Wana Brands CEO Nancy Whiteman Growth With Conviction (undefined:CGC)

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Transcript

Rena Sherbill: Nancy, welcome to the Cannabis Investing Podcast. I’m really happy to have you on the show. Thanks for joining us.

Nancy Whiteman: Oh, thank you for having me. Appreciate it.

RS: Yes, I’m happy to have you on. I don’t know if you know this, but I saw you at the Benzinga Conference in Chicago. And one of my favorite things about going to the conferences is my background is as a writer, so I’m an observer. And I like to see how people are without listening and, I felt like everything that I’ve ever read about Wana, I saw very much a human embodiment of the CEO moving around as a humble person and not just the center of attention or leading a big entourage.

And was standing with another couple of podcast hosts and we were commenting that to ourselves, that it really struck us. Anyways, that’s my whole preamble for, if you would share with us kind of your journey as coming on onboard in the cannabis scene and coming up with Wana and until we are today, Canopy Growth (NASDAQ:CGC) and all?

NW: Yes, sure. I’d be happy too. And, you know, I joke sometimes so that I come by my humbleness honestly because my story is one of truly grassroots kind of humble beginnings, so if you will. And you know, this is an ongoing joke. I think I probably said this a million times, but I’ll say it again that I always joke that I need a better back story in terms of how I got into cannabis, because there are so many people who have very, very inspiring stories about how they got into the industry. You know, our loved one, had a medical condition or they weren’t very driven by social justice issues, but my back story is a little bit less inspiring.

What actually happened was that one of my children, my older daughter had a friend over for a play day, and her dad came to pick her up. And at the time, this was 2010, and he was in commercial real estate. And that was being in Colorado and commercial real estate in 2010 was not really where you wanted to be. So I said so, you know, what do you do with these days kind of just opening up the conversation. And he said, oh, you wouldn’t approve, which, of course, peaked my interest immediately. And I said well, what would I not approve of? And he said, well, I started an infused soda pop company.

And although I was absolutely no stranger to cannabis shall we say, I actually was a stranger to medical cannabis and sort of the language of medical cannabis. So I said stupidly, oh what’s it infused with? I didn’t even really know what he was talking about. And he said marijuana which, of course, what we call cannabis back in the day was marijuana, right? So I said, oh that’s really cool. And one thing kind of led to another. And my Co-Founder and I ended up building out a kitchen with him. He was already kind of up and running, but just had a very rudimentary setup. And so, we built out a kitchen, and we started making edibles.

And actually, interestingly, we didn’t start with gummies. We started with, you know, everything under the sun because back in the day, there really were no data analytics company. There was no BDSA. There was no Headset. So although I have a formal background in marketing and market research, our market research really consisted of let’s make some stuff and see what people buy that was kind of our research. And so that’s actually what we did. And it really wasn’t until we started to get our products out in the marketplace. And I really started to get feedback from our end customers, not our dispensary customers.

But the patients who are actually using the products – how much relief they were getting from the products that it was the proverbial light bulb going off that I was like oh, my gosh. This is for real. This is a real thing. And then I became both fascinated and very, very committed to understanding everything that I could understand about cannabis as a plant medicine. And so that’s really how we started literally testing non-medicated. I always stress that because I did have school age children at home at the time, non-medicated recipes in my home kitchen. And it really was it was god, it was serendipity, it really was.

And probably just being always fascinated by the idea of having a product based business and just kind of sort of came along at the right time and being willing to take a risk. And I often say this particularly when I’m talking with fellow women entrepreneurs and younger entrepreneurs that I’m the perfect example of you don’t have to have everything figured out right from day one. You just need to take the first step and be persistent and keep going. So that’s a little bit about the background of Wana.

RS: I spent a lot of time this weekend hearing somebody talk about the importance of sometimes not the importance, but the advantage of sometimes not having plan and just being able to go for it and you don’t get all tripped up in psyching yourself out and you’re just kind of going from step-to-step and doing what needs to be done?

NW: And can I just say something on that?

RS: Yes please.

NW: And you know, I think and cannabis actually is the perfect industry for people who have the tolerance for that.

RS: Right.

NW: Because it’s particularly back in 2010, there was absolutely no roadmap. There was nobody. There’s no Harvard business school case study on this is how you start a cannabis company. You really just had to feel your way through it. And you had to be able to role with the constant regulatory changes and have some commitment and persistence. So I would agree with whoever it was that said that I really….

RS: Do you feel that you knew that you had it in you to start a company was that something that you felt within you? And second, part of that question is your friends comment or your child’s parents comment about you not being you know oh, maybe not being open to cannabis. Were you surprised that you were open to cannabis or did you know that you were open to cannabis?

NW: You know, as soon as it became legal, you know, which it was at that point then I was open to it. And you know, I had been a long-term [enjoyer, enjoyer is not a word] I have been a long time, you know.

RS: Consumer?

NW: Consumer of cannabis. And you know, I certainly had nothing against it personally. And of course, I thought it was very interesting as a business opportunity. So yes, I was – I would say I was open to it and, yes, I think there’s you know how two things can exist at once. I think I’ve always felt that I had a business in me and a very successful business in me, but if you had asked me exactly how I was going to do that. I don’t think I would’ve had a great answer for you. So it’s a combination of both things being true, it was.

RS: And what do you feel like you were able to, I guess, glean from your early days that you felt like you could do this. Like, this is something that you could really do?

NW: That’s actually an interesting question. I think one of the things that happened, and we’re based in Colorado. So my comments are specific to Colorado, but when Colorado kind of first went legal, it really was the Wild West. There was no real regulation in place. There was no third-party lab testing required. There was no you know, solvent testing or contaminant testing. There were no requirements for particular packaging or labeling or any of that stuff. And we always actually, one of the things that I think has always been a hallmark of Wana is that we actually third-party lab tested our products right from the get go.

So we always were very – we had a reputation for being very consistent when other people were they – literally people used to mark their products as being 1x, 2x, or 3x, and that was their potency that’s how they describe their potency. So I think what gave me confidence is that with every new – I don’t want to even say hurdle, because they were very legitimate things to require the regulations. But with every new regulation, what I could see is more and more people who thought this was just a, – luck and an easy way to make some money dropped out. And what I could see is that people who had persistence and commitment, and we’re willing to do the hard work of taking what looked like it was going to be easy money and turning it into a real business. We’re going to be the ones who survived and thrived and that was, Wana.

RS: So you knew from the outset we want to last, we want to go the distance?

NW: Yes.

RS: Like you wanted to be here at the end. It wasn’t something like, oh, let’s see if we can make this work?

NW: No, it was never for me a short-term. Let’s see if we can, you know, make some money and cash out of this real quick. You know, I tend to be the type of person when I – go into something, I go in and I go pretty deep. So that was always part of the plan. And I think, you know, that also came through for us. We were, I think, really one of the very earliest edibles companies to begin our expansion outside of our home state. So I knew really early that that was going to be a model that I wanted to pursue, that it wasn’t going to be easy because the state-by-state type growth model is pretty challenging.

But I consider us fortunate that we started so early because inevitably you make lots of mistakes. So, we made a lot of our mistakes early, and we learned from them, and then as more and more markets were opening up, we were really in much better shape and really ready to expand it in a meaningful way.

RS: How are you able I mean, it’s something that we’re seeing now in the market at large in terms of people re-pivoting from an expansive state to one of more focus on, you know, cash generation. How were you able to grow responsibly? Because I think anyone looking at Wana you know sees a well managed ship, I think for a long time?

NW: Yes, well you know, this is going to be maybe a little bit ironic, but not having any money in a weird way is a blessing. So we never raised a dime. We never took on any debt. We never gave away any equity. And because of that, we were very, disciplined and so we chose an asset light, capital light model for our expansion, which was a licensing model. And because we chose that model, we were really able to grow without needing a lot of capital. And you know, I used to always joke that, you know, I think about how I spend money, like I’m spending my own money, because it wasn’t my own money, right.

RS: Yes.

NW: So you know even though – even though there was sort of, you know, companies that came later that did much sort of sexier, more high profile stuff than we did from a marketing point of view. I was very practical. Like, if I couldn’t see what the ROI was going to be on it, I didn’t do it.

RS: And was that always your philosophy? Was that like, setting out that was always something that you were very conscious about? And similarly, in terms of not taking outside capital, was that also very conscious decision?

NW: You know, it was at one point I considered it and started doing some kind of poking around on it. But at that point, we were already cash flowing really well, and we were already quite profitable and a, very wise person said to me never take money that you don’t actually need. You know, I know you think you’re de-risking and I know you think you’re taking some money off the table, but be cautious about that because you’re giving up equity and you’re giving up control. You know, then you have investor that you have to answer to and you have you’re no longer in control of how you feel the business should be grown. And so, I backed off from that and never did end up raising any money before the transaction with Canopy.

RS: It’s interesting. I was just talking to an executive of a company recently, and they were saying how the whole reason that they went public was just because that’s where the money was coming from. And he very much did not want to go public, sounds like he still does not want to be public is, very much to what you’re speaking. Was that something that was, were you like, I also don’t want to become public? I, you know, I don’t want that headache. I don’t want those, challenge?

NW: That was – now that was a definitely a very deliberate decision, because I did have many people who wanted to talk with me about that and try to encourage me to pursue that. But, you know, it’s not my particular skill set. You know, I don’t have a public company, c-suite type background. And that particular type of role is the part of the business that I enjoy the least. I didn’t want to be spending my time with analysts and worrying about the stock price. I really wanted the freedom to grow Wana, the way that I wanted to grow Wana. And I didn’t see how that was going to be possible you know, in a public company situation.

And plus beyond that, my own preference is I had many conversations with companies who did go public, who ended up feeling that they went public too early. They were too small. The cost, even just the cost of being a publicly traded company, took them from being reasonably profitable to being unprofitable and they just really regretted it. So that was absolutely not anything that I considered for myself.

RS: Yes, where do you get your strength of conviction from, would you say? Is it a muscle that you’ve developed? Is it something that you attribute to how you were raised?

NW: Well I would, you know, probably a little bit of both. You know, my parents neither of my parents were business people at all, but they were very hardworking people, and they definitely demonstrated you know, grit and working hard as sort of family values. So I certainly got it from that. But I actually think a lot of times and again, I if there’s any young entrepreneurs and young women entrepreneurs listening, I hope they’ll hear this part. Confidence I don’t believe is something that you’re born with I think you earn it over time, from making it through difficult situations, knowing that you got through that and that you can get through other things as well. That’s where, for me, true confidence comes from. I don’t believe it’s some inborn quality that some people have and other people don’t have.

RS: It’s also interesting. I think you’ve linked confidence with conviction, which I wouldn’t necessarily do, although I guess that makes sense. Would you say those are kind of two sides of the same coin?

NW: That’s an interesting question you know what? I think one feeds the other. Like you know, I think if you have no conviction, then it’s – then the confidence is almost at a different level. It’s almost at a more superficial level, you know. And I think that deep confidence comes with deep conviction. I think that they are linked. But nobody’s ever asked me that. I think that’s an interesting question.

RS: Yes, yes. I like what you said, I like how you answered. I think that’s right. Well, you led me to the question. So this is prime podcast conversation. This is what I love about having a podcast. So if you would talk to us about your partnership being acquired by Canopy Growth and what that looked like, we talked about what you didn’t want to do. How did you know this was what you wanted to do?

NW: Well, since I had kind of ruled out, I had ruled out a couple of things. You know, I had ruled out trying to take Wana public. You know I, for the reasons that I mentioned, I knew that that one wasn’t really a good fit. But I also felt and now with the, you know, hindsight of almost two years, Yes, more than two years in terms of when we really started seriously pursuing this. I felt that it was going to be increasingly difficult for a small independent brand to grow and thrive in the industry. And so, I was looking for a larger partner to become a part of. And so, I did have many conversations with a lot of different types of companies and a lot of different types of situations.

You know, I talk to private equity firms. I really did sort of – I talked to people who wanted to do specs. You know, I really sort of ran the gamut of different possibilities that I thought might make sense for Wana. And with all of those conversations, I really was looking for who where did I feel that Wana would be valued and respected? And that I would be with a partner who wanted to help grow the brand and make the brand great as opposed to just. We are on a mission to grow at all costs and you are part of that that little mission that we’re on.

I wanted somebody who really loved Wana, the way I love Wana. And so, I actually had met Canopy many years before when we were looking for a partner in Canada. I had met some of the folks at Canopy. And so when they got back in touch with me, you know, this was now two or three years later. I really felt like, you know, the whole leadership team had changed. And I felt that it was worth having – it was worth having another conversation. Although our first conversations we’re not especially successful to be honest with you.

RS: Got you.

NW: So I did have the opportunity to talk with the person who is leading their corporate development team at that point and with David Klein who is the current CEO. And I just, I felt that that was going to be at least a conversation that we were going to be interested in pursuing. I felt some compatibility with them and their maturity as business people. And you know, with the backing of Constellation behind them and just the sophistication that that they as business people had, it seemed like it was going to be a good fit for Wana, and so conversations continued. And as they say, the rest is history.

RS: Was there – was there any concern about the Canada, U.S. kind of like the fact that your optionality into the U.S. once it goes legal? Was there any concern around that for you? In terms of not already being in the U.S.?

NW: You know, it certainly added complexity to the deal. You know, this was – remember this is a couple years ago, when I think we were – all a little bit younger and more optimistic.

RS: Our fingers were crossed and we believe it?

NW: Right that how things were going to work out, you know, on a federal basis.

RS: Yes.

NW: So, I think my belief then and my belief now in the longer term is that we will see movement of some sort. And of course, as you know, Canopy has already put a different structure in place now that is allowing them to exercise the option. But – there’s no doubt that that it added some complexity to, you know, what ultimately was going to, what the structure was going to look like. On the other hand, I would say, everything has a silver lining. And because it was not an immediate M&A situation, it gave us time to get to know each other as people and as businesses. And that has, that’s been a positive thing.

RS: Yes, we’ve talked a bit about this on the podcast, the notion of integrating companies, and you know, it’s not as simple as oh, let’s release this press release. It’s obviously a lot of work to integrate companies and cultures and strategies and personalities and what have you found to be, I guess, the most maybe surprising outcome of the deal or what is it afforded you to do that maybe you weren’t aware of? And part of that question is also well, I’ll let you answer that first because I can its maybe too much of a separate question?

NW: Yes, the first part was, what’s the biggest surprise, did I get that the part right?

RS: Yes.

NW: Biggest surprise. Well, you know, there’s I think part of it is what I said before is that I think I was more optimistic about the speed at which some of the federal changes would take place. Now that’s not specific to that transaction. Obviously, that’s a comment overall. But I think, you know, there are really, really, really significant differences between the Canadian market and the U.S. market. And I think that was part of the needing to get to understand each other perspective. And obviously, Canopy had had already made and then has subsequently made yet another investment in the United States.

So it certainly wasn’t that they were completely unknowledgeable about the U.S. But one of the things that I think that Wana really brought to the table is just our geographic coverage, right? So we don’t just know about California. We don’t just know about Colorado. We know what it’s like operate in, you know, 14 or 15 and more to, come different states. And so, I think probably mutually getting to understand the real differences between those markets has been one of the things that has occurred over the last year.

RS: Would you say one of the obvious points would be, you know, how you’re able to brand and what the packaging looks like? Would you put it beyond that, yes?

NW: Yes, definitely, definitely beyond that. But, you know, I’m going to just share kind of a little bit of a funny story, and I absolutely love the person who was helping with this. So this is not intended to be critical in anyway, but this is just an example. But I had asked somebody on their analytics team if he could pull some data for me on the size of the – high potency market in certain states. And he came back and he said something like oh, you know, 75% of this market was a high potency market.

And I said what? I said oh, I’m sorry. How did you define high potency? And it turned out that he considered a, 100 milligrams to be high potency. Because of course in Canada, that would be high potency, right? And I had to actually explain to him oh that’s not high potency in the United States, that’s a normal dosage. So sometimes there’s, even just things that are almost like we just – we just miss each other sometimes – on stuff that’s kind of its almost funny, but it just – it speaks to the real differences between those two markets.

RS: Speaking to investors, how do you think investors should be looking at those two markets or looking at companies doing business in those two markets?

NW: Canada versus the U.S.?

RS: Yes.

NW: Well, I think they have two. They’re both very challenging, obviously. I think you would probably agree that we’re at probably the most challenging point that we’ve ever been at in the industry, frankly, for both of those markets. In Canada, I think you have a situation where pretty much all the major LPs, you know, built out like they were going to be supplying cannabis for the entire universe and possibly the galaxy, right. And so you have, you know, these companies that built-up these $100 million gross of several of which I had the opportunity to go and see. And, you know, that has not turned out to be reality.

The U.S. did not open up as quickly as everybody was hoping, nor has the rest of the world. You know, now we’re even looking, you know, at Germany, for example, and now, you know, the initial rules that I’m seeing out of Germany is that everything has to be grown within Germany. I know that may change, but the fact of the matter is that the Canadian market way overbuilt. And so, it’s in a situation of, you know, the LP is really, really needing to pull back and consolidate. So, you know, that’s one situation.

However, at least they have the advantage of everybody has the same rules more or less, you know, being federally legal. The United States is a very, very different situation because we have a joke at Wana. We always say, every market is a market. And what we mean by that is that every market is a completely different – it’s almost like it’s a different country, right. The situations are so different, the regulations are so different, and there’s so many different things that that can and have gone wrong in so many different markets.

And so, in the United States, I think the challenge, and you know, I know, obviously, you all are – you audiences, investors, I think the challenge is really getting underneath what the strategy is of the various companies who are operating in the United States. And, really, you can’t just look at the company in total. You have to look at the underpinnings of them, which markets are they operating in? What are their strategies in that market? You know, we’re seeing now a lot of MSOs have decided that they’re pivoting to being CPG companies, for example, right.

And so, there’s just so many different sets of circumstances and challenges given different markets, and I’ll name two of the most obvious, if I may. One is the taxation situation. This is not a candy jar that we’re going to endlessly be able to dip into and pull out tax revenue. So, we’ve created situations in several markets where the juxtaposition of the taxation situation and the strength of the, call it, the legacy market or the illicit market, whatever it is that you want to call it, that is not operating under the same constraints from a taxation point of view.

The cost differential between being able to buy products on the illicit market versus the legal market is immense. And I think that states have not wrapped their head around the fact that you can’t endlessly tax and expect to get rid of the illicit market. And secondly, and I think our coastal states California and New York are great examples of this. If you don’t enforce, then the illicit market just gets stronger and stronger and the legal market has a more and more difficult uphill battle to fight. So, very, very different sets of challenges and situations in the two countries.

RS: Yeah, I know Wana got out of California. We’ve seen a lot of news this week about Curaleaf getting out of California and some other western states. And then you look at a state like Colorado, which doesn’t have the illicit market issue, but does have an oversupply issue, similar to Canada. How do you kind of decide about which states to focus on or what do you focus on now in terms of different states coming online?

NW: Yeah. Well, first of all, I would not say that Colorado does not have an illicit market problem. I think all states do.

RS: Okay.

NW: And I would also say that beyond the illicit market as it relates to cannabis, we have the synthetically derived hemp market, which is an enormous problem and an enormous challenge for the industry that is not getting nearly the attention that it needs to be getting. But to get to your question…

RS: Well, you can – I’m happy for you to expand on both of those points a little bit. First of all, would you say the illicit market is a problem just not as much as California and New York?

NW: Yeah. It’s probably not as much. And California and New York have different situations. I mean, California just historically truly has what I would call the legacy markets where you have growers who literally have been growing for decades and decades, grow very high quality product, and, you know have been selling it and the way that the legacy market and the legal market work together in California is quite a fascinating thing. They work together synergistically in many ways.

New York is a different situation. New York is just having literally tractor trailer loads of stuff shipped in, right? And I won’t grace it by calling it a legacy market because most of these places just opened a couple of months ago. You know, that card table in Times Square is not a legacy market. Okay. It’s just a plain old illegal market, right? So, they’re different. I resist painting everything with one brush because there’s nuance in everything in cannabis. And I just forgot the second half of your question, oh, the Delta-8 market.

You know, that is, you know, enormous. I’m trying to remember the exact number, but our VP of Innovation who’s wonderful and brilliant and amazing has been an instrumental part of the task force here in Colorado with the marijuana enforcement division looking at synthetically derived hemp products that Delta-9 and Delta-8. Of course Delta-9 can be derived through a full spectrum extraction, right. Delta-8 cannot. That is a synthetically derived product. It’s extracted using dangerous and harsh chemicals.

It is not being tested. There’s no regulatory structure around it. There’s no taxation around it. There’s no age gating around it. It’s very easy for children to get their hands on. And I think it’s something I’m going to and I can get back to and get you the actual number on it, but the estimates for that market, the vast, vast, vast majority of it is Delta-8, is something like $600 million or $700 million in the last here in Colorado. That’s about a third of the market.

So, we are absolutely kidding ourselves if we don’t think that the fact that we are allowing an unregulated and dangerous product to be sold to people under 18 in venues that are not age gated is not impacting the cannabis market, it is.

RS: No. It’s a great point. It’s a great point. I suppose that needs more highlighting, more education, more awareness.

NW: Yes. Tons and tons. And you know, I’m hoping, you know, this is – we’re now in year five of the Farm Bill. Farm Bill was passed in 2017, and there is a mandatory five year review. Of course, we’re hoping that we can shut down this loophole without shutting down the legitimate players in the hemp industry, that is certainly not my intention. I do want to see, I want to see it regulated, I want to see intoxicating levels of product, which are absolutely out there, kept out of the hands of children.

All the same things that are being required of the legal cannabis industry for intoxicating and even for non-intoxicating cannabis products should also be required of the hemp industry and absolutely we have to make sure that these products are safe.

RS: Yeah.

NW: Yeah. I think it’s actually a disaster in the making.

RS: Yes. Yes. One more thing to keep on our agenda. There’s always, kind of something else coming that we need to be paying attention to. In speaking to these different states coming online, how do you strategize, kind of where to go. I saw the – we saw the partnership with TerrAscend, I’m also curious how that works with your deal with Canopy? Are there certain people that you can partner with? Is it a discussion that you all have together?

NW: There is no rules around it. If that’s what you’re asking. So, the, you know, TerrAscend was, you know, a great choice for us in New Jersey. We’re also going to be partnering with them in Maryland. We’re switching partners in Maryland. As we look at markets, and I’ll be candid with you. New York is actually a great example of where we have a lot of very careful conversation. What we’re really looking for is a variety of things. So, we’re looking for markets that are large enough to warrant the resources to spend on them. And in some ways, our threshold might be somewhat lower than another type of model because we are using the licensing model, right?

So, we don’t have a lot of CapEx that we have to put into a state. And the way our financials work in those states is that the vast majority of our licensing revenue drops right to the bottom line. So, it doesn’t have to be an enormous market for us to be profitable there, but it has to be significant enough that it’s worth putting resources into because you can get, I always say, we’re an industry of magpies. We’re always looking for the next shiny thing, right.

So, it has to be large enough. It has to have a regulatory structure that makes sense to us. You know, with certain markets when they first came out, you know, with there can be two dispensaries in the entire state. Well, even if it’s a very large market geographically, that’s still going to be a very difficult model to make work. If it’s a medical market, we’re looking at what medical conditions they allow, because that becomes very significant.

So, there’s a whole variety of things. And then those are the most tangible, those are the ones that anybody can read. The less tangible ones are, can we find a partner that is going to be compatible with us where we feel that the chemistry is going to be good working with them and that we’re going to have productive working relationship. So, kind of all of those things come into play.

RS: I’m curious, speaking of the limited license states, do you feel like those are the states that companies should be focused on?

NW: Well, you know, that’s an interesting one. There is – it depends on what we mean by limited license because there is, what I would call, sort of the West Coast model, if you will, you know, sort of unlimited licenses, Colorado. I would put in that category. Oregon I would put in that category. And then you had what historically were the very limited license markets, which tended to be the East Coast markets. And then you had, sort of the in-between markets, which tended to be the Midwest markets.

Now, I’m generalizing here, because there are some exceptions. Oklahoma, for example, is a completely unlimited license market. I think that there are ways to make all of those situations work from a licensing perspective. That one is probably more for cultivation and dispensary strategy. We can make various different situations work. It does require a different approach. Obviously, you know, if you’ve got a market like Oklahoma that has a thousand plus dispensaries versus, you know, a market like [indiscernible] that, you know, until recently had, you know, a very limited number.

I don’t know the exact number. You’re going to staff differently. You’re going to be thinking about what field resources you need differently. So, I don’t think it’s a yes, no answer. Right? I think it’s, you have to look at it, sort of holistically, because, you know, again, you could have a situation like, New York, for example, where you are probably going to have a fair amount of licenses.

We all know that, you know, that first 150 have been, sort of set aside for social equity and justice applicants. But if they can’t get their hands around how they’re going to manage enforcement of the literally thousands of illegal stores that have popped up. Then the number of legal licenses may not be the key driver of whether that’s a good market or not.

RS: In terms of talking about edibles companies, Wana is Number 1 as it pertains to market share, is that correct?

NW: You know what? I actually don’t know the answer to that, Rena. You know, there’s no one source of data on that. And all the sources of data that exists are imperfect. They all use panels. So, what I think I can say is that I think we have the largest geographic footprint. And we’re certainly, you know, a top, you know, 1, 2, or 3. I really don’t know. I’m frankly not that focused on that. There’s things that are far more important to me than that.

RS: What are you more focused on?

NW: I am more focused on how we win. And how we win is an outgrowth of who we are, which is that, you know, I told you my story about how I started out kind of a little, you know, ignorant shall we say about the medical market, but now my belief is that the real winners and there’s a lot of ways to define winners. I happen to be a bottom line focused person, and I’m quite sure that we’re with the winner. They are – I’m positive on that one. But the winners are going to be the people who create highly differentiated product that is very effective and effective for what you might add.

So, effective, obviously, lots of people love to use the product recreationally. I like to use it recreationally myself, but there’s also enormously huge use cases for cannabis, sleep, anxiety, energy, focus. It’s the companies who are going to be able to develop sophisticated, highly formulated, highly effective products that command and deserve a premium price. That’s how I define winning, and that’s what I want to be.

RS: Well, first of all, I’m glad to hear you say about the different numbers because I myself find myself looking at them, I’m like, hey, where and where and what has happened? [indiscernible]? Yeah.

NW: At the end of the day, you know, we’re making a lot of money. I’m very happy and grateful. Very grateful in this environment. But grateful – I’m grateful, but I’m also – that’s how we run our business. That we run it with discipline and thought. We don’t engage in crazy discounting and racing to the bottom and bribing budtender, and, you know, everybody has some of those strategies up their sleeve, but at the end of the day, what I’d like to believe is that the best products will win.

RS: And I think also pointing to your bottom line markers, I think you can point to a few of those also in terms of pointing to your success. In terms of one of the ways I define success and I would put you in this category, also by what I’m about to say is, what you did with the money after the Canopy Growth deal? I found it extremely moving. I know that maybe some people look at it as just another press release, but I feel like the fact that you got this money and then really put it where accounts was – I found it very moving. I’d be happy for you to speak about how you came to that decision, how you allocated the money, what your thoughts were behind it?

NW: Yes. Yeah. This is really important to me. So, you know, this is when a transaction happens, like, what has happened with Canopy, and you know, we were fortunate in many ways. Timing was great. You know, we got an all-cash deal, which, you know, really is very unusual in this industry. And really, what I had to think about was what will really give my life meeting and joy? And it really is, it is helping other people. And so, I knew it wasn’t even a big decision, like, who shouldn’t I or shouldn’t I?

I knew immediately that I wanted to set-up a foundation. And I named it the Wana Brands Foundation, sort of in honor of where the money came from. And, you know, I think that a lot of philanthropic priorities come from what most the heart of the person who sets it up, right? And so, that’s where – what I have focused on. You know, I’ve talked a lot as we’ve been talking about my belief that that cannabis is, it’s really plant-based medicine. And so, the recent gift to Johns Hopkins, I gave two gifts to Johns Hopkins.

One was to their cannabis lab and one was to their psychedelics lab. Their cannabis lab – and both of them, by the way, are DEA approved labs, which means that they can do real research, right. Not what passes for research in this industry sometimes. But, you know, the cannabis lab is doing the foundational, kind of work that’s going to allow us to really unlock the potential of this plant in really powerful ways. And so, that’s incredibly meaningful to me.

The psychedelics lab is also incredibly meaningful to me even though Wana does not participate in the psychedelic space at this point. But their focus really is on psychedelics for mental health. And, you know, I think, like all of us, you know, my life has been touched by people that I love who have experienced mental health issues and addiction issues. And I think that the research that is coming out of Johns Hopkins and other institutions as well has the potential to be life changing for many, many people. And so, those are really important things to me. And we have really used the foundation in many ways to extend and expand what our corporate social responsibility focus and priorities are.

We give a lot to a variety of organizations for social justice. We do a lot with food security and helping people with food security and safety, whether it be sensible gun legislation or domestic violence. We had a really great partnership with the League of Women voters this past election period to help get people registered to vote. And I support voter rights and voter education. So, for me, it’s taking the things that are important to me in my life and being able to do more with them, and I feel really blessed to be able to do that.

RS: Yeah. I feel like the – it really came across even just in reading about it. Kind of your feelings behind it. If I may bastardize the topic by asking if you’re thinking about getting into psychedelics as a brand, but also my other question is, do you have conversations with other, I guess, company corporate leaders about ways of were – are they reaching out to you as ways that they can give back philanthropically or those conversations that you’re having with other people?

NW: You know what, I would love to be having more of those. And maybe as everybody’s [time frees up] [ph] a little bit as we get through this, really tough time, I would love to be having those conversations with people. Certainly, we do. One of the things that we do is, we try to do partnerships in each of the markets that we operate in. Like for 4/20 last year, we in the last couple of years has started calling out 4ward20 because we want to play it forward. So, in each of our markets, we chose a non-profit.

We happen to choose it last year around the topic of food security, all different kinds of models of people who are working on that issue. And in many ways, either we were working with our partner in that state or we were working with a dispensary partner in that state. So – but I think there’s an awful lot more that people can and should be doing, and I’m sure that there’s a lot of good work that’s going on that I may not be aware of, but I’m not yet having those kinds of conversations probably as much as I hope to in the future.

RS: People are like, yeah, we want money and then we’ll leave it away. First, give us some money then we can get away. Nobody’s got any money.

NW: Yeah.

RS: Just to the point about the psychedelics, is that something that you think about in terms of, like, the edibles? Getting into that at all?

NW: Yeah. I think we’re really pretty far from that, Rena, would be my guess is that, you know, I think that anything that looks like, you know, a macro dose at this point-in-time make sense to me to be done in a medical context. You know, micro-dosing, I think, you know, maybe someday, you know, it might look a bit more like cannabis, but I don’t think that day is anytime very, very soon.

I do think there’s, you know, tons of potential there and I’d love to be part of helping to be part of the research that, sort of unlocks that and helps us understand it, but I’m not sure that we were anywhere close to that. We can’t even get cannabis legalized.

RS: Yeah. Putting the cart before the horse.

NW: Yeah. Exactly.

RS: Yeah. Well, Nancy, thanks very much for a great conversation, and I appreciate you being part of the change and walking the walk. So, thanks for joining us today.

NW: Thank you for having me. I appreciate it.

RS: Thank you.