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Business Roundtable


Business Roundtable with Matt Battaglia

The show where Entrepreneurs, High Level Executives, Business Owners, and Investors come to share insight and ideas about the future of business.

BRT 2.0 looks at the new trends in business, and how classic industries are evolving. We Profile the current Players weekly in an Interview format to give you an inside look, to learn from their own experiences.

Popular Topics Discussed: Business, Entrepreneurship, Investing, Stocks, Cannabis, Tech (AI, VR, Biotech, Chips, Electric Battery), Blockchain / Crypto, Real Estate, Legal, Vehicles, Franchising, Farming, Sales, Charity 

 

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Mar 23, 2021

BRT S02 EP12 (59) 03-21-2021 -

Topic: Cannabis is Legal in AZ thanks to Prop. 207, and Harvest Health weighs in

 

Things We Learned This Week

  • Harvest Health is a public co. (since 2018) traded Cannabis company (in Canada) that operates in 5 states with 15+ locations in AZ alone
  • Legalization led to Tax Revenue off Cannabis business that was happening already and cleans up crime, business was illegal in past and unregulated
  • Regulations will relax over time, and probably all 50 states will legalize Cannabis use
  • Prop 207 passed, Cannabis fully legal in AZ in 2021 - Dedicated line for medical, huge demand 3-6x increase in revenue
  • No More licenses, high barriers to entry in AZ as it is a limited licensure state

 

 

Guests: Steve White, Founder / CEO of Harvest Health

https://investor.harvesthoc.com/governance/board-of-directors/person-details/default.aspx?ItemId=77f1cb4f-4a85-4ae0-8fd3-11caa6c9b345

https://www.linkedin.com/in/steve-white-40bb098

 

Steve co-founded Harvest in 2011. After opening Harvest’s first dispensary in 2013, Steve worked there for several months fulfilling orders, performing reception duties, and consulting with patients. He quickly learned that he had the ability to help shape a company that gave people control over an aspect of their life where they previously had very little – their health and wellness. This led Steve to instill a culture of education and empowerment at Harvest to provide patients much needed products, resources, and support. For example, Harvest facilities host a new patient orientation and monthly support group meetings for epilepsy, chronic pain, cancer, and PTSD.

Under Steve’s direction, Harvest has also engaged in many community activities and events, including donating more than $500,000 to local charitable organizations, veterans, seniors, and patients in need. Steve founded and now serves on the board of directors for Harvesting Hope, a non-profit organization that supports young children suffering from seizure disorders. To date, Harvesting Hope has provided a wide range of services for over 100 families.

As Harvest’s CEO, Steve is responsible for license acquisition, start-up, operations, and organizational direction and strategy. He has also been instrumental in navigating state- and county-level regulatory audits, including, to date, hundreds of state inspections across multiple states, four Americans for Safe Access Patient Focused Certifications, and more than fifty certified financial audits. He is also a board member and President of the Arizona Dispensary Association. In addition, he has done hundreds of interviews, speaking engagements, and has been qualified to provide expert testimony on a multitude of marijuana-related topics.

 

Harvest Health is a public co. (since 2018) traded Cannabis company (in Canada) that operates in 5 states with 15+ locations in AZ alone (18 in the future by 2022). Steve talks about the history of Harvest from 2012 to present, and how the industry has changed in the last 5 years, ad what he expects in the next 5. Also how Steve sees the Cannabis industry – is it mature? – or - Issues with the image of industry. Steve believes it has moved into the mainstream.

The insider knowledge in this episode is vast from regulations with the dispensary business, to the effect legalization has on the business, going public, relationship with investors, and distribution of the product (from farms for growing or facilities  to the dispensaries). We talk of the influx of corporate money and companies, and if the competition from alcohol and cigarette companies will hurt.  

Harvest is also the biggest player in the Arizona market with 16 dispensary licenses here, supplied mostly by a farm in Camp Verde, according to the company. Harvest has lucrative retail locations in big markets like California and Florida. And that's just the beginning.

 

Notes:

Building new installation near Cape Verde & Highway 260, off I-17

OTC listing in USA, w/ symbol – HRVSF

Canada - CA stock symbol – HARV (Public IPO in Canada in 2018)

States - CA decrease low cost for license vs FLA increase $100 million / license

License value of $15 million per in AZ, mass scarcity.

AZ better regulated state with same AZ Staff since 2010 and is a model program

4 cultivation (one has production facility) and 1 production facility

Zoning issues w/ Cannabis, where you can set up the business

Farming - outdoor and 4 indoor, greenhouse and indoor vertical

Other Cannabis States Harvest operates in - 9 PN, 6 FLA, 3 MD

Legalization led to Tax Revenue off Cannabis business that was happening already and cleans up crime, business was illegal in past and unregulated

Work with other distributers wholesale / niche

Harvest Goal – was to raise $200 million in funding, instead raised $800 million – had to turn down money.

Harvest was a startup in 2018 with huge potential, AZ is a mature market

California Pot Co’s make money $ going public (IPO)

U.S. industry looks great

Store 2011 - 2013 – license per store, full vertical

Health Q – AZ 2010 medical act

State Exceptions for Cannabis industry – since Fed illegal

Regulations will relax over time, and probably all 50 states will legalize Cannabis use  

 

 

Guests: Melissa Diaz w/ Rebel Rock

- customized accounting solutions, HR, and M&A for the Cannabis industry in AZ.
https://rebelrock.co/melissa-diaz/

https://www.linkedin.com/in/melissa-k-diaz-cpa-10215623

 

Melissa’s accounting experience as a CPA spans numerous industries, both domestically & internationally, including healthcare, hospitality and, of course, Cannabis. In addition to co-founding and serving as CFO to Rebel Rock, Melissa is CFO and Shareholder for High Rock Accounting, which places an emphasis on utilizing technology to strategically make day-to-day and long-term financial decisions, while pursuing company goals and compliancy.

At High Rock and Rebel Rock, Melissa helps companies remain competitive and efficient in increasingly high-pressure and high-stakes environments. Starting in 2016 she started branching out into the Cannabis industry.

 

Melissa discusses the passing Prop 207 in AZ, and legalization. What are the laws and regulations now in AZ, and federally. What is the expected future for the industry and will legalization go nationwide. She covers the bigger picture of new investing in the Cannabis business. What requirements investors look for in the Cannabis industry, and how the whole industry is maturing.

Cannabis (Marijuana) License in the state of AZ go for $10’s of millions of dollars, and are difficult to come by now. The industry will grow 30 – 50% in 2021, after 30% growth in 2020 to be over a $1 billion annually in AZ with a 16% tax statewide.

 

Notes:

Testing requirement for dispensary

Prop 207 passed, Cannabis fully legal in AZ April 2021, started Feb 2021 - Dedicated line for medical, huge demand 3-6x increase in revenue.

April 2021, started Feb 2021 - Dedicated line for medical, huge demand 3-6x increase in revenue.

No interstate commerce, not fed legal and if you cross state lines, still a drug offense & crime - 280 E – tax code, Cannabis illegal federally

Shortage of supply vs. large demand

 

Canadian stock market – Cannabis is federally legal in Canada

Private investment or SPACs – Cresco created REIT 11PR fund

No banking, no merchant or credit card accounts – all cash business

Security in locations, as potential theft real issue, plus need cash control

Copperstate Farms – greenhouses and cultivation

Vertical farming with special lighting and timed watering and feeding

Regulation – on site security for cultivation

 

Rebel Rock has medical card

No more licenses, high barriers to entry in AZ as it is a limited licensure state  

Safe Banking Act – need this to pass for cannabis banking at Fed level

Investors all in, at tipping point

Due diligence is sophisticated

Lease a license, avoid huge CAP x Cost of $16 million, new license may be less

$150K cost of license in 2010 or 2013

30% increase in sales revenue for Cannabis in 2019, to 2020

$700 million - $1 billion annual revenue (and beyond +) for 2021, growth of 30 - 50%

Taxes - 16% AZ tax + city tax, 10-11% medicinal & up to 27% total recreational

 

 

Cannabis Topic: https://brt-show.libsyn.com/category/Cannabis-Hemp-Marijuana

 

‘Best Of’ Topic: https://brt-show.libsyn.com/category/Best+of+BRT

 

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Business Roundtable with Matt Battaglia

The show where EntrepreneursHigh Level Executives, Business Owners, and Investors come to share insight and ideas about the future of businessBRT 2.0 looks at the new trends in business, and how classic industries are evolving

Common Topics Discussed: Business, Entrepreneurship, Investing, Stocks, Cannabis, Tech, Blockchain / Crypto, Real Estate, Legal, Sales, Charity, and more… 

BRT Podcast Home Page: https://brt-show.libsyn.com/

‘Best Of’ BRT Podcast: Click Here

BRT Podcast on Google: Click Here

BRT Podcast on Spotify: Click Here                   

More Info: https://www.economicknight.com/podcast-brt-home/

KFNX Info: https://1100kfnx.com/weekend-featured-shows/

 

Disclaimer: The views and opinions expressed in this program are those of the Hosts, Guests and Speakers, and do not necessarily reflect the views or positions of any entities they represent (or affiliates, members, managers, employees or partners), or any Station, Podcast Platform, Website or Social Media that this show may air on. All information provided is for educational and entertainment purposes. Nothing said on this program should be considered advice or recommendations in: business, legal, real estate, crypto, tax accounting, investment, etc. Always seek the advice of a professional in all business ventures, including but not limited to: investments, tax, loans, legal, accounting, real estate, crypto, contracts, sales, marketing, other business arrangements, etc.