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[Music] hello everyone this is gary smith and i want to thank you for joining the arizona cannabis bar association for this year's bar convention due to pandemic obviously things are very different than they usually are we'd be presenting this live actually back in august but pandemic kind of prevented that so hopefully you'll appreciate this video version and we'll try to get you all the same quality information as we do even when we're together and assuredly next year well i shouldn't say shortly because we can't really tell but hopefully next year we will all be together but for now please sit back relax and enjoy the show and to start off as we always do with each year's bar convention i provide a slight industry update of the happenings of the last year so let's dive in shall we there are two deaths that happened in the last few months that we wanted to bring to your attention the first one which occurred some months ago was michael weiser i appreciate that perhaps not everybody in our audience knows who michael was but michael was one of the lead voices in arizona cannabis over the last decade he was a local director of normal and also was probably the loudest voice in the room at any given moment on the topic of legalization of cannabis as medicine we lost michael this year and there's a hole now in the cannabis space that he used to fill and his presence is missed and he was dearly loved and if you didn't get a chance to know michael you missed a unique individual and hopefully his legacy will live on the other death which happened just two days ago was ruth bader ginsburg justice of the supreme court and i need not express the importance that she played in american jurisprudence also if you can tell by my reference that this is a death that occurred two days ago this recording is actually being made on september 21st due to the changes in the bar convention we had to submit by video and do it early so this presentation is being made in late september anyway justice ginsburg as we all can appreciate was an absolute giant of the court and her passing is only 48 hours and the country is reeling right now so at the time you watch this video i have no idea what's going to emerge on the other side but i hope all ends well a brief glimpse at the last year there was a lot of activity and yet not a lot of activity the pandemic which we'll get into in a little bit had its impact on cannabis but not so much against it as much as revealing kind of its strength but here's a brief glimpse of just some of the highlights the big things were of course last year's reintroduction of hemp into illicit status courtesy of the farm bill and that brought us in october 2019 the usda releasing its hemp guidelines which of course was promptly followed in may of 2020 by the usd usda releasing revised hemp guidelines not unexpected this is new territory the growing of hemp in our country hasn't been around for many many decades and it's not so much a reinvention of something as much as an invention of something and with new laws and new industries a little turbulence along the regulatory way is expected and i wouldn't at all be surprised if there were yet further revisions later this year or early next year from usda additionally just a couple of weeks ago the proposition 207 recreational marijuana initiative here in arizona survived a supreme court challenge again i'm recording this in september and you're not listening to this until december so i have no idea as i'm sitting here how the election will shake out but just a few weeks ago there was a mortal threat to the initiative even being on the ballot but it survived and then the last point for 2020 is that arizona's patients have increased now to 275 000 registered patients now as i do every year i give you a little side by side demonstration of where arizona's statistics reside and as always i'm lifting these directly from reports from the department of health services and in this instance i have march 2019 in the left column juxtaposed with august 2020 in the right column if the august profiles are difficult to read i apologize for that these are lifted directly from dhs's own reports i literally copied and pasted them and for whatever reason 2020 was the year that dhs decided to go black and white so i personally missed the color it was certainly more legible on the reports and if you feel likewise maybe let dhs know you like colors better than black and white but in any event let's take a quick tour to some of the numbers and this first juxtaposed chart is of course just raw numbers of patients and cardholders but 2020 offers a new category of cardholder called lab agent and to remind you all last year the arizona legislature passed a new law mandating testing for cannabis which in turn created a new class of card holder called a lab agent and it's exactly what it sounds like lab agents are the folks who work in labs and test cannabis but they needed their own special license in order to be able to do that which is why you now see this license appearing on the scoreboard but of course the the most significant thing to look at is just the overall numbers of card holders and in particular patients and as you can see between roughly a year and a half ago and august 2020 again march 2019 through august 2020 arizona's roster increased by over 75 000. this next chart shows the patient characteristics now a very nice thing that dhs did for the first time this year was break this out not just by age but also by age and gender so if you look at the march 2019 box what you're going to see is dhs historically just gave you ages and then separately just gave you genders and gave you total counts now you can see how those counts break down not just by age but by age cross reference with gender and the interesting observation and i don't know what to take from it is that while women are strongly represented across all categories they are still across the board fewer than men what is the cause for that i have no idea that's for statistics statisticians and medical professionals to figure out okay next chart is the qualifying condition profiles and this is a list of of course all the statutory bases that one could apply for to obtain a patient card and as you can see the the numbers have increased across all categories between march of 2019 and august 2020 but not in surprising ways except for a few and the the two i wanted to point to if you look second to the top is cachexia which is kind of a sort of a catch-all term for chronic wasting and a year and a half ago arizona only had 127 patients registered with cachexia but here now in august 2020 that number is increased to 536. i don't know what the cause of that is but that's almost a 500 increase and it's unusual when you look at the flow of these numbers now it could be due to just how people are categorizing themselves on their application so for example cachexia is a side effect of a number of different maladies such as cancer which is another item that appears as a qualifying condition it could also be a side effect of nausea or a number of these other melodies including pain so it might just boil down to how people are checking the box on their form but i noticed it enough that i thought to mention it to you the next chart is the breakdown by county how is arizona responding to medical marijuana county by county and overall the numbers are not shocking it's revealing that the populations of maricopa county continue to kind of lead the the four but that also makes logical sense because those are where the population centers are but if you take a look at pima and pinal county both of those counties had a decided spike upward in the number of cardholders i don't know what the reason for that is either but clearly cannabis is much more popular now in those counties and it might be due simply to people just growing more comfortable with it and being less inhibited to sign up for the program and give it a try but i point this out in case somebody has more insight than i do now the next chart here is the breakdown of type and poundage of material sold and dhs tracks marijuana meaning the flour marijuana edible being of course things you would eat in the form of like brownies and drinks and stuff and then marijuana other which i assume means vape cartridges and the like but i'm not exactly sure what dhs means when they say other but the important thing when you're looking at this particular slide these are not annualized numbers these numbers are strictly for the months listed so you've got march of 2019 and august of 2020. the prior slides were all annualized numbers these are just these months and what we see is that a year and a half ago arizona was selling about five thousand pounds less marijuana than it's selling today but when you take a look and juxtapose that against the fact that 75 000 more patients have signed on it's not difficult to account for that 5 000 pounds all right now since we're heading into election season and again i'm recording this in september by the time you're listening to this the election will have happened we do have a recreational bill on the ballot i don't know how the election is going to go and i don't know what's going to appear on the other side but i reached out and grabbed this chart from marijuana business daily just to give you an idea of how our neighbor to the north is responding to its recreational program and as you can see sales are briskly up on a steady basis basis excuse me and the numbers have climbed now to 231 million dollars canadian that's that's a big number and i don't know what arizona is going to do in comparison to an entire nation but this is an interesting portent now this was the chart that really got me kind of excited and i i wanted you to see this as well because it suggests two things that marijuana is recession proof and also pandemic proof and and in fairness to that if you look at this chart there's no reference whatsoever to the recession or recessionary effects but we all know that we're already in recession that's been on the news but this chart does show you the demarcator with that red line that's running vertically that tells you kind of when the pandemic was finally being responded to in mid-march is about when the different states started going into lockdown so that's a good demarcator and then when you look to the right of that vertical line you see the consumption rate suddenly dip down skidder and bounce and then pop back up and sort of re-stabilize which makes sense because this you can almost track how the country responded to recession went into lockdown everybody's hiding out so of course consumption and acquisition went down temporarily but if you look it barely makes it through april before it sort of renormalizes and stabilizes so for investors that of course is an incredibly exciting chart other things going on so the safe and fair enforcement banking act the safe act it actually passed in the house in september of last year and here i am talking to you now in september of 2020 and it's flat out stalled and what the safe banking act proposes to do is essentially normalize banking for cannabis businesses uh if for whatever reason you're brand new to cannabis or cannabis law what you might not appreciate yet is that because of federal law there's no way for these marijuana businesses to engage in normal banking practices with normal banks it's very hard to get banking in marijuana land so this safe banking act was meant and is still meant to allow banks to engage with marijuana businesses and vice versa unfortunately it's stalled out and my supposition is that nothing is going to get done with this until after the election so again as i'm sitting here taping this this is stalled it's going nowhere i don't predict it to go anywhere but maybe by the time you're listening to this something will have moved my suspicion though it's going to probably pick up again after the next president is sworn in and we don't know who that's going to be but we'll all wait and watch another thing that happened in the last year this was kind of cannabis early earthquake the vape crisis which very quickly flashed up and very quickly disappeared but it was quite serious and and not to be underappreciated because it was the first time that a cannabis industry faced a products liability problem a massive problem and and basically what was happening around the country there were these random patients showing up in emergency rooms and hospitals with a variety of problems principally lung trauma resulting from use of vape pens and cartridges well turns out that the cdc was finally able to drill down and discover that it was the inclusion of a vitamin e oil being used as a thickening agent in sort of cheaper quality cannabis cartridges and as a result it seems to have now solved the problem because now people aren't putting vitamin e into these cartridges or at least they shouldn't be but we're not really sure what the long-term effect of this is or or how it's still going on right now because as soon as the pandemic hit the cdc's priorities turned away from studying this to deal with covet full-time which i think everybody can appreciate so while i suspect the vape crisis is officially over there might be some lingering effect so keep your eyes open and see what you see and for those of you in the audience who might be personal injury lawyers uh this might get you excited okay the other hot button item coming up into 2021 and beyond is social equity and this is kind of a new topic for a lot of people and what social equity is is a legislative or regulatory addressing of past societal ills related to discrimination and racism and what social equity is supposed to do is look at that problem and figure ways within this new industry how it might be able to do things in a positive fashion to try to re-level the playing field or or create some sort of well social equity as the name calls and as you see across the chart here all the way back to 2012 through 2019 and the dark blue means no program whatsoever the light blue means yeah kind of a program for years it's been sort of struggling along struggling along come 2016 it started to switch on and then still kind of limps along but arizona's recreational initiative prop 207 does contain a social equity component to it so if prop 207 has passed and again i'm recording this before the election so i have no idea but if it passes there is a social equity component that will reserve 25 licenses that will be available to be distributed on a social equity premise now the the struggle there of course is the statutes leave the social equity components of the program a little undefined and by intention so that regulations can be created post-election to address this and in that effort you're going to have a lot of hot contests to get on the board in order to be part of the group that's going to decide these things and then of course the actual rules that will qualify who's going to be permitted to be considered what sort of criteria is involved in qualifying for social equity and what kind of social equity perk or benefit or or the equivalent will be given all of these are open-ended questions now make no mistake we're talking about 25 licenses which in today's market are valued at approximately 10 million dollars each i realize that's not what one pays dhs to obtain the license but when these businesses are operating and sold intact with a management company etc you're talking 10 million dollars a pop so 25 licenses represents roughly 250 million on a bad day so you can readily imagine that this is going to be a place where people are going to want to come in and and aggressively fight for territory so 2021 my prediction it's going to be a bloodbath as people try to jockey for position in this social equity sector anyway that's the intro for this year we've got a lot of good speakers coming up so i wanted to keep it short and i appreciate your time and attention to remind you all i am the current president and one of the founding directors of the arizona cannabis bar association the panelists today are all with i think only two exceptions members of our association and we've been aro nd since 2016 we are absolutely rabidly devoted to the ethical practice of cannabis law here in arizona and our mission is public outreach and education and we invite you to join us we did i didn't update this slide so i apologize for that but we did raise our dues we used to be fifty dollars a year but now it's a hundred dollars a year but understand it's for a good cause the extra fifty dollars is being spent on updating and upgrading the cannabis bar association website and we're adding a bunch of new components including a private library that's members only so if you haven't joined us yet that's a huge enticement and i do encourage you to anyway thanks and enjoy the rest of the bar convention have a question about psychedelics and the law you're welcome to submit them please send your questions to admin at psychedelicalex.com submission of questions is not an assurance that they will be used on the show also please be aware that neither the submission of a question nor a response creates an attorney-client privilege between you and the show's host nor does an answer constitute legal advice information provided is for general purposes only if you need legal counsel you should hire competent counsel in your community [Music] [Applause] [Music] [Applause] you