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Graham Farrar | Glass House Brands

November 24, 2022

Graham Farrar | Glass House Brands
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On today’s show, Scott sits down with Graham Farrar, President of Glass House Brands. Glass House Brands is one of the most rapidly growing, vertically integrated, public cannabis companies in the U.S. focusing solely on the California market and growth prospects. Graham is a serial entrepreneur with more than 25 years of experience, who taps into the explosive growth of emerging markets.

As an original pioneer in the tech space, Graham served as part of the original team at software.com, a company which enabled the collection and delivery of email, Software.com went public in 1999. Shortly thereafter, Farrar was on the Board of Directors of Seacology, a nonprofit focused on protecting island habitats and assisting local communities. The nonprofit funds for various needs of villages — whether it be a schoolhouse or health clinic — in exchange for agreements to create forest and marine reserves. Since its founding in 1991, it has launched more than 200 projects with villages on islands in 61 countries and protected roughly 1.3 million acres of some of the world’s most vulnerable ecosystems.

Thank you to Graham Farrar of Glass House Brands for coming on the show.

To learn more about Graham Farrar and the Glass House Brands, visit:
https://www.glasshousebrands.com/

To learn more about the Panther Group, visit:
thepanthergroup.co

Transcript

Michaela Petrone  0:05  
Welcome to joint ventures, a podcast where we delve into the cannabis investment landscape through the lens of investors and operators who helped fuel the growth of the cannabis industry.

Scott Berman  0:17  
Good afternoon, everyone. Welcome to the joint ventures Podcast. I'm excited to present today's guests, my friend Graham Farrar from glasshouse brands. Graham's is serial entrepreneur, he's been part of the cannabis space for many years, he has now grown and scaled one of the largest companies in the space, they have over 2 million square feet of grow facility in Southern California. They've also built a huge brand portfolio. Graham has a lot of great information on how to grow and scale your business. Also how to do it environmentally friendly and think about social justice and advocacy as well. So looking forward to today's chat with Graham. Hello, Graham, how's it going today?

Graham Farrar  0:59  
I'm good man. Thanks for having me, Scott. Appreciate it.

Scott Berman  1:01  
I really appreciate your time and looking forward to the discussion. So I wanted to start out by talking about like how you got here and how the company evolved over time. Tell me I'm

Graham Farrar  1:13  
happy to do that. So I've been a longtime lover of cannabis it's kind of been a call it a you know, hobby or side project for me for a lot of years. I mean really, if I'm honest, you go back to Santa Barbara High School and I was buying buying weed down in San Diego and bringing it back to Santa Barbara and turn and you know half pounds into eighths and selling them to my friends so I had kind of a you know, early in firsthand experience with cannabis both on the consumption and you know, the personal side as well as I guess a little bit on the business side of things as well. So I've been using cannabis for a long time and you know through that you're kind of been at the middle of you know, I was distributing weed I saw that a lot of what they were teaching you know, they're just say no, cannabis is a drug schedule one all that kind of BS was in fact BS because I knew that people using cannabis and it wasn't making them stupid and it wasn't you know doing all the making them lay them it's funny if you look at the studies now it's essentially every stereotype that tried to put on a stoner lazy you know, badge did not good health, fat, you know, all this stuff. Like it's actually the opposite, right? The studies coming out in our in that they exercise more, they have lower body mass, it really is funny to see that, you know, everything that we're preaching is essentially 180 degrees from the truth, but I saw it firsthand. And I think you know, one of the problems with prohibition, and I've got two young kids, one of the reasons I like regulations better than prohibition is prohibition approaches. The answer's no. And you don't even know anymore. It's horrible, right? And so when that breaks, especially for young kids, it doesn't break a little bit that breaks all the way there's no black there's no gray, there's only black and white. And what I saw was cannabis, you know, for many people made them the best version of themselves. I think I'm one of those people. And so I kind of said well, if this is yes, then everything else they're telling me is BS and get out of here with it right and so from there, my first role is a little closet in Colorado and this was probably like 1995 or 96 or something like that. So before it was legal, so it was you know, full on hiding and you know, fake fake doors and all that kind of stuff. But it was a little six foot I've been flood setup that I built myself and I really enjoyed it I'm a science and kind of technology guy and you know growing cannabis can be very science and technology you know, precision agriculture is very science technology biology heavy and so I enjoyed the lights and the co2 and the mylar and how can I optimize my yields and potency and stuff like that. And then I really loved the product that I got out the other end so I was smoking better weed than most people in Colorado and it was valuable. So for a college kid, you know, I was I had something at the time he was you know, four or 5000 pounds and my little claws that actually made a difference for me probably part of the reason I'm married to my wife is I could convince her to come on dates with me because she was was either going to date with grants or a good good restaurant or eat cafeteria food in the dorm. And I'm pretty sure the first the first dates anyway we're just for the food so you know I had a very positive impact I mean in the army and then went on to do a bunch of tech stuff. I was one of the early guys@software.com Which was a.com company back in like 95 We took that public made some money bought some real estate and started growing weeding and so then I was that went on a sailing trip for a while and then I helped start a Sona another awesome company in Santa Barbara but in the background I had houses and I was throwing weed with friends actually one of the friends is a guy went to high school and adjacent and he's our head cannabis guy today glass up so you know we started in a room and now he's responsible for 2 million square feet of canopy so about 90 I guess it was sort of in 2015 and made the switch full time with started glass house and you know, I kind of thought that what was what is happening would happen I thought it was gonna happen sooner actually but you know, at the time, it's the one of my favorite quotes is the moral arc of the universe is long, but it bends towards justice, which is a Martin Luther King quote. And, you know, I just my intuition was the truth always happens to steal it, Jason why output and that this you know what we're what we're going through what happened and so we started glasshouse farms. I found the best farm I could in Santa Barbara greenhouse and my partner now Kyle was a former cop who saw the war on drugs and turned against it. It was a member of Law Enforcement Against Prohibition VT and was, you know, in big in real estate and hated the prohibition against cannabis. And so he made the perfect guy to become my landlord. So him and his buddies bought the farm that I that I wanted, and then became my first investment investors. And so with that, we started glasshouse farms, it was 150,000 square feet. At the time, we thought it was the biggest thing in the world. And it was, you know, at that time back in 2015. And then we bought the second farm, which was 350,000 square feet. And someone behind me in the backdrop here, also in Santa Barbara, and that really was the biggest one and you know, at the time, so we had a half a million square feet. And then I opened the first dispensary in Santa Barbara called the pharmacy. And then we put all these pieces together into what became a glass house and about a I guess, what, a week, a year and a little bit ago, we took a public, you know, at the time, it was a really, it was a challenging time to get out, we raised $140 million, which felt like $100 million short of what our goal was, but in hindsight, I think, you know, good probably in the last 24 months, I think the only groups that have raised more equity than glass house are purely pure. And truly so you know, if we're in the Olympics, we're standing on the podium with a bronze medal. They don't you want the gold, but it's not it's not a bad place to be. And so we did that really to buy this new unicorn farm, which I'm sure we'll talk about again. And camera, Rio is second largest greenhouse, the United States. And most importantly, I think it has the best climate and the best technology and will allow us to grow the best weed at the lowest cost and then be able to scale that up, but to fit the national supply chain. So that's why I'm here now.

Scott Berman  6:46  
That's awesome. You know, there's a certain amount of vindication and then your story, you know, you knew back then it was good for people, it was a good thing to grow is a good way to make money and you did it. You know, you did it illegally for a while. And then you turn it into the biggest farm in the in the country pretty much. And so it's really exciting. Tell me more about the evolution from the 150 to the 350. Like how long did that take? And how did that journey go to make it bigger and bigger?

Graham Farrar  7:13  
Yeah, so um, in hindsight, we were pretty aggressive, right? I mean, 150,000 square feet is a decent sized farm that's about you know, three acres or so greenhouse, which is is not a small greenhouse for cannabis. It's, it's been right. I mean, many of the companies out there, you wouldn't know, like the guys build the new greenhouses or, you know, facilities in New York and the big ones, those are like 200,000 square feet, right. So seven years ago, we were doing something that similar scale, the stuff that people are still building right now. So it was an undertaking, we I would say we just barely kind of got our feet under us when we decided to start the process on the 350,000 square foot one, right. So that process took 30 months, because it was in the very early days of cannabis, we literally were building local ordinances, we were the first one that ever go through the process. And so we, you know, had that farm. And it took us almost three years to get that, you know, from acquisition to you know, the first harvest. So, you know, if we hadn't been that bolt, it would have been a totally different world. But we felt like the model worked. And the kind of purchase principles approach made sense to us, which is you go to a good climate, you grow an advanced facility that can take Mother Nature, which gives you both with no environmental impact, as well as also with no cost, I eat the sun, right, and then harness that and kind of polish and supplement it to grow really high quality cannabis, not a really high price. And so that's that's what we believed in fundamentally. And we went for it, and then it worked. Can you give

Scott Berman  8:34  
us a sense of how much weed it's actually growing there? And how that's like, expanded over the years? Like, how much do you put out every year?

Graham Farrar  8:43  
Yeah. So there's a couple ways to think of it right. I did. I was doing the report the other day. And so currently today, this includes our first farm in Santa Barbara, second farm in Santa Barbara. And the first phase of what we have in Cambria, which we call our SoCal farm, we have 735,000 plants growing right now. So that's one way to think of it from an output point of view. You know, it's what we currently have in the ecosystem, I think, as we've said, is good for about 270,000 pounds a year about what now about half of that is trim, right so that's kind of that's for extraction and becomes vape pens and edibles and things like that. The other half of that does flour. So you know if you if you think about it, from that point of view, it's about 135,000 pounds of flour that we can do from our operational ecosystem.

Scott Berman  9:25  
It's amazing. It's really fantastic. So I know that you're focused a lot on environmental issues with solar and water talk to me about how that evolved and what you're doing.

Graham Farrar  9:35  
I'm environmentalists from way before cannabis, I was on the board of directors of a group called Healing ocean which is a local Santa Barbara ocean quality group. I'm a surfer I'm kiteboarder so snowboarder mountain biker I live in nature and my perspective is that we are identical with nature that I think too many people look at us as somehow on top of nature, like it belongs to us might be this we're not we're just part of it. Right and That makes us identical. And so treating nature poorly is no different than treating ourselves poorly. And that's not a smart thing to do. So that's kind of my perspective, I was on another board of directors for the psychology group, which is an international environmental group that focused on islands because that's where like, 90% of the extinctions are happening. And so it's a high leverage place to do it. And really, I just kind of brought that, you know, it wasn't some strategic move, brought that ethos to the glass house, right? And so for us, that means things like go to a climate where the where you're close to the climate you want, right? If you're somewhere where it's snowing, you have to use a lot more energy to undo that for the plants to be able to grow year round. So I'm lucky I'm from Santa Barbara, that's my hometown. It also happens to be you know, some of the best places the best climates on the in the country, I think to grow cannabis cannabis is really unique. It's like a fruit with no skin. And I think people don't appreciate, you know how hard that is, like I hear people say, Oh, well, they grow tobacco in North Carolina, right? Tobacco, you harvest beefs, right, like, leaves are very different than fruit and high humidity does not screw with a leaf like it does with fruit, right? Like, imagine a fruit with no skin to protect it. And that's really, if you're growing dense bugs, that's when you're growing. So humidity is really important. Temperature is really important. Cannabis is a very light loving plant. So lights important. So we can first we started with a place that we thought we had the basic fundamental building blocks that we could win with in winning MIT, not messing up the planet, right. And you know, some things you can't change. The weather is one of them, right? So go to a good spot. And then the next thing we did, I'm a tech guy. So right. So I'm thinking, well, how can I get what Mother Nature's giving me for free and at no cost to the environment? as perfect as possible? I came out of growing indoors. So that's I knew what I was aiming at. And I was then trying to figure out how do we do that with Mother Nature. And the answer to that was a greenhouse. And the more high tech and more controls you have, the better. And so we evolved from the first farm, which was a very nice farm. And still one of the nicest cannabis greenhouses. I've seen the second farm, which was bigger, maybe even a little bit lower tech, but had some additional features that were helpful for us. And then we ended up in Cambria, which is the unicorn where you've got positive pressure greenhouses, and we recycle all of our water. And we have megawatt of solar panels. And we make our power on site, which allows us to capture the heat and co2, so nothing's wasted, makes us twice as efficient, basically, as a power plant. And we can make the power less expensive. So I'm winning on the triple bottom line, it's good for the planet, it's good for our consumers, because they get a better product at a lower cost. It's good for business, because instead of buying electricity at 16 cents, I'm making that floor and I'm getting free heat and free co2, both things that I need in the process. So we really try and take that kind of stuff, put it all together. And we can see the results. We have a study done by third party that showed that even when there are existing greenhouses, we produce 127 carbon dioxide emissions of an indoor grill for a program produced we use when it came to the electricity. And you know, if you contrast that, right, we'll talk I'm sure we'll talk interstate commerce. But part of that is there's it's an environmental travesty to not let the plant grow or the plant likes to grow. Right. And that's what's happening right now. Because in Massachusetts, they're gonna need and they're using 10% of their energy grid to grow indoors, the energy is coming from coal, and what they're trying to do is replicate the climate that I have for free in Southern California. That's not good business. It's not good for the environment. Second thing too,

Scott Berman  13:18  
so yeah, totally agree. And by the way, I love Camry is a great place. Perfect climate and I love it. Yes. And we'll get I want to get to the interstate in a few minutes and how it's different in Cali. But as you grew, how did you maintain, you know, the efficiencies that you and you've mentioned, some of them with the environment? But like, was it a challenge? You know, when you got bigger, went up to 2 million square feet and really grow at the same cost? or lower? How did that evolve?

Graham Farrar  13:43  
Yeah, I might ask the question a little bit different and say, How can we maintain the quality as we scale up, right. And because it is it's challenged scale generally helps with costs and what you know, our challenge was, and one of the kind of drag unfortunates we had was we wanted to take the love that we have for cannabis and amplify it at scale, not diluted at scale. Right. So what we're looking to do is how can we you know, for example, you got 1.2 water every day, check it out, right? Like, okay, that's great, and you can grow awesome, but what about when you're sick? What about when you go on vacation? You know, things like that. So what we do is we take a group of people, right, you got your canvas guy, you've got your greenhouse operations guy that your agronomist your nutrition got good to get us in what is what is the absolute best thing we could do for this plant. And then we figure that out. And everybody agrees, right? And then we programming into a computer computer that works 24 hours a day, seven days a week, right? So we tell it what we're trying to achieve. And then it helps us do that so that we can do that for 700,000 plants, but it literally shouldn't be doing it better. Right? It can do amazing things. It has a light sensor. So on a cloudy day it will give the plants a little less water because they can't put a synthesizer they don't need it right. It's actually negative for them and wasteful for the business. On a bright sunny day. They don't give them a little bit more water because if you don't give them that water, they can take advantage of the exercise. So we want them to do everything they can and it does that, you know, on Sundays and Mondays and Christmas. And so you know a lot of what we do is technology really smart people who then go in and like I said, amplify the love we have not diluted as we get bigger.

Scott Berman  15:09  
Yeah. And I wanted to shift and talk about the people a little bit. And I know you place a lot of emphasis on culture, authenticity and making a good environment. So how is that changed? And as you build the organization up?

Graham Farrar  15:21  
Yeah, I mean, I think the biggest thing that I've learned is, it doesn't happen by accident. And you have to be intentional, it can happen by accident when there's five people 15 people, right, like, you know, you, you have a have someone who's the leader, and you know, things kind of everyone has the osmosis that they're just around that and you have a culture and you hire the people that fit it in pretty quickly get rid of the ones who don't, right, as you get bigger, right, and we're probably coming up on 500 People in between cultivation, retail, CPG, or brands or manufacturing, you know, the the corporate offices, you have to be intentional about it and it gets, it gets harder, and it really comes down to the people you need to Northstar. And then you need to make sure that things fit with that. And it all the different mothers because you know, there's I don't, I used to know everybody's name, right. And it's, I can't say that I do anymore. And so something in the process, and the structure has to instill who we are because I can't can't do it, and one on one for I think will probably be 1500 people and not that long. And that means that it's got to be built in,

Scott Berman  16:23  
I find that I'm just following you and getting to know you a little bit you do a great job of that Graham, and just like the vision and the you know, the vibe that you put out is really excellent. And I'm sure thank you. Yeah, so it comes across.

Graham Farrar  16:36  
Thanks very much, I take that as a big compliment.

Scott Berman  16:38  
It's great. And look, a lot of people in this industry, they want to grow as big as they can. And you know, they're not as concerned with like the people that work there and and eventually it pays off, you know, your your dedication to your employees. So

Graham Farrar  16:51  
no mistake, my goal is to make the most consumed cannabis brands on the planet. So growth is what I want to do. But the My belief is that the way that you do that is how many employees make good products, which make happy customers, which make happy cereal, right. And so it's you don't need to pick between those things. It's, it's really, if you do it right in the beginning, the natural progression is going to give you all the things you want, which is people who love the products that we make employees are happy to be part of the team, and, you know, creating value for shareholders who believe in us and help make that happen. So we tried to put it all together,

Scott Berman  17:23  
and you're doing a good job of it. And I want to talk a little bit about the future of the interstate commerce and how you're positioning your company for growth into there and like really blowing it up across the country.

Graham Farrar  17:34  
Yeah. So I mean, I think, you know, first of all, my perspective on interstate commerce was maybe more aggressive or optimistic, maybe than I think some people are. And the reason I say that is, if you look at what's happened with legalization, right, everything that's been accomplished, 100% of it has been led by the states, right, like literally zero has been the federal government. So I don't really see any reason that interstate commerce will be any different than that. You don't break any additional federal law, taking the product, if I take the product to Los Angeles, or Las Vegas, and Nevada, right, like the federal laws I'm breaking are exactly the same. There's not a distinction there. Right. The only real distinction is that the common law, which isn't even in effect, but it's still kind of how the world operates, said, if you're in compliance with your state laws, the federal government is going to get to leave you alone. Right. So the really the only thing missing to be able to do an interstate transaction. Let's use California as an example in Nevada and the shared border canvasses live on both states, California now has a new bill that was signed by the governor, the governor Newsom, that said that isn't interstate commerce bill, right? It provides a pathway for California, you know, operators to export. And there's a you know, so if you look at that, and you say, hey, well, the only thing that we're missing, right is Nevada to say, yeah, it's okay. If you bring your California cannabis over here. And I actually don't think that's such a big stretch, right? I mean, Nevada, growing up we've lost in the desert is not like, you know, Las Vegas is not the best place for growing cannabis. So they don't have a ton of product. The product is not amazingly good. It's somewhat it's expensive. And I think Nevada as a call it a culture is a lot more focused on tourists, right? So many of those tours in California are looking for California cannabis products. They're looking for the taxes, they're looking for the retail, right? So if they were to say, Hey, it's okay, it's okay, let's import some California brands. Now we'd be in a situation where it's compliant with the state of California might cultivation my export, and if it's compliant with Nevada, I'm receiving it right now. We're still complying with all the state laws. So from a federal government's point of view, they got a choice, right? Like, is that okay? compliant with state laws like we are in Nevada, and we are in California, leave it alone, or no, I'm gonna go arrest this person who drove across the border who didn't violate different rules than everybody else's. And if you got arrested the guy who drives across the border to be consistent, you got arrested everybody in California, and you got to arrest everybody in cannabis in Nevada, and I don't think they're gonna do that. So I think that that world is not that fun. are off, I would not be totally surprised if we saw a interstate commerce transaction by the end of next year. And I think in our back myself up with our web and Nicole Elliott, who is the head of the department of Cannabis Control for California, which recently said in an interview that she rejected the notion that there wouldn't be interstate commerce in two years. So somewhere between optimistic Graham and the head of the largest cannabis industry in the entire world of the cold, we're hovering somewhere in a one or two year range, which I think is going to happen pretty quick.

Scott Berman  20:28  
I would love it. And you know, we all know a lot of California cannabis gets to the East Coast now. Anyway, so

Graham Farrar  20:34  
yeah, I always laugh when people say, oh, yeah, we're waiting is not an interstate market. There has been for 25 years, right. If you go to a dispensary in New York, we don't have licenses. You don't have rules or following right. And you ask them, What do you think of California cannabis? They will tell you quote, California cannabis is the best. It's all we sell. Right? So we know what people want. And you know, Florida's closer in New York, Michigan is closer to New York, there's Maine, Massachusetts, there's lots of places that are closer to New York, they don't get the cannabis from Florida, they drive 3000 miles and get it from California, because it's better than cheaper. And that's what's gonna happen. And we're only moving toward more liberalisation, right. So as long as the glass is charged 20 bucks in California and 40 bucks in New York, someone's going to drive it across country to double their money. Now, it's going to get more legal than it is more people are going to do it, your arbitrage will probably click this, you know, narrow, but until there's an arbitrage someone's going to make money doing it. It just shouldn't be legal. And that's what we're hoping to get to

Scott Berman  21:32  
totally agree. I can personally vouch for that, by the way that California Wait, and now I'm buying weed cannabis in Pennsylvania. And it's not the same, you know, but anyway, I want to shift.

Graham Farrar  21:44  
It's not an arrogant, arrogant, they're just not every state is meant to grow cannabis grow plants, where they like to grow it. If you say corn, I don't think in California, right? If you say potatoes, I don't think in California, it's not the California is the best. It's just the best place to grow cannabis, which has been doing, you know, legally under medical for 27 years, right? Like, yeah, if someone's been playing football for 27 years, and someone else been playing football for two years, who's better, right, but it's not an arrogance thing. It's, that's, you know, it's gonna take a while to catch up. And that's California's got the culture and the genetics and the innovation, the climate and etc. I mean, we are an arid place, African, I think it's 80% of the fruits and vegetables in the country come from California, it's just a great place to grow thick.

Scott Berman  22:26  
I mean, and when you compare it to the alcohol industry, I mean, we're buying, I'm buying wine from Napa and German, and I'm buying bourbon from Kentucky. And you know, it's just makes a lot of sense. And it's really all just tied up in the in the politics, which have been wrong for so long. So I want to kind of shift to that. First of all, I want to talk about social justice, which I know is important to you. And how does that How have you been working with that? And how does that play into the future? where we're headed? Yeah, so

Graham Farrar  22:52  
social justice is a really big deal to us. And it's particularly big deal to Kyle, you know, he 25 years ago was a cop and so he saw the War on Drugs firsthand, but he was not out there arresting people for weed. He wasn't, you know, some drug where he was just a city cop. But in the process, he saw the drug war wasn't intended as a war on drugs. It was intended as a war on people. And that's the only place it's actually been effective. And so I think he knows it. And even you know, maybe he feels responsible responsibility or debt to kind of like, you know, undo his participation in it 2025 years ago. And so, you know, it's I think it's important to be important for this industry. We're trying to know there's crazy shit. There's a guy named Luke scar Maza, who was in prison, a Federal President, he was following all the laws of California but this is before like, that was enough. So he's literally doing the same thing. We are legally cannabis, California. He's in prison. He could buy stock in our company for doing what he's imprisoned for. Right like so that kind of that kind of stuff. Just we can't as an industry, let it stand. So glasshouse in particular does a lot of work with welding. Angelo's welding Angeles was another one of those stories and sentenced to 60 years I believe in prison 13 of them he was pardoned by Obama and getting clemency I think if I'm saying that right by Trump and his mission now with a welding project and budget mission green is to get the 2700 nonviolent cannabis prisoners are wore out of federal prison and so Kyle is on their board of directors glass house donated $25,000 To them we recently participated in a a pardoning request for a guy named Kurt Coleman. And you know, our part of that was Kyle speaking as an ex law enforcement Kyle's speaking as someone in the cannabis industry glass house saying if you let them out, we'll find a job for him. Right so like, you know, we're trying to do the things that we can you know, Pete person by person and as well as you know, systemically to undo this, you know, the first thing we should do and part of the thing that frustrates me in politics is worth doing rescue people and putting them right like first day like we don't have to don't don't get hung up on fixing the last 50 years. First, do that next, but first like quit like a guy named Callie Dotson? Kyle Winslow. In a sentencing hearing to try and talk the judge and do a lower thing, the guy was literally selling vapes on Facebook. Never been arrested never nonviolent never do anything else. You got sentenced to seven years or so and vapes Did you know like, I remember reports and do promos by how many vapes? Can we sell this weekend? Right? Like, I, of course, have a license, and he didn't, but seven years, because that's the gap. I'm trying to make money. And he's trying to, you know, not get in trouble. And I mean, prison makes prisoners and then fix them. And this guy was not was not a criminal, it. It's just really hard. Well, obviously, we're doing everything we can to try and fix it.

Scott Berman  25:34  
That's great. And you know, it's sad. I mean, I, you know, when we look back on it, we've ruined people's lives over this. And it's really a shame. And we've also prevented people from getting the medicine that they need for a long time. And, you know, we're heading in the right direction. And I really appreciate that you guys, in addition to building this huge company, you're focused on those important issues. That's really good for your culture. What do you think about Biden's announcement a couple of weeks ago, good, bad, like, will that change things? Or?

Graham Farrar  26:01  
I mean, I think I would put it up there with him as amazing. I think people don't appreciate I hope I'm right about this, but I think people don't appreciate quite how big it is. Right. Do you have? I think a couple of things, right? Was one has a very high level, whether you'd like the politics or the person or whatever, I don't think I think there's not enough appreciation for the moral power of the office of the presidency. Right. Like it's the most powerful person on the planet is not a you know, it's not hyperbole and the fact that someone who is not a pro like this gives a drug war. Right, right. Its history is as a drug. Correct. He is now saying people shouldn't be in prison for a plant is specifically said we should look rescheduling also specifically said it should not be worse than fentanyl, which currently is right. It's very obvious that date, but now you have the President saying, and I feel like you can see the ripple effects of that where a politician now if they're asked, What's your stance on cannabis, the smart vote was probably support. Right? And that I'm not sure that was the case even six months ago. So I think that that kind of collective, I think an analogy maybe is the same sex marriage, right, which is, I think a lot of people move to the Who cares who you marry position, and they didn't necessarily talk about it. And then you had people start talking about eventually, you know, President Obama, and all of a sudden said, Yeah, I agree with that. And then they realized everyone else in the room, agreed with them, too. They just hadn't said it yet. And so it went really slow. And then all at once. And I think that's a big piece of this. I also think that you know, the technical pieces 6500 pardons, nobody got to jail, right? So it's not like the work is a first step, not a not a last step. But it's still 6500 People easier time getting a job, use your time getting housings, your time getting a loan, like their lives are better after this. So it's significant. It's the biggest social justice thing the federal government has ever done on cannabis. He also asked the governor's to go, which is where most of the prisoners are so and you've seen examples of people starting bills and things like that. So a carry weight, and then the D scheduling, I think, or I should say that looking at the scheduling is huge. There's basically two ways you can legalize cannabis. One is through Congress, where you got partisan politics, you need 60 votes, and you got a house and you got to send it in, like wrangling and pork and all the political shift that that I think most people get pretty tired of, but that's that's one path. The other path is the one he started, which bypasses Congress the entire right. And I've heard people say, you know, it's just the midterms. Like, I think this is a lot more strategy than stunt myself. No doubt that the timing of the midterms was not an accident. But if you look at the people, it's hard to deny this was like not intentional, right? So handpick secretaria hell, Xavier Becerra. Right. He's now in charge of this process. That's what Biden said. Please like the scheduling. Please do it quickly. Xavier Becerra answered back immediately, we will. We heard the President we're gonna go do this. But Xavier Becerra, his last job was handpicked by California Governor Newsom as the Attorney General of California. From a technical point of view, Xavier Becerra, legalized cannabis in California. California is now the fourth largest economy in the world, right like us, China and Japan. I think, California, right. Like it's the fourth biggest country. It is the biggest economy that has ever legalized cannabis. And Xavier Becerra is wanting to get right so he knows how to do it. He's not opposed to he's seen that happen. Right? So then you go a step lower right. So the FDA is a big piece of this. The day before Biden's announcement there's a guy named norm Biermann who was appointed as the first other first ever cannabis Health Advisor in the FDA. New position cannabis Health Advisor Norman his prior job was helping New York legalize helping Rhode Island legalized I think even helping Connecticut legalized so you got a guy who is obviously not opposed to cannabis. He's helping states do it has done it has seen it and is now in charge of the FDA is kind of, you know, take on Canvas. So you can go out you can look on the DEA even which may or may not, you know, have a role if it's the schedule, they have nothing to do if it's rescheduled, you know, they're still part of the conversation. Sure, and I forget the woman's name, I can't remember her name but her, she's I'm gonna try and find an input. So her roll over in the DEA is that she's basically kind of in charge. She's appointed as the Senior Advisor on it. And and she's got a great quote, I'm gonna look out for you right now. So her name is Anne Milgram, and he she's a new administrator, the DEA, and her mission coming into this was to reduce crime and incarceration. That's an goal, right? So if that's your goal, the number one thing people are incarcerated for drug possession. Remember one drug that incarcerated for cannabis. So if you want to help on social justice, and if you want to reduce incarceration, the thing you should do is the schedule Canvas not rescheduled but the schedule, right. So it's important because if if you reschedule it, a couple of things happen. One is the FDA has to schedule. The FDA has never scheduled a plant the FDA schedules and studies the molecules, they go through phase one and phase two trials, their drugs, right cannabis plant drug, I don't know how the FDA can even say like this plant with, you know, 1000 compounds, many of which are unsteady, like, have you scheduled it, I don't think the FDA can. So the only thing that would happen to reschedule that is states lose a bunch of control. If Texas wants to ban cannabis, you can't ban Xanax. So if you put it on schedule three, which is Xanax actually stands to be scheduled for but anyway, the state now like is pushed into it, even if they don't want it, which doesn't seem not not gonna be states rights, where it keeps happening, right. And the other thing is, nobody gets out of jail. So if you do scheduling now, you can still have regulations on alcohol, tobacco, things that are very harmful, addictive etc. or deep or not on the schedule, we still have regulations on states gets choose how they want it, people who are get out of jail for it. And Milgram gets a dream of reducing incarceration, Joe Biden gets a progressive win on legalizing cannabis, he gets a social justice win on getting people out of jail and gets a stage rights when because he doesn't shove anything down their throat, he gets a pro business win because taxes, jobs, etc. Take off. So, you know, to me, that passage is pretty clear on where to go, which is we should be on the path to get scheduled cannabis. And if I'm playing politics, and I was Joe Biden, I'd want it done by the general election in two years.

Scott Berman  32:12  
Yeah, I think we're in a good in a good spot, and better than we have been. And I think your same sex analogy was perfect, because things do take a long time in DC and until until they don't. And I think that the general fear and it catches up with public opinion, clearly public opinion is where you're at. And most of us can agree, it's a lot of common sense. We just have to get the politicians to make the changes. So I'm thinking about the midterms and save banking and the next, you know, five states that have it like where do you see things going? Like, either in the lame duck of Congress or into early 23? Yeah,

Graham Farrar  32:47  
I mean, there's no way that all the politicians didn't notice the broad acceptance from Biden's announcement, right? I mean, you know, answer whatever, take it for what you want. But his tweet is the most liked tweet Biden's ever had when he said, I'm gonna, you know, I'm looking at the scheduling of candidates, right? Like, that's the best thing you ever did Twitter's point of view. And I think the polling across party lines was, you know, 60 70%. So like, you know, that's political landslide. And today, we're, you know, votes, it's 500 votes, margin, or whatever. So there's no way people miss that. I think I'm not good enough to, you know, handicap politics. I won't tell you, you know, who I think is going to control houses and sentence and stuff like that, after the midterms, I do think that there's a good chance was saved. My understanding was that, you know, the, the gap between the Democratic and Republican side was the Democrats wanted a bunch of social justice things, which of course, we support on there, and the Republicans did, but what Biden just also did was handed them a pretty solid social justice when was 6500 pardons. So nobody can say, hey, this is just for business or whatever, there's a good, you know, there's good social justice stuff happening, which I think makes it easier for them to come together. And then you're starting to see him you see groups, like the Bankers Association, and the NAACP, both support, say, fake, right, like, I don't know if there's other groups that like, lean this way and lean that way for those two things. And they both support it. So at the end of the day, if it's happening, probably four out of those five states are going to pass it, which is going to bring us to like 45 out of 50 states having some form of cannabis. And if you want to collect taxes, you want the money in the bank. If you want people to pay workers comp with the money in the bank, you want people to not get shot and dispensaries, which happens on a bi weekly basis. Now across the country with every state that legalizes you want the money in the bank. Right? It'd be great for business too. I mean, we have bank accounts, but cost of capital come down, maybe small business and USDA loans in there. Certainly you could get credit cards in there, it's probably good for a 30% Bump. And in business revenue. People can use their credit card, you're probably gonna have better tax collection rates, all kinds of great things happen from a policy point of view. So it's pretty hard to make an argument why you shouldn't do it.

Scott Berman  34:52  
Yeah. And I mean, just your organization alone and what you've done in the last four or five years in California between job creation taxes, you know, all the things that you've done to create a local economy to help it. I mean, there's it's a no brainer, really, you know, it's it's really amazing thing I want to kind of we could talk politics all day but you know we covered a lot there I want to go back to you know where you are as a company I want to touch on brand development. I know that you've built brands, you've bought brands, though. So tell me how glasshouse brands has sort of evolved in come to this point.

Graham Farrar  35:26  
Yeah, so I mean, we it's a dichotomous world, right. We're all familiar with the equities market. I remind people that the equities market is a derivative of the real market is not the actual market that it reacts to it right? Short term popularity contest, long term weighing machine popularity of cannabis as a sector is off right now. But that doesn't mean that what's happening in the actual true market is reflective of that right and so the reason I say that is I'm looking at our last year glass house and we went public and raise 140 million bucks. We got $100 million credit facility. We bought the best farm in the entire country. We retrofit that farm we got a farm license that the first day is totally planted, harvested a million square feet planted a million square feet harvested again sold it all right, we had three stores at the start of the year we've got eight now we got three under construction and by the end of the year, you know very early next we should have you know living live in stores, well stores maybe even having had a top five brand and glasshouse farms we acquired plus which is top five edibles brands. And now we have top five brands in both categories. We have launched a new brand called all as well, which is an affordable line which I think is the right fit and indications are the that's a it's an accurate assessment of you know, tighter wallets, inflation gas and stuff like people are looking for how can they make stretch their dollar we got we got a product that is 10 milligram gummies, which is out the door for 11 bucks, including taxes, it's like $9 on the shelf, an unlicensed, you know, illicit market gummy is eight bucks, right like and you don't know what's in it, you know, it's not tested, you don't know if the dosage is right. So for $2 more, you can have a tested life and well labeled gummy, right, like when we can keep driving it that I think it's going to really cannibalize people over from the illicit market. And that's going to be good, good for everybody. So you look at those things using them, we accomplished a lot, right? Yet the stock is still down 80%. And I think it's less than that now. But someone actually told me we were the best performing cannabis stock year to date so far, which doesn't feel like that because I never thought that I would feel like $3.75 quiver was a good thing. But I guess it is an accurate statement. So you know, the markets haven't caught up to that. But I think the progress is really great. And you know, everything we're growing, we're selling people, more people smoke weed today than they ever have in history, I think more on smoking tomorrow than today. So you know, overall, I think it's getting better and better. And our goal is, as I mentioned, to create the most consumed cannabis brands on the planet, we're building a platform, it's kind of you build a skyscraper, right? Like for a while looks like no one's doing anything. It's because they're underground, building a really strong foundation. And then they can throw up floors, one after another quick. And that's we built that foundation now. So we can grab the highest quality cannabis at the lowest for the lowest cost, we can turn it into products with our manufacturing our brands, we can sell it in our hands. And when the doors open up, we can do all that at a national scale. And that's I think, a pretty unique.

Scott Berman  38:12  
So yeah, and I think it also let you know, leads to your investment opportunity. So we got a couple of minutes left, you know, talk to me just a little about how the investment opportunities evolved. And how you see that going forward? Yeah, I mean, so you mean, just like the market in general and like just the market, and also your company in particular, you know, why is it a good investment now? And how has it changed?

Graham Farrar  38:35  
Things I really like about glass houses, I think we're very focused, I call it quality, consistency and costs. So first, we're trying to do a great, then we're trying to do a great every time then we're trying to do a great every time efficiently. And I think that's always kind of a right answer. One of the things I like about us a lot is we're built for today, and tomorrow, some of the other companies are built for today and yesterday, right. And where we were trying to make it everything we're doing is we're trying to build 100 year company, right. And so we're trying to make the moves, which are not always the most profitable today. But the moves that are gonna be the long term, the durable competitive advantage just to take for more that are going to be the right move for the long term. And I think we're doing a really good job at that. And so as we move closer, Biden etc, etc. Everyday, we're a little bit closer that we get closer to that world when our ecosystem that what glass house is built is the perfect thing. It doesn't need to be located it doesn't need to be shut down or written off. It's the right answer for where we're going. And, you know, someone said it's us versus the MSOs at which I actually I don't think that at all. I think the way things end up is it's us in the MSOs are some of our best partners, right? The MSOs with stores. The one thing you can't relocate one thing it has to be where it is is where the people are. So if you want to sell weed to people in New York, you need a store in New York, right? Same for every other state and so those MSOs know when they have hundreds of stores. It's not us first time it's there. My biggest partner there this CVS, I want to grow in California and have glass house on their shelves across the country. So, you know, I do think that there is going to be some pain for some of them with you know, things that don't make sense siloed cultivation small and expensive and you know, in the wrong spot, but I also think there's gonna be things that we're going to, you know, really have synergies with. And I did a thought experiment the other day, you could poke lots of holes in this and just, you know, take it for what it's worth, but I think it's still illustrative, which is the entire cannabis industry, every single us cannabis company put it together. It's like $20 billion, right. Philip Morris is I think $150 billion, right? That one company is big, as you know, seven times bigger the entire cannabis industry clearly that it's a flat to declining business. We're still on a growth trend. We know cannabis isn't a bad. So like I think about it, I'm looking, Philip Morris trades at like, a bit over a 4x Multiple on revenue, right? If I think about cannabis, I do this system, there's it's very hard for me to get to the industry being less than 100 million audience. So if Philip Morris was a flat to declining business should be conservative, it's obviously a strong brand. But let's just say let's put it in kind of similar terms. $100 billion cannabis industry should have $400 billion in market cap, it currently has 20. Right now, that's not going to be distributed evenly. Maybe it's not up to the people are here. But somewhere in there, there's a $380 billion value gap that is not going to persist forever. And so at some point, the sector, the energy and even the investment, it's got to catch up. And there's, you know, I do the math on that, right? Like, what is that that's a 19x and value from where it currently is right? Like it's 20, or sorry, 20x is 20 times what it's less it's 120 is what it should be right. So at some point that is going to catch up. And that makes me really optimistic that from an investment point of view, we're in a good spot.

Scott Berman  41:47  
As you mentioned, you're prepared to do it well, right now. But you're even more prepared for what's going to happen later. And when things change,

Graham Farrar  41:55  
nothing, nothing that we none of our models count on any regulatory change. We're not counting on anything other than today. Today's pricing, today's regulations, taxes, etc. Right. So we're built and I think, you know, able to do very well and in the pond that we live in right now. Yeah. As soon as that dam breaks, though, I don't think anyone's better setup anywhere in the country than we are to take advantage of.

Scott Berman  42:18  
Yeah, totally agree, man. Awesome. Well, Graham, this has been really fun. Appreciate your time, your vision, your your success. You know, we we're really big fans of what you're doing there. Thank you very much for spending a bit of time with me today. Yeah,

Graham Farrar  42:32  
thanks a lot for having me, Scott. Appreciate it.

Scott Berman  42:33  
All right. Thank you. Bye bye.

Michaela Petrone  42:36  
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