Todd Harrison Discusses Biopharmaceutical Investments

starts doing some really really unusual, interesting different things. I think you will find the space he's carved out presently to be both very very interesting and somewhat unique. He runs a hedge funds that focuses on health and whelming us specifically through CBD and cannabinoids. That is, um, the proper pronunciation of what I was messing up. I was calling it cannaboids, but apparently that's wrong. Uh. It is one of the many um active medical ingredients in marijuana.

He believes this is a space that is uniquely situated to benefit from a number of waves uh, the changes in demographics that are taking place with the aging of American society, how expensive American healthcare and pharmaceuticals have become. Uh, not only that, but the the huge change in the science of what we're learning about the various molecules and chemicals within marijuana and all of its medicinal applications. And at the same time, he looks at this as a

wildly underserved space in the investment world. You know, when I think about legalization, I think about people who are gonna go get a PAXs pen or a vape and and basically, you know, have a little bit of fun on a Saturday night. He's looking at this completely differently. This isn't about UM recreational weed. This is about the application of science to the compounds in marijuana and everything

at all. That plus the opioid crisis, which UM there's a huge overlap in UM helping to solve that and some of the applications of cannabinoids and marijuana, and you end up with what is really a fascinating conversation about a fairly unique niche in in investing. And if you're at all interested in this, I think you're gonna find it fascinating. So, with no further ado, my conversation with CB one Capital Partners Todd Harrison. This week I have

an extra special guest. His name is Todd Harrison, and he has quite the career uh in finance. He spent seven years on the worldwide equity derivative desk at Morgan Stanley before leaving to manage derivatives at the Galleon Group. He became president and chief trader at the four hundred million dollar hedge fund Kramer Berkowitz. At the Street dot Com, he created the Trading Diary, which, for my money, was

the first real time financial blog ever. He founded the investor education site Minionville, author of the book The Other Side of Wall Street. He currently is the founding partner and chief investment officer of CB one Capital Management, a healthcare fund focusing on medical canniboyds. Todd Harrison, Welcome to Bloomberg. Thank you for having me, Barry, and I've been looking forward to having a conversation with you on air for forever. There's so much stuff to talk about. Let's start in

the nineties. You go from Morgan Stanley, where you're on the derivative desk, to Galleon to Cramer Berkowitz. What was that side of trading like during that sort of crazy time the es Well, I think it's everything everybody hates about trading now and the Wall Street persona, it was. It was a lot looser, it was a lot more maverick um, and I think the industry was a lot more fun back then. You remember, we actually believed we

were doing uh, real utility in our work. We believe we were facilitating the mechanism of the capital market structure, and that was noble work. Back then, it was it was God's work and so else. I stayed away from that by design, but certainly I think there was there was a lot, a lot of meaning in that. Back before this we all became algorithmic and certainly dominated by the computer world, and and also before it became less profitable,

less volatile, less um, less interesting as a career. So so, Morgan Stanley, you're just a derivative trader. Are you trading on your own behalf? You're trading on behalf of the firm's clients. What are you actually doing on the desk? Well, I was trading on the equity derivative desk, So I was facilitating customer orderflow, but we also traded proprietarily back then, So I had the biotech book, I had the financials that I took as my own. But it was an

interesting journey to Morgan Stanley. I know, I didn't always plan to be on Wall Street. When I went to Syracuse, I was proficient in accounting and finance, and it was

really a jump ball back then. But uh, I was accused of cheating on my UH my advanced finance class mid term UH in my junior year, and as I got pulled to the professor's office, he asked me a number of questions and when I realized what the dynamic was, you know, long story short, he ended up placing me at Morgan Stanley in one in between my junior and senior year of college. And that was really the beginning of of really watching the energy and seeing the the

way this business worked. And I was hooked from from the word go. So, so you dropped into the middle of that sentence I was accused of cheating. I'm gonna assume it wasn't. Oh, I have this ethicless kid who was a cheat, or let me send them to London. That's where they go he figured out, obviously you weren't cheating, and what was the basis of the accusation? Were you scoring too high on the test? Yes, I blew the bell curve. So I think I got like a hundred

and fifty something on the mid term. And I thought he was going to congratulate me. But you know, as it turns out, he's Uh, he's a good man. And I was actually in a fraternity with his brother, with his with his son. Uh. It was. It turned into a good story. But at the time it was an interesting dynamic to go to London while you're in college and to sit there. I was in operations control. I

brought the trade breaks to all the traders. I was screamed at, yelled at, uh, completely demoralized, and I was hooked. I said, that's where I want to be one day. I want to be, not seat. I want to be the screamer and not the scream a. So so Morgan Stanley to the Galleon Group, which was then a huge and very successful UM hedge fund prior to that little

hiccup towards the later years. What did you do with Galleon? Well, I had two I had two roles there I traded my own book, but really my primary role was to manage the derivative book. Galley On when I started was five hundred million. That grew to about five billion UM, and it was it was a lot tougher than I expected, without the infrastructure and the franchise behind me of Morgan Stanley. But I think maybe some of that had to do

with the environment. Now, you know, I worked there for two years only, and I think, you know, the writing was on the wall after the first year, when there was about a hundred million to whack up between five partners. There were five partners in me, I was shut out and and and subsequently the next year something very similar happened and I was told that I didn't have what it takes to make partner, which I was actually upset

about for some time. But that that that has passed, I would imagine, So how do you end up going from Galleon to Kramer Berkewitz. Well, Jeff Berkelewitz was always a friend of mine and I knew they had a tough year year prior. Uh So we had started a conversation once the writing was on the wall at Galleon, and he asked me to come over and that's where I met Jim and and Jeff and it was a good dynamic there. So I came in um and I

took control of the trading operation. I turned the desk over and implemented risk protocols and uh, you know, it's a terrific year that that was y two k So that was the one year that Jim and I actually overlapped. We did quite well that year, and I ended up staying there for another couple of years after. And to put for those people who may not be familiar with Kramer Berkelewitz, you know, Jim Kramer, the talking head, but I want to say their long time track record was

something like year compounded. Is that about right? That's a very respectable track record. And you're gonna take credit for how much of it? Very little? Very little. So from that trading background at Kramer Berkowitz, Jim Kramer decides to launch the Street dot com. And we'll talk more about that later, but you decide to start writing for the Street, a real time online trading diary. What what was the

motivation behind that? It wasn't my decision. This was Jim going on vacation in July of two thousand and asking me if I would fill in for a day, and never having written before, but certainly Jim being Jim is hard to say no to. And uh, it was something that I had fun with. I was using pop culture references in double entendres uh and and musical lyrics and

I happened to be extremely barished. This was the spring or summer of of two thousands the case maybe uh, and it just it just took and developed quite a community out of that. So I think a lot of people here in New York might be surprised to know that New York has a legal medical marijuana uh set of statutes that allows, on an extremely limited basis, the prescription approachase and consumption by people UM who have very

specific diseases. New York is nothing like California. Just say, you know Oregon or Colorado or any of the other places that have really moved from the criminalization to um full on legalization. What what is the New York situation? Well, they actually just expanded the access to include PTSD and that's actually how I got my cannabis card in New York. Is true? That is true, UM, And it wasn't going to talk about this, but certainly as a as a bit of a context for the card. Uh. Nine eleven

was very profound for all of us. So I was going to say, anyone who worked with Cramer is Jim's a good man. Uh. So you know nine eleven, we were down there, that's where our office was. And and certainly, uh, you were right on Fulton, so we you know, certainly you know, heard the bang and saw people holding hands and jumping, and saw the second plane entering the building, and um, you know, it was a pretty horrow experience.

But I remember that I refused to really let myself feel bad because I felt guilty because so many people lost so much more. And I thought, and although it is doesn't seem to be the healthiest way to well clearly, but what ended up happening is over the course of the treatment protocol, I was I was um prescribed a numerous different medications anti anxiety, anti depression. Uh, and before I knew what I was stocked on four or five

different medications. That was really just it changed who I was as a person and really changed how I was able to think and act um. And it was during a time that that significant and impact Ye and it's not this is not a this is not a solo story. There's a lot of people out there that I think are are going through this right now and they become dependent on these prescription drugs. And you know, that was really one of the catalysts for me to really start

to dive down into the Canada space. I started to invest in a company called GW Pharmaceuticals a number of years ago, and you know, they're studying the plant right there, taking a not a noise out of the plant and studying it for efficacy. So these are people rolling up joints and striking weeds. These are people who are actually either consuming it in a pill form or or some

other assumption like traditional pharmaceuticals. Sure, and that's really what what UH really enlightened me because for a long time, and I remember going on TV about eight years ago talking about cannabis is my single best investment idea for the next decade. And I was a little early, but certainly I was also wrong, and that I was looking at the job growth to tax revenue, the prison population,

crime rate and saying this makes sense. I failed to realize the coordinated agenda by the big pharmaceutical companies to keep this illegal, and all of that that I studied and look back on it really what I think is criminal activities on the part of the government to really suppress this given what they knew at the time in

terms of efficacy. So here's the question on that. Years and years and years ago, like the eighties and nineties, I always heard weed is going to be legal because all the big tobacco companies know that their products killing people, and they know how to grow, and they know how to roll, and they know how to do all this, and one day the switch is gonna flip and you know, Philip Morris and Brown and Williamson and all those companies are going to go from selling cigarettes to selling joints.

That never happens. That's not true. It actually is happening now. It is now. I mean that never happened where where I certainly didn't happen on my timeline to be to be um precise, how much is that actually happening? And what I'm trying to tee up is how much is that same pivot going to take place with the pharmaceutical

industry that's been fighting what appears to be a losing battle. Well, We've been saying for some time that the by build was going to migrate across for spaces by build by build, So it's not as easy as dropping seeds in the ground and growing a cannabis plant. There's a lot of science and we're gonna talk a little bit about the frontier science the endocannabinoid system, UH and what the science behind this is. And it's really fascinating. It's it's for

those who are intellect really curious. This is a rabbit hole that I still haven't climbed out of, but we've seen it. We saw Constellation Brands take a stake in Canopy that was on the beverage side. We saw a oy by a Canadian growers, so that's on the tobacco side. Uh. And we think the next phase is going to be biopharmaceutical and then ultimately consumer goods because if you think about it, as more supply comes on, the prices will decline.

That's going to help people who use cannabis as an ingredient. That's going to help their margins on the back end. That's quite fascinating. You mentioned an investment in Canada. Last year, Canada passed the law that essentially says they're decriminalizing marijuana as a country, the first G seven country to do. So, what what's gonna happen with that? Well, there, that's gonna happen, clearly.

But I think part of part of the mist perception about Canadian cultivators is people are extrapolating that to the Canadian population, but in actuality, what they are going to be is a service station to the world. So they have deals with Germany, they have deals all over the all over the world, and you're seeing this sweeping across the world, whether it's followed the money, whether it's people

are understanding for the first time the efficacy. What's interesting is the morning that Jeff Sessions revoked the Coal Memorandum the Australian and then explain that for people who may not the Cole Memorandum effectively protected the States from government interference under President Obama, correct, all right, and then under President Trump Sessions Sessions provoked that And then didn't we just here a deal with Corey Booker and who was

blocking some of the President's appointments and President Trump it was Corey Gardner in in Colorado. But um, you know, when we've been saying for some time now that we think that the foremost dangerous words in finance, this time is different. That this time is in fact different because it's an election year and you have of the constituency that's supportive of medical cannabis. That's amazing, And the only thing that politicians like more than lobby money is being reelected.

So we actually have been saying for some time that we thought that you're gonna see a pretty significant pivot this year. And sure enough, you saw Mitch McDonald, Mitch McConnell with the Hemp bill. You saw John Bayner. Now, by the way, Bayner was rapidly anti hot when he was Speaker of the House. And what happened He saw a little bit of that no pun intended leafy green

stuff and suddenly he changed his view. Well, there's that, but there's also what I think the real You know, when we talk about this investment in our strategy really through the lens of four arbitrages, right, arbitrage of time versus policy. Right, we do believe this is efficacious and oh, by the way, the only way the US government can tax this as if it's through the FDA. Right, we believe it's an arbitrage of of price versus UH the high net worth individuals and the US institutions that are

going to be on boarding to the space. Vanguard very quietly has become a top five holder in all of the Canadian majors. Now is that is that within their indexes or is that within the one and a half two trillion that's active. I don't know the answer to that, but I know that. But I do know that when I've gone to these conferences, I've seen Fidelity, Vanguard, Putnam, Goldman all walking around. These barbarians are massing at the gate.

If if if institutions don't chase growth, it'll be the first time in my thirty years that it hasn't happened that. That's so. So here's the question. How big can the market for medical marijuana become? Well, Gallup right now is saying it's about a three and twenty billion dollar annual market all in. What is that comparable to? I mean, you know we have talked, You and I have talked

about the parallel with prohibition and alcohol coming on. I think that's a non linear comparison because alcohol never killed cancer cells, alcohol never reduced epileptic seizures. We think that the third arbitrage I alluded to is perception getting well versus getting high. We think this is about getting well, and we talked about earlier with the coal memorandum. The health ministers of Australia and Canada came out that morning and said they wanted to dominate the world in cannabis. Now.

Their health ministers said this, now, unless they want a nation full of stoners. We're betting that they see what we see in terms of the efficacy. And this is the untold story here. This is why it's so powerful right the people. There are people on the right thing that think this is the devil's weed. There are people on the left that like to smoke a vaporizer on a Saturday night. But all of us, if somebody that we love is suffering, we want the best care with

the least amount of side effects. And that's the story here. This is a wellness story I know, and full disclosure, I know Todd for a couple of decades. We both wrote at the Street dot com back in the day. I have to talk a little bit about that. We mentioned the trading diary that you filled in for a day. How did that become a daily routine. Interestingly, I found that it helps synthesize my thought process. And I've always looked at the market and said, there's always a bear

case and there's always a bowl case. And if you could you know that that friction between those opinions is where both education is found, but it's also where profitability lies, right, um. And so I I took to it, uh the online platform, and keep in mind this is before blogs and social media, so it was still, um, a bit of a pedestal, I guess, but I enjoyed it because it allowed me an opportunity to uh synthesize my thoughts and really lay it out there in a way that held me accountable

to really following my own my own thought process. That that's a very um astute insight. Daniel Burston was the Librarian of Congress and his famous line was, uh, I write to figure out what I think, and besides, the bars aren't open at that hour. And uh, you pretty much said something similar. So the trading diary continues, and you did that for a long time. I recall you mentioned there's always a bull and bear case. You came up with a great metaphor for your putting on your

bullsuit or your bear suit. I have one one hoof in, I have two hoofs in. You you literally explained for readers not just I'm bullish, embars hey, I'm se bullish or how did the process of writing help with your own trade? Well, as I said, I think it held me accountable, but it also it also allowed for more

sequencing in my thought process. So, uh, you know, certainly, and we talked a lot about you know, there's always this bowl case and the always this bearcase, and we sort of brought them to life with the characters that we invented and animated and ultimately, you know, they won an Emmy Award for their work, and Huffy and Booch certainly, and you know, the perfect media prize, right, an Emmy award. It looks nice on the mantel, it's nice and shiny,

but the zero revenue attached, you know. So but that was but that was you know, the idea behind Minonville was really to create a vertical from the A, B C s to the four one case. You know, we identified financial awareness, financial empowerment, financial literacy by another name. Uh, you know, through my writing at the Street Dot com realized that there's a lot of people out there that need the help, that want the help, that are good people who deserve the help. And I sort of took

that upon myself to to do that. And for fifteen years that was a very meaningful way to spend my day. Not a very profitable way to spend my Uh you know, I traded my own account throughout the al but uh, you know, certainly, I think psychic income was at an all time high. So my colleague Josh Brown called the Street dot com the motown records of the financial web.

And I could point to just about every institution that covers trading economy, markets, media UM from from from Bloomberg to the New York Times, the Wall Street Journal to you name it, and there's a huge pro publica, a huge swath of people um that trace their roots back to the Street dot Com. So I have two questions for you about that. What was the feeling like inside the Street when this new idea of democratizing research rolled out? And then what was the leaping off aha moment Frommingonville

as a as an educational outlet. Sure, so I think they were the original on on community and financial media I mean, you know that Doug Cass and Wire and Bill Fleckenstein, and you know Jim obviously Greenberg. I mean these are all, but this was you know, these were good people who happened to trade, not traders who happened to write. And I think that came through you know, authenticity is very hard to fake by definition, right, So I think that was authentically um an opportunity for all

of us to give back. And I think that, you know, it was lightning in the bottle for a few years. Sure, and then Minionville, What what made you say I want to attack to something that's more educationally focused and and especially focusing on teaching kids about money. It was nine eleven, you know, it was nine eleven in that it was like that catalyzed me to really ask the question, what am I doing with my life? What's the difference between

having fun and and being happy? I love that quote of yous by the way, I tweeted that recently and someone said you should get Todd on the show, and my answer was, well, I'm doing my research. What do you think that world came from? Well, it's certain me. I think before that I was having those questions. I would look in the mirror, and you know, the net worth verse self worth thing certainly was a long time coming. But after nine eleven, uh, you know, I wanted to

take it to a different level. My grandfather was failing at the time. I had a lot of emotions and I really wanted to just, uh you know, selfishly create a Catharsis. And after nine eleven, uh, you know the street and you know, I'm not going to get into details. It didn't end well. I think in hindsight, I regret a lot of the things that went down, and maybe

some of the things that were said and done. You know, as you get older, you tend to reflect on sort of what matters and what doesn't matter, certainly, and you know, and and Jim, you know, listen, I I care a lot about the man. You know, we haven't talked in a long long time, and that's unfortunate. But uh, you know, like I said, as you get older, you start to reflect on your life and and the people in it.

And certainly I have I owe him a great debt for opening this world to me and also for things, uh that nobody knows that he did behind the scenes that I think of the real definition of a good man what you do when nobody's watching. So after nine eleven, I decided I was gonna put all my efforts into starting a new platform. And after I spent about two million dollars on it, I decided that if I didn't turn this into a business, uh, then it's the world's

most expensive hobby. And you know what's that all about? So uh, it turned into something pretty powerful. I think anybody who remembers Minionville can remember the energy and the events and the and the lessons and and it's something that I think after the after, you know, with the benefit of hindsight, I think I appreciate it more than than maybe I did immediately thereafter. And last question, tell me about the Ruby Peck Foundation and the rock Stars guitars. Well,

the Ruby Peck Foundation Ruby Pecks my grandfather. So in two thousand and one started at children's Ruby Peck Foundation for children's education and we raised, you know, a lot of money for kids. It was part of the giving back ethos that's part of Minionville. And I remember Doug Cass and you and a number of others got to that got that all star guitar as signed by everybody from Buffett to Chainos too, you know, Peter Lane right across the board, and we auction it off for charity.

So it was a past the organization. We raised a lot of money for kids. But you know, between Menonville and the Ruby Peck Foundation, it was a it was a terrific uh stretch in my life. But as people say, you are with things for reasons, seasons or lifetimes, and you know, I guess Minonville wasn't a lifetime endeavor. So let's talk a little bit about CBD. Can we call that that instead of my mangling the word, Um, what

is CBD and what's it good for? Well? CBD in and of itself as an antipsychotic, right, So it's a calming influence and taking a step back cannabinoids and talking a little bit about the science because this is really the thrust of what's the most important conversation about cannabis right now, and what most people are missing is the

wellness side. So everything that's alive, whether it's a dog, a cat, a plant, fish, or human being, has what's called an endocannabinoid system, right, and this was first discovered in the late eighties and early nineties, it's the most ubiquitous network of receptors in the human body, Okay. And what they found is the cannabinoids found in cannabis are identical in action to the endocannabinoids that your body produces. Now, so in other words, these aren't things that are getting

you high. This has an impact on the biochemistry of the body. Well, about ten percent of carnabinoids will produce that euphoric effect or non euphoric. All of them are anti inflammatories, all of them are therapeutic, right. So what they're finding out now is that by looking at the endocannabinoid system, you can now target receptors in your body with certain cannabinoids across a wealth of indications for wellness. Right now, we my partner Lauren de falcore nine and

I'll tell you his story. Uh, but we spent a lot of time talking to scientists and genealogists, and the mosaic that was painted for us effectively was over the last hundred years, we've gone from hunters and gatherers to desk jobs, and we've gone from organic foods to process foods, trans fats and chemicals, and certainly heredity plays a part. But as you get older, your body stops producing these endocannabinoids. Case in point, the Runner's high. Everybody always thought the

runners high was endorphins. False. The runners high is a e A, which is an endocannabinoid. It's identical in action to th HC. This is all frontier science. Remember, still illegal to test cannabis in the United States. So all of this is happening in Israel, Israel, and Italy, Germany overseas. Right, But what they're finding now, and you might I'm sure you saw the g W Pharmaceuticals their epidialects drug. We

have a position in GW. But their epidialects drug is reducing seizures and children by fifty cutting them in half. So they had their FDA expert panel a few weeks back and they got a standing ovation on top of a thirteen to nothing unanimous decisions. So this is going to move forward, which is significant, demonstrates medical efficacy. The d e A is going to have to reschedule and that's going to open up the pipe and arch. So let's talk about asthma, Alzheimer's cancer, epilepsy, park and sins.

What else is on the list for things that CBD can actually, uh make a difference either in the quality of life or potentially finding a cure for these diseases. Well, the the answer is that it's frontier science and we don't yet know the scope of the wellness activity. Not just but it's not just CBD, is what I'm saying. CBD and th hc or or sort of the main players. What everybody associates with cannabin lots of other chemicals, a ton of minor cannabinoids. You think that people were mining

for bitcoins and that became crazy. Wait till people understand how valuable these minor cannabinoids are. CBN as a sleep aid, th h c V as an appetite supressant. This is all coming through the pipe right now. There's about clinical trials. It's gonna blow your mind when you see the efficacious agility of this plant. Wait, weed as an appetite suppressant. Now I'm I'm stunned to you that well weed is

a four letter word. Okay, we're talking about wellness, right, We're talking about extracting the cannabin voids and targeting receptors in your body. And this is literally frontier science, and this is what people don't get We've gone and spoken to big pharma analysts and biotech CEOs and cardiothoracic surgeons and they looked at us like we're crazy. Seriously, they

never studied this. As a matter of fact, only nine percent of medical schools now even touch on the ECS on the endocannabinoid system and that all started last semester Oxford, Right, So you literally have a four year time line on an arbitrage here before this becomes mainstream therapeutic relief. So one of the things I read the other day, and it could just be a correlation. I'm not suggesting there's a causation because I didn't look at the study closely.

But in states where there's a huge opioid addiction problem, and subsequently either decriminalization medical marijuana or legalization, the opioid addictions plummet. In states where it's kindabis friendly states, less morbidity. This is saving law. Now. People who have been following this for a long time, it want a lot longer than I have, will tell you that epilepsy cancer. As a matter of fact, Nixon's on tape burying the stat are actually blaming the Jews for all the cannabinoids but

they knew this. They knew this one, and they banned testing, which I'm saying, this is you are you gonna make me lower my view of Nixon even further that he knew this was had a positive impact and ultimately still said just I mean, listen, there are so many reasons when we talked about the met but think about the racial disparity, right, how this is clogging up the prison system, and how this is the crime rate and the cost what about simple calculus. The cost of this is insane, right.

But but my point being, were at the cusp of of a revolution in healthcare, which we think is going to be a healthcare disruption, and we think big farmers about to turn buyer, but uh, we don't think they have a choice. I quoted you in a Bloomberg View column a couple of months ago, and the line I said was, imagine, for a moment, you could go back in time to nineteen thirty two, the year before the twenty one Amendment to the U. S. Constitution was ratifying

repealing prohibition in the eighteenth Amendment. And I raised the question if you could do that knowing what the future was going to look like with alcohol being legal again, how would you invest? So we're not quite at the repeal of all these rules against research or medical usage or even recreational usage, but it certainly feels like that's the inevitable way we're moving that, which leads me to

the investing question. If everything goes as it's expected, and I imagine it will be parallel to the marriage equality rules. People felt we were getting closer and closer than suddenly the dam broke. How would you position your portfolio? What

sectors would you look to invest stin? If someone comes up to you and says, hey, I got ten percent of my portfolio, I want to be a little speculative, and I think this medical marijuana thing is going to be big, how would you recommend invest I think the consistencies are you're looking for brands, and you're looking for brands at a distribution and quality of product, and certainly good management teams and all the things that you would

look for in a good company. Right you're looking at management teams, you're looking at at their balance sheet, you're looking at their patent portfolio, whatever the case may be. But where I think it's different now and where I think a lot of people are gonna get hurt investing in cannabis is there's a perception that this is about cultivation and that you know a lot of the Canadian cultivators have had their run in the sun. Uh, there's a lot of them that are that are well undervalued

as a matter of fact. I mean, we're looking at a company right now that has about two million dollar market cap that we think is gonna do eight hundred million in revenue in and why is it trading like this? It's treating like this because there's no institutional research analysts, no institutional holders. And we think that's about to change in a big way. You're gonna see Wall Street a job cannabis because they're gonna follow the money and that's where the money is going to go. But it's not

just cultivation again. Cosmetics and vanity gonna be huge, huge, huge vertical and it's gonna have a huge talent because the cannabinoids. But the people are gonna find in the wellness attributes between makeup between consumer goods, industrial hemp and farming hemp, creet plastic composites. I mean, the I think what's gonna surprise people the most about this industry as it starts to evolve. Is is not gonna be any There's not there's not gonna be any sector that's not

touched by this. It's gonna it's gonna touch every sector of society. So part of the pun. But this is a fairly sober approach to investing in a very specific sector that has yet to really gain broad acceptance amongst the investment and this is how we're approaching it. So we have exposure in Australia and Canada, in the US, and in Israel and uh in Europe and in South America, and we're looking across ten verticals, which includes cultivation dispensaries,

but certainly we think that's gonna migrate to drugs. From drugs from state dispensaries to medicine prescribed by doctors that's covered by insurance. Like in Germany right now, if you want cannabis in Germany, you go to your doctor, get a prescription, go to the pharmacy to get your cannabis, and submit the bill to your insurance company. That's it.

It's covered. And we think that's the model. So we're but we're investing across biopharmaceuticals or the laboratory space that the extraction space, UH and certainly industrial have been farming. We think is going to be a pretty significant market for UH, for consumers. Your your portfolio. Is it all publicly traded companies? Are there any pre public any private or venture or how do you guys approach It's all

publicly traded companies. And again, I've been looking for an advantageous risk reward in this space for a long time, and I kind of got caught up on if I found a really good private equity deal and it did very well, how am I going to demonstrate that income on my federal tax return? And I always sort of stumbled there, this is UH, this is different. We are investing, and we're not touching the plant. We're not moving a plant across eight lines. Were invested in publicly traded companies

only that are listed on in exchange. And we're legitimately viewing this as a healthcare play. This is not an optics We're not trying to put a wolf in sheep's clothing here. We're passionate about this because we believe this is impact investing. And I keep reading about all this usage of CBDs as treatments for pets are we using our pets as no again, no pun intended guinea pigs. Or is there a legitimate reason that we're giving CBDs

to two doves? And again it's an antipsychotic. I have a very nervous dog at home, and I give CBD two and it helps relax them. Uh. And again, anything that's alive, plants, fish, dogs, human beings all have an endocannabinoid system. And again this is frontier science. We are scratching the surface of what we understand here. And I'd like to you know, there are a lot of people out there who have been fighting long and hard to bring this to the four and it feels like we're

right there. This is an election year, and if the Republicans don't take this issue off the table before November, they're gonna lose the election. We I've been speaking with Todd Harrison. He is the chief investment officer and founder of CB one Capital Partners, specializing in healthcare and cannabinoid medical products. Be sure and stick around for the podcast Actras, where we keep the tape running and continue discussing all things cannabinoids. You can find that at Bloomberg dot com,

Apple iTunes, Overcast, wherever finer podcasts or soul. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot net. Be sure and check out my daily column. You could see that on Bloomberg View dot com. Follow me on Twitter at Riolts. I'm Barry Hults. You're listening to Masters in Business on Bloomberg Radio. Welcome to the podcast, TATO. Thank you so much for

doing this. I have been looking forward to having this conversation for a while, and I think this is a wildly undercovered section of not only the political issues. My libertarian friends are on the right side of this. Hey, if you don't think the government should tell you you can't you can drink or not, then why can they tell you you can? And I don't smoke weed is the funny part of it. But why should they tell

you you can or can't? And um, I I just always looked at it as as a sort of odd um a sort of by the way, I'm not saying I never smoked, don't don't send me emails, um, but you know I've I found when I stopped smoking, I suddenly became a whole lot more productive. But that's just

my experience. You talk libertarian governor. Governor Gary Johnson's on our board along with Dr Ethan Russo, Dr Julie Holland, Dave Charnick, and Warren Gertner, who we're proud of that board because these are people who get asked a lot to get involved in. Certainly in this space is a massive, massive credibility chasm. So what we found is that the people who know what's going on, who have the integrity and the authenticity and mission uh, they all know each other.

So it's been a very good network for us to tap into because there's a lot of good people doing a lot of good work, and there's a lot of bad people doing a lot of shady things. Out of the Out of the five hundred or so publicly traded cannabis stocks we found it, there's that many five hundred and about fifty to sixty maybe or legit of which we'll ow about half of that depending on time or price. But it's really it's really we're talking about the nascent industry.

And again that's why we think the by building is going to be so pervasive, because people are gonna have to get involved in your spirit company. You have to get involved in your tobacco company, you have to get involved your healthcare company, if your consumer goods company. This

is all happening sequentially. So fifty out of five hundred, right in line with Sturgeons law, famous Theodore Sturgeon, famous science fiction writer, defending science fiction when someone called it crap quote unquote, and he said, yeah, science fiction is crap. But then again, ninety percent of everything is craped. And and here here it is, so fifty companies out of

five hundred. Um, is there any chance that this gets co opted by the large farmer companies, just gets taken over and these innovative, little small companies get pushed aside? Or is it going to be more like the biotech model where these small, innovative, nimble companies find new molecules, new way of processing, new applications, and eventually they get bought or or merged with some of the big guys. I think the answer is yes. I think you're going

to see all of the above. Um. And again, Uh, the expertise necessary, especially when you start talking about the science and the endocannabinuting system and the compounds. This is not something that you can pick up, you know, over the course of a couple of weeks or a couple of months. This is something you have to go acquire. And that's why a lot of these companies, in our opinion, are going to be taken out as this becomes more adopted and more accepted across not only state lines, but

international lines. And we're seeing that wave theory of sorts sweeping. When New Jersey's governor was elected saying they was gonna legalize within a hundred days, I said to my partners, how long do you think before Cuomo uh softens his stance, And sure enough, the next day he came out uh and and he said he was open to learning more. Governors do not want to see tax revenue for sure

going to their neighbors. It's just not gonna happen. And when we talk about tax revenue, it's it's a double edged sword because on the one hand, we spend literally tens of billions of dollars a year keeping an enormous number of people in prisons. And there's a whole another conversation to have about, Hey, you and I, a couple of white guys from Long Island get pulled over with the joint in our car. The cop is gonna say, all right, you idiots, try not to do this again.

But if we're two people of color and get queens, we go to jail. That's exactly right. It's called in the courts is clogging the systems, and it's just not right, you know. But you talk about follow the money. B DS Analytics came out with the number and said that the industry owed billion dollars in state taxes in two thousand sixteen and another one point four billion in two thousand seventeen, and that it would save medicaid another billion on top of that. So all of these billions are

starting to add up. And you know, the total market right now, we figure private and public, we've cuffed it around seventy five billion. That's got a lot of rooms. Is just medical message, just legal. This is just legal

tradeable investable assets right now. But again, you're talking about about a three three twenty billion dollar global market before before you start seeing these end products start to start to show up, what you're gonna see because when people understand that this is not a bad thing, this is not a gateway drug, this is actually an opioid terminus. Right, We talked about the mortality rate and a decrease decrease dates where where it's friendly to cannaboids and cannabinoids. Uh.

And there's a heavy opioid problem. That's right, and that's just. And this is a bit of a blessing. You hate to find pleasure in somebody else's pain, but this is a bit of a blessing for uh, this science because it's pushing the conversation to the four. But then you have pain, and you have psychological relaxation, all of the mental issues, which people say, Okay, I can see it for that, But what people aren't prepared for is this killing cancer cells? Is this so let me let's say

this one by one. Cannabinoids kill cancer cells. GW Pharmaceuticals, which again we own UH in two In February of two thousand seventeen, they had their face too much studies, which is brain cancer. The primary endpoints were terrific. They couldn't release secondary end points, which is overall survival because quote too many people were still surviving. They said, we expect to have that information in the coming weeks to months.

That was fifteen months ago now, so we think that that information is actually gonna come out this summer at ASCO. We're hoping, but we's gonna show pretty demonstrative efficacy against brain cancer, which is one of the if not the most most aggressive forms of cancer. Uh. And there's a lot of a lot of that's about this is there's

a lot there's a lot of anecdotal science. We talk about clinical validation anecdotal or is it science, Well, there's a lot of anecdotal information because it's been illegal to test this, right, So we talk about clinical validation because let's be honest, like, let's take those those those onerous indications out of the equation. People have been using cannabis to self medicate for I mean back eight thousand BC.

I mean we're talking ten thousand years now. This has been you know, this has been in existence, So staying power, right, But it's not just for what people would think it's for. There's a lot more here that science is going to demonstrate going forward. Why can um pharmaceutical companies in the United States or any medical schools or whoever wants to do research, Why can't we do research on cannabinoids and

and marijuana ask Jeff's sessions. That's a good question. It's a schedule one narcotic right up there with the worst of the worst herold But but we research heroin and we research other stuff. Why we precluded from doing medical research? Is there a law that prevents that you just can't obtain There's a multibillion dollar pharmaceutical lobby that prevents that because they've been wanting the pockets of the politicians to really repress this. And then you know, you look at

me like, is that conspiracy theory? That's not listen. That's why is the United States played twice as much for a medical care as any other country in the world. So it's not a big leap to say, oh, and by the way, they're repressing this. But we'll come back in a couple of years. I will tell you, you'll say that health care disruption conversation we had with spot spot on. So let me ask you. I am not a big believer in forecasts or predictions, but let me

ask you a prediction. Um, And I know this is way outside of your expertise, but I'm just curious as to your views. Since you're putting hard capital, including your own money, at risk. When does the United States decriminalize marijuana for medical purposes? Across the whole country. And then when does it just become like alcohol and other drugs sold to add else like alcohol and tobacco, another drug

salt adults over the counter with just a driver's license. Well, I do still believe it's going to be this year's business, even if it's framed as a state's rights issues, which it is also a states right Stuey. The way everybody who talks about states rights is wild hypocrite. They'll use it to let something goes in their way, but then something goes against them and suddenly states rights no matter. So I've always found that argument to be so disingenuous

from most people, um, including myself. You know, I do think the motivation is political, al right, because this is this is going to be a Democrat, a Democratic issue, blue wave this this is gonna be a blue wave issue, if that's for sure. And you saw McConnell, you saw a banner, you saw Trump. And they're trying to very intelligently, i might say, trying to remove this issue before the

midterms get here, and I think they have to. So that's on allowing that's allowing the states to make their own decisions in the states so just in other words, remove the federal so it's no longer class one narcotic. You remove the federal government from the conversation and just let the states to make their own. And I think equally important we'll see this year's is banking reform. That was the next question I was about to ask you, because literally you go to Colorado or are Gone and

there's one local community bank. You can't JP Morgan Welles, far Ago City Bank. None of these companies can do it because they want to have access to the federal reserve and they operate across state lines. So the role terrified to do and Nutan has already said this as a priority for him. I mean, people walking out with bags of cash is not sustainable. Supposedly, these black ops guys are huge because they're making these hundred thousand allar cash drops every day and it's just, you know, not

not a smart way to to manage business. So you think in there will be some reform that will allow um, these things to be banked, so you could pay with a credit card, you can deposit, uh, they'll be able to deposit money directly into a major bank. That this is gonna go completely legitimate, I think so, you know, I mean, listen, it's speculate at this point given the environment. But you know, look at what's happening north of the border.

You have Bank of Montreal now entering the space, I mean, the biggest of the big you know, this becomes right BMO. And as a is there any business you know, when you see a new revenue source, you're going to, you know, look to capture it. But the government has to get out of the way on this. This is the horses are out of the barn. The patients aren't giving back their medicine, the states aren't giving back their tax revenue,

and the people are giving back their jobs. So if you have to make a bet ten years from now,

blockchain or cannabinoid which is bigger? Why I am making a bet um And I think I think cannabinoid wellness is going to be massive because I think blockchain is going to have its own role and I think I've always been a fan of I know, this is sort of become the the popular narrative now I'm a big fan of blockchain more so than trying to speculate which currency because I don't know, but cannabiniated wellness is healthcare, right,

This is better care with less side effects. Uh. And when people understand that of cannabinoids are non euphork and they're all good for you in different ways. And you can target receptors. And my partner hates when I use this analogy, but it's a little crude. But rather than the Western medicine of taking a pill and hoping it gets to where it needs to go, you can actually target receptors in different parts of your body as a

retrograde pathway. I mean, this is this is really powerful science here and it's just on the cusp of coming through. So I have two demographics I have to ask you about. First, we we have sixty baby boomers retiring each day. The population in the United States is aging. What do the cannabinoid group of um compounds and molecules, what do they mean for the healthcare of the elderly? Yep, it's the

it's actually that that's our that's our focus market. That's why Florida is such a big focus for us because the elderly obviously take the most medication. But interestingly, the older you get, the better this is for you. If you think about how your body stops producing endocannabinoids as a function of diet, exercise, and heredity over the course of time. What we've heard all of these scientists and

genealogists talk about is an endocannabinoid depression. Right, our endocannabinoid system is just it's just withered up and died at a certain age. As we get older, the cannabinoids identical in action to what our bodies are supposed to produce, but stop producing. If you ever saw have you ever seen the elderly and just cannabis, they light up right and forget like the no pun intended. But here's the here's the part that's interesting. I'm not a doctor, but

what's demensia? Dementia is the degradation of the mind. Right, your mind fails your you know, it becomes decrepit. What what does THHC do? It stimulates brain cell activity. So again that is that a medical uh, but I'm just it's an intuitive one, you know, coma the same one. It opens very specific, right, that's a very specific pressure on the back of the odde, which is why your eyes get read because the capillaries and large as the as the t as the end, as the cannabinoids take effect.

So and then the second UM demographic. I have to ask UM for partially selfish reasons, because my office we have a significant number of veterans we've hired, and that group has an enormously disproportionate amount of medical issues, including depression, and there's some sixteen suicides a day. Not all veterans, but a high number of veterans are in that group.

What what can cannabinoids do for that? That group of people coming back with PTSD, coming back missing limbs, coming back with all sorts of permanent pain and ongoing trauma. What could this do for that? Here's the difference between opioids and cannabinoids. You have opioid receptors in your brainstem, right. Your brain stem controls your lungs and your breathing, right, That's why people overdose from opioids. You have very, very

scarce endocannabinoid receptors in your brainstem. That's why nobody's ever died from cannabis. So right there, you're talking about pain relief or or emotion in a relief without the possibility of death, much lower risk type of medication. Clearly, the adverse effect profile is is to monstrably be better for starters that. That's quite that's quite interesting. You're very comfortable speaking in public, but you weren't always very comfortable peaking

speaking in public. We want to have a conversation about that. You said, everything's on the table. Sure. Do you remember you and I doing an episode of Dylan MSNBC show. Dude, you were Albert Brooks on Broadcast News. I listen. I think it was one of the best lines ever. Verse said on TV. If we don't stop being Democrats and don't stop being Republicans and we start being Americans, this thing is just gonna fester. And what happened, it's festered? It well there, that was almost a decade ago, and

you're right, it did fester. But what I'm bringing up is not that we got off the set and you were drenched. I'm bringing up you're so much more comfortable discussing this than you were talking about out whatever we were talking about. Is it just you've gotten used to this or is it you're just so enthusiastic about the subject that whatever. Butterflies just well, I'll tell you this.

I've you know, and some people will maybe disagree with this, but I've never really been interested in doing the whole media thing. And I did it for a long time at Minnonville because I felt like obligatory. It was part of the part of the just to get more sort of page views and clicks. And it's also see from everything we've talked about, writing is a way to distill what you think and being able to share your perspective. I've always looked at it as at first of all,

it's fun too. I started doing Cudl and Cramer two thousand three, it was they were fun to have the conversation with. You got to help shape the debate. Especially they really weren't a lot of people talking about subprime housing and derivatives and and c d os. Prior to the were on the money for Nothing Federal Reserve by documentary, you and I both were, and and there were very few people talking to that and just being able to

move that debate forward. I especially when you say I've seen something that's unique, no one else is talking about it. I want to have this discussion. You seem to be doing that same thing with with the cannabinoids today. It's the parallel to two thousand and six seven, maybe even two thousand five six seven before the market. Well, I think I think that's just there. I mean, I've always been somebody that needs a purpose. I need a purpose to get up in the morning. I need to be

passionate about what I do. And it hasn't always been that way. And I think for a long time, you know, when the writing was on the wall with Minonville, and I still was, you know, sort of you know, going through the motions because I had that sense of duty to finish that thing. Uh, it lost a lot of its passion, a lot of its spontaneity, a lot of its enthusiasm. This to me, this to me is powerful. Right. I've seen the parents, I've talked to the parents, I've

this is the stories. The stories are hard break. I was sitting there watching them speak at the g W Expert panel when I was swelling up. Watch I have a little girl at home. I have three kids at home. You know, any parent is going to see that, and really it's gonna hit home with my kids disease and you're not letting They're going. There are kids I have

to run over with a steam roll. There are kids going from three hundred seizures a day to two a month, right, And they're saying that this is illegal and they have to run from the fees. They have to move to Colorado to get there. It's criminal. This is the time has come for this issue. And and what's why we're passionate is because people are so off sides here. They think this is a gateway drug. Yes, it is a

gateway drug. It's a gateway off of opioids, right, But it's also a wellness play and that's what people are missing. They think of Cheech and Chong. Even still, you said to me just before during a break, you know, maybe do you have any samples with you? As a joke, but we hear that all the time. People think this is about getting high. The more people who think this is about getting high, the war of an opportunity is for the wellness strategy because people are looking on the

wrong side of the pipe. I mean, it's but it really is true. I'm assed on us. By the way, there's a bunch of stuff I have to nobody's talking about this, nobody's married the science in the strategy. It's it's so amazingly clear that this is a wildly undercovered space. It's shocking. Um. So we have an office in Portland, Oregon, and when we're out there. The first time we were out there, I said, uh to our employee Joey, I've never been in a wheed shop. You gotta take me.

And it was the craziest experience. First, like there's a they buzz you in and this door slams behind you like you're in a vault. And then you have to show I D and they photo I D. And then they take you to the next thing. And it's sort of like the Starbucks of weed. They are all these different things and the you know, the mellow caramel flavor. And I'm right, well, there's different, strange, different cannabinoids. Everybody

has the same same coffee slash, wine slash. There is a certain type of um obsessive deep dives in a own a file type of I'm drawing the blank. People are passionate about their cannabis. I mean not just from a wellness standpoint, but again, I think I think from a semantics and lexicon craft beer is probably the best parallel I could come up with. Their Like I like this, I don't like hops. I like a white beer, and it's the same sort of uh is this Indica is

it's sativa. What's the the depth of enthusiasm is really But but I'll say this though, just because I think it's important. I was at a Wall Street dinner a few months back, uh, and they were talking about cannabis and framing it as a discretionary vice, framing it as beer. That's my frame of reference, right, that's most people's frame of reference for this, But it's in our opinion it's off base because this is, well, again, it's not all medical.

I think a lot of its semantics people it's self medicated. And certainly there's a contingent that does this recreationally or is it's called it don't use, but I certainly think that's there's there's blurredlines that people who believe that they're they're doing this recreationally, but really they're self met acicating in a way that maybe they don't realize. I remember, I know you, well, I know Jim Cramer. Well, I

read the first book, Confessions of a Street Addict. The one aspect of that book that stayed with me was Kramer taking a keyboard and smashing it and literally there's somebody is signed to before the keys stopped dancing across the desk. Someone has to walk into the closet, get a box from a stack of keyboards, come back, plug it in. So he's ready to trade. Literally the keys haven't even stopped moving. And there's another Is that an

exaggeration or is that a fairly accurate occasional occurrence. It was the best of times, it was the worst of times. But again I owe Jim a great deal of of debt for, you know, really being kind to me. You know, my father as as an example, when I was this is why two K we're in the middle of a y two K. I don't know how else to put it, you know, fifteen points wing things in a day, and you know, I got a call my father, who I hadn't talked to him many years was uh in a

in a jail and MAUI uh. You know it was really like emotional sort of like. And Jim turned in the middle of the trading day, gets off the desk and he calls up his people in in Hawaii and gets an attorney and says, go, we'll take care of everything. I mean, these are things that people don't know about Jim's how kind he is when nobody's looking. And I think, uh, I think the rest of it. You know, he's a passionate guy. You know, he he hates to lose. But

if you're his friend, will do anything for you. If you're his enemy, like I still appear to be, I guess, uh, you know you're persona on ge. So so the thing, I've always been amazed by Cramer. So people have told me I don't have much of a filter, and that's sort of true. I guess I have to cop to that. But Jim literally, like whatever voice instide your head that

says you shouldn't say that, he is completely filterless. You you've never and anyone who's never spent time with him, for for good and for bad, no one in the universe is more honest. There's zero filter. There's just nothing between. Hey, maybe I should hedge this a little bit. Maybe I should put a little maybe I should make this a little white lie, put it pretty it up. That filter is congenerally not there. And that's what makes him such

a unique and fascinating individual. Because say what you will about him, you know you're not getting spun by him. He is telling you exactly what he thinks. I don't know how else to describe that. I think I think Bill Flecknstein said it best. Sometimes right, sometimes wrong, always honest. I mean, you're getting that, You're getting you're getting the truth. And I think there's something to be said for that. And it's a shame you guys had your falling out.

He he seemed to feel that you, uh, you stuck a knife in his back. You just had enough of what you were doing and moved on. Yeah. No, And this is sort of the you know, this is I guess my cross to bear. But you know, after after nine eleven, I had my own issues and I wanted to do some thing meaningful and and kind of strike

out on my own. And you know, having I was a writer on the street dot com and I was at the time president of his hedge funds, So I understand sort of the animus of of me leaving and doing my own thing. But you know, again, things were said and done, and certainly on my part that I

take full responsibility for. But you know, life's too short to kind of hold these things going from I've I've always thought you've had a very healthy attitude, not only about stuff like this, but about money and the pursuit of it. And understanding it's just a tool, and I fits your whole life their promise. I mean, listen, Manyonville. You know when you know Manyville still, did that really push your two million dollars? It costs me twenty two

million on paper? Well, I mean in actually yeah, I put a few million in, but I put fifteen years in my life and and and every part of my body and soul and purpose into it. So you know, it was like losing a child. And you know, I say losing Listen, the digital media model broke. You know, I got in, I said, I literally wrote an article said the digital media model is broken, you know, and

I'm putting this up for saying. And we sold some of it, which was you know, the proceeds were used to pay back everybody that was owed money, uh, for the most part. And you know, certainly I have the uh you know, it's still up you know, I have the I have the the archives are still there, everything there, and you know it's still up there. So you know, in the back of my mind, I sort of think that maybe a revival one day, But you know, I think part of it also is there's a lot of

very good lessons in there. There's a lot of good content and and really it was a real time assimilation of probably the most interesting fifteen years in financial history. So through that lens, I mean from Y two k to uh, you know, to two thousand and call it fifteen. You're you're talking about a lot of changes in the financial Well, you haven't seen the next fifteen years, and I have just sneaking suspicion it's going to be, uh, perhaps just as interesting. All right, So let me get

to my favorite questions. These are the things I ask all my guests, and I found that they are both fun and intriguing and revealing. Um and a lot of these have come from listeners, so I've I can't take full credit for alities. So let's jump right into this. Tell us the most important thing people don't know about your background? I think there's a lot of there's a lot that people don't know. But you were, you were starting forward at Syracuse right now, what what do people know?

What give us? I think it's, you know, I think it's really, if anything, it's the fact that it's just you know, I've been working since I'm thirteen years old, and you know, from from working in a bagel shop of turning bagels at thirteen at five o'clock in the morning on a Saturday too. You know when I lived in California for high school and going out to see me Valley and picking weeds for fifty dollars a day, picking what I'm picking weeds out of a field like

literally like literally reading for fifty dollars. First, I keep hearing subconscious weed references. I understand that about Malle in California, Alle like everything has a menial labor, my point being, you know, backbreaking labor. Yeah, but I think it's the best thing that ever happened to me. You know, when I was a young kid, my mom said, if you want money, to get a job, and it stuck with me because we didn't grow up with money. We lived on the other side of the tracks, and I always

wanted to be the guy with the money. And it taught me at a very early age if you wanted something, you better put the work and makes sense. Tell us about your early mentors, Who who goded your career? Who do you who did you take a lot of lessons from? Well, I gotta say in early when I started at Morgan Stanley, there were a few people there. Jack Skiba, Uh, you know I would come in at five five thirty in the morning and right up the tea accounts and write

up the point and figure charts. And uh certainly Jack was was a meaningful purpose person in my development. Tommy Cardon, David Slain, these are people who were there early and and they didn't really care about anything other than seeing me succeed. And I think that's uh something to be said for that. People don't realize what those desks were like back in the desk. I had friends on on the Meryld desk, Um, I knew other people on other That was a big family, wasn't it. Yeah, it was.

You know when I was Stanley, we were you know, we used to put on our hats and go to war against Goldman sacks every day. I mean it was Morgan and Goldman a right, So we were We took that seriously and we would go out there and try to get all the customer business we could and try to trade out trade these guys who remember back then there were no tape lines. You know, your name was your word. If you wait, if you picked up a phone and made a trade, you're bound by your own

you know, yeah, and that's it. But it worked for a long time until until it didn't. I guess. So what traders influenced your approach to either trading or invest in. You know, I've always had a respect for Peter Lynch and and the obvious, uh, the obvious reason would be, you know, getting to know your investment and really believing in your investment and having a stake in your investment. But I also like the fact that he was that you know, he adapted his style to the market. And

there are a lot of different markets. You know. There are times when you want to you know, fade the market and trade around the core. There are times you want to hit it to quit it. There are times you want to you know, uh, invest for the long haul and trade uh, you know, against it. And I always admired Peter Lynch for having the ability to sort of, uh to adjust his style to the type of market that he was in hit it to quit it, which is a phrase I love. And most of my young

colleagues have no idea who James Brown is. Um hit it then quit it. Um. Let's talk about everybody's favorite question. Tell us about some of your books that you like best Um when I mentioned the book you wrote, But what do you read for fun? What do you read? Uh for finance? Fiction, nonfiction? Tell us what you enjoy well. I think from a book standpoint man Search for Meaning by Victor Frankel is probably the most powerful book I ever read UM, and I strongly suggest it if you

haven't read it. But you know, I'll tell you. Given where we are right now, I'm reading NonStop, but I'm reading about clinical trials, and I'm reading about research studies, and I'm reading about everything that's happening around the world. In Connabinoid own this that people don't get. So we're

actually to that end. We're building ACB one capital. We had our website, we're building a research repository that should be up this week so you'll be able to go in by indication, whether it's cancer, pain, epilepsy, and be able to access all of the research that we've been reading because we want to share this with people. We want people to understand what's going on here. Have you plowed through any UM book on health and wellness that really stood out with you, Because I know you've read

a ton of that stuff. They all kind of blur together. In my mind, anything that stands out well. You know, Dr Julie Holland, who's on our advisory board, has written some terrific books. The Pop Book is one of them. She's also done great work with M D m A and depression, which I think is probably on the horizon. Is the next like, oh my gosh, is that really medicine? Uh So, there's a lot being done for particularly for veterans, for PTSD and things of that nature. But she's certainly

the first step that I were taken in learning. Normally at this point, I would ask you what are you most excited about today? But I don't think I even have to ask that. I've never been this excited. I think this is the best risk a war that I've ever seen. And the next question is what's the next major shift that you see coming? But you've you've already answered that. Also, you think politically this is gonna be just the next domino we marge equality fell under Obama administration.

You think this is gonna fall soon around. I think it has to. I mean, the world is not waiting for the US. This is an outside in global bull market, and we we are we are way behind and by our own doing right, but certainly not too late. We have this This is a great country. We have the resources and the intellect and you know, uh, you know, we talked about it. We have the capital, but we

also have the human capital. Right. There's a lot of these kids who are coming up right now who don't know what to do, and and a lot of these uh industries that I think we grew up on I have changed so dramatically. I'll put Wall Street on the top of the list in terms of the way it used to be versus the way it is now. But I gotta tell you, like, I have kids, and I think I think cannabinoid wellness. Learned the science, right, there's gonna be such demand for people who understand this science.

You're talking six figures out of the gate for your entire career. In my opinion, you just got to put the work and you gotta learn the science. So this is always an interesting question. Tell us about a time you failed and what you learned from the experience. How much time you have. I've got a lot of failures. I actually give us one that stood out that perhaps people could take a lesson from. Well, Um, I remember when I was at Morgan Stanley. I think this is

about uh. I was what twenty four at the time, maybe, uh, And I was just coming into my own I just you know, and I never, I never was prepared for wife on a trading desk. I came out of Syracuse University. They gave me a black shoals model in a Wall Street journal and they're like, good luck, right, but none of that was applicable really, so having to teach myself the derivative business, and uh, certainly, UH stumbled more often than I would like to admit, but got to where

I thought I was in a pretty good space. And uh, you know, one day we had a customer come in and the biggest bank trader on the street and wanted to buy first Interstate calls and you know it was an a it was a hundred and twenty stock. I think he was buying the eighty calls like forts in the money. And you know, we started buying him after the first five hundred, af the first thousand, after first

two thousand, I said, what's going on? And he tells me a story that he thinks it's gonna get taken over, so right, so he ends up buying eight thousand calls, which at the time was position limit. I sold the most of them, and against that, I pretty much was long everything under the sun against this stock. It was gonna make a lot of money if this happened. And I also told a lot of my friends on the desk, you know, like you said, it was a very collegiate community.

So I told everybody who would listen, this is where you want to be in this stock right now, and I'll never forget it was. It was about three fifty one afternoon and my sales trader, Kim dispec Nuk, said, how you making a letter I And I'm thinking to myself, cheese. You know he's position limit. I thought he knew that, and I showed him an offer and she said, no, I needed two sided market. He wants to sell them,

so I try to get the story. I assumed the deal is off, and I bought the first five hundred and I got myself in shape, sold a lot. Bade him on the rest of it, which is a terrific bid at the time calls. I said, I'll you know, I'll bid you X for these, and I said it's a great bid, but we'll pick it up tomorrow. Morning,

So right right, that was my thoughts. So the next morning, I come in early and I'm sitting there and and I'll never forget Bobby Groscoffer ran the banks on the on the listed side of Morgan Stanley runs up to me said, are you still involved letter I and I kind of looked at him. I said yeah, and he said, well, you're still long right And I said why, and yeah,

I said, I can't tell you. And then sure enough, you know, fifteen minutes later, I went to the bathroom and I hear the just cheers on the trading four everybody's excited thing got taken over for like a hundred and eighty dollars or whatever it was. And Morgan Stanley was the banker, so I was restricted. I was probably done. I would have been up four or five million. I was down, you know something in the Severn figures, and I thought I was done. I was like, wow, you

know which I thought I was done. I waited till the end of the day. I was last one there. My how much money came back from that trade to the firm because the guy, I have no idea, I know. And then then I had to execute agency and I had to error for hung I was and um, long story short, I got pulled in. My boss asked me what was going on? What happened? I told him, play by play what happened, and he said, he traded it right,

That's exactly what you should know. How you should have handled it, you know, coming tomorrow to to fight and end up getting promoted that year was the youngest vice president of Morgan Stanley. But it really what it taught me was you have your process. You stay to your process. Sometimes it's gonna work, sometimes it's not gonna work. But if you stay true to your process over the course

of time, it's gonna work out pretty well. There's nothing more nunciating that then sensation when you have a giant position and suddenly you realize, oh my god, this is just going time. I'm sweating. I'm sweating talking about it. Like I remember that I have a pretty iron constitution my gut. I can eat anything, as you know, but I just remember that sinking feeling and the pity of stomach business breakfast, here comes Eric comes and uh god, you had to you had to look at that and

go five. Yeah, But I mean listen, when we were at Kramer Berker, which you know a few years later we were having thirty million dollar swings in a day, up or down. We're both ways well. Kramer tells the story of being on was it the Asian contagion and he's on the beach getting shell lacked the markets up

that year, He's down fIF from the beach. His then wife, who he called the trading goddess, picked up the phone and literally said by del Baya, who by went down the whole list and basically in a bikini from the beach, saved their year. True, more or less, I wasn't there for that. It's definitely in one of his it was they were interesting times the turn of the century. They were.

They were certainly interesting times, something I'll never forget. And I, you know, we didn't talk about in in two thousand, so I was lightly bearished. Then nobody knew who the hell I was. So no matter how barrassed I was, it wasn't relevant. You were full on bear come March

two thousand, like you went full on. I said, we were going to the War of eighteen twelve, and we were at five thousand something at the time, So lucky and smart better lucky and that I had actual platform too, you know, otherwise it beressed if you're a barish in the woods and the market goes down to I was bearish in the woods in two thousand, no one newer care of who the hell I was. Um, what do you do for fun? What do you do to stay either mentally or physically fit outside of the trading room?

You know, I got a peloton from my wife for the holidays and sec and I live on that thing as much as you can. Yeah, it's terrific. You know, I try. You know, it's tough. I get out. You know. We just took an office in Port Washington, which is a stone's throw from my uh from my house, and you know, I thought this would allow me to do some more in the morning. But now I just get to the office like at six o'clock, six thirty, and I just can't wait, you know, to be able to

get up every day. And this is another one that I've always said in kind of lost its luster. You say it enough, but it's so true. You know, if you do what you love with people, your respect while serving the greater good, I mean, that's not work, that's professional nirvana. That's as good as it gets. If you can get up every day with purpose and and do something you love and actually have a knock on effect for society, or or at least believe you do. I

think you're you're You're a blessed man. You're more or less just answered the question I'm about to ask. So if a millennial or recent college graduate came up and said, Hey, what what sort of career advice? UH, can you give me? What would you tell them? If they said I want to go into either trading or investment investing, what would you say to them? I would say, to prepare yourself for a very long, very long process. I mean, listen, the cream will always rise to the top, and they'll

always be demand for the exceptional talent. But certainly the playing field has changed. Uh. And I'm not even talking about the seventy percent of trading that's done by computers now. I'm just talking about, you know, the efficiencies. I mean, listen, when I start to do do Morgan Stanley in the early nineties, the Dells, the Microsoft, the Intels of the world would all sell puts rather than buy backstock because they were capital gains instead of There are lots of reasons to

do that. But my point is we would price that and we we would win, you know, by seventy vols because we were the only ones in the market. So we make seventy volves pricing this this paper. Uh, and in a couple of years we were winning business by maybe a quarter penny, right, So the inefficiencies were such. Those inefficiencies, in my opinion, now exist in the cannabis space.

You have no institutional presence, you have no institutional analysts, and you have a lot of inefficiencies that because you have all retail holders in a lot of these names. They're very emotional, and you have these moves that are outsized relative to what they should be. So if you have the time horizon and the risk profile and the fortitude to kind of see through that, I think you

can make a lot of money here. And our final question, what is it that you know about the world of investing in trading today that you wish you knew twenty or even thirty years ago. I think you would be just to hold onto your winners and let your winners run. Uh. You know, I think you have to. Somebody once said to me, don't be afraid of losing money or don't

be afraid of making money. I should say right now, I've always heard, hey, bulls and bears get uh, bulls and bears make money, but pigs gets slaughtered, and I always thought it was terrible advice. So you're up hit that bid when especially in a world of Amazon and Apple. But there are different strategies you can trail your stops. There's a lot of different things that rather than just say okay, I'm up what you we might have a preconceived notion of how much we should make. Okay, I

hit that and I will get out. If you do that, you can make money, but you're never gonna get wealthy, right, You're never gonna get like like I listen, I say to these guys all the time in the office. You know, we sell for dimes, we buy for dollars, right, so I will you know, listen to if I think a stock gets over at Skis, I own two fifty while I sell fifty because it's up in a matter of two weeks around. But I'm not going to sell the position because it reached some uh you know, some P

and L that I deemed to be adequate. That way, I'm never gonna really to turn this from, you know, from a trading operation to an investment shop. We have been speaking with Todd Harrison. He is the chief investment officer and founding partner at CB one Capital Partners, a

health and wellness medical cannabinoid hedge funds. If you enjoy this conversation, be sure and look up an Inch or down an Inch on Apple iTunes or Bloomberg dot Com overcast wherever fun or podcasts are sold, and you can see any of the other two hundred plus such recordings we have made over the past four years. We love your comments, feedback and suggestions right to us at m IB podcast at Bloomberg dot Net. I would be remiss if I did not thank my crack staff who helps

put together all of our weed related podcasts. Uh. Taylor Riggs our booker slash producer. Medina Patwana is our audio engineer. Producer. Michael Batnick is our head of research. I'm Barry Ritults. You've been listening to a Masters in Business on Bloomberg Radio