Stop Ignoring Germany’s Massive Opportunity – Europe is Coming! ft. Jamie Pearson

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Jamie Pearson: The German consumer is a little bit different than the American consumer, naturally — but I think the Germans always have their eye on what America is doing. Bryan Fields: What's up, guys, welcome back to another episode of The Dime. I'm Bryan Fields, and with me as always is Kellen. This week we've got a very special guest, Jamie Pearson, president of New Holland Group. Jamie, thanks for taking the time — how are you doing today? Jamie Pearson: I'm doing great, I'm super happy to be here. Thanks for having me, I'm excited to dive in. Bryan Fields: Kellen, how are you doing? Kellen: I'm doing really well, really excited to talk to Jamie. Her reputation speaks for herself — I think 'Superwoman of Cannabis' is one of the terms that's been thrown around. So really excited to pick her brain and dive into some international topics I think we have on the docket. How are you doing today, Bryan? Bryan Fields: Yeah, I'm stoked. I think international topics continue to be one of big interest, and I wonder if we're approaching the time where this really starts to make the move forward. So, Jamie, before we dive into the fun stuff, we're gonna have to put you on the spot with the little East Coast/West Coast battle. I think it's really important to focus first on education-wise — school is super important — so from a university standpoint, is there a coast that's maybe more important to you right now? Jamie Pearson: I would definitely say the East Coast is more important to me. I don't know why that's making you so happy, but look — it hasn't been perfect anywhere. We know the good quality product is coming out of California and Oregon, where the terroir to grow is optimal, but we all know that all the weight gets moved on the East Coast, and always has. Bryan Fields: Love it, love it. So for our listeners who are unfamiliar with you, can you give a little background on yourself and how you found your way to the cannabis space? Jamie Pearson: Sure. I grew up in a small town on a cattle ranch in Montana, and my parents still live there. On my mom's side, my first cousin is DJ Muggs from Cypress Hill, and my dad has been growing cannabis — I'm 55, he's been growing cannabis 57 years. He's a Vietnam vet with PTSD, doesn't drink alcohol, and I didn't know any different. I grew up my whole life with my dad being an awake-and-bake pot smoker, and got really comfortable around cannabis, it being a normal part of my family. So when Muggs lit a joint on Saturday Night Live, I was in law school. Fast forward to about 2013-14, he and I bought a farm in Sonoma, in a little town called Sebastopol, with this grand scheme that as cannabis was spreading across the US, we were going to get in the game. We quickly learned we're not cultivators, we're not scientists, we're brand builders. We built a couple of brands, then fire swept through, farmers got evacuated, and we decided, okay, too much, and we sold. Then we focused on the brand side, and simultaneously I had found the company Bhang, to do a deal with Cypress Hill — that product we created, that collaboration, sold out, did great. Bhang asked me to stay on. I was with Bhang for seven years — the last three years I was CEO and president. It had gone public, so I was running a public company, which wasn't something I thought I'd be doing in my life. A couple years ago I left Bhang after seven years and started a consulting firm helping companies and brands do what I did for Bhang, which was cross borders and expand into Europe. I call it 'kissing frogs' — I went around the country, met everybody, decided who was going to be our Prince Charming in that state. When I left Bhang, we were in seven states, we had signed an 11-state deal with Trulieve, we were the number-one chocolate in Canada, and I had brought the brand over to Europe into nine countries through four distribution agreements — and that was before Novel Food regulations hit, before things hit the fan with CBD over in Europe. And, you know, it's cannabis, so everything changes, it's dynamic. That was really the start. I've been in it about 12 years, and the last two years I've just been consulting with MSOs, governments, trade organizations, and lots and lots of brands and e-commerce companies. It's been really interesting, and I'm happy I landed in consulting because it's a natural place for someone who's a teacher — I taught middle school and high school honors English, and I taught German at the University of Oregon. So I'm a natural teacher, and consulting works well for me. I love it. Bryan Fields: And I know one of the areas you focus on now is Germany. I think a lot of people have their own understanding of what Germany is, but I'd love to get your perspective — you're boots on the ground all the time — so take us to exactly where Germany is today, and what you think the future holds for them. Jamie Pearson: Germany — I don't know if you saw the riots, there's been political protests going on around the resurgence of the far right, which kind of mimics what's happening in our country, but they're not having it — their history is a little too fresh for what's happening worldwide with Brexit and this movement toward nationalism. The Germans are not interested in that. Well, their government fell apart — the so-called 'traffic light coalition,' coined because you have the red, the green, and the yellow indicating where on the political spectrum these parties were — and the coalition fell apart. They're going to have a vote on February 23rd; we'll see who the new coalition ends up being. Why that matters for cannabis specifically: first Germany decriminalized, which, per usual, emboldens the illicit market, so they've got a robust illicit market going. Then they launched a recreational program with social clubs — not social clubs like we're thinking of in Barcelona, more like the grow cooperatives we know from the early days of California, where someone's a caregiver. These cooperatives can have up to 500 members, they can grow cannabis, and you can purchase up to 50 grams per month out of your cooperative — doesn't require anything in the medical program. Then their medical program — this is the piece people in the US need to wrap their heads around. Germany took cannabis off the narcotics list, so cannabis is a non-narcotic in Germany, and the medical program has predictably exploded. You have to take your American lens off and put your European lens on — Europeans are used to single-payer healthcare. We're the only developed nation without socialized medicine. So citizens of Germany, Spain, France, and other European nations are used to: you go to the doctor, you get a prescription, you go to the pharmacy, and either state-sponsored health insurance or your private insurance pays for it. The medical program in Germany has gone bonkers because now everyone can prescribe your access to cannabis. If you're a consumer, would you rather go to your plug on the street and not know if there's fentanyl involved, or go through the hassle of joining a cooperative with limited access, or spend zero disposable income — go to your free doctor, get a free prescription, go to the pharmacy, get a menu, and if you want edibles or a vape pen instead of smoking, the government pays for it. Of course it's not that simple, there's still dust settling, but that's what's emerging. Companies like Bloomwell let you do a telemedicine doctor's appointment — because it's not a narcotic, think of it like getting erectile dysfunction medication or hair-loss medication like minoxidil or Viagra. You fill out a form online and the product comes to your door, prescription sent right to the pharmacy, meds delivered — no stigma of walking into a pharmacy. It's opened up incredible opportunity for German companies, and the medical market has exploded. The last piece — the real recreational market, dispensaries with edibles, drinks, concentrates — needs the government to get back together, because that was the fourth component of the law that was supposed to roll out at the end of last year before the government dissolved. We're waiting to see who ends up in power. My prediction: they've already seen the budget implications, they're addicted to potential tax dollars, and companies like Sanity Group — Finn Hänsel's company, which did a deal with Organigram out of Canada — already have permission for multiple municipalities to get going. The German approach is to run a very controlled pilot connected to universities to collect data before rolling out a full law, rather than throwing spaghetti at the wall like some US states did. There's a lot happening in the background — real estate being tied up, license documents prepared — and you'll see quick movement the minute the government invites it. Bryan Fields: The one thing you made really clear, at least in my opinion, is that the German government understands that if the medical program is thriving, maybe they shouldn't kibosh recreational and should consider bringing it in. Do you think that will greatly influence whoever takes power on how this unfolds? Jamie Pearson: Here's the rub — tax dollars aren't coming in from the medical market because they're paying for it. They're looking at other countries and recognizing not everyone using cannabis is doing so for medical reasons. That's where our countries are similar — those patterns of Gen Z and Millennials drinking less alcohol and being more aware of what they put in their bodies. Germans don't allow GMOs in their food, they're already leading the clean-eating charge, and you're seeing that same shift away from alcohol over there, even though Germany is a big beer-drinking country. One person I'm working with is developing a way to legally infuse beverages with cannabinoids in Europe — beverage isn't ready to launch in Europe yet, but it's going to be big. Bryan Fields: Do you think Germany is favoring building its own internal supply chain to manage that, or specific portions of that four-tier system, versus outsourcing and importing product from other countries? Jamie Pearson: What happened initially — and you have to keep in mind world events impact all of this — is the war in Ukraine. Germany was pretty dependent on Russian oil and had committed to getting off nuclear power a long time ago, so oil was really important. They've been weaning off fairly quickly, but when they first rolled out the medical law a few years ago, cultivation in Germany wasn't allowed, because they didn't want to strain the already-strained utility systems. Most cannabis had to be imported, with an exception for four companies allowed to grow a limited amount in-country. One of the tenets of the new law lifted that restriction — anybody can grow in Germany now, as long as it's EU-GMP certified pharmaceutical-grade cannabis. Not the stuff we see in the US, which is often grown cleanly but wouldn't pass EU-GMP standards over there. There was also a three-strain limit on those four growers that's now been lifted. So to your point — yes, they're starting to see how imports impact the supply chain. I spoke in Iceland last October; the Icelandic government is looking at whether they could use their geothermal energy to grow beautiful indoor cannabis with cheap energy and supply the European continent. A lot of product currently comes from Colombia and Australia through Portugal, which has EU-GMP facilities, cheap labor, and less taxation — the product gets converted to EU-GMP standard there, tested, and plugged into the German medical market. Those supply chains are currently clunky, and I predict they'll get streamlined over the next few years. Bryan Fields: Those clunky, soon-to-be-streamlined operations are the perfect opportunity for US operators who have experience putting these things together. When they reach out to big MSOs, is it more of a 'let's apply the skill set we used in another state' approach, or do you see an opportunity based on the framework and recommend specific entry points based on a team's expertise? Jamie Pearson: It really depends on your expertise. Aurora and Curaleaf have been making moves throughout Europe for a long time. You've got MSOs, Organigram, Village Farms — those are Canadian LPs — but some MSOs, like Trulieve, aren't looking at Europe right now that I'm aware of. I don't see Green Thumb Industries making visible moves in Europe yet — Trulieve is trying to win Florida, GTI has other fish to fry. Ben Kovler is looking at a deal with a big beverage company, he just bought that Señorita beverage brand. Some MSOs are just trying to win the race where they're at. Curaleaf is looking to be a truly global player and is investing in global plays. Canopy Growth made some early investments and lost their shirts — I think because they were early; the ones who waited and let others lose money first and let the dust settle were smart. Some multi-state brands are looking to go over — Wana made a deal with Alpine Group in Switzerland to be part of the Swiss pilot program, a small program, dipping their toe in the water and getting connected. Basically everyone's got their eye on it and looking for an entry point, but there isn't yet room for consumer brands because there's no recreational program — a brand at the pharmacy doesn't translate yet unless you have the budget to just build name recognition, like buying billboards before there's anything to sell. Some of these strategic plays are smart — Curaleaf is making money in Europe selling product, they just announced a big facility in Ukraine, which just went medical. Curaleaf, Aurora, and Tilray all have EU-GMP certified facilities they own and operate. So medical is happening now; recreational doesn't exist yet, so it's early for brands. Cookies is doing a lifestyle play over there, they had a consumption lounge in Barcelona, building name recognition. Anyone who wants to be a player — grower, processor, brand, packaging company — should get to ICBC, the MJBiz of Europe, and start making connections. Bryan Fields: Do you see the transition from this robust medical market Europe is building being similar to the state medical-to-recreational transitions we've seen in America? If not, how do you think it will be different? Jamie Pearson: I think they'll be two very separate markets, because the medical market in Europe is pharmaceutical, while the US medical market is medical with air quotes — a workaround to get the plant into people's hands compassionately. In the US, the minute a state goes medical it's just a matter of time before it goes recreational, because enforcement wastes money, and legalizing medical cannabis always goes hand in hand with decriminalization — I possess it legally, I can hold it anywhere, I can even give it to another adult as long as there's no sale transaction. Cops are set up to fail, and we recognize it's a waste of resources going after people smoking weed when they could be solving violent crime. I just spoke with a criminal justice expert who cited a statistic on stage: places that legalize recreational cannabis reallocate police resources and see 20% more unsolved violent crime get solved. Bryan Fields: That's a great statistic. Jamie Pearson: Yeah, yeah. And over in Europe, they just figured it out — they said, we're not going to do it this way, we're going to have medical be medical/pharmaceutical, and we're going to be very careful about how we dip our toe into recreational waters. They're watching us, seeing the mess that America is, and doing it a little differently, as they should. Kellen: So I want to go back to what you said about brands thinking about expansion — let's do a hypothetical scenario. Let's say you're a brand on the East Coast doing really well, and you're thinking about expanding to a new state. Do you think about it as — instead of going to Missouri or Michigan, they should also consider Germany? Is it a one-to-one comparison, or do you think about it differently? Jamie Pearson: This is exactly what I do in my consulting business — help companies with their expansion strategy. I have a client, Hello Again, a vaginal suppository brand for women in menopause and period pain — that's not really a recreational product, it's a medical product. For them, I say let's get into the UK, get your product into women's hands, because all women have periods and go through menopause. That's a different conversation than I'd have with a gummy brand. When Wana was deciding to go into Switzerland, they had deep pockets and a brand already crushing across borders in the US and Canada, so they were in a position to be exploratory — which is basically spending a lot of money to figure it out. If you don't have that kind of money, I'd recommend looking at a market like Missouri instead. Another brand doing a good job is Zen Cannabis — not super well known, but they're in 28 countries, playing both hemp-derived and cannabis, parallel-processing everything, and their products are amazing. I took them on reluctantly at first, but the more I've worked with them the more professional I realize they are. Their CEO flew to Ukraine when it went medical to figure it out in a war zone — they're fully operational there and across Eastern Europe, building massive brand awareness quietly, conquering markets nobody else has their eye on, while also operating in about seven US states with an e-commerce CBD line. Those are the companies that will be here long after the noise, because they're not spending money on parties and press releases. Bryan Fields: Who else is like Zen — really killing it, maybe a little under the radar — anyone you think is getting slept on by the industry? Jamie Pearson: There's a brand called Dope Drink — I'm telling you, it's the best drink on the market. If a brand sends me product and I don't like it, we part as friends, because if the product's not good, I don't want to rep it. I think Dope Drink is the best beverage I've had, and I've had them all. I'm a LaCroix bubbly addict, and what I like about Dope Drink is it doesn't have that bitter cannabis-beverage aftertaste — it's spring water with subtle flavor, no sugar, no salt, not overly sweet. I always drink one before I work out — get high while you hydrate. Bryan Fields: I love that, I'm gonna go buy those drinks after this — that was a nice sell job. Who is it that should be reaching out to you — let's say a US-based brand thinking about going to Germany, what kind of brand infrastructure? I don't want to put anyone on blast, but what product portfolio or infrastructure style — high-end cultivators? Is there someone you think there's an economic opportunity in front of that they're just not considering? Jamie Pearson: I'll put my long-term hat on — if I were, say, a chain of dispensaries, I'll give you one example: Happy Munkey, you guys know them from New York. They have a compelling brand that speaks to the legacy market. I think they'd do really well in Germany — I think they'd crush in Munich, Berlin, Cologne, maybe open in Hamburg and other large German cities, and I think they'd do better there than in California. Other store chains have approached me asking about that future recreational pilot program — I think there's a market for that retail play, because while there are retail experts in Germany, and the German consumer is a bit different naturally, Germans always have their eye on what America is doing. I think 'Happy' and 'Munkey' will both translate, and American branding is going to do really well over there. Kellen: That makes a ton of sense — that's what I was wondering, how you see where a brand fits today and whether it would translate. So, probably an impossible question, but timing-wise, is sooner better, or should brands wait until the vote in a couple weeks? Jamie Pearson: If you start now, you'll meet the people making moves in the background, you'll know where the opportunities are, and you'll be on a reconnaissance mission to gather information and build a strategy — even if that strategy is to wait for a specific trigger event before pulling the trigger. I'm of two minds about first-mover status — it doesn't always help. Trulieve is a great example of a wildly successful first mover in Florida, just heads-down building, opening store after store efficiently. But name another first mover that still exists in some cases — sometimes it's so tumultuous you burn a lot of money and learn hard lessons without making it. There's wisdom in letting others blaze the trail and then strategically deciding where to enter. It really depends on who you are. Bryan Fields: What do you think is the best-case scenario for the vote in February — what outcome would you prefer for the market as a whole? Jamie Pearson: If this had been November 1st and you'd asked me if I was voting for Biden or Trump, I'd give you the same answer — I'm not going to answer that. Not for that question, Kell. Kellen: Nice try, but nice try — you gotta come hotter than that. Jamie Pearson: Yeah, no, no, in all seriousness — what my sources tell me is it kind of doesn't matter who you vote for over there regarding cannabis. They don't have a two-party system, you vote for your party, not the candidate. All the parties want cannabis, just for differing reasons and want it to look a little different, but they're not arguing about whether cannabis should be there at all — that's decided. So I don't think it matters much. Their broader issues stem from economic fallout of liberal COVID policies, governments dumping money not knowing what would happen during the pandemic. Every country is suffering from the economic impact of that and the supply chain fallout, with a lot of dissent from people who took the brunt of it, especially service labor. Everyone's just trying to figure it out now, with AI and robotics and China thrown into the mix — it's a crazy time. Bryan Fields: So we talked a lot about Germany, but what other country is Jamie thinking about that's maybe further down the pipeline? Jamie Pearson: We're really waiting on Spain to produce their medical rules — I'm excited about Spain finally getting into the fray. But the sleeper market I'm super stoked about is France. Using American analogies, Paris is the New York of Europe — it's fashion, and it's the largest consumer of illicit cannabis on the European continent. When France goes, you're going to see big things happen in Europe. Bryan Fields: Do you think they'll have a better rollout than New York did? Jamie Pearson: They have a tumultuous governmental situation over there. The Germans are very orderly, and it'll be very structured, as it's been. The French are just going to fight about everything, so it'll take a while. Bryan Fields: Talk to us about what's going on with ICBC events — I know there's some exciting stuff, maybe some capital raises that people here in the US might want to know about. Jamie Pearson: ICBC founder Alex Rogers saw an opportunity and launched a new initiative called the Tokeman House — spelled with one L. He puts on Tokeman Group events; you have to join the Tokeman House to participate. Individual memberships are around $3,500 a year, corporate memberships around $5,000. It's an event organization pairing entrepreneurs needing capital to enter or grow in the European market with capital that's pent up in Europe — a sign in itself that Europe is a great place to do business. A lot of companies you've seen — Sanity Group, Demecan, Cantourage — received a large portion of their funding from American or Canadian capital, but now that pendulum is swinging back and European capital that's been sitting conservatively on the sidelines is coming forward. We did the very first Tokeman House event in Munich in November — we curate pitches, make sure presenters are trained, decks vetted, so it's by-and-large investable companies, since Europeans are more conservative than Americans were during the funding frenzy. At the last event, two of four pitching companies got funded — over a million and a half dollars for one, two million for another — and a third had numbers being circled with investors in the room. The big raises we saw in the US aren't happening domestically anymore — money there is coming from Canadian LPs, British American Tobacco, Philip Morris — but it's exciting to see entrepreneurs get a million and a half circled for expansion when that kind of capital has otherwise dried up in the US outside of friends-and-family rounds or angel investors. There's another Tokeman Group event in Zurich, Switzerland on February 21st, and the day before ICBC Berlin on April 28th, there's a Tokeman House event at the Adlon Hotel in Berlin, right at the Brandenburg Gate. Alex picks super-luxury hotels and creates a membership barrier that weeds out the riff-raff, so only serious people are in the room. Bryan Fields: I can only imagine there are companies listening who are intrigued and interested in learning more — we'll link all that up in the show notes. Jamie Pearson: And just so you know, it's Tokeman with one L, so if you're Googling it, make sure it's spelled that way. Bryan Fields: Yeah, I would have missed that one too. Jamie, one year from now, what has changed? Jamie Pearson: The recreational pilot program in Germany is in full swing, and cannabis is everywhere in Europe — because you have to remember, Germany is roughly the size of Oregon, a little smaller than my home state of Montana, with 85 million people and borders all around it. The minute Germany goes recreational, it becomes a free-for-all in Europe, and other European governments will move very quickly. A year from now, it's going to be hotter than it is today. Bryan Fields: What question do you wish more people asked you? Jamie Pearson: 'How can I help you?' Everyone comes to me and says, can you introduce me to Kim from Trulieve, or can you get me into Europe — but nobody asks how they can help me. Bryan Fields: How can people help you? Jamie Pearson: They can contact New Holland Group and hire us to do strategy work with them. Bryan Fields: I love it. Dream smoking session — three people, dead or alive? Jamie Pearson: RBG — I just want to be in the same room with her. Bob Marley. And alive, probably Snoop Dogg. Bryan Fields: Oh, that's a nice trio — how do you not want to smoke with Snoop Dogg? Jamie Pearson: It's fair, that's fair. Bryan Fields: Last question, prediction: do you see any key catalysts that help US companies go into the German market — a regulatory change, market dynamic, or something else? Jamie Pearson: If we go Schedule III or deschedule cannabis altogether, that's going to be a game-changer. For example, one company I'm working with is importing Moroccan hash, and getting it imported legally involves lots of moving parts — Legacy to legal and everything in between. It's the most interesting project I'm working on right now. Nothing comes into the US legally without a pharmaceutical license or unless it's hemp-derived, and our hemp requirements differ from Europe's. Getting America to go legal would open up global trade, and the minute you open global trade you solve a lot of California's problems, because those fantastic producers could supply the globe. I hope the US government does something in these next four years, but I'm not hopeful, because I really believe the big lobbies — alcohol, tobacco, and pharma — aren't ready for it yet, and it won't happen until they're ready, because they control the money. I'd love to be wrong about that, but I think that's what we're waiting on — those industries figuring out their place before they take their foot off the neck of Congress. Bryan Fields: That is the same thing I think is happening. Jamie Pearson: Agreed — same thing, even though they told us otherwise. I don't know if I believed them anyway. It's like your parents telling you about Santa Claus — all the lies we're told as children are done for our own benefit, and I think the same happens when governments engage in double-speak, trying to walk the fine line of truth amid so many moving political parts. I think the current administration doesn't care much about the truth — they'll say whatever accomplishes their agenda, and they believe they're doing what's best for the US. History will bear out what happens. Bryan Fields: For our listeners who want to get in touch and are interested in expanding to Europe, where can they find you? Jamie Pearson: They can find me at jboogie.22 on Instagram, Jamie L. Pearson on LinkedIn, and I'll have a website live sometime in early February — I'm working on it now — for New Holland Group. Bryan Fields: We'll link it all up in the show notes. Thanks for taking the time, this was a lot of fun. Jamie Pearson: Thanks for having me.