Keep Your Eye on Ohio: Why California’s Failures Are Michigan’s Success, and the Global Cannabis Landscape ft. Hirsh Jain

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Bryan Fields: What's up guys? Welcome back to another episode of The Dime. I'm Bryan Fields, and with me as always is Kellan Finney. This week we've got a very special guest returning to the podcast, Hirsh Jain. Hirsh, thanks for your time — how are you doing today? Hirsh Jain: Hey guys, how are ya? Bryan Fields: I'm doing great, excited to have you in town. How are you doing? Kellan Finney: Doing well. I'm grateful to have you here. How are you, Bryan? Bryan Fields: Yeah, I'm stoked. Before we started recording, I was already pestering Hirsh trying to figure out the industry's current issues — trying to understand: does this make sense? Why is this going on? What, if anything, makes sense? And I think before we get right into it, Hirsh, we've got to talk California. Help us understand what's currently going on. Should we roll back prohibition? What are we doing at this point? Hirsh Jain: Totally, yeah, let's talk California — honestly, I could talk about California for this whole episode, but let's dive in. I think at a high level, California kind of crystallizes a pretty failed approach to regulation and policy in cannabis. Let's start with the facts to substantiate that claim. California's market has been in secular decline over the past four years — the most recent quarterly sales in California were 30% lower than they were in the second quarter of 2021. Just digest that stat: the California market has declined about 30% in total sales over the past four years. Right before we recorded, Headset put out a report on California showing that the state generated about $300 million in sales in the month of June, whereas Michigan — a quarter of California's population — generated about $270 million in sales. So think about that: California is generously a four-billion-dollar market. If it were performing on a per-capita basis like other states, such as Michigan and Montana, it would be a thirteen-billion-dollar market. California is nine billion dollars short of what its sales should be. And if you zoom out further, the U.S. cannabis industry is a $30 billion industry. That means if California were performing as it should, the U.S. industry would be a $40 billion industry, not $30 billion — a third larger than it is now. Instead of talking about 400,000 people working in the U.S. cannabis industry, we'd be talking about 600,000. We can unpack the reasons why, but I think it's indisputable that California is an anchor around the neck of the U.S. cannabis industry. And one of the unfortunate things is that the regulator in California, the Department of Cannabis Control, seems insistent on not acknowledging that reality and continues to insist the market is growing — which is frankly Orwellian given the stats I just laid out. So that's where we're at in California. Bryan Fields: Those numbers are staggering — they're almost hard to hear and to actually process the size you're referring to. So let's talk about the regulator. Is it fair to put the blame just on them, or are other forces at play driving these challenges? And do you think they're aware that they're limiting the market? Hirsh Jain: Yeah, so to unpack that — is it fair to put all the blame on the Department of Cannabis Control? No, because the DCC is charged with executing the laws that already exist on the books, and we'll talk about why those laws are so flawed. That said, is it justifiable, even required, to criticize their performance? Yes. So let's talk about the laws on the books that are outside the DCC's control. I think everyone listening to this podcast knows California has one of the highest tax structures in the nation. We're recording in early July, and on July 1st those taxes increased further, with the state excise tax going from 15 to 19%. That's one of the reasons California has such a problematic market — tax rates are very high. Someone defending California would also say cities have the ability to decide whether they want to ban cannabis businesses, and a lot of cities haven't opted in — that's why sales are so tough. They'd also say California has a very robust legacy market, so of course it's going to have a hard time competing with that. I think all of those things are true to some extent. But going back to the Michigan example — a lot of what I just said about California could also be said about Michigan. Michigan has long had one of the most robust caregiver markets out there, a gray market that really resembles California's. And yet it has still managed to nearly catch up to California in sales. Michigan has that same robust illicit market, and it also has local control, where cities decide whether they want to allow cannabis businesses. On that specific point about cities not opting in — cities in California aren't opting in because the system is a disaster, and I say that from firsthand experience. I sit in these city council meetings, and just to give an example, if you look at the Redondo Beach city council meeting — Redondo Beach is this beautiful beach town just south of LAX — there is no cannabis retail there. In the South Bay, those beach cities just south of LAX, if you go back to the July 1st city council meeting, Redondo Beach basically said: yes, we know voters support legal cannabis here, but we don't want to allow it because we don't think we'll generate the tax revenue we'd expect, since these legal businesses are failing in every other jurisdiction. So a failed regulatory climate is what's contributing to cities not opting in. You can contrast California with other markets — they're not perfect either, but if you look at Ohio or New York, initially only a few cities opted in, but when they saw neighboring cities generate tax revenue, they said, "we want a piece of that pie too," and you see an incremental process where more cities come online. That's not happening in California, because the cities that have opted into cannabis retail there only get headaches — they're not collecting tax revenue, businesses are folding, and it's been more chaos than it's worth. We can talk more about the DCC if you want, because there's a lot to unpack there, but that's the regulatory and legal climate in California. Bryan Fields: So where's the right approach to fix it? If we've got this chicken-and-egg dilemma — say, Hirsh, last time we spoke you were kind of the drug czar for the Trump administration in this thought experiment, and we were pretty close with some of the guys — let's say we started in California. Let's say you're the California czar: "put this market back under control." Where's the first step, the lowest-hanging fruit? How do we get this program back on track, make it make sense, and start getting counties to opt in so we can get the revenue, so these businesses can grow, so our numbers can be where they need to be — so we can beat Michigan? Hirsh Jain: Yeah, everything I say here is going to be obvious, unfortunately. The first place to start, if I were the governor of California, would be to lower the tax burden on cannabis businesses. And I think it's important to be very honest here, because there's sometimes an attempt to shade the truth about who's responsible for these tax increases. So let's be absolutely clear: the tax rate went from 15 to 19% on July 1st. That tax increase was set in motion at the behest of Governor Newsom back in 2022, when the state legislature suggested cutting taxes, but Newsom suggested that eliminating the cultivation tax should be paired with a future increase in the excise tax. The reason he did that is because the beneficiaries of that tax revenue are politically important to him. That's just an objective fact. So the first thing California needs is some element of leadership that prioritizes a legal cannabis economy over funneling money to interest groups that could be useful to Newsom in a 2028 campaign. Going back to the idea of leadership — there was an effort by a lot of folks in California, myself included, over the first six months of the year to prevent that tax increase. There was a really robust lobbying effort; anyone following the industry saw the noise that was made. Governor Newsom was totally silent during that process. It was only after that potential tax freeze was killed that he meekly suggested he was in favor of freezing the tax. So that's one thing — a total absence of leadership at the governor's level. There are other things we can discuss, like municipal incentives to encourage cities to come online, but the fundamental point is that if these were sustainable businesses in the cities that allow cannabis retail, other businesses would start opting into the system. The other thing is basic competency and government accountability. It's been well documented that the state has allocated money to cities to help build up their cannabis programs, but somehow in California, millions of dollars the state allocated to cities to shore up their cannabis programs has just magically gone missing. The only thing you can call that is graft — in a state that spends tens of billions of dollars on homelessness that isn't accounted for as the problem gets worse. This is just part of a pattern of governance in California. There's more we could say about the regulatory burdens these businesses face — the licensing fees in California would make people blush in other states — but those are some of the most basic things: leadership and competency, which are totally absent in California's experience. Kellan Finney: At least they're consistent, right? Across the board. Hirsh Jain: And maybe I'll give you one other example of why more cities aren't opting into cannabis in California. It's been well documented — if you read the LA Times, the paper of record in California, they've documented extensively how the testing regime the Department of Cannabis Control has instituted is largely ambivalent to a whole bunch of pesticides and toxins that exist in cannabis products. Basically, the testing regime we've put in place for legal cannabis — which was supposed to be the whole point of legalization — has been very faulty. I can't tell you how many city council meetings I go to where prohibitionists stand up and say, "why do we want to legalize this industry? You said the point was to make it safe, but I'm reading in the LA Times that a lot of this product is inverted or tainted or dirty." Now, I'm not suggesting those prohibitionists have good intentions — they're looking to leverage any argument they can to stifle the legal industry. But if the basics were being attended to in California from a regulatory perspective, that would give a lot of these stakeholders more confidence to opt into the legal industry. Bryan Fields: Do regulators have a hard job? Hirsh Jain: Do regulators have a hard job? Here I'm going to be very honest. It's an interesting thing — there are a lot of instances of regulatory malfeasance in California, and I often hear people use the refrain "regulators have a hard job," where there'll be some scandal and a journalist will say, "well, there was this scandalous thing, but regulators have a hard job." And look, in a literal sense that's true — regulators do have a challenging job standing up this new industry. I understand that as a literal statement. But if you take a step back, the head regulator in California makes almost $300,000 a year — I'll just repeat that, almost $300,000 a year in salary, paid for by the taxpayers. If someone holds that seat for five or six years, that's millions of dollars in salary, and that doesn't even get into the Cadillac benefits California gives its public employees — benefits that would make Jamie Dimon blush. This is public information. So when you hear "regulators have a hard job," yes, it's true, but if you're making a couple million dollars over the course of several years in that job — that's as much as the average American family makes in a lifetime. So who really has it hard here? I would think that working class people have it much harder. And perhaps another thing — when that trope comes up after the latest scandal, I think to myself: isn't that the point? When we put people in tough, important jobs, aren't we supposed to hold them accountable? Isn't that the responsibility of citizens toward public officials, and of journalists? We don't say "the president has a hard job, so whatever" — we say they have a hard and important job, and it's important to hold them accountable. I'm much more sympathetic to the working-class people who put their life savings at risk to participate in this industry because they thought their government would give them a fair shake, than I am to regulators. And if I can be completely honest, especially when I hear journalists say "regulators have a hard job," I think this is kind of a class thing — journalists are more likely to go to cocktail parties with regulators than to engage with working-class people. That's just a fact. There's an inherent sympathy for one class of people — maybe people who have an advanced degree, the same way I do — whereas the real sympathy should go to people who don't have those privileges. On the DCC's performance — the testing issues, the accusations of retaliation and fudging data — this has all been documented by the LA Times, SFGate, and Weed Week. This isn't just me; these are publications putting it out there. What I'm saying is what everyone else in California is saying in private — and look, I've got the group chats to prove it. Sometimes people say very complimentary things in public but something quite different in private. All of this is substantiated by the facts. I think the most charitable read is that sometimes people are afraid of retaliation from regulators, or they want to be friends with them. But our responsibility as citizens is to hold people accountable, especially when we're paying their salary. So I'll just say again — everything I just said is what's said often in private in California, and I think it's important to be honest instead of trying to play teacher's pet in the hope that maybe they'll favor me, or favor my client, or come on my podcast. Bryan Fields: The fear of retaliation is real, I'm sure — the fear of retribution for speaking up. And I think you're right, we should hold people accountable for those things, and they should be incentivized for a successful program, not just for killing a program, however it's currently structured. I wonder if there's a way to realign incentives so both sides can work toward a shared goal — here's the goal we want to achieve, your job is to enable safe, regulated access, here's how we make that enforceable, and tax collection is a separate issue on top of that. It's a super complicated issue, but I want to highlight that the people who put their life savings into this business, who are getting crushed every step of the way, are the ones we're trying to help — they're the ones taking the risk, putting themselves out there. Instead, the government just smashes them. And then the Michigan comparison is just crazy — you look at that Headset data and think, why? That's the first question I asked when we saw it: is it the fact that they have the lowest prices in the country? Is that why they're topping the charts? Hirsh Jain: Totally — and we should talk about Michigan, because Michigan isn't perfect either, there are plenty of challenges there too. But I still think the comparison is useful. Before we get to Michigan, though — Bryan, going back to what you said about holding folks accountable or measuring performance differently — look, I'm not naive, none of us are. There will always be some element of an adversarial relationship between the regulator and the regulated; it's not always going to be kumbaya. But at a certain point, if the impact of a regulation is destructive of the very ends the regulation was meant to serve, that has to be a lightbulb moment. If we say we want regulations to protect the environment, but California's national forests are being decimated by illicit cartels, we have to admit we're not achieving our intended outcomes. If we're regulating these businesses for safety, but we're just enabling an illicit market that's destructive of public health, that has to be the moment we say we've gone down the wrong regulatory path. So it's complicated, but there comes a point where we've gone so far off the rails that we need to be honest about it and course-correct. States like New York aren't perfect, but at least at one point admitted, as Governor Hochul said, "this is a failure, we need to change leadership here." California seems incapable of admitting that. Until you face something, you can't change it — not everything that's faced can be changed, but nothing can be changed until it's faced. That's the important lesson. Now, Michigan — there are plenty of people who'd point to its imperfections. The Michigan market has had its own challenges with inversion, and a very high rate of business failure because pricing has dropped below the cost of production. There are plenty of challenges there. But why has Michigan almost caught up to California? One, it has much more robust retail access than California — these cities actually let cannabis businesses operate. In California, there are recurring stories about tax revenue falling short of goals. In Michigan, the most common story is "hey, this town got three new fire engines because of the cannabis business." Not every business succeeds, but municipalities have an incentive to opt in. In California, it's more like, "I spent all this time developing a cannabis program, these businesses didn't even open, or they failed, and then I got stuck with a huge tax bill" — what city manager wants to sign up for that? And the other piece is that Michigan has one of the lowest tax rates in the country, while California has one of the highest. It's not rocket science. Both states have had longstanding illicit markets, but only one of them has managed to make its legal market price-competitive with the illicit market. And I know people will say Michigan is doing well because it borders states with an influx of traffic — yes, that's true to some extent, but California gets 300 million visitors every year. The notion that Michigan is unique in having out-of-state residents is a little misguided. And yet when those visitors — when you guys go to Disneyland next with your kids — you have to drive about half an hour to get to a dispensary from Anaheim. That helps explain why that out-of-state demand isn't generating sales. Bryan Fields: Is that your way of launching Disney into the cannabis industry? Because that would be — it's like, "here, Bryan, bring the kids, here's an edible, good luck." Hirsh Jain: I had this problem recently when I was at Disneyland, so it hits close to home. It's like, "you want me to drive to Stanton?" Bryan Fields: Oh my — guys, where's Walt? I need help here. Hirsh Jain: Yeah, so. Kellan Finney: Michigan, though, has a really strong middle class, right? I think that plays a huge role — you were just describing the journalists and the stories being told in California. I think the middle class has more of a say in how that message gets distributed to Michigan citizens, so like you said, now it's fire trucks and "we're helping the community," which helps create that momentum. The other state with a really strong middle class is Pennsylvania, so it'll be interesting to watch what happens when Pennsylvania comes online. They also have a really high GDP — Michigan and Pennsylvania have similarly high GDPs, which I think plays a role in disposable income for supporting a new industry like cannabis as it comes online. Hirsh Jain: Totally, totally — your point about the middle class was really good, Kellan. This is anecdotal, but what I hear about in Michigan is middle-class workers, working-class people, people in the automotive industry, being able to affordably obtain legal cannabis. That doesn't happen in California — if you're on a budget in California, you don't buy weed legally. The people who buy weed legally in California tend to be 65 and older and afraid of breaking the law, or people with a lot of disposable income. But to your point, Kellan, what's happening in Michigan is that middle-class, working-class people are able to afford plant medicine and shift their habits because it's actually feasible for them. That represents a dramatically different industry. And they don't have to drive hours across the state to reach a dispensary, because retail access is so much more robust. So I think you're absolutely right about that. Bryan Fields: Do you think it comes down to what the actual goal of these markets is? In Michigan it seems pretty clear — they want affordable pricing, they want to increase jobs, they want tax revenue going back to the community. Do you think sometimes the goal gets lost, and politicians position themselves in a corner, like Newsom saying, "I'm just going to squeeze this thing as far as I can, my prohibition instincts are still real, we're going to make it impossible to operate and kill these companies"? It seems like in Michigan they're actually trying to get this market off the ground and want it to work — at least based on some of the data. Hirsh Jain: Totally, right — the goals question is interesting. I think we can identify a primary goal and a set of subsidiary goals. The overarching goal, which shouldn't really be controversial, is that if we've legalized cannabis, we want to replace the illicit market with a legal one, because a legal market better serves consumers, has accountable businesses, safe and tested products, and contributes to the economy. I know that's obvious, but that's the overarching goal, and people will say Michigan, for all its imperfections, overwhelmingly has a legal market now, whereas California effectively has an illegal market. In that respect, Michigan is fulfilling that goal and California is not. At least in practice — despite what it says, despite a lot of the rhetoric California regulators use about how cannabis is medicine, the goal of legal cannabis in California seems to be to funnel money to a set of politically connected interest groups. That's just objectively the fact. The goal of the cannabis tax regime in California is to take that money and funnel it to politically connected nonprofits, often with nice names — "I'm an environmental group," or "I'm a group that supports children" — even though the proliferation of illicit cannabis destroys the environment and harms children. It's to equip those groups with resources so they can repay the favor down the line to elected officials running for office. It's a real quid pro quo. The stakeholders in California are very narrow, whereas in Michigan they're trying to do what's best for the state's citizens at large, and therein lies the failure. Bryan Fields: That's politics — a problem at a higher level. So let's take it up a level: federal reform. How does that change anything? Can California get some help there if we get rescheduling? As we're talking here on the 9th, a lot of Trump-world influencers seem to have some kind of coordinated messaging campaign going on — whether it's ill-timed, very timely, or just coincidental, it seems intentional enough to be worth looking at. Hirsh Jain: Totally. Yeah, we should talk about rescheduling. Maybe the last thing I'll say on California is — can California turn it around? I hate to say this, and look, I love California, it's my home, I've spent most of my life here, my family's story is California, I absolutely love this state — but we're in a really vicious cycle right now where the business is perceived to be a failure, so cities don't opt in, which perpetuates a persistent illicit market. I say that because I sit in these city council meetings where people ask, "why should we bother?" So whereas I think you can be optimistic about the progress other markets might make — you can say New York will probably be a little better six months from now, or Ohio will probably be a little better six months from now — I don't think you can say that about California. And we're living in the second week of a tax increase that will demonstrably reduce sales. That's the unfortunate reality about California. I would love to be proven wrong. To your question about rescheduling — yes, I think rescheduling can help some businesses in California, for the obvious reason that they're dealing with a difficult state-level tax climate, and rescheduling would lower their federal tax burden. But at the same time, more than 20% of California cannabis businesses are in severe default on their taxes — the CDTFA is owed more than a billion dollars in outstanding taxes in California. Is rescheduling going to solve that problem? I don't know that it does. But back to rescheduling more broadly — we're recording on July 9th, so a bunch of stuff might happen in the coming days and weeks, more influencers might come out, but it's been remarkable in recent weeks and months to see the drumbeat around rescheduling. A lot of us in cannabis have had our hearts broken so many times before that we didn't want to pay attention to this, but people are starting to pay attention now. What I'd point you to is that there are all these influencers, some of whose names I didn't know before, who seem very connected to Trump world, hitting the drumbeat on rescheduling — we all see that on X. There's the well-documented letter written by Mike Tyson, Allen Iverson, Kevin Durant, and others calling for rescheduling — the chorus of athletes. And then the thing that's gotten my attention more subtly: over the past three months I've read maybe a couple dozen op-eds from random state senators — GOP state senators in states like Alabama — echoing a very consistent message that gives Trump a lot of credit for embracing rescheduling and tries to make the case to a skeptical audience that it's worth it. Bryan Fields: Why is that interesting? What do you think the reason is behind that? Are they just floating trial balloons — testing the language and seeing how it resonates? Hirsh Jain: Yeah. I mean, look, I have no inside information — I have no idea what led these 15 or 20 state senators to specifically write op-eds about this issue. But I think it's notable that they have. Why is it interesting? Because it seems to be an attempt to seed the ground — a lot of these op-eds, if you read how they're written, preempt some of the conservative skepticism of rescheduling. They say things like, "this is not full-blown legalization, this is a good compromise that moves us forward, this will enable us to do more research." So it seems to be seeding the ground to rebut skepticism on the right if rescheduling were ever announced. And if you line up these op-eds side by side — these seven- or eight-paragraph, maybe 1,500-word op-eds — they're basically the same message written in slightly different ways. So I don't know who's pulling the strings, or if anyone is, but I think it's incredibly notable for the consistency of the message and their desire to play to Trump's ego, give him credit for announcing this process, and say, "we've got your back if you finally move forward with this." So yeah, that's super notable. Bryan Fields: It's like a ChatGPT prompt — "imagine you're a conservative, we're trying to lay the groundwork, what would you say in case something like this happens over the next few months, plus pat my boy Trump on the back right now" — boom, here it is, copy, paste, and fire. Mitch McConnell's like, job done. Hirsh Jain: We totally — totally, totally, for sure. So yeah, that's super exciting. And then there are all the people working behind the scenes, some of whose names we know, like the Jason Wilds and the Brady Cobbs, who are evidently engaging with well-known figures like Tyson who have a relationship with Trump. We already know there's a large number of people working behind the scenes, so it wouldn't surprise me if one day we learn there was a set of right-leaning folks coordinating behind the scenes with these voices in different states. Our hearts have been broken so many times before, but I hope it doesn't get broken again. Bryan Fields: No, me either. But do you think there are certain states that are critical — for example, Ohio? Do you think that's a critical state that could have an outsized influence, given how it's positioned, on what happens next? Hirsh Jain: Yeah, I think Ohio is really interesting. I think most people would properly say Ohio has been a disappointment so far in terms of performance. If you look at Ohio's adult-use sales, it's still generating less than Pennsylvania, even though Pennsylvania is a medical-only state. Really think about that — Ohio and Pennsylvania have approximately the same population; one is an adult-use state bordering a bunch of prohibition states, and the other is medical-only, and Pennsylvania is doing more in sales than Ohio. That's pretty wild. And Ohio is doing less in sales than Missouri, even though Missouri has about half its population. So a realist would say, let's not get too excited about Ohio — it's not doing that well, in part because it's still operating under medical-style rules. The wild thing is Ohio started adult-use sales in August of last year, so we're coming up on the one-year anniversary, and you still can't buy an eighth or a pre-roll in Ohio — you can only buy a tenth of an ounce, which is insane. What normal cannabis consumer thinks, "oh, it's awesome, I get to buy a tenth from this dispensary"? So there are plenty of reasons Ohio is underperforming — it also really limits its advertising, which has mitigated sales. But I think the reason Ohio is interesting — and here I'll say some pretty obvious things — is that it's home to a set of political figures. Bryan Fields: I died. Hirsh Jain: First of all, Ohio occupies a very unique place in the Republican consciousness. It's well known that no Republican has ever won the White House without winning Ohio — Ohio really matters, it's sort of the heartbeat of traditional conservatism. It also has a lot of up-and-coming stars and cannabis advocates in the state — people like David Joyce, who's long supported the SAFE Banking Act, or Warren Davidson, another supporter, or Bernie Moreno, the new senator from Ohio who beat Sherrod Brown and has become the point person for Ohio and the GOP on SAFE Banking at States 2.0. So it has a lot of those folks, and I think the easier we can make it for them to be proud of their state's industry — the more of an economic and political incentive we give them to show it off — the better for our fortunes when it comes to legislative change. That's true in Congress with everyone I just mentioned, but I'd also encourage people to watch Vivek Ramaswamy closely. He's obviously running for governor — people know he ran for president, then was part of DOGE, then went back to Ohio to run for governor next year. He still has to win the primary, so there's a long time between here and there, but I think there's good reason to believe the operators in Ohio want to build a strong relationship with him. I'd pay close attention to how he engages with Ohio operators going forward. The more robust that industry becomes — we've had 30 new dispensaries open in Ohio this year — the more Ohio-based cannabis businesses, employees, and sales there are, the easier it is for someone like him, who's already predisposed to lean into this issue, to actually do so. I think the businesses in Ohio, especially the homegrown ones, know that, and you'll see them engage smartly with people like Ramaswamy. A year from now, when the race is heating up, we can revisit that prediction, but I think you'll see a friendship building there. Bryan Fields: That's one of those things where right now it might feel a little premature, but months from now you might say, "damn, Hirsh called it." I'm fine with that — those are the kinds of tips people can start watching for. I think one of the biggest challenges is that sometimes there's action, and sometimes there's just words without the action, and the action takes time to arrive — it's hard to tell whether we're making progress. But things like this show it's happening, just terribly slowly. Sometimes change takes a long time, and that involves advocates like Vivek coming through, recognizing the opportunity, and using the platform to push it forward — maybe Ohio is the kind of thing we look back on and say, that's one of the key reasons why, and the conservative-side momentum politically was exactly right. Hirsh Jain: Totally — and maybe one last thing on Ohio, because I agree with everything you said. If you look at the county-level voting data for Issue 2 in 2023, a lot of the deep-MAGA counties voted for it by around 70% margins. It's sort of the country-club Republicans who are more ambivalent, but Appalachian Ohio — MAGA Ohio — was very supportive of that initiative, and I don't think that polling went unnoticed. The other thing is that Appalachian Ohio, the part that borders West Virginia and Kentucky, is ground zero for the opioid epidemic. That's part of why someone like Vivek Ramaswamy, who's run on wanting to address that issue — and Trump has too — matters here. If Ohio operators can tell a compelling story about being an economic driver, being politically supported by MAGA, and helping solve a crucial social issue like the opioid epidemic, they'll make it easier for people like David Joyce, Warren Davidson, Bernie Moreno, and Vivek Ramaswamy to carry that water. We kind of have to meet those elected officials halfway, which is why I think Ohio is so important, even though it's underperformed to date. Kellan Finney: What influence do you think the movement internationally is having on federal policy change? Hirsh Jain: Yeah, I think what's happening internationally is super exciting. I'm probably going to say things you've heard before, but they're worth repeating. I believe cannabis is now, for the first time — and this is a subjective claim — truly a global industry. You can say that because of the robust rate of growth happening in other countries. Just to pick a couple of examples that have been in the news lately: Germany and Australia. Germany just hit a million medical patients, only 15 months after reclassifying cannabis from a narcotic to a medicine. Germany has 85 million people, so more than 1% of the entire country is a registered cannabis patient — that's wild. I've heard estimates that number could reach one and a half million by the end of this year. That rate of growth is incredibly robust, and to state the obvious, Germany is the most robust economy in Europe, so it's a trendsetter. Australia is at a similar patient-registration rate — we're about to hit 350,000 medical patients there, and some think it could reach close to 400,000 by year end. Australia is smaller than Germany, about 26 or 27 million people, but that's still over 1% of the population. So these medical programs are growing in a really robust way — that's exciting. The other exciting thing is you're starting to see the development of an international supply chain. It's not just that other countries are growing their own cannabis economies — they're interacting with countries across the world. Those two countries I mentioned are getting the majority of their cannabis from Canada, so an international supply chain is developing. This has a deeply legitimizing effect on the industry, because a lot of the skepticism around cannabis fades when you see other countries participating. And finally — we talked about this a year ago — the countries opting into cannabis are what I'd loosely call liberal Western democracies. You'll continue to see countries like China, Russia, and Iran remain skeptical of plant medicine for the foreseeable future. But if I'm the United States looking around and seeing Germany developing a rapidly growing cannabis program, Australia developing one, Israel leading in cannabis science, Canada being the first country to legalize it, Western Europe with pilot programs in places like Switzerland — whose values do I want to align with? I think the growth of cannabis in countries that share the same liberal democratic norms as the U.S. should be a wake-up call: do we want to be like Russia and China, or like Germany, Australia, Israel, and Canada? No matter your political orientation, that should be clear. Hopefully that's a lightbulb moment for the U.S. Bryan Fields: When we talk about the global supply chain, and hearing that, with Trump continuing to push "Make America Great Again" — this is the easiest opportunity to help American companies. You take a product — most people want California cannabis, generally speaking, people around the world would love to get California cannabis. And here's the problem: we talked about California's issues, and you want to bring that product out and help all these people, but it's so challenging because it makes so much sense, and it's frustrating because California just has to get its act together and make some adjustments to participate in that global game. My fear is that too much time is passing, and they won't have the ability to use their soft power — your word from last time — to get what they want accomplished in the timeframe needed, unless there's a better plan we're not thinking about that hasn't been rolled out yet. Hirsh Jain: Totally — and just to play back what you said, one concept you hit on is that California brands are in demand across the world. Going back to the beginning of our conversation, it's true that the California market is incredibly stressed and those businesses are failing, yet California retains its cultural cachet when it comes to cannabis globally. That's fascinating to watch in real time — the migration of California operators who've had a hard time in the California market but have incredible products with real brand equity, moving into other states. This is well documented in places like New Jersey, where you're seeing California brands like Lowell and Clade9 move in, or brands like Bloom moving into Western Europe. That's the opportunity for a lot of businesses operating in California — to move into other markets. And it's funny — there's the phrase we've all heard a million times, that California is like training for a marathon at altitude. I've always thought that's kind of funny, because it's true in one sense — California is very challenging — but I've never run a marathon, and you have to ask, should you train for a marathon at altitude? What if training for a marathon at altitude killed you? It's sort of a catch-22 — it could make you stronger, but if you're at 16,000 feet trying to run 26 miles, you might just pass out and die. So the question for a lot of these California operators is: how do I retain the strength I've developed hacking it out in this difficult environment, and survive long enough to plant a flag in another state, before I'm decimated operating in just that one state? It's a catch-22. Bryan Fields: Yeah, that's a prompt I'm going to throw into ChatGPT to see if that's even possible, because you're right — at a certain point, the limit does exist. But I want to go back to the Ohio conversation, because I've been thinking more and more about the political implications. How does what's going on in Texas also play into this? I think there's kind of a triangle here — Texas essentially killed prohibition with SB3, and what happens next there is going to be a crucial marker. Hirsh Jain: Thank you. Bryan Fields: We've had some people come on and talk about the importance of that. But with Texas and Ohio, can you talk about how you think those come together and become really important going forward? Hirsh Jain: Totally, Texas is fascinating. I listened to the episode you guys did a few weeks back with Jim Higdon, where you really dug into the hemp issue, so I won't try to do justice to that the way you did on that episode. But I'll make a few points. One, I think what happens in Texas will have a massive influence on a lot of states, particularly in the Southeast — states that have cannabis prohibition but really robust hemp industries, like North Carolina, Tennessee, Mississippi, Kentucky, Alabama, Georgia, and Florida. I think Texas is worth watching because it'll have a massive impact on how these issues get resolved in a lot of those states in the coming years. Just to state the facts — a special session begins on July 21st and will probably last up to a month, maybe a little less. I think that session will be very contentious and hard to predict. We all know what Governor Abbott has laid out as priorities: don't ban this, regulate it — ban synthetic THC or high-potency edibles, require age-gating and child-resistant packaging, keep sales away from schools and churches. His priorities are pretty sensible and intuitive. But the challenge is he'll be doing this dance with Lieutenant Governor Patrick — if Patrick had his way, all of these businesses would be banned. That said, Patrick has said if at least 15 senators in Texas get behind a proposal, he'll lend his support to it, which might be an acknowledgment that he has to bow to reality. He probably also knows that if he doesn't play ball, the status quo continues, which is probably the worst outcome for him. So, no real predictions on how it shakes out in Texas, but those are the considerations at play. Regardless of what happens, I think one of the interesting things about Texas is that it shows how the proliferation of intoxicating hemp can both help and hurt cannabis reform. I really want to see the regulated cannabis industry expand and see an end to marijuana prohibition, and Texas shows that the proliferation of intoxicating hemp can enable the expansion of cannabis programs — the state's medical program was expanded, and I know people will say it's still a joke of a program with only 15 dispensaries that's super expensive, and I don't deny that. But Dan Patrick signed off on expanding a medical cannabis program because of the proliferation of intoxicating hemp, which is a pretty earth-shattering development. So on one hand, the proliferation of intoxicating hemp across the country can facilitate cannabis legalization or expansion by showing that prohibition doesn't work. But at the same time, it can also be a hindrance — a lot of the negative public health incidents associated with the worst intoxicating hemp products get used by prohibitionists, misleadingly, as a way to slow down expansion. The best example is Pennsylvania, where a lot of prohibitionists point to edible poisonings happening in the state — but Pennsylvania doesn't even allow edibles in its medical cannabis program; those are all unregulated intoxicating hemp products. So it's this weird thing where the proliferation of these products illustrates why prohibition doesn't make sense, but at the same time feeds the same "reefer madness" attitudes people use to say cannabis is evil. And the last thing — it doesn't just give ammunition to prohibitionists, it also takes the wind out of the sails of advocates. Traditionally the argument was, let's legalize cannabis to stop these arrests and make it available. But when hemp is available, as we saw in Florida, people think, "it's basically legal already, so why should I care about legalizing weed when it's already everywhere?" So it's a super complicated phenomenon — intoxicating hemp illustrates the folly of prohibition, but it also gives ammunition to prohibitionists and diminishes reformers' enthusiasm. Bryan Fields: It's impossible, right? There are so many moving pieces, and each market is so incredibly different. The easiest way I try to explain it to people is — I'll bring over a beverage I bought on the internet, and someone says, "oh, this is awesome, do I have to go to a dispensary for this?" And I say, "no, they'll ship it to your house." And they say, "what, why?" And I say, "here's the list of reasons," and they say, "that doesn't make any sense." And I say, "I know, that's part of the problem." It doesn't have to be complicated. It just has to make sense. Maybe what we need is a 12-hour whiteboard session: here's the problem, if you don't want the problem, here's a solution, and here are two other problems that arise if you don't take the solution, or if you do — and then we come up with some logical rules. I know that word is probably misapplied when we talk about Congress, but that's really what needs to happen to make sense of all this, because you're right, it's way too confusing. Each market has its own problems, and people point to one and say, "see, this is an issue," without realizing, like you said, that market doesn't even sell edibles — it's a different problem entirely. Hirsh Jain: Totally, and I think that whiteboard point is great, Bryan. To his credit, the one governor I've seen actually attempting to do that is Josh Stein in North Carolina — the one governor who's said, wait a minute, how are we going to deal with this? We have intoxicating hemp, we have cannabis prohibition, these two things are connected. When I look at someone like Josh Stein, and we'll see next year what he's able to get done, that's the first real effort I've seen at a comprehensive, sensible conversation about how to regulate cannabis and satisfy the obvious demand for cannabinoid products in this country. So you're totally right, we're not there yet, but the optimist in me says we're starting to see small glimmers of hope in certain states, and we need those folks to carry the day to get where we want to go. Bryan Fields: It would be fun to watch that whiteboarding session. What do you think, Kellan? Kellan Finney: I mean, from a macro perspective, it just changes the whole dynamic — there are businesses in the South now making money through cannabinoid sales, regardless of whether it's hemp or cannabis, and I think that continues to fuel federal prohibition regardless. It's tough for all businesses in cannabis, honestly — kind of a rough hand to be dealt. Bryan Fields: But then you've got politicians who have no idea what's going on, and they're like, "well, we said this, but this is happening — so what do we do?" I think it's just too confusing for them, and maybe it starts with simplifying it: what are the goals? We want safe, regulated products, we don't want kids to have access, we want tax revenue, we want to build businesses, we want to create jobs. Okay, here's what we need to achieve that — does anything else matter? No? Okay, continue. But the problem is the lobbies come in, the influence happens, and things start to change — "well, we don't really want this to happen right now," and that's where politics becomes a whole other game. But the Ohio thing — I keep thinking about it, because that's one of those signals that doesn't make sense to anybody today, and won't when it happens, but down the road you look back and say, that was the defining moment that got us over the line. Because if someone like Vivek becomes a national figure and can use that as a talking point, that's a big move. Hirsh Jain: Totally — and you guys are data guys, so I'm excited for cannabis to spread across Ohio and for us to get the data on how the proliferation of cannabis has mitigated things like the opioid crisis. That's what we need — the data. And I think, as you just said, Bryan, that's what starts to change the conversation. Bryan Fields: Numbers don't lie! Bryan Fields: Alright, last question — a prediction with no wrong answers. Tell us: over the next year, what happens? What are we getting? Hirsh Jain: Yeah, I'll make a few predictions. One, I think we'll continue to see an increase in the number of medical states. Texas, however flawed that program is, became the 40th medical state — that's significant. About 80% of the country has allowed medical cannabis, and of the remaining ten states, five have governors who've expressed support for medical cannabis — some of the states we just talked about, like North Carolina, South Carolina, and Indiana. So I predict you'll see an uptick to 41, 42, 43 medical states over the next year. I know people ask, "who cares?" but I think it points out the absurdity of Schedule I and serves as a reminder of it. And like with gay marriage, once the number of holdout states starts to shrink, it changes the internal politics of the issue. The other thing you'll see is moderate but real adult-use growth in some states. This isn't so much a prediction as a fact — Delaware will start adult-use sales in August, Minnesota will start seeing businesses come online in Q3 or Q4. We haven't had a new state come online since Ohio. Pennsylvania, as we speak, sounds like it'll be tough to get done in this budget process, but we keep getting a little closer. So I think we'll see a few more states come online. And finally — I hope I'm not wrong here — the rumblings on rescheduling keep getting louder. I do think Donald Trump will want to play that card at some point before the 2026 midterms, especially since, as with any administration, certain decisions start to become unpopular over time. I don't know if it'll be next month or next quarter, but I do think a year from now we'll either have Schedule III, or at least a clear signal from him that it'll be done soon. I hope I'm not wrong about that. Bryan Fields: Let's go! Hirsh Jain: We're all sort of — our hearts have been broken so many times, but yeah. Bryan Fields: One more question. Given Trump and Newsom's — let's call it a non-solid — relationship, is it possible California cannabis could align with Trump to find an alternative to Newsom? Something like, "this guy's not my enemy anymore, this guy is now my friend, because we have a common enemy"? Hirsh Jain: Yeah, Trump and Newsom are funny — Newsom's entire governorship is built on the idea that he's not Trump. And look, there are plenty of objectionable things about President Trump, but Newsom's been running for a decade in opposition to him, so at some point he's going to need a new political script. That's one comment. The second is — if Derek Maltz and the DEA, as we've gotten some signal in recent weeks and months, start going after the proliferation of cartel cannabis across the country, we could be living in a really interesting world. If they're sincere in the coming months and years about going after cartels, imagine a few years from now the Republican nominee saying, "the Republican Party stamped out cartels across the country," while, and this is just a fact, on Gavin Newsom's watch the proliferation of cartels across California and the destruction they've caused has been undeniable. So if I were one of Gavin Newsom's political advisors — on the off chance they're listening to this podcast — I'd say, you should probably clean up this mess in your own backyard, because it's probably not going to be a good look come 2028 if the opposing candidate can say you enabled the proliferation of cannabis cartels while we were dedicated to stamping it out. That's probably not a position he wants to be in. Bryan Fields: I think we'll leave it there and let the rest lie. So if people want to get in touch, learn more, where can they find you? Hirsh Jain: You can find me on X — my handle is Ananda Strategy, A-N-A-N-D-A Strategy. You can also email me: hirsh@anandastrategy.com — H-I-R-S-H at anandastrategy.com. Thanks, and last thing — I appreciate being on the podcast, and I learn a tremendous amount from the outstanding guests you have on week in, week out. I'm not just blowing smoke — there are so many people with such diverse perspectives and intellects who come on this podcast, so thank you for creating so much good content for our community. Bryan Fields: I appreciate the kind words. Thanks for taking the time — this was a lot of fun. Hirsh Jain: Thanks, guys.