Leap into the intricacies of cannabis regulation with us as we celebrate a special leap year episode of High Spirits, featuring the powerhouse duo of Gillian Shauer, PhD, Executive Director of CANNRA, and Nicole Elliott, Director of the Department of Cannabis Control (DCC) in California. Prepare to have the veils lifted on the complexities that state regulators face in the shadow of absent federal guidance, and discover how the human element shapes an industry at the crossroads of growth and governance.

Ben Larson and AnnaRae Grabstein navigate our 33rd episode through the nuanced waters of cannabis policy, where the knowledge shared by Gillian and Nicole illuminates the unspoken challenges of crafting state-specific frameworks. We engage in a candid exchange about public safety, market success, and the sometimes surprising influence of lobby groups on the legislative process, offering a rare glimpse into the machinery of change.

As we cast our gaze towards the future, we muse on the budding potential of interstate commerce and the quest for market fairness in the cannabinoid space, with California at the helm. The episode wraps with a call to action for data transparency and stakeholder engagement, emphasizing the importance of collaboration and respectful dialogue in refining a diverse and safe cannabis market. Join us for an enlightening journey through the corridors of regulation, where each revelation paves the way for more informed and impactful participation in the cannabis community.

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Your hosts are Ben Larson and AnnaRae Grabstein.

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Ben Larson: 0:00

Hey everybody, welcome to High Spirits. I'm Ben Larson and back to the show is Anna Rae Grabstein. All right, welcome back, anna Rae. It is our 33rd episode and we're recording Thursday, february 29th 2024. It's a leap year, all right. Today this is going to be an incredible show. We have Jillian Shower, the executive director of Canra Cannabis Regulators Association, and Nicole Elliott, the director of the Department of Cannabis Control here in California, so two big heavy hitters on the regulatory side, and we hope that we can help unpack some of the misperceptions, or maybe accuracies, about policy and those who are representing it and running it. But first let me check in with my cohost, anna Rae. How are you doing? How are you feeling? Welcome back.

AnnaRae Grabstein: 1:00

Thanks. Yeah, I was in Mexico last week. I got the the Mexico sickness. It happens, um, but I'm feeling good, feeling really excited to be back and excited for this episode. Um, even maybe worth turning back time a little bit.

AnnaRae Grabstein: 1:16

Um, you know, and I, I got my start with um with NorCal cannabis. We had our first cannabis licenses in San Francisco and, and one of our guests, nicole Elliott, was my first regulator back then and, um, we got to know each other pretty well. I remember sitting in the office at San Francisco city hall, uh, because I could not get an appointment with her to answer my questions, and so I just went and I posted up in a chair waiting until she would talk to me, and it probably took two hours until she came out of her office. She was in meetings and the person at the front desk said well, she's not available, you can come back later. And I said, I think I'll just wait. And I just waited and, uh, so it's fun to see all these years later. Now she's at the helm of our largest cannabis market in the world, california and, um, I'm getting to talk to her on the podcast, so I'm pumped for today. It's going to be a good one.

Ben Larson: 2:11

Yeah, well, look at that. Before we even get the guests coming on, we were already dropping hot tips, like just Patients sit there, annoy the crap out of them until they come out of their office. And it actually Second point.

AnnaRae Grabstein: 2:26

I mean we are currently the largest cannabis market in the world, but that might not last long because Germany just legalized or decriminalized and waiting, awaiting a legal framework, I guess yeah, it sounds like it's going to be medical not not adult use, and I'm not totally up to date on all of the news in Germany, but I am excited to see more international federal level policy coming down. Incrementalism, Radical incrementalism what an idea. That's right.

Ben Larson: 3:00

Well, yeah, it's so like like short. So we I had to host the show last week without you. I think it went well, we had, we had a great time. Immediately after the show I I jetted off to Sacramento and actually got to see Nicole on stage at the NCIA stakeholder summit, and it was, it was a really great event.

Ben Larson: 3:21

We had Nicole, and then we had Barbara Lee and and Cecilia Agar Curry from from California and just kind of really talked about a lot of the state and federal policy, and so it's kind of a it was a little bit of an appetizer to today, to today, and got me thinking a lot about the, just like how this is all working. And you know, we'll, we'll go ahead and get the guests on, but just to kind of see it at like, nicole said something last week that just really stuck with me and basically said, like you know, complexity is the enemy of progress and California has a lot of complexity. And then on the on the panel, we're talking about how, like the complexity between local municipalities and the state level and the state level and the state level and the municipalities and the state level, how that kind of mirrors this, the slowness or or the disconnect between state level and federal level. So that's the, that's the joy of regulating and working in the cannabis space.

AnnaRae Grabstein: 4:25

Yeah, and and I'll say one other thing too I for some reason, this topic is is triggering lots of me looking backwards on my own career in cannabis, but when, when we started the first cannabis lab, steep hill in 2009, there was, there was no regulation, california was still operating under the the Prop 215 schema and there was no framework for lab testing and quality control in the space.

AnnaRae Grabstein: 4:54

And, and ultimately, as an entrepreneur and a founder and someone trying to create a business that I could, you know, plan for and operate into the future with some level of stability, I was really face to face with the fact that, without regulations, there was no stability and as much as the wild west of what happened what was going on at Prop 215 was great for some. There was a lot of downsides to not having the stability that that a regulatory framework provides, and so I became a real advocate for regulation because I do believe that it can be a strong pathway for for businesses to at least know where the boundaries are, and if you know what the rules are, then you can play the game and win the game. But but when there are no rules, it's there's a lot more anarchy that that makes it really hard for for anyone to to do something that can have longevity and sustainability into the future. So I think it's really hopeful to see that that our regulators want to engage with us and have conversations like we're going to have today.

Ben Larson: 6:02

Let's engage, let's get them on. Okay, let's bring them on.

AnnaRae Grabstein: 6:05

So I'll queue it up. The first person we're going to bring on is Jillian Shower. She is both a PhD and a master's in public health and the first executive director of the Cannabis Regulators Association, full time staff supporting the board and the membership at Canra. Jillian has been doing really incredible work on the public health front, both in cannabis and in smoking cessation, and she hails from Washington and really pumped to have you here today. Jillian, thanks for coming. Thanks, glad to be here, excited for the discussion Awesome.

AnnaRae Grabstein: 6:41

And next Nicole Elliott, director of the California Department of Cannabis Control, head regulator of California, as I mentioned and and I'm going to go ahead and talk about this and Nicole started her career in cannabis overseeing San Francisco's office of cannabis, the first regulator of local cannabis in San Francisco, or actually maybe not the first. The Department of Public Health was in it before you, but yeah, you were official and a long time contributor to California's kind of whole political machine and democratic process San Francisco, sacramento, all of it. Really excited to have you here today too, nicole, welcome.

Gillian Shauer: 7:22

So excited to be here. Thank you guys. Big fan, big fan.

Ben Larson: 7:26

All right.

Nicole Elliott: 7:27

And Nicole is also a Canra board member. Just want to get that credential added to her as well.

AnnaRae Grabstein: 7:32

Thank you, and Canra board member Appreciate that.

Ben Larson: 7:36

Well, I must say, you guys look nothing like the devil. So I'm just going to get that out of the way. And you know, I, I think you know, and and I'm Jillian probably knows, and maybe Nicole, like I'm referencing a particular article that came out shortly after we had a certain guest on our show a few months back and I felt very inclined at that point to kind of reach out and get get in touch with you guys and get you on. I think it's fair for us to have a balanced conversation and really get to know the players and the positions that we're in, and so we're going to dive into all the complexities and all that. But I think it's important for us to start, jillian, with what is Canra, what is the intent and and just kind of like lay the groundwork for for, kind of your guys's role.

Nicole Elliott: 8:34

Yeah, so Canra is a nonpartisan, non-profit association of government agencies, so we don't have individual members. Our members are agencies. About half of our members have joined at a statewide level, so any state employee across all their agencies could be engaged, and we're really targeting agencies that are regulating cannabis, cannabinoids and hemp. We have more than 45 US states and territories, canada and the Netherlands in our membership. We're not an advocacy group. We don't lobby, we don't take positions on federal policy, but we talk a lot about what happens on the ground and what regulators are experiencing, and Canra actually came out of informal collaborations that regulators in a couple of the early states were having to try to compare notes and figure out what works, what doesn't work, what are you trying, how are you dealing with this challenge. And those regulators really were the ones with the impetus to say this needs to be formalized, especially given that we don't have federal agencies in the United States that are involved in supporting regulators.

Nicole Elliott: 9:37

Every state is trying to create their own regulatory framework. We need to be able to learn from each other. So that's really our mission is to convene regulatory agencies to support them and to help them learn from each other. It's not to advocate for one policy over another. Now, that said, there are certain things that are cross-cutting. We have red states, we have blue states, we have purple states in our membership, but there are some challenges that are really cross-cutting. I know we're going to talk quite a bit about it during this podcast, but cannabinoid hemp is one of those regulatory challenges where we have been a little bit more out there trying to do education just to help lawmakers understand where the challenges are on the ground, where the sticky points are for regulators and what different states are trying to try to resolve those issues and what's working or not.

AnnaRae Grabstein: 10:23

It sounds like what you're describing is almost like a support group for regulators.

Nicole Elliott: 10:29

I mean we joke, but yeah, go ahead.

Gillian Shauer: 10:31

Nicole, I was going to say I mean, and then it is also that actually it's really nice to spend time with counterparts and realize that we're all going through very similar things, not just from the policy standpoint, but like the pressure that comes with the work, that type of stuff as well. So it is in its own way, an informal support group also.

Ben Larson: 10:55

It's funny. I was having a conversation earlier today with one of my colleagues and we were talking about heavy is the head that wears the crown. And, nicole, I'm just curious is what has that journey been like for you, elevating from City of San Francisco to now the head of California and this great state that at least the three of us live in?

Gillian Shauer: 11:23

It's been a total trip. It's been an honor, though. I mean, it is such an interesting space to work in and you know I was listening to as Anna Ray was talking about posting up in the office of cannabis in San Francisco. I remember that interaction. I remember how passionate she was about specifically her employees really is what she was really focused on when she was talking to me that day and that really stuck with me. I mean, this is a personal process for everybody involved in it, so it feels like an enormous responsibility. To your point about, heavy is the head that wears the crown right. These decisions have really big implications on everybody the operator, their employees, consumers, and so you know, honored to have the role and to take on that responsibility.

Nicole Elliott: 12:14

And I don't know any regulator that takes those decisions lightly. And it's a really difficult space that regulators occupy. I've spent my career largely working in and around state and federal government and I've never seen public servants, public officials, that work as hard as cannabis regulators. They have so many stakeholders they have to hear from. We're operating in an era where we're really lacking clear regulatory science, so they're sort of building the plane as they're flying it or you know, we often say drinking from the fire hose and they're trying to find that little piece of overlap in the Venn diagram where they're hearing every single stakeholder on all sides of the issue and trying to find commonality. So I think it's a difficult place for regulators to be and I appreciate what they do. I mean, I've witnessed it firsthand. They're working much longer hours than most government officials would.

AnnaRae Grabstein: 13:07

So I want to tap into. You're both touching on the role of regulators and cannabis and hemp drive, cannabinoids and this whole space. It's a complex web of laws and regulations, and then there's the humans that are behind those laws and regulations. I'd love it if you could give us the short and dirty of the role of the regulator and of the role of the regulation versus the law, and I'm not sure which one of you would like to take this, so I'll toss it up.

Nicole Elliott: 13:40

Nicole, do you want me to make some global comments and then you can talk about California? Yeah, so I think there's a misperception. A lot of people point a finger at their regulator as being the reason that something is not the way they want it to be in their state and especially in the newer states that are regulating. I mean, we're seeing the state legislatures make a lot of those decisions. I remember when Washington so I'm in Washington state I remember when our legalization bill passed. It was 16 pages and that was like whoa, that's a big bill. Or the ballot measure. Rather, that's a big ballot measure. You get a paragraph and this is so much more extensive.

Nicole Elliott: 14:15

And now we see states passing legislation with 300, 400 page statutes that are very prescriptive and the regulator's job is to dot all the I's and cross all the T's and put that into effect, and they're often not able to make the decisions that people think they're making. It's coming from the prescribed statute that the state legislatures implementing. So I think there's a misperception that regulators are making all the decisions and a lot of times they're implementing and they're trying to figure out the best way to implement and a lot of times they would like to see changes, but those changes have to go through the state legislature. And there are a lot of issues that we've talked about at Canna where regulators have more consensus across the different states on how things should be, but the states look very heterogeneous and that's not the regulator's fault, that's because that was the statute they were handed to implement. So I think that's an important misperception to clarify. Nicole, you can talk about how it looks in California.

Gillian Shauer: 15:12

Yeah, I'm going to. So it's sort of like a triple dynamic. So you have Prop 64 on top of MacCursa, on top of a regulatory framework is sort of how I think of that, the stacking dolls. So Prop 64 is sort of our big constraint, if you will. That's the big sandbox we play in. And then we've got MacCursa, which is slightly smaller sandbox, in that sandbox, and then you have the regulatory clarifications that you're making within that smaller sandbox.

Gillian Shauer: 15:45

And to Jillian's point, I mean, yes, we are absolutely constrained on a number of issues and I think that when you hear chatter, you hear the public conversation about frustration in the space, oftentimes in the back of your mind, you're thinking, yeah, I don't disagree.

Gillian Shauer: 16:04

I think that that is unfortunate and a challenge and, like, the legislature is where that's got to be resolved, or the ballot is where that's got to be resolved. And then, of course, I think it's really fascinating dynamic where we are in California and probably other states feeling this too, where as a regulator, your job is to protect and promote public safety, in particular consumer safety, and in California that's specified in statute as our primary objective. So we are held to that standard, but we're also trying to figure out how to make this transition to a legal market successful. So we're really trying to walk this line between supporting an industry being successful but also regulating it for public and consumer safety and they're not mutually exclusive efforts but sometimes there can be tension in that space. So it's a really fascinating dynamic that California is in. I assume other markets have experienced that, are experiencing that, will experience that as well.

Ben Larson: 17:15

So there's two ways that operators typically or I shouldn't speak for everyone I'm dropping, like my perception, into two different buckets. There's the establishing the rules and then there's the hopefully fixing the rules. And in California we were talking before the show about AB 2223 and how that's working to clean up this divide between hemp and cannabis in the state of California. We can touch on that later, but bringing it back to CanRUN, this opportunity for states to collaborate, I think a criticism that often comes from operators in newer states. These days it's like there are 40 some other states to collaborate with and look to and learn from, and we're still getting these crazy environment situations. I'm not going to isolate any of your constituents, but I think you can tell maybe the opposite of whatever California is. It's just like how is that happening if they are talking? Thank you, I know it's not all you, so I'm going to give you the opportunity to defend yourself, but it's like it just feels like there we are in this perpetual state of Perhaps not learning from our mistakes.

Nicole Elliott: 18:33

Yeah, I mean I I think there's been an evolution that's a really important one. I do think some of the early states were. You know, we everybody admits we're doing sort of a copy and paste of Colorado and Washington because nobody had done this before and that was what they had to look to. I also think the earlier states were operating in a very different paradigm under the coal memo, where there was a lot of fear that the feds could come shut it all down. It was brand new. We're not operating in that paradigm anymore.

Nicole Elliott: 19:00

I think everyone acknowledges that, which creates challenges for some of the early states that Built their entire program around trying to make sure people were protected from the feds coming and shutting it down. And maybe some of those decisions aren't the right decisions for the market or the market they want to have. And you know we see course corrections. You know every year Washington and Colorado have Dozens you know if not more bills about their regulatory scheme and how to make adjustments. And I think we've seen some of the most recent states, particularly on the Eastern Corridor, go into spaces that the original states didn't, especially around equity, and I think there's a lot of learning there.

Nicole Elliott: 19:38

But in terms of sort of repeating the same mistakes. I think it depends on you know who's perception it is, whether or not it's a mistake. It also depends on who has the ear of the state legislature, and Often it's not the regulator. There are actually many states where the regulator can't engage at all in that. They're not allowed to for different reasons.

Nicole Elliott: 19:57

So it's really who's the lobby? Who's the lobby that's pushing for legalization? What do they want to see? And you know how much is the state legislature Interacting if they have an existing medical program, for example, with their medical regulator to try to understand what the implications of different policy Levers might be, and that that interaction doesn't always happen, can't always happen as I described. So I think that's part of it. And we've seen, you know, different lobbies around cannabis and hemp develop and grow and, you know, have louder voices in some states than others. So I do think that has implications for the policies that we see.

Nicole Elliott: 20:32

But overall I think states acknowledge that there is new ground being paved by new states that are legalizing adult use and I think we see a lot of states that legalize decade, you know, a decade ago, trying to figure out how they can get into some of that space because it's new and important, interesting, so very distinct divide in between the legislators, like the Kind of like this broad rule set that's being cast down and then those tasked with enforcing it and Defining the rules, like in that framework.

Nicole Elliott: 21:03

Yeah, and I think, I think it varies from state to state. They're definitely states where the government officials operating the medical program were asked about Implications of policy, asked to review policy, and their states where that can't happen and doesn't happen. So it varies, nicole, I don't know if you have thoughts.

Gillian Shauer: 21:21

Yeah, I was just gonna reiterate a couple of things which you know we are talking right and I don't To your point about, like no state has perfected this right and some might argue certain states have done better than others. I think some of that is the result of discussions that happen in Canra and information exchanges that happen at Canra and some of it is, you know, the the ability or willingness of that state, that legislature, to take Different risks and different policy paths. I, you know, I myself track what you know, rollouts in other states and the evolutions of those states, because I think it's fascinating to watch, I think there's a lot to learn and then to tap into that regulator to see, you know, their take on it. But to your point, ben, I think that there are and to Jillian's point, that sometimes it's relative In some states that have taken different approaches than California.

Gillian Shauer: 22:16

Right, some might say California was very aggressive and, you know, overcompensated on the regulatory side. Other states did not. But you seen those states start to shift their regulatory approach, just as we're trying to shift our regulatory approach where it's merited and move closer together. So there is some of that progress happening. But you know we are regulators in Canra and the legislatures are their own separate entity making policy decisions.

Nicole Elliott: 22:49

I Also think there's a lot more Harmony and agreement across regulators, even of red states and blue states, than the policies reflect.

Nicole Elliott: 22:57

So I'll use lab testing as a case in point, and I, you know, I came to this position having led a learning collaborative of state health officials around data monitoring and cannabis legalization, and so I thought great, this will be easy, we can start to harmonize state policies, especially in areas like lab testing.

Nicole Elliott: 23:15

There's no reason that lab testing should be different across states, except for, maybe, heavy metals, where the you know Soil is different from state to state, and that's an area where I think there's a lot of consensus across states. But again, a lot is written into statute and so just because the regulators agree and we have discussions in camera about how, you know, everybody thinks lab testing should look and work, it doesn't mean that anybody can put that into place. So that's one of the reasons that we have been more vocal, as we look at policy changes on the federal level, about the need for federal minimum standards. We think that that's one of the ways that states will harmonize around certain things that protect consumers and work Well for the industry will be to have these federal minimum standards that you know, states should still have the right to go above and beyond those in our opinion. But the federal minimum standards could create sort of a level playing field across states.

AnnaRae Grabstein: 24:07

So you said that that you're not that you don't do lobbying, but you're clearly coming up with with federal policy positions and and and and also requests of this is what we need from the feds. You guys have done that. You put a letter out in September Related to the farm bill and some requests for different types of definitions and things like that. How do you walk the line between Making requests, recommendations, policy insights, and and not lobbying those, those, those desires to get them across the board?

Nicole Elliott: 24:46

Yeah, so our members are all government officials. We have no non-governmental members. Government officials can't lobby, they can educate. So the way we engage. So I don't engage with any state legislature Period unless I'm asked to by the regulator. That's not a practice I have and there are states where the regulator wants to have me engaged to share you know national perspectives or share how it looks in other states.

Nicole Elliott: 25:10

On the federal level, we don't engage with any congressional office unless the member is there and the engagement is usually to connect the federal official with the Individual in their state government who's you know, implementing programs. And it's surprising how often Congressional members don't know the person who is implementing you know, a hemp or cannabis or cannabinoid Regulatory program in their state. So that's a lot of what we do. And then I think the education we view as being, you know, an Extension of what state government officials would do, and we do that with them and in concert with them. We have a seven-member board. All of our board members are active regulators in their states and jurisdictions.

Nicole Elliott: 25:50

We have a committee structure and all of the committee co-chairs are people doing that work from the state and anything that we put out publicly, any letter, any education, you know, has has been vetted through our, our membership and our board to try to make sure that this is the type of education that the majority of our members would want to put forward. So we strongly view it as education and we're very careful not to lobby. We're very careful not to endorse or oppose any particular federal bill. We haven't done that. I don't foresee us doing that. We are a 501c4 so we could if we wanted to, but it's an ethical decision that we've made that we're representing government agencies and we're gonna Act ourselves like a government agency where we can. Nicole.

AnnaRae Grabstein: 26:39

California. Like I know, like as a regulator in California, and, nicole, like you, run up against things that are problematic all the time between Things that the, the businesses that you regulate, struggle with, and, and I've seen you walk a line of sort of Letting us know sometimes when you think that something is is problematic and that you understand. Have have you taken a step further and and done some policy advocacy behind the scenes to try to get some of the laws fixed so that your Regulations can be more effective to the industry?

Gillian Shauer: 27:17

Yeah, and I'll just echo Jillian, like the approach we take is education. So just like we're telling it, you know, in a ram, just like I'm conveying to you guys in a direct or indirect way, that I see you right, there's also conversations that I'm able to have just from a policy standpoint with some of our legislators State or federal have done both right where. Here's where we're seeing pain points and it would be really great if we could shine a little light on that In the in the sessions ahead, so that we can work through those pain points as policy makers. You guys can work through it and then you know, engaging you guys as well on that issue, so that there are, you know, industry members also engaging From a subject matter expertise and other stakeholders, for that matter.

Gillian Shauer: 28:07

So, yes, there are sometimes constraints on how I engage with policy makers, and that's protocol, government protocol. And then you know where we sense that there's space for Subject matter support from the government side, we we jump in. So like, for instance, on the tax reform conversation a couple of years ago, we did convey what we were hearing from industry members as part of that discussion. We were called into a lot of hearings To help policy makers understand what we were hearing from the industry and the regulatory construct and how that was impeding the objectives of the regulatory framework. So you gotta, you gotta have like a tight nexus there. But yes, there's possibilities of sitting down with those policy makers and educating them on the impacts of Action or inaction.

Ben Larson: 29:07

I think one of the biggest challenges we face is that on one end you have operators and entrepreneurs who like to move very fast. The industry and the science is all moving very fast. The more I get to meet people like yourselves and get involved in the policy work, that timeline is just so much slower than the speed of business. It's nearly impossible to comprehend when you're trying to really rationalize it and change things.

Nicole Elliott: 29:41

Yeah, I think that's a really good point, ben.

Nicole Elliott: 29:43

I think that the timeline of how policy change happens in states, or certainly federally, is slower than a regulator's ability if they have the authority to act on something.

Nicole Elliott: 29:55

That's one of the reasons why part of our education is helping policymakers understand not just the implications of something they might be proposing on the ground but also the implications of the state legislature doing that, versus giving the regulator the authority to do that. I think the vaping lung injury outbreak is actually a good example of this, where states that had authority to work quickly within their program to figure out are these adverse public health events coming from regulated products, unregulated products, and to address policies like okay, we think it could be this, this can't be in products anymore. So states could move a lot faster than states that had to go back to a state legislature for permissions for that. So I think that's part of this sort of legislature congressional regulatory agency dynamic, too, is thinking about the pace at which policy change happens, and if you want it to be fast, your regulator probably needs authority to be able to move in that space, because that's how change is going to happen the fastest.

Ben Larson: 30:53

Yeah, one of the big conversations that we were having last week at the summit was that, even just the integration aspect.

Ben Larson: 31:01

We're talking about AB 2223 here in California, which would really hopefully unify the hemp and cannabis supply chains or at least show how those markets work together. Just understanding all the different components of it, how it all integrates into the existing structure, is probably one of the most complex aspects of it, so I'm going to use this as a segue into that. Topic that we alluded to in the beginning is like hemp is a big conversation right now and, as you mentioned, your constituents 45 states. Some of those include Tennessee and Minnesota, as well as Washington, oregon and California, and so, having these very disparate kind of infrastructures and perspectives in the room, I'm really curious as to how much airspace is the hemp conversation taking up right now in your meetings and is there common ground? Being like what I hope is people are like looking at Minnesota and be like oh my God, they did it and like that's really interesting. Maybe we should consider doing something like that, but I don't know if it's as easy as that.

Nicole Elliott: 32:16

I mean I think it's one of the top three regulatory issues that regulators are concerned about and working on now, If not the top. Nicole can speak to sort of prioritization in California, as an example, but we have a very active cannabinoid hemp committee. The thing I love about that committee is it brings together cannabis regulators regulators that are regulating cannabinoids, regardless of where they come from, and regulators that are regulating hemp to talk about the issues. We've talked a lot about the problems, but we've also talked about some of the things that regulators think would be some possible solutions. And that's where you've seen our letters. Our letters are not meant to be prescriptive policy. Our letters are meant to be sort of an indication to Congress of this is what a bunch of regulators think might help resolve the problem. But we want to start a dialogue around that. We've done a ton of stakeholdering around this. I will literally take calls with any nationally focused entity to try to understand their perspective, their pain points. I think that's how we think about the national scene in a better light. But this is also just case in point, an example where state legislatures are making decisions. This is a really scientifically dense topic and I think it can be challenging even for people that live in this space every day to understand, let alone state lawmakers that are dealing with a myriad of other issues. So I think it's been tough for states to try to figure out the solution. There are also lobbies on both sides cannabis and hemp, and some that occupy both spaces that are trying to persuade policy to go in one direction or the other.

Nicole Elliott: 33:49

I think the thing that regulators care most about is protecting consumer safety and I think there are a lot of ways to go about that.

Nicole Elliott: 33:55

I wouldn't say there's one solution to the current issue on the ground, but I do think it's an urgent issue and I think what's potentially at stake.

Nicole Elliott: 34:05

I think there are a ton of good actors in the cannabinoid hemp space for sure and Nicole sees them in California. I chat with them as I work across different states but all it takes is one bad actor using a bad solvent, using a bad excipient or diluent, having a bad chemical reaction to result in a public health issue. That really could put the entirety of legalization under the microscope. That could lead to hearings in Congress while investigations happen to try to figure out where the issue is coming from, and that could lead lawmakers to say this experiment was fun, but now it's over. So I think there's a lot at stake, not just for consumers but potentially for the industry, and I think that's why regulation is urgently needed, in whatever form it comes in, to try to protect against consumer safety issues that could come up. So we've seen states try a lot of different approaches and we're talking actively about how those are working.

Gillian Shauer: 34:58

Yeah, jillian nailed it, like what she said, but it truly takes up a lot of our time, whether it's calls for enforcement, it's obviously the policy questions, right, like how is integration the right thing?

Gillian Shauer: 35:15

If so, in what form and what could be the consequences of that from a market perspective and a legal perspective.

Gillian Shauer: 35:22

It's just like Anyway, I don't know if I told it like when I was in San Francisco, always thinking about this as like a three-dimensional chessboard, right, that is exactly what this conversation is, because outside of California's cannabis market like it feels like chaos, right, like states disagree, the federal government disagrees, courts disagree, like nobody has consensus.

Gillian Shauer: 35:47

And so, you know, what we're really trying to do right now is understand what those impacts could be, as well as talk to cannabis operators, hemp operators, and sort of get their vision for how this could work, so that we can you know, we can operate nimbly in that policy conversation and try and figure out what that path could potentially be in California, acknowledging the federal dynamics from both an administrative, legislative and judicial perspective, so that we're trying to sort of tee California up for success. And I think, candidly, it's going to take a ton of education for our legislators here to be able to move at a pace, from a policymaking standpoint, that I think you guys would want to see them move. So I encourage you guys to really spend some time with those legislators to get them up to speed on what's happening, what you're seeing, just to help them be a bit more fluent in the space. I'm doing my own part on that too.

Nicole Elliott: 36:53

And I think, nicole, you highlighted the number one question that I ask every nationally focused stakeholder group that I speak with how would you recommend these two markets you know coexist or come together or, you know, have a path forward, because the current status quo is really challenging for regulators. It's really difficult to have the same molecule, sometimes in the same type of product, regulated by a whole different set of rules if it comes from what we call hemp than if it comes from what we call cannabis. That just that makes a regulator's job inherently more difficult. And I also think you know there's a risk with consumers, where most of the things we buy in a grocery store or gas station you know arguably everything we buy in a grocery store or gas station has some sort of regulatory oversight to protect consumer safety.

Nicole Elliott: 37:40

So I think consumers are, you know, often not fully educated about the market as well and think that they're consuming something that is regulated, that has you know serving size, that has all the labeling to tell them exactly what's in the product. That you know won't lead to a positive drug test at work, if that's what they're concerned about All these different things that regulation could bring into the fold. So, yeah, we're really curious if you all have perspectives about how you'd like to see the markets, you know, in the future. I'm always I'm only here every idea, because I think that makes us richer in the discussions we have among regulators to know the different options that industry is thinking about as well. And we're having those same discussions with all sorts of stakeholder groups researchers, you know, public health and safety groups. That's a regulator's job is to get all the perspectives and try to figure out what is actionable in the field and what could lead to good outcomes.

AnnaRae Grabstein: 38:35

Look, and I think it has been a moving target for many people, whether you're an operator, a regulator or a policymaker the way people have been thinking about hemp drive cannabinoids has shifted, and I can say that as part of my own personal evolution is that when I was in-house operating a company that was focused on cannabis cultivation, I felt very afraid of what hemp could do to our business and I felt that I needed to protect it and I needed to protect my fiefdom over here in the corner.

AnnaRae Grabstein: 39:07

And I sit in a different place now and I'm doing different types of work, like more big picture, strategic work, and I'm not inside that company anymore and I have my perspective has changed because I see that, oh wow, actually, this work that I've been doing for 15 years in my career to open up access to people that want cannabinoids this is this way that people are finding it, but they just need to know that it's safe and, on top of that, the layer of those businesses that chose to believe and follow the path that the regulators laid out for so many of us.

AnnaRae Grabstein: 39:41

We need to figure out some way to keep it fair. People have invested a lot in that and I think that there's totally a path forward. I'll just plug quickly what I think could be that path forward is that I think that regulated cannabis companies that have chosen to believe in regulation should be able to have a pathway to play in both spaces and that if there becomes a low dose regulated THC, that that can become the pathway and that if you're a regulated cannabis company, that means that you have the opportunity to participate in both the high dose and the low dose market, but if you don't have that license, that high dose market is off limits for you. And that that could be a way to create a fairness and a choice for the people that have made that larger investment into compliance, into the regulated space as an option and I know the regulators don't get to choose that and that that would be a policy choice.

Nicole Elliott: 40:41

But I mean it's fascinating to hear that and I think what you said about fairness definitely rings true for a lot of regulators. We're having a lot of discussions at Canra also about the impacts on equity, and some might argue the market is more equitable because it's unlimited licensing. But on the other hand, states have really tried especially recent states that have legalized to lift up equity operators, to give them support, to give them funding. They've invested in many cases, generational wealth to try to get into this cannabis industry. So I think it's a real concern for a lot of regulators about what might happen to programs like that, trying to lift up equity and small business operators as the market moves more into this cannabinoid hemp space. I also think there's a tax implication too. Cannabinoid hemp is not currently taxed in any state that I'm aware of with any extra taxes.

Ben Larson: 41:33

I think Tennessee might have some.

Nicole Elliott: 41:35

That they're implementing. Yeah, a lot of states are allocating a lot of their tax revenue, especially recent legal states, to disproportionately impacted communities and if the market shifts, there won't be as much of that revenue there. So I think there are lots of discussions about fairness to have and lots of variables at play to try to figure out what's the path forward that does protect these variables that states have decided are important for their market.

Ben Larson: 42:03

Oh yes, chris, Also Minnesota, all right, so I feel like I could talk about this all day, and I mean the equity component's a deep rabbit hole, like I was having a discussion.

Nicole Elliott: 42:14

Sorry for taking us there, Ben.

Ben Larson: 42:17

I have a discussion recently with a fellow operator where it was just like in certain states like our own, it was like, oh man, it was a bad bill of goods and almost like anti-equity, because people lost their life savings like into this broken system and, like I said, we could probably spend an hour talking about equity in the ways that implement it.

Ben Larson: 42:39

So we're not going to go there, but before we run out of time with the show, I do want to make sure we talk about another kind of popular topic and so it's switching gears a little bit. And, nicole, this came up last week in the summit where we're talking about like the vision of like a thriving cannabis market, especially from the California perspective, because we have this real California cannabis brand right, and we started talking about interstate commerce and in the discussion of 2022, 23 and hemp, that there is some interstate commerce opportunities there. How are the various members of Canra thinking and talking about interstate commerce and whether it's the potential from two regulated markets together, like Oregon and California, or leveraging the hemp opportunity to kind of facilitate this low dose opportunity.

Nicole Elliott: 43:36

Yeah, Nicole, should I start, If you want to?

Gillian Shauer: 43:38

yeah, go for it, and then I'll give the California take. I'm happy to do that, okay.

Nicole Elliott: 43:43

First, I think there's a realization among all regulators that we already have interstate commerce for cannabinoids. We have it from hemp, we have it from the legacy market, we have it from sort of the newer unregulated markets. So there's already interstate commerce. There just isn't interstate commerce for state regulated cannabis, but everybody knows that's coming. This last year we went through an exercise of having a couple of our committees come together and meet to sort of draw up a roadmap of what are the different pieces that would have to harmonize or have workarounds or data systems that would have to speak with each other to have interstate commerce work.

Nicole Elliott: 44:19

And I think we talk a lot about the different ways that interstate commerce could come to states. It could come from the courts and if it comes from the courts there's probably not a regulatory scheme. This job would get really hard, really fast as people tried to figure out how this would work. If it comes from Congress or the executive branch, it could come with or without a regulatory scheme. On the other hand, if it comes through a sort of state to state agreement which I'm sure Nicole will address, because California has been pretty vocal about wanting to have that option and California, oregon and Washington all have statutes that would allow them to sort of opt in. That could give some really valuable information about what are the pieces that need to come together to make an interstate market work. So we have a lot of questions. We're not naive that this is coming, and I think we're hoping to see some examples of how it might work, perhaps ahead of time. So cue, nicole.

Gillian Shauer: 45:18

I mean. So you guys are well aware of how California has teed up the conversation of interstates, in particular to the cannabis market, acknowledging Jillian's first comment about existing interstate commerce already happening. So, setting that aside and looking at how we've approached from our Merkur's side, we wanted to try and enter into agreements with other states in a way, as you saw from the policymakers, that reflects the values shared between those two states and unfortunately that isn't something that we can do as swiftly with the response from the Attorney General, although I will acknowledge he did say that the department's arguments were strong, but that just put a little time out on how we were approaching interstate and those state to state agreements In the context of Canra. It's been a fascinating evolution to watch. Actually, from the West Coast side, we're super aggressive about interstate because we realize the history of cannabis in the United States and the West Coast in particular, I would argue, california's cannabis community and the role that the California cannabis community has had in that, and we know that we produce a lot of cannabis in California. So, with that said, we have a lot of. There's a lot of benefits to opening up our market to other states legally right and providing operators with the legal opportunity to do that type of commerce. So we really want to push that.

Gillian Shauer: 46:56

I think we're looking at all different avenues for potential ways to do that. But I would say that even if we got to know from the Attorney General, I don't want that to be interpreted as we're sort of stopping. It's just what are the next avenues we have available to us? And the last thing I'll say is Jillian's right.

Gillian Shauer: 47:17

I think regulators in Canra, across the United States, recognize that this will one day be a much clearer space, right when interstate is all go. I think the way it's done does matter and will have implications. But regulators also feel a sense of pride over their markets too and want to preserve access to that interstate market for the operators that they've licensed in their jurisdiction. And so it's an interesting dynamic. Right as we have this West Coast, we really want to open the floodgates in other states that are like whoa, whoa, whoa. But I really appreciate that Canra provides a venue for those conversations to happen so that we can all move past those concerns, those fears, acknowledge them and incorporate them into how we think about the future state of interstate in the United States.

AnnaRae Grabstein: 48:16

That's really inspiring and it's hopeful. So I'm excited to hear you that people are thinking about it and at the same time, I'm going to move into the last question before we go into our last call, and it's coming out of this thought about interstate commerce and I think, as a regulator, nicole and Jillian, within the community that you organize, you guys have a very unique position to see how the industry is changing, and what I mean by that is like as licenses don't get renewed or ownership changes happen and consolidation across the industry happens. And I'm curious, just as we wrap the episode, if you're able to share any unique perspectives that are happening in California and the area that you oversee in the industry that maybe the rest of us don't see, that you're able to tell us about as a regulator.

Nicole Elliott: 49:13

Well, I think one of the benefits of Canra is we have so many regulators coming to the table to share what's happening in their markets, and so it does give you a more national perspective of things that might be trends, as opposed to just feeling like this is something only happening in my state, and it's been pretty clear the last year that things are tough for the state regulated cannabis industries.

Nicole Elliott: 49:35

I mean, we've had a lot more discussions about challenges that operators face in each state and what regulators can do to help with that. I think the lack of banking has been difficult. I think the different regulatory pathways for state regulated cannabis and cannabinoid hemp have been difficult, and those are serious questions that regulators try to think about as they uphold their market. So it's not easy, but I think that's one of the things that we've talked a lot about is what is the future of the market? What can regulators do to try to support businesses in their state? Because while all regulators have consumer safety at the forefront, most of them also have supporting this growing industry, while protecting consumer safety, at the forefront of their mission as well.

Gillian Shauer: 50:23

Yeah.

Gillian Shauer: 50:24

So the only other thing I'll add is, as you know, california just put out a data dashboard and love it or hate it.

Gillian Shauer: 50:31

What it does do is it shares the data that we have available to us, whether that's incorporated through metric, by licensees or our licensing dashboard, and that is really meant to light a fire under the conversation, the public policy conversation that we should all be having informed by data, so that it's like crowdsourcing these types of responses.

Gillian Shauer: 50:57

It's not just relying on us because we have a very big job, we have a very big market that we're trying to wrap our arms around, but it's trying to shed light on those data sets so that people can also weigh in, looking at that data with their takeaways. So that's one thing I really want to point people to. It was meant to infuse, like put on steroids, some of the policy conversations Thank you, look at that, that's great Publicly and also to ultimately, at the end of the day, help businesses, too, with access to public data, aggregate public data to inform business-making decisions. So definitely want to thank you for showing that. Let's steer everyone in that direction and invite feedback and takeaway, since this is the first iteration of that dashboard and will be a continuous project of the department.

Ben Larson: 51:53

Yeah, I love this data. We've been working in the Canadian market for some time now and I was always really thrilled with the visibility into sales and that information, and I saw this get released just a week or two ago and so, yeah, nice step forward.

Nicole Elliott: 52:12

And I think that data transparency is something that we've talked a lot about at Canra, and we see more and more states trying to do that and put that forward. So kudos to California for getting a dashboard up.

AnnaRae Grabstein: 52:23

Awesome. Well, we're going to move into our last call, and this is where we turn the mic over to each of you to leave our listeners with one last thought. It really can be whatever you like. So, jillian, let's start with you. What's your last call?

Nicole Elliott: 52:37

Yeah, I think my last call would be to understand that regulators are trying to do their best to find a path forward and that stakeholder input is really important, and there's not a state in our membership that doesn't feel that way. So just want to encourage people to engage with their regulator and to do it in a respectful and productive way. It doesn't help to threaten your regulator or send hate mail. What really helps is to maybe voice a problem but come in with a solution, and I'm surprised at how few stakeholders actually come to the table with solutions. It's a lot of griping about problems that your regulator probably already knows about and or doesn't know exactly how to fix. So the solutions are key, and the same goes for my engagement with folks at the national level. I love it when I have conversations with folks that say this is our perspective, this is what's hard for us, and here's a way that we think things could get better. That's always productive and want to encourage those productive discussions to make policy better.

Gillian Shauer: 53:37

Nicole how about you? What's up? I want to just sort of double down on Jillian's comment. Ben, you started this conversation by saying we don't have horns. We don't have horns right.

Gillian Shauer: 53:46

Those conversations matter. They're meaningful, they're educational. I think there are times where there is frustration in that space, and that's normal, but we always you can see, in the corner right. We have some of our values there support, collaboration, integrity, innovation, fairness, knowledge. Those are all things that are the result of productive conversations with stakeholders, and that includes, and importantly includes, our licensees and the businesses trying to be successful in California. So those conversations are some of the highlights of my workday. I really want to encourage people to continue to reach out and share the information that they want to share with us. To Jillian's point, it's really great when we're presented with possible solutions, because I do think that we have a collective objective we're all sort of working towards here and I think we all care very much about a number of the values that are in California's market and California's regulated framework, and that being a diverse market, a safe market, but that takes a collaborative effort.

Ben Larson: 54:54

Thank you guys so much.

AnnaRae Grabstein: 54:55

I think that there's a lot of invitation for the future for both of you to come back and talk to us. There's so much more that we could have covered today, and so you just let us know, and our audience, I'm sure, would be really excited to get to hear more about all the works that you're doing. So I really appreciate the openness. I think it means a lot.

Ben Larson: 55:14

Yeah, and thank you for taking the time, and it's an honor to be able to have you on the show and spend an entire hour with you. And, yeah, just humanize the other side of the table.

Nicole Elliott: 55:26

Thanks for having us. Thanks for having us.

Ben Larson: 55:28

All right. Well, Anna Rae, we did it and you're back. That was awesome.

AnnaRae Grabstein: 55:38

Glad to know that I was so missed, Always missed. I missed you.

Ben Larson: 55:41

Phil, thank you so much. Yeah, I'm really excited to do it again, and I have so many more questions that I felt like we could have gone on for hours. But, alas, here we are. All right, everybody. Well, as we wrap up, remember that that dialogue doesn't have to stop here. We invite you to continue these conversations and we'd love to hear your thoughts. Who would you like to see on the show? What topics do you want us to cover? Next week? We're diving back into sales Krista Raymer Super excited for that one too. See if we can get some lift in all of our sales as we get deeper into the year. We are immensely grateful to our guests and for you, our audience. Just keep liking, subscribing, supporting however you can. We're growing. Every week, we're gaining momentum and I keep seeing that we're going to go through a rebrand. It's coming really soon, really soon. Super excited for that. Finally, as always, stay curious, stay informed and keep your spirits high Until next time. That's the show.

High Spirits

#033 - The Cannabis Regulators Association (CANNRA): What You Need to Know

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