On this Episode of Trade to Black, TDR Founder Shadd Dales and lead financial writer Benjamin A. Smith sit at the table with Kyle Kazan, Co-Founder and CEO of Glass House Brands. Together, they tackle the complex subject of the California cannabis market. There’s huge potential; it’s the biggest cannabis market in the world. But will California ‘figure their shit out,’ to quote some operators who are walking away?
It’s a great interview and you won’t want to miss out on listening to the full podcast, but here’s some highlights.
Part of the California mess: current wholesale price of cannabis is ‘destructive’
Kazan says California’s history with cannabis is deep. From the Summer of Love in 1967 to the present, people in California regarded pot as no big deal. Even the police didn’t treat it as a big deal. Because of this attitude of acceptance, the strain varieties out of California make it special.
But California’s got an AG problem. The wholesale price of cannabis is destructive because there’s too much production.
Kazan believes his company will survive this destructive price period. We know that Aaron Edelheit seems to think they will, too. Due to inherent advantages, he believes Cali is set to dominate industry supply. Companies like Glass House Brands produce at a fraction of the industry average, and that gives them an edge.
Eventually there’ll be a homeostasis, where companies become ‘lean, mean, and grow very good quality,’ says Kazan. For now, he says, the price may keep out of state operators out of the cannabis business in California.
Glass House projected to be cash positive by early 2023
Glass House recently announced their Q2 2022 earnings, and investors may feel that this was a particularly challenging quarter for them. Kazan says the largest part of their cash burn was extending their greenhouse. Unfortunately, it cost a lot of money.
Kazan feels that it will pay off soon. The value of the land and facility has increased, they’re producing cannabis at a great price, and the quality of the flower is spectacular.
Key points of the podcast you won’t want to miss:
@22:41 Kazan and Ben discuss the ruling from the US Court of Appeals of the First Circuit in Maine. The court affirmed the dormant commerce clause of the constitution. Kazan says this is great news, and he explains in detail what this means for MSOs – and California cannabis producers.
@27:25 Kazan also speaks to his history, as he was previously in law enforcement and involved in the ‘war on drugs.’ It’s a policy he feels is the third worst in US history behind slavery and native American policies.
@32:00 Kazan and Shadd discuss social justice generally, and for Brittney Griner, Iman Shumpert, and Parker Coleman, who have been arrested or sentenced to prison over cannabis. Parker Coleman was sentenced to 60 years in prison for trafficking in marijuana. Brittney Griner was sentenced to 9 years in prison for smuggling a personal amount into Russia. And Iman Shumpert was detained in Ft. Worth.