Transcript:

Seth Adler:
Narbe Alexandrian returns. Welcome to Cannabis Economy. I'm your host, Seth Adler. Download episodes on canneconomy.com, or wherever you currently get your podcasts. This one was recorded couple of weeks ago with Narbe, as the pandemic set in. So he gives his thoughts here in what should be a more regular occurrence for Narbe on the show. First, a word from our supporter and then, Narbe Alexandrian.

I've known the family behind Medicine Man for the past eight years. Pioneers in Colorado, the family business helped set the path for global adult use cannabis. Mg Magazine has voted them Top 50 Cannabis Companies To Work For, two consecutive years running. Check out their website at medicinemandenver.com, or visit one of their locations in Denver, Aurora, Thornton or Longmont the next time you're in Colorado to understand how one family has helped chart the course for the next great American industry.

All right, we've got Narbe Alexandrian. Narbe, it's good to see you again.
Narbe Alexandrian:
Thanks for having me.

Yeah. We set up this idea, this future speak idea, where we're going to kind of check in on the various components of the cannabis economy and see where we might be going as far as each of those components. And first up is brands. Yes?

Narbe Alexandrian:
Correct. Yeah, so we think that we have a bit of a great thesis around brands. So if you can take a step back right now, a lot of the brands that you see in the cannabis industry at this point in time are trying to serve the mass market. They're trying to be the Coke in Pepsis of the cannabis world. They're creating a single brand name where they sell pre-rolls, vapes, as well as topicals and tinctures. And to us, that sounds a bit backwards.

If you think of the future as cannabis as an ingredient, not the actual product itself, every single brand should be catered to what the use case is and know what the target audience is. So we firmly believe the future of hyper-focused niche brands, which is to say that brands that are focused on solving a specific issue. Taking the friction away from having to talk to bud tender and really focusing on what the consumer sees and understands about the brand before they enter into the dispensary.

And an example there is if L'Oreal was to create a chocolate bar and sell it in CVS or Walgreens would people purchase it? Chances are no, because you automatically think of a chocolate bar and the cosmetics industry and you don't see the relation between the two. So why is it that we're seeing brands in the cannabis space creating different product lines for the individual? It's because they're centered around cannabis, but cannabis is one of many ingredients.

If you're making a hyper-focused brand that's focused on sleep, not only would you include cannabis in there, but you would include things like melatonin that helps with sleep, or any other herbal or medical ingredient that helps with that. Makes marketing it much easier as well. And when your customer comes into the dispensary or store, they know that that product is meant for sleep and that's the pain point that they have.

This is what the industry is going towards, is this insanely obsession around the customer and the customer's inclination to buy, and their preferences and the data around that to really understand who they're marketing towards and what products they can create for that customer.

Seth Adler:
Yeah, it's obviously an evolution and a moving target, and so is the cannabis economy itself. Since we last spoke, things are certainly different. Right? There are leaders that were at the top of companies that aren't there now. There were stock prices that were up that aren't there now. So, just as far as the evolving cannabis economy itself, what are your thoughts on where we are as far as retail investing and otherwise?

Narbe Alexandrian:
I mean the market size of cannabis has not changed. So it's still going to be a 50 to $500 billion industry someday. It was awkward to think, and I've always said this, to say that this would all happen overnight. Just because Canada was going to legalize wasn't going to mean that U.S. was going to follow within three months from then, and all of Europe was going to follow three months from that point. These things take time. You look into history of alcohol prohibition. It took 50 years to get alcohol into a bar or into a restaurant for consumption. 50 years. Not to say cannabis is going to take that long, but these things tend to be incremental rather than radical, because you want to get it right. You don't want egg on your face if you're a first time legalizer, and then your government try to legalize this thing. You want to take your time and make sure that the whole process makes sense.

Seth Adler:
Yeah. And you do have that global perspective and these things take time as you say. Because if you and I were to speak a year and a half ago, which I'm not sure if we did. I think we spoke after that. But, everyone in the industry basically was saying to me, state's act is going to pass. You'll see. Everything's going to be fine. Federal legalization. We're all good.

So it's been a year and a half. So it's definitely not happened within that timeframe. If it happens tomorrow, fantastic. But with Canada being completely legal, in quotation marks, and other nations around the world making movement, what is your perception from Toronto on the importance of any sort of federal legislation from the U.S., and any sort of movement as far as the FDA is concerned? How do you see that?

Narbe Alexandrian:
Yeah, so to take a step back, I'm on the Board of Directors of the NCIA, which is the National Cannabis Industry Association. So, think of us in that perspective as lobbyists as a service for small and medium sized businesses in the cannabis industry. Seeing what's happening in legislation within the U.S., you know that legalization is going to take place. You have 33, 34 states that have legalized for medical or recreational or both purposes. You have seven states that are looking to legalize upon the federal election that's coming up. You're getting to the 40's mark of 51 states. It's inevitable that this will happen. Whether that be through the next government that's going to come in, or the same government that's going to stay in within the next election cycle is a big question mark.

We don't know if it's going to be Democrats or Republicans. Of course, some Democrats are more open to cannabis legalization, versus other candidates on the Republican front, a lot of their constituents in the Midwest are anti cannabis. So, there needs to be some type of a change in legislation that gets the popular vote but doesn't also screw around with the constituents.

Regardless of all that, we know that in the next four years it might be difficult to see broad federal legalization take place, but it might be that the next election cycle after that. Inevitably this thing, the prohibition, is going to go away and this is the best time of ever to get into the market where everything is cheap and these companies actually have substance.

During the heyday, like when we last spoke when stocks were up 90% above what they are right now, everyone kept moaning and complaining about how if they came in two years earlier, they would have made so much more money, et cetera, et cetera. But, this is the time to come in because it's the same price as it was two years ago, except now these companies have revenue, they have substance, they have market share, they understand their customers, they're building IP. This is the best time to invest.

Seth Adler:
And I can appreciate that. We've been talking about this industry and the brands that are in this industry for this conversation. Taking a few steps back to the macro economy and understanding no matter when we post this, right, podcast land knows no time. But no matter when we post this, Coronavirus, COVID-19, whatever you want to call it, is most likely still going to be having an effect. As events have been changed, supply chains have been altered from Q1 to Q2 to Q3. We're already seeing Q4 receiving an impact from decisions that are being made.

So, the year 2020 is in total going to be affected by this. As a business leader, as a global business leader, as an industry leader, how do you see this disruption, and what do you do about it?

Narbe Alexandrian:
I believe that the cannabis industry is recession proof, and issues like this really help us out. I see cannabis as being the Netflix of consumables in the sense that if COVID-19, or Coronavirus, however you want to call it, is all red but all over the world, you stay in and you watch Netflix and you don't want to leave your house because of any risks that might occur outside. Same thing on the cannabis front. It's a product that you consume at home most likely, maybe with a few friends, you may be by yourself, but it's recession proof in that sense. If you want to stay home with some bud or with a drink or an edible and spend your time there.

So I do think it'll help sales. I don't think it will hinder sales from that standpoint. Mind you, when you look at the macro environment, we're thinking about employment and if people lose their jobs, this is a discretionary spend. But they might also want to consume cannabis to take some of that anxiety away. So you could see it in every which way working. Regardless of it, I think cannabis is a fantastic investment for society based on the fact it has limited to no side effects that we can tell. And the fact that it is just a revolutionizing product that's just come into play all of a sudden, that we're all seeing just unfold right in front of our eyes.

Seth Adler:
Yeah, and in that macro economic picture I'll go back to the Amendment 64 days in Colorado where we were saying legislate cannabis like alcohol. Whether things are good or things are bad, those alcohol stocks go up in good times and bad times for obvious.
Narbe Alexandrian:
For sure.

There we go. All right. So, pay attention to your brand. Make sure that you understand that cannabis is an ingredient and not the solution itself, until you get into a point where there's a potentially pandemic and then yes, cannabis is the solution.

Really appreciate your time, Narbe Alexandrian. Very much, already, enjoying these future speak conversations and looking forward to the next one.

Narbe Alexandrian:
Thank you. Really appreciate it.

Seth Adler:
And there you have Narbe Alexandrian. Very much appreciate his time. Very much appreciate your time. Stay tuned.

Read the full transcript:

Become a member to access to webinars, quarterly reports, contributor columns, shows, excerpts, and complete podcast transcripts

Become a Member

Already a member? Login here.