Cannabis Investing In The Age Of Legalization With Julian Lin, Tim Seymour And Pablo Zuanic

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How to best invest in the cannabis sector with Pablo Zuanic, Tim Seymour and Julian Lin.Compelling metrics for evaluating cannabis stocks include EV/EBITDA, EV/sales, and total addressable market....

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Best metrics to use when evaluating cannabis stocks (4:40). At this point in time, what is the best way to get into the sector? (19:00) Rescheduling, the Trump factor, investing in an election year (26:40). Transcript Julian Lin: I think the interesting thing about the sector is there's definitely something for every kind of investor. I think if you're looking for a more momentum, short-term trade, I think the operators makes a lot of sense, even the Canadian operators, just based on how they traded on historical volatility. But of course, I wouldn't say that only short-term investors could invest in them, but even for more long-term investors who aren't willing to overlook some of the nuances with cost of capital, with the operators, the cannabis landlords, the cannabis REITs are something that I have favored for quite some time, just given that they have much less than traditional, that these real estate investment trusts, and they trade out really compelling valuations, even now after the rally at 7% to 9% yields. Rena Sherbill: Tim? Tim Seymour: Hi. First of all, great to be here at Seeking Alpha's annual event, because I would say for cannabis, Seeking Alpha has been a very important voice. In my career, I've been an institutional investor. I've run hedge funds. I now manage an ETF, Amplify my ETF partner. We've got about $400 million under management in terms of cannabis assets. But the cannabis industry and the cannabis investment and the cannabis trade has been a retail trade. And to the extent that there are major obstacles and barriers to investing and entry, that's part of the reason. Part of it is that I think, in terms of risk and the ability to take on risk, and we're going to talk about some of the unknowns of investing in cannabis, and some of the things that make it really hard. I mean, I've been investing in emerging markets my whole career. So, when cannabis popped up as a thing, it was an obvious place for me to be investing because of what I take as a long-term view on growth for the sector. And that investors that are investing now, and it's been largely, call it retail investors, I think are here well ahead of big institutional capital. And that's a function of big institutional capital not able to invest because of some of the legal and regulatory restrictions. And frankly, because big institutional capital has got AI and Bitcoin and other things to chase that they think is probably easier to chase, even where you're in speculative markets. Rena Sherbill: Pablo? Pablo Zuanic: Yes, so my career has been mostly equity research in the consumer space. I started covering cannabis stocks about six years ago, gravitated to the sector because of my work in emerging markets, but also particularly in the CPG space, in the Constellation Brands (STZ), some of the beverage companies, tobacco companies, investing in cannabis. And I always start by saying, whatever sub-segment you're looking in cannabis, remember this is a very volatile sector. If you want to invest in cannabis, we think there's an opportunity very long-term, but there are technical issues, poor liquidity, no stock listings in the U.S., at least for the U.S. manufacturing companies, they trade over the counter. So there's a lot of technical issues that make the sector complicated to invest in. On top of that, it's very volatile, heavy retail investor participation, and of course, a lot of short-term trading, right. But I always say, if you're going to invest in cannabis, as anyone should, we do it in a diversified manner, put money in the sector, taking a long-term view, and money they can afford to sit on for a while, because again, it's a choppy sector. The only thing, I know we're getting into the details here, but what I remind myself, one thing is investing in cannabis, another thing is the industry. This is at least in the U.S., a $100 billion industry, $70 billion illegal, $30 billion legal. But those $30 billion, five years ago we were around $15 billion. So the industry, most states have legalized, so you've been taking share from the illegal market. One day when we have full federal legalization, you will have more innovation, less stigma, more acceptance, better distribution, we think the market will reach $200 billion, right. So, there's an opportunity here, but another question is, how you invest in it in the short-term and in the long term. Rena Sherbill: Which is what we're here to figure out, how to invest in cannabis stocks. We had a crypto talk earlier this morning, and talking about the nature of a burgeoning industry, and having to navigate so much volatility, so much risk, are they the same thing? There's a lot of questions on how to measure and value these companies, especially as we evolve in the marketplace. Tim, I'll start with you. How do you gauge, how do you value, what metrics do you use to evaluate cannabis stocks? Tim Seymour: Well, and to paint that picture, part of it is, why do people invest in cannabis overall? Pablo's referencing also just the nature of, is this CPG, is this consumer packaged goods? You're here at a sophisticated investor conference where you're hearing about consumer stories and consumption stories. So, cannabis as an investable place to allocate a dollar, historically, part of it is, yes, it's exciting to be part of a new trend and a new industry, but ultimately, how do you compare cannabis companies relative to peers in either CPG, retail, whatever we're calling it. And by the way, cannabis could be defined in many different ways. It could be seen as discretionary spend, it could be consumer staples, but part of the job for me as a guy that's managing a cannabis ETF is, first of all to be diversified, to try to give people exposure to a sector that we all at least can appreciate. There's an enormous amount of growth and we're still very, very early stages. So, I'm trying to capture the exposure to the industry across certainly the core weightings, the core sectors that have both the most investable dynamics to it, but I'm trying to give exposure to people who are investing thematically, and I'm doing it through an active fund. So, it's an active process. It's not waiting for a quarterly rebalance. So, it brings it back to, look, it's about meeting with companies that, first of all, I can track. Can I invest in these companies? Do they have financials? And just to be clear, the cannabis companies that are listed in the U.S. in many cases are Canadian issuers, and those that are listed in Canada in many cases are U.S. issuers. Some of this is, we'll get into this too. You guys know how this goes. We could spend an entire panel on it. I'll just say, I do care about fundamentals. I do care about bottom-up. I do care about companies that are generating free cash flow, and I do care about companies that have corporate governance profiles that I can understand, even though this is very much of a macro industry. And you can make an argument that if you invested along macro lines over the last five years, our fund's about to hit a five-year anniversary. That's been a lot of the story, but again, I would summarize it by saying there really is a research process. There's a process where we try to look at cannabis through a lens that would be similar to how I would look at a CPG company, even though - and we'll get into what metrics are the most important ones, but I think that's the goal I have. Rena Sherbill: Pablo? Pablo Zuanic: Yes. One thing is the valuation multiples, right? But the issue with valuation multiples, we're just looking at the next 12 months pretty much, right? So, yes, I look at valuation multiples. We look at EV/EBITDA. The group trades around 9, 10 times EBITDA. We look at EV/sales, trades about 1.5 times. What are your fast-growing CPG stocks? Look at Monster (MNST), right? Monster is around 6, 7 times sales, probably 25, 30 times EBITDA. So, in that metric, this being a high-growth potential sector, the group in general looks cheap, right? But more than the multiple, I like to think about the TAM, and I know the total addressable market argument has been overused, and it was used back in 1718 in Canada to raise a lot of capital, and we saw the disaster that that turned to be, and it continues to be used here in our own way, right? But I think it's important to remember what the total addressable market is, and the reason I say that, I believe that one day this is a $200 billion industry in the U.S., right? And that means one day depends on the base of legalization, but say by 2030, 100 billion times 50% wholesale ratio, 20% market share, 25% EBITDA margin, put it 20, 30 times multiple, you get to a $100 billion market cap company, $100 billion. The largest MSO is ‎Curaleaf (OTCPK:CURLF), $3 billion market cap. There's a couple, two or three others that are over a billion. So, if you can find the right stock here, and I'm not saying the Amazon (AMZN) or the Pepsi (PEP) or Coke (KO), because I think it will be more than just one or two, you would have significant returns over the next six or seven years, right? But that's taking a very long-term view, but I like to think that to invest in this sector, you either take a long-term view or you think you're very smart, and you can play the short-term trade day-to-day, but that can be very volatile. But again, in my opinion, once you go through the usual filters, like is this company too unlevered? Is this company burning too much cash flow? Is this company going to be around in two years? Or is this company going to sell out at the bottom in six or 12 months? Once you leave that aside and you look at the strong players, the ones that are building for the long term, I think you have a significant opportunity. And I always say, especially right now, given where we are in the sector, someone that can afford to, in a diversified portfolio, to invest in some of these key names, could be looking at significant returns on a seven-year horizon, in my opinion. Rena Sherbill: Julian, I'm happy to kick it over to you. And in your answer, if you want to include some specific metrics, happy to delve into that also. Julian Lin: Sure. So something unique to the cannabis operators, especially in the U.S., is because for the longest time, because cannabis was illegal on the federal level, they had to pay what is known as 280E taxes. So, a lot of these operators, they might pay significant tax burdens, even if they actually are not making money. That's set to be addressed with the recent risk scheduling announcements, but because of this important nuance, a lot of investors, you might not want to use the P/E ratios when looking at these investments because a lot of these names have negative earnings. However, if you assume a more normalized regulatory environment, you could use adjusted EBITDA or EBITDA. And that might give you a better sense of what kind of cash flow these names will be generating, following more normal regulatory conditions. Rena Sherbill: Tim, do you want to get into specific metrics? Tim Seymour: Yes. I think Julian's right. There's a certain time and a certain place to look at a P/E or an EV/EBITDA or look at even balance sheet metrics in terms of how much debt. I would say, we've had periods in the cannabis industry. So, if you look at the last eight years, we've probably had three to four distinct market cycles. And each one, I would argue, there's been a different investment metric that's spent the most time. In the early days, especially when Canada was federalizing, there was a metric called funded capacity, which is basically an asset-based multiple, which implied the companies who had the most funded capacity won, or they were going to be the biggest companies. Now, we all have learned, and it was probably not difficult to tell even then, having the ability to grow tons and tons of weed isn't necessarily going to mean not only you're profitable, but the industry and prices. And one of the big debates investors will always have is, hey, it's a commodity. I've invested in commodities my whole career. It's not a consumer product. It's ultimately, but we won't get into that. So, funding capacity at one point was really important, but as we got into certainly dynamics around where some of the biggest operators in the U.S. were putting up businesses in multiple states, they're referred to as multi-state operators. And to do that, it's very capital inefficient, right? You have to build the same business in Michigan as the one you have in California, I mean, with some slight nuances, but it's very asset-heavy. So, to some extent, it's about understanding what is their OpEx, and what is their ability to serve that OpEx? What is their ability to actually run at a margin profile that allows them to win? And back to P/Es, and Julian referenced this, I'm not sure I care as much about P/Es right now as I do about companies. I care a lot about sales. I really, I mean, and again, it's all relative, and I care about margin, but the cannabis industry right now is still figuring out what multiple it wants to trade at, and it's trying to figure out also where end pricing is going to be. And look, if it ends up being CPG, if Constellation Brands (STZ) is a big CPG company in the spirits industry that's got more than a toe into the water in cannabis, but if you think about and compare this to booze, like end pricing is all about marketing and brands, and we don't really have brands yet. So, it's a long way of saying that I think you can spend a lot of time being really smart about stuff you might be spending time on in other industries, but there's a time and a place to really drill in on the metric that makes the most sense. Certainly, as Julian said, free cash flow right now for the industry is extremely important because free cash flow translates into balance sheet reparation. It translates ultimately into what ability you have to grow and build out more assets. And the industry has really pivoted in the last six to nine months. Even before rescheduling was a headline, you were starting to see a handful of the companies, so whether it's a GTI, Green Thumb (OTCQX:GTBIF), even a Trulieve (OTCQX:TCNNF) in Florida, who is actually a multi-state operator too, but they dominate the Florida market. These are companies that were already starting to show operating free cash flow. And to some extent, it's an industry that was already lobbying the IRS to get rid of this punitive taxation even before rescheduling was a thing, even though it's been a very coincident combination of this happening. Rena Sherbill: Pablo, I'm adding on another question before I ask you about the metrics. I'm curious, Tim, you mentioned about price stabilization. Does it get more stable when we get to legalization? Pablo Zuanic: Yes, it should, but that question of legalization, there are many definitions of legalization, right. And I'll be brief, but in this whole discussion of multiples, how to think about the sector, it's mostly a macro trade. The stocks move in tandem to a great extent based on expectations for reform, right, whether more states are going to legalize in the short-term, Ohio, Florida, Pennsylvania, and what other big states, Texas, Georgia, could be down the road. So, it moves a lot based on reform at the state level, but also at the federal level. And when I say reform, it's not just legalization, but it's changes at the federal level that can make life easier for the industry, right? Whether it's tax relief in the case of removing 280E because of rescheduling, whether it's some form of a safe banking bill or some type of a memorandum from the DOJ or an Act of Congress that allows banks with a federal charter, depository institutions or financial institutions in general to service the industry. This is an industry that starts for capital. A lot of the dispensaries operate in cash for the most part, which is high risk. So, there's a lot of things that can happen in terms of reform that can help the industry's fundamentals and the industry at large, right? So, I gave examples there, rescheduling, 280E tax relief, banking reform. You will have other safe harbor language coming out of the DOJ that could allow for the uplisting of U.S. plant-touching assets, right? Companies that own plant-touching businesses in the U.S. trade over the counter with safe harbor language, perhaps NYSE or NASDAQ would be willing to lease those stocks there. So to me, it's more about what happens at the state level and what happens at the federal level in terms of reform that will dictate where this group goes, right? So, yes, we look at metrics, and I mentioned the ones, EV/EBITDA, EV/sales. We look at balance sheet cash flow, but it's really a sector trade. And many times when you have news flow regarding tax relief, it is the weaker companies, the ones that go up the most, because those that are stretched, that have high debt or are burning cash, with something like rescheduling with 280E taxation going away, where you're paying taxes on your gross profit, not your profit before tax, a lot of companies pay effective rates of 70%, 80%. So, the weaker companies tend to benefit more than the other ones, and the stocks have reflected that when we've seen this news. So, from that perspective, to me right now, where we keep an eye on more than anything, more than a model or more than EBITDA margin going from 25% to 30%, we're extremely focused on D.C., right? And probably there once a month, we talk to people in Congress, to staffers, because you need to understand what's going to happen, right? Whether it's coming out of DOJ, whether it's coming from Congress, whether it's coming from judicial actions right, that will help the industry. I mean, we can delve into the details there, but right now, in my opinion, the investment thesis on the sector, because in most metrics, the sector is cheap, if you're choosing the right stock, but to me, it's all about reform news flow and what we call legalization. The idea of legalization in the form that cannabis is sold like beer at liquor stores, with interstate trade, in a three-tier industry, I think that's still far away, but there are significant changes that could happen in the near-term or medium-term in terms of reform that would help the industry and of course, would help the stocks. Before we move on, the only thing I want to add here also is that, and not to get too technical, there's a question mark about how this industry evolves, right? Does it evolve like the casino industry or does it evolve like your traditional CPG sector? And what I mean by that, casinos are a very licensed, restrictive industry, and the ones that are lucky or fortunate to get a license and run it well can be very profitable, right? And we've seen that with some operators in this sector. Green Thumb (OTCQX:GTBIF), in my opinion, very astute. They've been able to be ahead of the curve. They benefited early on in states that went from medical to recreational, generated lots of profit margins and cash flow, and then they took that money and began to invest in Minnesota, Virginia, and states that could eventually go right, right? And they've always been one step ahead of the curve. If you think the industry is going to, over time, be like a casino industry, which means vertical integration is allowed, where you control the cultivation, the processing, the brand, and the retail, and it's going to also allow, it's going to be license-restricted in the sense that there's not a lot of competition, so you have abnormal profits, if you believe the industry will pay that way, that's great for some companies in the group, right? If you think the industry is going to be more like Michigan or California, which are extremely competitive markets, unlicensed, restrictive, low margins, then it's a different way to think about the sector, right? So again, it's not just about the metrics, but it's how does this industry evolve and what type of news flow or changes we get at the federal level in terms of reform, which I'm sure we'll get into more detail. Rena Sherbill: Yes, absolutely, and I think a lot of the questions around where we're at in terms of legalization and what it looks like and how to measure companies, a lot of questions about, okay, what kind of company should I invest in? Should it be an ETF like Tim runs? Should it be a REIT like Julian likes? Should it be a multi-state operator? Should it be a smaller player? Do you like a private player? Julian, I'll start with you. How do you think about that? How do you digest it and encourage investors to see that picture? Julian Lin: So, I think investors are looking to invest in this space most likely, intuitively, are going to want to invest directly in the operators just because it feels more direct to invest. The thing that's actually selling cannabis, I would just caution to not overlook some of the risks with some of their balance sheets, but one operator I do like would be a Florida, primarily a Florida operator named Cansortium (OTCQB:CNTMF), a very small name. Again, this is a penny stock, do your own due diligence, but Florida is set to vote on adult use legalization later this year, and Cansortium stands to benefit if that were to occur. But I think long-term investors, even if you're not familiar with the cannabis space, might like a lot of the cannabis REITs again because these names, because of their association with cannabis, tend to trade at a big discount to some of those net lease operators like Realty Income. One cannabis REIT I like is NewLake Capital Partners (OTCQX:NLCP). I like what they've done when their stock went to a 12% yield, the management as a company repurchased shares, something very unusual for a REIT to do. The company still has no net leverage on their balance sheet, and it trades at a 9% yield. Rena Sherbill: Mr. Seymour? Tim Seymour: Yes, I run an ETF, and I run an ETF in an industry that's growing and changing every five minutes, it seems. So that to me is, I'm offering an opportunity for people to invest in a sector that is an emerging asset class. And therefore, my approach is, the top of the balance sheet of the ETF is dominated by the biggest companies in the U.S. The U.S. is the biggest market in the world, as it is in every other industry, in other industries, etc. I own some Canadian players who, not because I love Canada, but because I think they're companies that have either a global business, or because they're companies that I think are really the ones that are piped into at least what a brand Trulieve is. Irwin Simon, who runs Tilray (TLRY), and Tilray 2.0 is a company, 1.0 being just not a place I would have ever owned a company, but after a merger. And here's a guy that started and built Hain Celestial, he understands how to build brands. They've been slowly buying up actually craft beer companies, and are the fifth largest craft brewer in the U.S., along with being a major cannabis player. But then, you have other players that have actually strategic relationships, whether it's a Constellation Brands, or in Canada, again, you've got companies that I think of at least because of the federally legal status, it's brought Altria (MO) to the table, it's brought British Tobacco (BTI) to the table. Those companies are not necessarily interesting outright in terms of their business, but because of those strategic partners, I think about wanting to have some exposure there. I do own the REITs, I do like the REITs. I own (REFI), which is Chicago Atlantic, the ticker is REFI, here’s the ticker, it's a pretty good ticker. But it's a combination of having a view that on a trailing basis, a 15% annual yield in an industry that's generating more free cash flow, I think that's pretty interesting. But again, I take the view that this industry is going to continue to change. And part of my job as a PM, and my background is in emerging markets, I mean, I lived in Russia for a couple of years, I've invested in Brazil and China and India, and all these places. I don't take a view that the world stands still, and trust me, I kind of live by the credo, you only invest in a good neighborhood. And I don't mean the place is on the map, I mean, look, if you're investing in cannabis, when cannabis is running, you want to be here, and when cannabis is diving, you don't want to be here, but most of the folks in the room, I think you also have part of your portfolio that's invested long-term, and thematically long-term, especially in an active approach. I think that's how you want to invest in cannabis, because I think we're all here to say, this is an industry where the addressable market continues to grow. I do care about what happens in Washington, but meanwhile, state by state, you've got states that are legalizing and putting adult markets in place. At some point, you're going to have, and we're seeing with Ohio, and debate what you want, but I think it's a red state, you've got legislators going to Washington, now being backed in a red state, and they're going to pass cannabis legislation at some point. Meantime, the companies are operating and building businesses. So that's, I try not to be overly righteous about it, I try to accept the market I have, and I try to also understand that this industry is going to grow. And I'm not here to invest on behalf of my ETF investors, saying I think federal is going to happen next week, next month, next year. I have a view on that, but I think that's not the right way to invest in the sector. Rena Sherbill: Pablo? Pablo Zuanic: Yes, more than specific stocks, I would just echo some of the comments here, in terms of this is a global industry, right? You walk down Las Ramblas in Barcelona, or the Brandenburg Gate in Berlin, people are smoking cannabis, right, whether legally or illegally. Australia medical market is actually bigger than Germany right now, but oh, by the way, Germany just had some significant changes in their narcotic law, that could mean that market will grow by 5, 10 times, right? 0.3% of the population in Germany uses medical cannabis, in Florida and Pennsylvania it's close to 4%. So, it's a global industry, and that always brings me back to what's investable at the moment, right? So, let's make an assumption that over-the-counter stocks, you cannot invest because it's only $1 million or $2 million a day, at best, or $5 or $6 for some. So what's investable, right? You have companies that are listed in NASDAQ, that are called Canadian licensed producers, but these are really companies that are global companies, right? Tilray, Canopy Growth (CGC), and Aurora Cannabis (ACB), and I'm not recommending them per se, but I'm saying these are just like in the forestry and mining industry, Canada built a moat globally, I think that they've done that in cannabis, right? Cannabis was legalized there at the federal level back in 2018. So, there's been lessons along the way, but these companies are well-positioned in Australia, in Germany, and other parts of the world to benefit. Have they been smart in terms of investing their capital to get ready for U.S. legalization? There's a question mark there, whether some of these Canadian companies have or have not, but I'm just saying, in terms of what's investable, right, some of the three names I mentioned just now, they can trade $100 million, $150 million a day, and they're listed in NASDAQ. Some of the other companies, again, are plant-touching, but it's a global industry. If you want some names, I like InterCure (INCR). It's a company based in Israel. They export to various parts of the world, including Germany, and they have, of course, a know-how of Israel in terms of legal cannabis. We also like some of the Canadian names that were mentioned here, but I like, for example, Village Farms (VFF). It's one of the largest producers in Canada, number two in the recreational market right now, but it's a company that can produce at scale at low cost, so they will probably benefit from the export markets, right? And in the U.S., there's a number of names that we like in the ancillary services, finance, as well as plant-touching. The issue, again, is that they are not so investable for everyone, given that they trade over the counter. So that's the issue there, but again, we've stepped back. I know that we don't like to talk too much about federal level reform, but I look at, right now, we have something called - I don't know if we want to touch on risk-sharing or not. Rena Sherbill: Go ahead. Yes, please. Pablo Zuanic: So, I think that, given - and again, I want to emphasize, global industry, I like to think long-term, and there are opportunities in this sector. But right now, there's something very significant going on, which the stocks are not reflecting, right? There's a scheduling review of cannabis that's going to move it from Schedule 1 to Schedule 3. Cannabis has been in Schedule 1 for 50 years. President Biden ordered a review back in October 2022. And we think that, based on everything that we're looking at, most likely by November, we will have a final rule from the process that we're going through right now. We're going through hearings. We are going through a public comment period. DOJ and DA will have to write the final rule, put it on the federal register and publish it, but we believe that that will be implemented before the election, and that will be significant for the industry, one, in terms of tax relief, but also because it removes some of the stigma, right, for patients, for legislators at the state level, at the federal level. So, we're keeping a very close eye on the scheduling news flow and the process, literally, day-by-day, but we think that's a key catalyst for the group. Remember, this is a sector that after February, if we look at the U.S. cannabis sector, using the (MSOS) ETF as a metric, this sector peaked at 55, that ETF, in February 2021, after the Georgia run-off. And right now, we're at about seven, right? So in our opinion, there could be upside here if things play out the right way at the federal level. Rena Sherbill: One of the reasons why I'm so excited about this talk is because there's such a small pool of investors in cannabis, and there's good reason for that, but I think there's also good reason for there to be more investors. And so the fact that this is a general investing conference, and we have such outstanding cannabis analysts speaking to us is a real gift. I was going to ask about institutional investing, but I'm kind of more excited to see if any of you have questions and to leave enough time, because we do need so much insight into the sector. Yes, please go ahead. Male Speaker: So, this is an election year, right? So, what type of news or what type of movement you see happening this year in terms of the cannabis, whether it's positive or negative? Pablo Zuanic: Why don't you take that? Julian Lin: Yes, I think we already saw rescheduling of being moved by the DOJ and President Biden. That's a big one. Even though we already got the news, it still hasn't officially happened. So that actually might be something to look forward to, but the one that I'm most enthusiastic about is definitely the vote in Florida for adult use sales because that is something that could really, for the operators in Florida, including, I mentioned, Cansortium and the big giant in the state, Trulieve (OTCQX:TCNNF), they could see their revenues and cash flows jump substantially if adult use sales are legalized there. So for them, - in Florida. So, for some operators who have disproportionate business in Florida, legalizing cannabis in their state is similar to just like legalization in general. Pablo Zuanic: The Trump factor is something that everyone investing in cannabis has to think about right now. Maybe some reporter will ask the question at some point before the election. Is he going to say states' rights? If he says states' rights, like he said, for abortion, that would be very bullish for cannabis. In terms of the election result itself, if rescheduling gets implemented before the election, it would be difficult for the new administration to reverse it. They would have to start a whole review all over again. And that would be a three-year process. And then, could there be a Congressional Review Act that reverses the whole thing? Given how well cannabis polls, 90% for medical cannabis, I have a hard time thinking that the new Congress, whatever the makeup of it is, would vote to reverse the rescheduling rule. So, we are quite bullish on the rescheduling, even with a change of administration. Male Speaker: What impact on valuations and cash flow has this explosion of the threshold THC products being able to use the USPS have on both public companies and private companies in terms of increasing viability and just increasing cash flow? Because I know that's been a huge issue. Julian Lin: Well, so the question is about hemp-derived THC products, which through the Farm Bill are kind of - by the way, the Farm Bill left us all - pardon the expression half pregnant in terms of what to do with hemp. And so, there are derivative products, Delta 8, Delta 9, that in different form factors and segments have caught on - are big, big sellers. And I know the question is just around both the profitability of that segment and what it's meant for either some of the players. What you're going to find is that the major U.S. operators in cannabis, whether you're talking about Curaleaf, Green Thumb, Trulieve, Verano (OTCQX:VRNOF), Cresco Labs (OTCQX:CRLBF), these are the five biggest companies in the U.S. They're not focused on that, or at least if they are, they're not telling you they're focused on it because there's still - frankly, I think there's a lot of regulatory heat. And in Washington right now, there are bills to ban these products. And to be honest with you, for a sector that - I think we all really want this industry to be regulated and regulated in the right way. And I think that leads, by the way, to valuations. So, when it comes down to these products that 12-year-old kids could buy at gas stations at C-stores, I don't think anybody really wants that. I mean, that's obviously putting a personal view out there on this, but I think ultimately what is interesting about hemp-derived THC is I think it spurred the beverage segment in cannabis because this is the way a lot of these products hit the shelves. And I do think beverages are going to be a massive part of how cannabis companies operate. And right now, it's through hemp-derived. We could talk about this for a long time, but it's a fascinating thing that's happened as a result of, I think, incomplete legislation. Pablo Zuanic: Can I just - one very quick thing. I mean, I find that stigma is a big issue here, right, because when people think of cannabis, many think of, stone or wasted, but when they think of alcohol, they think of a man sitting in a very fancy restaurant with a glass of scotch. But, so that has to change. Cannabis helps for older people, for chronic pain, veterans with PTSD. You have a lot of benefits from cannabis, and it doesn't always result necessarily in someone being wasted. So, I'm not, like, advocating, but I'm just saying there's too much stigma out there that nobody thinks of someone when we think of alcohol, they don't think of a guy, throwing up or puking or on the floor. But when they think of cannabis, they think of someone in a very poor state, and they should think otherwise, in my opinion. People helping with cancer treatment, being helped with cancer treatment. There's a lot of benefits to the product, but there's a lot of stigma that has to go away. And it doesn't help when Congress is made up of an older age group to some extent. Rena Sherbill: That's a great last point to end on. Unfortunately, we're out of time, but I really appreciate you. I really, really appreciate Julian, Tim, and Pablo. Find out more about Cannabis Growth PortfolioEditor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. 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