Transcript:

Seth Adler:
Charlie Bachtell returns. But first, hi. Yeah, it's me Seth Adler speaking to you, the listener. Thank you for listening. Thank you for dealing with what's going on here. Our global pandemic. Finally, all of us, each one of us has a enemy in common. We can all dislike COVID-19 as much as possible, together. So we're going to probably switch some things up here as we go, and I wanted to give you a little note to let you know that that's what we're thinking. If you would like to be involved in that change, if you've got ideas, go ahead and email me at [email protected]. Of course, no worries. We'll go ahead and do what we're going to do. You don't need to help, but if you want to help [email protected]. Anyway, Charlie Bachtell coming up, letting you know what he's doing. First a word from our supporter and then we'll get to Charlie.

Join us for Sensible 2020, a virtual event, May 1st through the 3rd. Students for Sensible Drug Policy, SSDP is the largest global youth led network dedicated to ending the war on drugs. At it's heart, SSDP is a grassroots organization led by the board of directors, primarily elected by and from the student and youth members. Each year, SSDP brings the community together for Sensible. Sensible 2020, May 1st through the 3rd is a virtual event focusing on criminal justice, mass incarceration, global drug policy, harm reduction, health, intersecting social justice issues, lobbying and advocacy, psychedelics, skills building and cannabis. I have the honor of hosting this year's gathering. So please join me by [email protected]. That's conference.ssdp.org. Okay, so it's Charlie Bachtell. Charlie, how are you doing here in the apocalypse?

Charlie Bachtell:
I'm hanging in there. How are you doing stuff?

Seth Adler:
Doing all right. Everybody safe and sound. We've heard some crazy stories of course. We are recording this in the same week of the passing of Charlotte. So we send our love as I've already done to Paige and her family and everything. And of course Charlotte Paige changed the world as we know it for the better. So that's a pretty amazing life to have had, even though it wasn't necessarily that long.

Charlie Bachtell:
I couldn't agree more. And if the whole COVID experience so far wasn't enough to create these opportunities for reflection on certain things. The passing of Charlotte Figi is... I don't post much personal stuff on my social media feed, but this was one of those things where I wanted to make sure people understood. That is why I'm in this industry, right? Charlotte changed the world. There are a lot of people who over the decades have been responsible for helping us get to the point that we're at with this movement, with the industry. But none of them changed public opinion the way that Charlotte did. And so without her contributions, this isn't this industry. It isn't.

Seth Adler:
Yeah, that's it. I mean, big CEOs like you and big policy makers really next to her, not as much of an impact. I'm happy to say that to your face. Right? You know what I mean?

Charlie Bachtell:
Without a doubt, to give you a little bit from the medicinal aspects of it, the benefits, the greater quality of life that millions have been able to achieve because of the changes all the way through. The way that we're thinking about adult use now and the social equity and the social justice. None of that happens without Charlotte and her family. So.

Seth Adler:
Yeah. And let's go ahead and bridge the gap here. Because you did say this gives us an opportunity as humans to reflect. I'm noticing that I'm talking to my family a lot more through FaceTime. I was talking to my dad every day on the phone, now at FaceTime with him every day. It's a totally different connection. There's more deaths there. So, if there's a silver lining here, it's that this is happening in the 2020s, when we have this kind of technology available.

Charlie Bachtell:
Yeah. I couldn't agree more. With the connectivity that exists today in the platforms like what we're doing right now. Right? And the fact that we could do this remotely and that we do have the broadband and the capabilities and the infrastructure in place. It's pretty remarkable. It is from a timing standpoint, fortunate. And then the ability continue with business in operating an organization exclusively remotely is unique. I don't know that these ways of working would not have been possible as recently as four or five years ago. So it is pretty remarkable across the board.

Seth Adler:
Yeah. It does mean that in forums like these, the audio is not going to be perfect and there's going to be a whole lot of bells and literal whistles happening. But if that's the worst thing that happens during this conversation, I think we're going to be okay. Now, what about the industry? Is the industry going to be okay, because you brought up operating the business on the way into this. We were not having a wonderful time in the cannabis industry. It was tough times before this thing hit. So give us the lay of the land from your perspective and on the way in and where we are now, including that pop in sales for what turns out to be a 10 or 15 seconds.

Charlie Bachtell:
Yeah. It's interesting, this industry in particular. And as you know, I make glass half full. I'm a seeker of silver linings. It's how I'm wired, and I'm always trying to figure out how to look at a challenge and overcome it. And not only overcome it, but turn it into an opportunity. So, coming into COVID, you're right, the general feeling on the industry and the excitement and there was some concern capital markets wise.But the industry from a performance standpoint has been solid. I think what COVID has also... What it has done though is it's made not only operators, but also your regulators administrations take a real look at the cannabis industry and come to the conclusion, almost across the board that the cannabis industry is an essential industry. And there's other definitions or titles that they use in certain states, but life sustaining businesses is what they use in Pennsylvania.

And that in and of itself, when you're talking about reflecting on the status of cannabis in what has happened over the last couple of years. Another thing where three years ago, if you would ask me if cannabis would be deemed an essential business or essential industry at the time of a global pandemic, I would have said no. But fortunately, I think the industry has developed so much over the last few years and has created these working relationships with administrations, with regulators. So we're seen as a professional industry that does provide enhanced quality of life.

However you want to look at it, whether it's medicinal, whether it's adult use and in between. It's an enhanced quality of life that a lot of the citizens of the states depend on to feel well. And again, the industry should be recognized for putting itself in place to be a trusted resource like this. Not to mention if you look at it purely just from the business perspective of it. There's very few industries that I think you could look at and say, "We're now relied on for job creation, for tax revenue." We've ingrained ourselves into the way that society works on a business and governmental management level too. Which is really important. It's very important.

Seth Adler:
Yeah. And what this really has done is all the things that you've just said, and risen the good players. The players that are doing real business, good business, into a place where you guys can continue to do real business, and good business. It's eliminated a lot of the noise that we had. And so it's given a true picture of what actual real good cannabis business is. And so, finally we're here again. You're a guy who likes find us a [inaudible 00:10:03]. We found one. So now let's dive in on how we're actually getting medicines to patients. How we're actually getting wellness to adult use participants. Give us a sense of what's happening on the ground. I guess start there in Illinois and [inaudible] the targeted markets. Now let's name him. And who is that?

Charlie Bachtell:
That's Ringo of course, it's the audience at home.

Seth Adler:
There you go.

Charlie Bachtell:
[inaudible 00:10:28].

Seth Adler:
Ringo, officially a German shepherd or?

Charlie Bachtell:
Yeah. Long haired German shepherd. Another thing that the COVID experience will be known for, like you said, is the animals and their kids in very serious conference calls [inaudible] more options. So, looking at really what it looks like in this COVID era. And ways of working changed, right? Overnight, and into a pretty extreme extent. I'll speak to the Cresco Labs experience here. We looked at the businesses in three main tronches or buckets. You've got your corporate job types and responsibilities of office settings. But then you've got production facilities and you've got a retail dispensaries. So there's three main buckets that we had to look at our organization through those lenses. With corporate headquarters scenario, that's about 250 ish employees here in Chicago.

Charlie Bachtell:
And for us it was relatively straight forward. It was to adopt a work from home, teleworking model really, really quickly. We used the last day in the office to come up with not only... The systems were already in place, the technology was there. It's one of the fortunate things about having a business that achieved a certain level of scale at this point. A lot of the fundamentals that are needed to be able to pull this off have been developed. The infrastructure was there. And I'm really fortunate to have a phenomenal group of leaders that have had professional careers that have put them in positions to have to deal with uncertainty from time to time. It's not only just blue skies and growths. This happens where there's business disruption that needs to be accounted for and they've been unbelievable in helping design this, develop it and then implement these changed ways of working.

So from a corporate level it was, to a great extent just working remotely and putting the procedures in place. But then when you're talking about like a production facility, it's this combination of making sure that the facilities continue to function while at the same time prioritizing the health and safety of the employees with this new risk. Of course, health and safety of employees is always number one. And again, in any manufacturing facility, it's the number one priority. But this is a new variable that you didn't have to really prioritize infectious disease prevention and not containment. And fortunately, we put a task force together for COVID about three weeks. I would say mid February is when we put together this task force of [inaudible] to look at this from all the different angles, continue to monitor it.

So we were able to hit the ground running when it reached the point where there were going to be this drastic changes in the way that society worked. And we were going to have to implement those changes too. But at a facility level, again, of course following all the guidance that you could get from the CDC and other health organizations. But it was also taking the lead from healthcare and these other existing traditional industries like food manufacturing where you're producing a product that's intended for human consumption. There're protocols that are developed by these traditional industries that are very applicable to what we needed to do too. So it's bifurcation of teams and creating this pod system, and a red team and a blue team. And you don't have overlap to try and contain any risks to certain groups and not jeopardize the facility as a whole.

So a lot of that had to go into play immediately. That was the largest challenge I would say is that the timing in which these changes of working needed to be implemented were immediate. There was no ramp up. There was no anything like that. And then at the retail facility, at the dispensaries, same changed ways of working there. Increased priority of sanitation. I think we definitely always have very clean environments, but it traditionally doesn't require us to disinfect any surfaces. That's different. So, it was more again protecting the workforce and also the customers that would be coming into those stores. Social distancing is different. All of the protocols that you have built for scenarios similar to this to increase sanitation and safety, they don't include making sure that people stay six feet apart from each other traditionally. So that was new, and figuring out ways to accommodate that has been definitely challenging. Especially in certain locations compared to others, smaller, tighter locations. It's tough to create six feet of distance, but you'd figure it out.

It has been overall, as you would expect, a completely different way of working. The first couple of days of that, I think your field of vision is about six inches in front of you, right? It was making sure that we could open for operating on Monday, and then it was on Tuesday. And then you start to get your legs to your feet underneath. And then you start to look a little further. And now we're wrapping up our fourth week of this changed way of working. And now we're doing a little bit of a post-mortem. What has worked well? What would we change? What do we want to change for the next four weeks? And also what do we realize that we actually want to incorporate into our operations methods longterm going forward.

I'll come back and check in with you on those things. That sounds exciting. I mentioned the tiny spike at the beginning. What would you share with a sober head and mind and body as far as where we are with cannabis sales? Again, from your perspective?

Yeah. This spike I think you could chalk that up to pantry loading, right? I think it's a terminology that gets used often. I think it was a very large spike. That was not a sustainable increase in demand. We saw a little bit of attrition over the days that followed. And then we've seen a stabilizing normal state. I think the impact definitely would depend on what state you're talking about. So some states are going to have different reactions in trends to spot. But in highly regulated states like in Illinois or like in Pennsylvania, I think demand is still there. It really the governor though that's on that is how many transactions can you actually process in a day where people have to be six feet away from each other?

So, that's the governor. So we're trying to massage and modify procedures as we see the opportunity to create a better customer experience. Still being COVID-19 responsible. Maybe longer hours in the day because you just can't have the same throughput per hour that you would have without the COVID-19 procedures in place. So extending the time of the days, and then also online ordering and curbside checkout and delivery where applicable. I think all of those things are creating... What we're seeing is roughly this steady state. But less peaks and valleys at this point. More of a steady state.

Seth Adler:
Some of what you just talked about will have to involve some legislation. Delivery being I think the heaviest lift. You are fortunate enough to work in markets that do have delivery and don't have delivery. What is your sense and what would you share as far as how necessary this is and how quickly we can get delivery into states that don't have it on the books just yet.

Charlie Bachtell:
Yeah, Yeah. I think it's definitely something that every state needs to look at if they don't have it already because, especially with the COVID-19 issue and the inability of people to really [inaudible 00:19:58]. The recommendation that they don't leave their house. That's different. But even from a steady state or longterm view, I think the anecdote that was put out the other day of this might change the way that Americans think about shaking hands going forward. This is going to impact our culture for the longterm. There are definitely things like our business. What would we want to incorporate longterm that we've learned in this? During this time. I think Americans are going to change certain behaviors going forward. I think there was already the trend of course to the direct to consumer delivery approach to a lot of things. And I think that you'll continue to see the further development and prioritization of that with cannabis. I do think that consumers will appreciate the ability to having it delivered to the house.

Seth Adler:
What else now, back to Cresco are you guys doing as far as that direct to consumer? You mentioned online ordering. Give us a sense of that role.

Charlie Bachtell:
Yeah. Again, it's going to depend state to state, but the increased integration of technology that will allow us to accommodate these ways that consumers want to have transactions going forward is going to be what we are doing and it will be a bigger part of it going forward in accordance with the applicable regs. But the online ordering, the call center type of... The consultative component of cannabis is really big. It's really a big part of the consumer experience. So one of the things that were a negative impact of this immediate shift to online ordering only is a lot of consumers want to have that connectivity, that touch point, that discussion.

They need the education and it's very difficult to do that under the current guidelines, unless you develop the opportunity to do that using technology. There's no reason that a consumer couldn't have this exchange in advance of coming to the store or ordering online. They get their questions answered virtually. And then they place their order and they come in, they pick it up. So they get the same thing and the the expedited transaction experience that is needed in the current state. But they also got the consultative opportunity as well.

Seth Adler:
I mean, again, that is a better customer experience than the one we had before. You still keep that interpersonal connection and you make it more deep as we were saying. So yet another silver lining highlighted you Charlie, right? You have to go because you've got stuff to do, but we have to ask you the final question. What would be on the soundtrack, it doesn't have to be time specific, but at least a song for us as we bid you farewell for the mall.

Charlie Bachtell:
To what? I'm sorry, what would be on the soundtrack?

Seth Adler:
Yeah. On the soundtrack of your life. One track, one song that's got to be on that old Chestnut.

Charlie Bachtell:
Great question. I will tell you that again, silver linings, right? Of the changed the ways of working is I have a four year old and a six year old and now I spend 24 hours a day with them. And being able to expose them to some of my musical tastes. I can tell you that their favorite song right now is the lime and the coconut song. So, right now I would say that's the song I would have to put on this soundtrack for this period of time. I've heard it a hundred times in the last week.

Seth Adler:
Yeah. You put the lime in the coconut, you drink them both down. You put the lime in the coconut, you drink a both together. Yeah.

Charlie Bachtell:
Yeah. I will.

Seth Adler:
That's a good one. And it's a happy song.

Charlie Bachtell:
It is.

Seth Adler:
Yeah. Charlie, man, thanks so much. Stay safe. Wash your hands and we'll talk to you soon enough. All right.

Charlie Bachtell:
Good to see you as always.

Seth Adler:
And there you have Charlie Bachtell. Very much appreciate his time. As I mentioned earlier, very much appreciate your time. Love the ones you're with, whether they're in that environment or on Zoom. And be safe, be healthy. Wash your hands.

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