Cannabis Beverages at Thanksgiving 2023

How about some cannabis beverages at your Thanksgiving gatherings this year? Maybe your crazy uncle won't get belligerent, because that's just not what happens when you drink a cannabis beverage.

Before you declare your Thanksgiving shopping done, go pick up some cannabis beverages at the dispensary (or gas station, grocery store or liquor store if you're living in a state that realizes this is where social beverage consumption is headed).

Give your guests a new beverage to be thankful for this holiday season.

#normalizethanksgivingweed

Side note - This is also a great way to get high without annoying your entire family with the smoke cloud you bring into the house from your pre and post walks.

The Operator Perspective Mitigates Risk

Many of our investors in the Receptive Capital Syndicate are operators. The operator perspective mitigates risk in investing.

The ability to conduct due diligence through the lens of an operator enables the operator to, among other things, ask the tough questions, manage growth expectations and provide the entrepreneur with more useful feedback. That is most likely why operator investors make great advisors! We have been cautious to lead another deal this year. Candidly, we have not seen many new companies that fit our investment strategy and those who did, were still hoping to raise at unrealistic valuations in a historically timid cannabis investing environment.

This is starting to change but It’s still not clear to us if we’ve begun the turn around. We’ve seen signs of life in September following the HHS announcement and more recently with SAFER making its way through committee for the first time. Companies who are positioned well and called off fund raises in 2022 and 2023 are back out again. While attending the Benzinga Cannabis conference in Chicago last week, we noticed a different energy. We would call it “cautious optimism”. Perhaps the greater investor community is starting to take a page from the operator perspective.

Hemp Derived Beverage Availability

Regarding cannabis beverages, I would prefer to see regulators focus on regulating the PRODUCTS to ensure the consumers that desire them have SAFE access to them. Consumers have demonstrated demand for these products. Banning them is not the move.

1. Low dose hemp derived THC beverages everywhere you can buy beer (groceries, gas stations, restaurants, etc.) It’s important to maintain strict policies surrounding packaging and branding to ensure that no products are attractive to children. E.g. NO gummies in this channel obviously.

2. Higher dose, heavily concentrated beverages in the dispensary channel. Liquor and wine stores as the comparison here.

3. Eventually there should be a third channel of even higher doses and targeted at specific outcomes that will be available through the pharmacies.

I'm still forming my opinion so happy to be challenged on any points here.
The category “edibles” altogether needs to be broken up into two categories, food and beverage. Cannabis beverages will deserve their own category shortly. It’s already getting its own day.

This Sunday is 820, NATIONAL DRINK CANNABIS DAY, enjoy a cannabis beverage.

I Just Enjoy The Plant. It’s As Simple As That.

“I just enjoy the plant. It’s as simple as that.”

During Kevin Durant’s interview at Game Plan by CNBC and Boardroom, he said, referring to cannabis, “Everyone does it, to be honest, it’s like wine at this point”. This was the line most media outlets lifted. But the line that I remember most is…

“I just enjoy the plant. It’s as simple as that.”

Coupled with his demeanor suggesting “Andrew, this is no big deal”, I admired KD's reaction to these questions. This is exactly the kind of statements and demeanor we need from those with power and influence. Not only has Kevin Durant invested in the industry, here he is on stage just keeping it simple. It’s a plant. It’s time we all start acting as if cannabis is a plant. I’m going to try to incorporate KD’s style into my own communication about cannabis stigma because I think he has this right. Less is more in this case.

Updated Thoughts on Social Consumption Lounges: Summer 2023

I was pretty excited about social consumption lounges. These businesses, if located in one of the East Coast markets, are within our investment criteria. I’m sure it will come as no surprise that we have yet to make an investment. More recently, I'm starting to challenge the viability of the stand-alone social consumption lounge idea purely from a consumer experience perspective.

The premise behind separate, stand-alone cannabis social consumption lounges is flawed. It still may work, but it remains somewhat flawed. I think there are some scenarios that still make sense such as a social consumption lounges adjacent or within a cannabis retail environment. Listening to a recent episode of Coffee with the Collective podcast by The Cannabis Collective with Ariel Palitz, New York City´s first “Nightlife Mayor”, she reinforced and validated this thought process for me. During the show, Ariel was answering a question about the challenges of siloing cannabis in the night life scene. She said that it’s challenging because “cannabis is consumed everywhere”. She’s right. Cannabis is used in a wide array of social gathering places and separating that social use from other social gathering places such as bars, restaurants, night clubs and event spaces doesn’t make much sense.

State liquor licensing outfits think they have alcohol and cannabis siloed but they don’t. Finish your drink at the bar, walk outside, smoke a joint, walk right back into the bar and order another drink. Bring an edible with you to the bar and eat it right after your first drink and a few wings.

Cannabis use in social settings will have to become more nuanced for the type of environment the social use is taking place. For example, beer and wine are served and sold in many places where whiskey is not…and for good reason. Allowing different types of cannabis social consumption in different types of social environments needs to be considered and defined. Cannabis beverages at a bar or restaurant make a lot of sense. Allowing anyone to smoke a joint in a bar or restaurant would annoy almost everyone, including those smoking the joints.

The East Coast markets have yet another opportunity to lead by redefining social consumption for cannabis. Recently New York’s Office of Cannabis Management approved Cannabis Growers Showcases (CGS) as a stop gap to increase access to safer cannabis products. In a Linkedin post they rightly described this move as meeting consumers “where they are”. I am hoping this is a good sign as it relates to the development of regulations with regard to social consumption lounges as well.

If you or someone you know are building a company that addresses this opportunity please contact us.

Why Are We Asking Consumers to Memorize Chemical Compounds?

"Look at those terps!"
"Check out those terpene levels"
"This strain has a lot of terps"

I've been in the cannabis industry for years now and I'm getting a little impatient with "Terpenes are the future of how consumers will buy cannabis" theory. I'm constantly hearing how "good" a cannabis product is based on the same vague references to terpenes that are listed in the beginning of this post.

My opinion is that consumers are going to buy based off quality ingredients, consistency, and brand value transparency...not chemical compounds. The "connoisseurs" or "ganjiers", maybe. Maybe.

I want to believe that terpenes will play a big role in cannabis product selection because I'm becoming a bit of a nerd learning cannabis science, especially as it relates to pharmacological use cases. But I am still struggling envisioning the day that I or someone else walks into a dispensary or visits an online store looking for the "linalool" section. We don't have to create our own lexicon and confuse consumers. Lavender, gas, citrus, pine, pepper, etc. These are all words consumers use that they understand. Why are we making this more difficult than it has to be? Why are we asking consumers to memorize chemical compounds?

Cannabis Companies Planning to Raise Capital from Equity Investors in 2023

Some thoughts for cannabis companies planning to raise capital from equity investors in 2023.

1. Have a plan to not only deploy the capital but also include in that plan a set of established KPIs to achieve from this capital raise. A pie chart on a slide is no longer good enough.

2. Validate the assumptions behind your plan. Be conservative with these assumptions. Raising capital to fuel unattainable growth leads to failure in the cannabis industry. THIS IS NOT TECH. If you’d like to see some examples…you’re not paying attention.

3. Ask yourself, is this investment needed? Does it add immediate shareholder value? If it does, plow forward and be relentless. If not, I suggest waiting out another 6-12 months and reassessing. If you are one of the few who planned ahead or have a plan for 12-18 months that is cash burn neutral, why raise money now?

4. If you don’t have customers who love at least one of your products or otherwise can demonstrate revenue growth, go back to the drawing board and build something that has one or the other. This isn’t 2019 (or 2021).

5. Stop giving equity to advisors and service providers so early on. Unless this advisor comes with an investment in your business or a significant asset to contribute to the business, do your best to avoid compensating your team of service providers in equity. And if you do, make sure that equity vests or is otherwise granted over a period of no less than 4 years. They shouldn’t get better deals than your future employees will.

A Multi-Dimensional Regional Cannabis Market Landscape on the East Coast

Cannabis is personal. Each person experiences cannabis differently just as we experience our lives differently. Cannabis communities form as consumers seek those who have similar or desirable experiences with the plant.

For that reason, we envision a multi-dimensional regional market landscape on the east coast within the next 5 years. These regional and hyper-regional markets will be driven by consumer demands for products that fit their way of life and deliver the value they seek. Brands who are able to align their value they deliver with consumers’ desires at this regional level will establish a foothold in their respective region.

Here are some examples:
- Top Level Regions: NORTHEAST / SOUTHEAST
- Sub Regions: NEW ENGLAND, MID ATLANTIC, CAROLINAS, GEORGIA and FLORIDA
- DMAs: NYC, PHILLY, BOSTON, DC, ATLANTA, MIAMI

Which brands currently have a head start in these regions, sub-regions and DMAs?

Old Pal “Baked At Home” Hits The Mark

This product hits the mark and, in our view, provides validation for the "cannabis will be everywhere" element of our thesis. The cannabis plant is so dynamic and we have decades of product innovation ahead of us. That is what makes the consumer side of this business so attractive to us as investors.

Some people may see this as a "clever product". We see this is as a company who knows their customer base and provides straight forward solutions to their needs in the form of a product. Making your own edibles seems daunting. This product makes it possible.

Cheers to Old Pal for keeping it simple and sensible when it comes to new products. Will this be a big category? We don't think it matters. This is a showcase of cannabis product development, branding and marketing maturing in the cannabis industry and we're very excited about it. And we can't wait to try them...