 17:39
      Wow, AYRSF is up almost 10% today!!! Now THAT is the power of Real Vision! :-)
  • SS
    S S.
    8 October 2020 @ 16:56
    There is too much content on RV at the minute. Less is more. Just looking at average likes/dislikes on videos, way down on what it used to be. Give people too much choice and what ends up happening is you end up watching nothing.
  • CB
    Clifford B.
    8 October 2020 @ 13:03
    In good times people will get high, in bad times, people will still get high.
  • TR
    Thomas R.
    8 October 2020 @ 12:13
    "..It solely relies on branding.." BevCanna?
  • CS
    Christos S.
    8 October 2020 @ 11:49
    Great interview. Great to see what an experienced business builder with a longterm view can make out of a new industry. What are your views on Europe and the near East?
  • JW
    J W.
    8 October 2020 @ 10:20
    Sorry to see this has only a few Thumbs up - I hope people will watch this video as, apart from a good angle on the state of the cannabis industry, it's a fascinating insight into business decision making and management skills.