Goldenseed CEO Says Cannabis Market 'Insulated'

our Interactive Broker studio on this Friday. Welcome, nice to have you here, Thank you, Thank you for having me. Tell us a little bit about your business. And I mentioned to you before we got going off air that

we had jealous ality of cure Lea Finns. So cannabis is certainly and the industry something we've talked a lot about over the last two years, going from I think to focus so much on the Canadian companies a little bit more now on the US companies, and now we're just trying to figure out, you know, where the regulatory environment goes and what that means for the growth of

the business. Tell us about our company, golden seed. We started a couple of years ago and UH initially to be a cultivator and to sell wholesale UH cannabis to the market. UH we got into a situation where our harvest was reduced UH with regulatory issues in California, and so we immediately went into the retail market with the product pre roll joint and it was very unique in that we included a turpene tropic typene, and that's really the Roman the flavor of the plant, so that same

plants flavor intensified in the joint. And essentially the first two contests we entered, we were we won the Gold Cup, and our brand was really established and to create enterprise value, I think in cannabis you can't just be a cultivator. You have to have a lifestyle brand, and Santa Cruz is a perfect place for that. I have to say, I was in Santa Cruz over Christmas break that checks out. It is such a great laid back part of the country.

I mean, what's interesting too is your you know, your background is largely in real estate, environmental land red mediation, so like tie that together for us, what have you seen from sort of that background that sort of lad you here. Well, you know, we have been a real estate developer in finance for thirty years, my own company for twenty years. About five years ago we started buying

operating companies that had real estate. The first big acquisition was the Napa Valley wine train as that ends up with like seventeen other pieces of property we could develop. About three years ago the opportunity to buy a nursery in Santa Cruz County that sells conventional plants that came to us and so that business is essentially funded the start of the cannabis UH company. We've parceled off twenty acres to have the appropriate zoning and started that operation.

So it's a real estate play and it's also an operating company play. But um, so give us a little bit idea of the outloo because I think, you know, we're trying to figure out kind of where does the industry go from here, because I think the regulatory environment is taking slowerty evolved, certainly on a federal level. Then everybody anticipate anticipated in more states certainly are signing on in terms of medical marijuana and recreational Um, how do

you see it though? For us out in California, it's still insulated, right because it's not a national market. The regulatory environment and California is very difficult. Uh. The legal market last year is about three billion. The black market and California is estimated at eight billion. So you know, until they can get some really strong compliance and enforcement, that's going to continue to be a challenge. And that challenge is the accepted industry, right or the legalized industry.

On the flip side of that, you know, if you're a producer of legal cannabis, there's a great market for it. And so how did how does that imbalance get solved? Like what are the sorts of regulations, the sorts of laws, or I guess maybe just the sorts of enforcement that need to happen to sort of bring that essentially the other way, right, that the that the legal outweighs the illegal. Well, first, I think the regulations need to be clarified and may

be simplified. It's been kind of a disaster the way it's unfolded in California. The big hurdles for legal weed is the the pesticides, the testing that's required, the taxes, and there's very arcane rules that are different different by every jurisdiction. I'm in three counties right now, three sets of rules. So it's very this is this is largely regulated on the county level, not the state level, and the state basically delegated the jurisdictions the right to create

their own ordinances. Taxes are different, everything. It's different in building permits, standards. So it makes it really hard to have an enterprise that's in multiple areas. I mean, here here we've talked about how you have to be vertical in in a single state because of the lack of obviously federal regulation or or anything like that. I did not know that it been deeper way down county County. I think that's ultimately gonna be a challenge when that

becomes federally legal. Is you have all these different states of their own rules, all the counties and jurisdictions within the states have their own rules, and I think creating an order to that type of market's gonna it's going to be a challenge. So, okay, so when do you see a more orderly market like is it? Can you even do even have that kind of visibility to be to say that, I don't know, it's gonna be another year or it's gonna be another five years, and it

really is down to the federal government. I think that I think we're within five years it will be federally legal. Might even be sooner than that. Recreational and medical, Yeah, I believe that. I actually, you know, in the short term, just from my own company's perspective, it's not bad that it is federally illegal because I can establish my brand and presence in California, which is the largest legal market

cannabis in the world. So we'd be remissed because we want to talk to you about disapproval that you got to do a nationwide public offering to offer shares to the public. Talk to us a little bit about this and why you chose this route. Well, you know, the capital markets and cannabis are difficult, and our company were not friendly right now, very very much so, so we self funded until we got to the point where we're very close to turn the corner and going cash flow positive.

We came to the market the first cannabis company in the United States to be qualified by the SEC to sell shares in our private company regulation is unique and that you don't have to be an accredited investor, so we can sell to anyone in the United States or even in the world. So after a little bit five weeks we have about people that have applied for investment. There's a clearing mechanism, so about eight hundred seven hundred

official investors. The mechanism background checks. You have to provide your I D. California requires that takes a couple of weeks to clear. Uh. You know, it's very simple, straightforward, sus. Our website is owned Golden seed dot com. You can pay it the credit card minimum investment of only a hundred dollars. But the cool thing of ISZI creates brand ambassadors for our lifestyle brand and you know, to have

national exposure before Canadas goes legally nationally. I mean, we're building a we're building a base in all these states. So how has no one done this before? I think people are intimidated by the fact the SEC is a federal agency and could you really get through that? And it's not inexpensive to do it, and so we took

the risk that we could get through it. Great Securities Council Kendall Almerico, He's done other regulation A offerings and it's been a great experience, And so is this a precursor to a more traditional I P O or what what does this get you from a financial perspective and what happens next in that regard. Well, this offering is you can have it open for a year. Our offerings for ten million dollars. We can close it at anytime if we want to look at changing the valuation. Uh,

it's gonna how sticky is it that? In other words, if someone makes an investment and then they decide I don't want to be in it, is there a commitment or is it liquid? Can they get out of it? They'd have to sell out to another individual, so they'd have to find somebody. There's not a market for it. Uh yeah, But so our goals uses to reinvestment facilities, marketing and building the brand and just keeping our debt low. Alright, So tell us about how you see this market growing

for you. What does it mean to be a lifestyle brand? What is it? What does that mean in terms of different products? You mentioned him, but give us the whole portfolio as you envision it. Well, what I like to say is that we're going to be one of the strongest vertically integrated companies in both hemp and in cannabis. And you know early on when I was stocking to private equity groups, being a cultivator is not going to

be creating a lot of enterprise value. You know, Coca Cola is going to buy a Gatorade, They're not going to buy a production facility, say at a big valuation. So for us, it's continuing to grow that brand, get exposures and stakeholds in other states, and we think that will be very attractive. You know when the consolid consolidation happens, and you do anticipate that there's going to be more of it there or there has to be, right absolutely,

because economy is a scale, right. We heard that from Pure Leaf that basically like we're at this moment where there are a lot of smaller players that are going to uh that are going to get uh sort of either put together somehow or another. Uh So how expensive

is expansion though? Because you do have to be essentially vertically integrated state by state, you can't really have any kind of cross business, right, We're not planning going to any other states until there's potential to license our genetics and other states. We've been exploring that but we won't be doing that anytime soon. A lot of business in California at this point, it's the largest legal market in the world. What do you see is the biggest risk

to your industry right now? I think the regulatory risk and kind of the confusion around that causes a lot of expense, a lot of uncertainty, and it's really kind of rundom how they enforce. And do you imagine that you will do acquisitions? Uh, you know they're in California because there are other smaller players right now. We're looking at some opportunities right now where we may bring some

in under our umbrella. And I think again, if you have a company that's looking to acquire, you have multiple lifestyle brands that would be a good target. We also can combine your cultivation, right right, Yeah, I mean this is a classic sort of scale business and in some place I would imagine, but I do wonder about cash burn right as you wait for the regulatory environment, it's going to be kind of tough, or is it. Once we start our cultivation. Our first starvist will be in May. Yeah,

that will be the turning point. Okay, Hey, good to check in with you. Very interesting as it grows up, as it were, all right, it's got Goldie? Is this ce? I did? Well? You know you? What did you do earlier? You did something earlier, Dear, I don't even see how you can criticize that was a really bad one. Scott Goldie as the chief executive abuser of gold and See based out in Santa Cruz, California, here with us in New York City today