Episode 32

The Southern States Mixdown

The southern states have been hold-outs in the emerging cannabis economy. However, they’re starting to dip their toes in the waters of strengthening their state economies with the help of revenue and stability from cannabis businesses. In this episode, we dive into states like Texas, Mississippi, Alabama, Arkansas, and Louisiana to give you, our listeners, the best guidance possible in choosing which state is right for you and which opportunities will be the most lucrative in coming years.

SPEAKERS

Cory Waggoner, Mercedes Woods, Emily Seelman, Adam Kulbach

 

Adam Kulbach  00:12

Hello and welcome to the higher enlightenment podcast brought to you by higher yields cannabis consulting your seed to sale Business Solutions team. My name is Adam, part of the creative team here at higher yields. I’m your host, and today’s episode is about the southern states with our guests, Corey Wagner, Mercedes woods and Emily Steelman. The southern states have been holdouts in the emerging cannabis economy. However, they’re starting to dip their toes in the waters of strengthening or state economies with the help of revenue and stability from cannabis businesses. In this episode, we dive into states like Texas, Mississippi, Alabama, Arkansas, and Louisiana, to give you our listeners the best guidance possible in choosing which state is right for you, and which opportunities will be the most lucrative in the coming years. So let’s get on with the show. So for our first question, why have the southern states been slow to adopt cannabis as an economic opportunity?

 

Mercedes Woods  01:25

I think that there’s still a lot of MIS education going around. So I think they’re having troubles still with understanding, you know, the benefits of cannabis itself. And so it’s hard for them to see it as an economic opportunity. As of right now, they they still, you know, see it as as a drug, and as something dangerous. So I think even though, you know, you’re seeing other states benefit from it economically, I think that morally, they’re just not, they’re not ready for that they kind of see it as a moral issue more than something that could be of a benefit to, to their state currently. However, you know, I do think some states are taking measures into place, even though you know, it’s slow. For instance, Tennessee wasn’t able to, you know, get medical cannabis bill passed. But they did go ahead and pass the bill that created a study commission, to consider medical cannabis for Tennessee, and study it and kind of decide, you know, what would that bring to the state. But it is interesting as well, because a lot of this issue seems to still reside within the political sector of each of these southern states. Because when looking at the percentages of, you know, who the people of those states and their agreement or disagreement with cannabis, it’s still leaning towards the majority of people still agreeing that medical cannabis should be legalized in their state, even in the southern states. So I think a lot of it is still tied up in the political sector. And then their feelings about it and kind of becoming, you know, the voice to decide to put that out there. I think it’s still more taboo in in a lot of these states. But I think they’re attempting to make some progress, even though it is very, very slow in comparison to you know, the rest of the country right now.

 

Cory Waggoner  03:45

Yeah, just to echo that, I think, you know, the southern states, it’s very conservative mentality. And, you know, as we move into new states, even states that currently have programs there, there’s still a lot of educating that has to be done. And I feel like in in southern states, you know, there’s still this idea that cannabis is this drug, and it’s bad for you. And people are still very skeptical of the medicinal benefits, but we’re starting to see a lot of traction down there. Alabama, Georgia, Mississippi, as we said, he was saying Tennessee, Florida, you know, was one of the first ones in the US to actually regulate medical cannabis. So starting to see a lot of progress down there, which is really promising.

 

Adam Kulbach  04:29

So what social and cultural factors have impacted and will continue to impact the future of cannabis?

 

Emily Seelman  04:37

Well, I think when it comes to a state introducing cannabis, or the cannabis industry for the first time, that usually is focused around patients, patient care and medical. And then as you see a state adjust from a medical sector into adult use, that’s when a state generally becomes more focused on And how can we support individuals who have been disproportionately impacted by prior cannabis laws? How can we define social equity to benefit the residents of our state or economic empowerment or provide opportunities for diverse owned companies, women owned, veteran owned things like that? It can sometimes be a focus in the medical rounds as well, you’ll see that in some states, like Georgia, for example, is a great example, the southern state, who was very strict had a very stringent MediCal program, but also focused on some equitable provisions, mainly providing opportunities or a lower barrier of entry for residents of the state who are looking to apply. So I think as we see more and more states progress into the industry, we’re seeing those two kind of siloed focus areas start to blend. So when it’s not just, it’s not just medical, it’s not just social equity. It’s not just diversity, but it’s a blend of the two. But usually it takes the footprint of medical focus. First, they want to make sure the patients are protected. They have really stringent rules around the types of products that can can be supplied. And then the focus shifts into adult use, which is how can we open up this program to more people,

 

Adam Kulbach  06:18

which southern states seem to be most open to a cannabis market?

 

Mercedes Woods  06:23

I think right now, Alabama, even though it is pretty limited, still, they’re only going to be allowing, you know, 12 cultivation licenses, no more than four processor licenses for their medical program, they still are moving forward, and more similar matter to some of the other competitive states that we’ve seen throughout the US and are moving forward with legalizing medical and, and starting to have their application windows set for next September of 2022. So I think right now Alabama is looking very promising. There was some hope for Mississippi. But unfortunately, as of May 14 of this year, the Mississippi Supreme Court decided that they invalidated the constitutional amendment for medical cannabis. So kind of push them back a little more. With that, and then, you know, some of the other states such as you know, Arkansas, even though it is legalized there, it’s it’s very difficult and very expensive. They do your surety bonds with the state. And they can range anywhere from 100,000 to $500,000. So the barrier to entry is just very high. And then, of course, we have Florida, which I think has the most potential for becoming legalized for adult use. Because they have had their medical cannabis program the longest. So I do think that there’s hope for that. I think, you know, Texas is a hard one, I think it’s very divided, I think, you know, you go to a place like Austin, and you know, they’re decriminalizing it, and really wanting to push for that medical legalization. But then you have other areas that you know, are very against even the medical side, and in the biggest kind of build, they’ve been able to pass is raising that low THC percentage from a half percent to 1%. So there’s just not a lot of movement happening there. And Texas still, even though I think that, you know, it would be a huge market, if they did decide to legalize for medical and then eventually for adult use, but but overall right now, I would say, you know, Florida and Alabama, are kind of going to be moving the fastest of the of the southern states

 

Adam Kulbach  09:12

or any southern states opening up application rounds in the foreseeable future.

 

Cory Waggoner  09:17

Georgia just accepted applications and released the first round of scoring a few months ago. And Alabama seems to be in my opinion, probably the closest one to providing its RFP is the regulations are being formed right now. And seems like we’re starting to get a lot more traction, a lot seeing a lot more movement in Alabama from potential clients.

 

Emily Seelman  09:37

Yeah, Alabama is probably the, the one that everyone’s got their eyes on because it’s shaping up to look like Georgia’s program. And it’s a it’s an interesting blend of a lot of different states, all across the East Coast and Midwest to build the components of the bill. So I think that’ll be an interesting state to watch. Particularly because and it kind of goes back to your earlier question, Adam, this was one state where you kind of see that blend happening where advocates really came in on the ground floor, and saw an opportunity to not only make this a viable MediCal program, but also one that is far more inclusive than you would regularly see in, in medical programs and states. So that’ll be an interesting one to watch. I know Arkansas is another one that it, it passed its bills and came up with its application processes a few years ago. So that’ll be one I think, as the state grows, and as demand grows, or the industry grows in the state, that will be one that I think we can we can watch for some further opportunities as well.

 

Adam Kulbach  10:46

Okay, so which types of cannabis businesses show the most promise in the southern states?

 

Emily Seelman  10:54

Well, this is just my opinion, but I think whenever you see a state open up, a lot of people go after pursue cultivation licenses, just because they’re the ones who are going to be the suppliers to the state. So as demand grows, that just increases the opportunity for revenue from well run cultivation facility. So and you also see opportunities to become vertically integrated in states, especially in the southern states that are opening up medical programs and kind of mimicking each other and form for those programs. So you’ll see a segment of vertically integrated opportunities where individuals or teams can apply for licenses to operate, cultivation, manufacturing or processing facilities, depending on the language used in the state and retail or dispensary facilities. So, um, it’ll, I think, you know, I think most people see the opportunity in pursuing a vertically integrated license just because you have a foot in each of the main sectors there. And when you establish market dominance, you produce product for yourself to yourself, it your costs become a lot lower, and your margins become a lot bigger. So that I think is just across the board, an opportunity that a lot of people like to jump in on.

 

Mercedes Woods  12:09

Yeah, I agree with Emily, with the vertically integrate it. And then I also think something that wasn’t talked about much is, you know, getting that transporter licenses as well, within the states. Because if the federal government does decide to decriminalize cannabis that would help open up that interstate commerce and having those transporter licenses and a lot of these states allows you to also if interstate commerce does open up to be able to deliver outside of that state and across state lines, which I think is something that is important for people to consider when when moving forward with getting their applications is to consider that transporter license as well.

 

Adam Kulbach  12:57

Okay. Yeah, I think that’s all the questions that we have for now. Does anybody have any final thoughts?

 

Emily Seelman  13:02

You know, this is a thought I think I provide every time we have a podcast, Adam, that’s, and that’s really if you’re looking to get started in a market. Don’t wait until the license round opens. Start now. Your competition is has started yesterday. You know, Alabama’s a great example like Cory had mentioned, the bill is passed. We’re expecting movement and an application round here in the next few years and more defined regulations and things like that. But your competition the ones who are your you are going to be competing against for a license. They’re starting now. They’ve started yesterday. So if you want to have a competitive shot in this industry, especially in these southern states, as they’re introduced in their programs, have a hand and advocacy, get started with consultant, get your strategy in order, get your team together, and go about this in a very methodical approach. But if you wait, you you really don’t have the strong chance of winning the license.

 

Adam Kulbach  14:00

Good point, Emily. Anyway, thanks, everybody, for being on the podcast today. Really appreciate it. Thank you. We’d like to thank everybody for tuning in today and listening to our podcast. For information on how to follow the higher enlightenment podcasts. Please be sure to check out the description below. You’ll receive all the latest and greatest podcasts news and announcements will also let you know when we release new episodes. If you’d like to be a guest on the higher enlightenment podcasts, or have ideas about upcoming episodes, please be sure to check out the description below. For information about sponsorship or advertising on the higher enlighten podcast, please call us at 844 For high yield, that’s 844 H AI, why i e, LD or visit our website at higher yields consulting.com. Thanks. Have a great day and we’ll talk to you soon