With more than half of Europeans supporting Cannabis legalization, and Germany coming on board the journey to recreational cannabis legalization is getting closer and closer. Although recreational use is not legal in Europe, the majority of European countries have legalized medical marijuana in recent years. Harry Brelsford of The CannaTech Group sits down with Eric Boone who recently moved to Europe and chat about the European Cannabis landscape.
Video Transcription
Harry Brelsford
Hey, welcome back to the Canna tech podcast. We’re back with Eric boon and now you got to pronounce your company name man. I’m never gonna get it.
Eric Boone
Meristematix
Harry Brelsford
All right. Well, fun. So you moved to Europe, you’re you’re helping with operations over there. Talk to me what’s going on in Europe? What’s going on with you?
Eric Boone
Yeah, well, I’m actually fairly freshly back from a trip to Portugal, I was honored to give the opening keynote for Canna, Portugal, which was one of the first business to business sort of full cannabis conferences where they’re discussing hemp and theoretically THC, because that’s still a fairly new subject over there. So it was kind of a first for Portugal. It was a great time. There’s, there’s so much going on over there right now. I mean, Portugal is a unique market, in that they decriminalized all all drugs like 20 years ago, in the early 2000s. And that’s been good in a lot of ways. But for cannabis, in particular, it’s been a little bit, it’s sort of grouped in with everything else. So they’re their medical program, which was just passed in 2018, is still fairly nascent. However, we had some huge news out of Europe yesterday, with Germany, you know, essentially, they had a sort of a side caucus on the future of recreational cannabis in Germany. And they came out with not a huge surprise. But definitely another big step forward, they came out committed to creating a recreational cannabis program for Germany. And, as goes Germany soon follows France, very likely, Spain’s behind, you’re going to see the dominoes fall in Europe in fairly short order, I would anticipate meristematic loves to be there at this time, because we are predictive and prescriptive analytics for cannabis enterprises, particularly vertically integrated ones. However, we’ve introduced a new product called perfect tax, which is essentially a modification of our AI driven price elasticity model that’s specifically geared toward governments. And what it allows the AI to do is essentially use price elasticity models and sales data to find that sweet spot in the tax rates. As you know, a huge problem, particularly in California, is that the government’s just got so greedy with with their taxation, that they end up providing a tremendous amount of fuel to the to the unregulated markets to the traditional markets. At I believe the latest that I’ve heard in, even in California, still to this day is only about a third of all the sales in the state are take place within a regulated market. So all that $4 billion of, of cannabis that they’re selling every year in California, that number is probably closer to 12. And they’re only capturing taxes on a third of that. So, you know, with using AI and big data analytics, we can hit that sweet spot on the taxation to figure out, you know, what are the cons, what’s the consumer going to accept? And what will allow the government to get as you know, a smaller portion of the pie, but you’re growing the pie pretty considerably by taking, you know, some wind out of the sails of the unregulated market. Yeah, that’s sort of one of the messages that we’re delivering to Europe. And we really hope that Germany is going to bite or they love analyzing stuff. So we’re really hopeful that that meristematic will be well received by not just our friends in Portugal, but throughout the the greater European market as well.
Harry Brelsford
Yeah, so a couple questions. One is, I saw something fly by that California just lowered the taxes to 15%. I like within the last several days. I don’t know if you know anything about that. I saw a couple LinkedIn posts and Randy row, my friend and yours talked about it too.
Eric Boone
Yeah, I didn’t do a deep dive onto that. I noticed it myself. But I, what I have not heard any evidence of and I could be wrong on this is that it wasn’t like this is more of a crapshoot. Like I don’t know, how they’re just sort of, I don’t know, how data driven the decision was for that particular tax rate. Because I mean, you know, straight up 15% is not that’s not what AI rates look like, they they’re, you know, they’re highly, you know, be 15.8732 or something like Yeah, and so like, when they hit the sweet spot, like they really really hit the sweet spot. And so 15 probably is not too far off. And another thing that I liked here Going out of California is that I believe there’s an even lower preferential tax rate for social equity candidates, people from disproportionately impacted communities. Yeah, we’re on drugs. So there’s even a little bit of an extra incentive to help balance out the playing field a little bit more, which I’m always happy to see.
Harry Brelsford
Yeah, cool. And then the maybe the final question I have, and we’ll certainly circle back to you next quarter would be the, you know, we’re just coming off an event. That’s not why we’re here on this podcast. That’s, that’s a whole nother podcast, but with Europe, a publishing partner and global cannabis times. They’re evaluating the feasibility of a show, like in Spain, and I would like to know and be able to tell them, did your show have legs? Do you think a show in Europe has legs right? Because there’s always a promoter? Right? Well, you’ve been in show business, you’ve been involved in him fast? Do you have a good feeling for the opportunity for cannabis events in Europe?
Eric Boone
See that, I would actually argue that that is probably where the value is. Right now. I genuinely. And this is coming off of, and I’m sure that I’m gonna get, you know, hurled with, with with disagreement on this. But I mean, at mjbizcon. Last year, I had a really tough time sifting through the value of that absolute behemoth of a show. And it seems like, you know, a lot of the new players there, kind of didn’t have their feet wet. And a lot of the established players have already sort of, you know, seen the ROI not come through, and if opted to, you know, either have a much downplayed presence there, or just, you know, buy attendance tickets and walk around and have conversations on the phone. That’s what I do. So yeah, I mean, same, same here. We didn’t have a booth there in in, in last year. And it’s 2021 show, but the, you know, I think that the shows, like this Portuguese show was was much smaller, but you also had some who’s who they’re like Neela, the hash queen was there from Amsterdam. You had Captain hooter there who’s a pretty good on a social media circuit and an expat cannabis guy throughout Europe. Goes back through the day. I was traveling over there with Jack Harrison, Dan. Dan accepted a lifetime legalization award on behalf of his father. So that was pretty cool. So you have some you have some bigger and bigger names, like starting to hit the markets, but this shows are still, you know, by our standards, fairly small, like it was. Okay. Yeah, I mean, I’m fine with that. You don’t need 330 Different CBD distributors at one show. Like, there’s just too, it’s too much. So, you know, I mean, the smaller, more intimate shows were really nice. A lot of cool innovations were showcased, like 8000 kicks, they’re like the cannabis shoes, the hem shoes and stuff like that. They’re all over Facebook. The founder, the president and founder was at that show Hawkins wears it was it was pretty cool. So the you still have some some good high level accessibility. And I genuinely feel that there’s there’s more genuine potential ROI in those shows because they haven’t become so ubiquitous yet. Yeah, there’s still something fairly unique about it. As a matter of fact, that show we probably actually got hurt a little bit by the fact that there was a, there was a medical cannabis show that, you know, a cynic would say perhaps somewhat, you know, dastardly just happened at the last minute to hold their show, literally two days before water. Yeah, it’s not an uncommon and they claim that they were this the established show, because they’d already done it one year. So it was it was one of those annoying situations, but even in, in light of that sort of competing show, popping up at the 11th and a half hour, the reception was still really good. And and like, you know, there was a lot of coverage on CNN on Bloomberg there locally. Oh, wow. It was picked up in print media. It was picked up on television media. So it’s still new enough and unique enough. And and it’s not like we’re still in the early days. I mean, it’s Portugal would be considered an archaic MediCal program by our standards, and like, probably within a year, that’s going to be completely turned on its head. Yeah, best hamfest has some amazing as an amazing event planned actually for the end of September, because I also in addition to the the job that makes me my money, the one that See, takes all my money is my nonprofit volunteer work on the board of directors of Seattle hamfest 30 year old fixture in the industry great in the space, and we’re going to actually be scaling our model over to Europe. And we’re anticipating a fairly well publicized and well visited at least 10,000 event in in end of September and there’s actually going to be an opportunity to get some free smokable hemp at this event, it’s going to be far out. So it’s CBD not Not, not the THC stuff. We’re not we’re already dealing with local law enforcement and local politicians. But we’ve got some exciting things planned for Portugal and for Europe, so I can’t wait to come in quarterly updates because they will be ample 15 minutes might be inadequate.
Harry Brelsford
Next, you’re officially our global correspondent for this. Hey, before I go, I gotta read it a second. But before I go, just to clarify, because I’m actually going to spin the month of August back in Seattle because of my cannabis related business activities. I you know how it goes Eric, i i If I want to maintain those relationships, I gotta go back to Seattle and maintain the relationship. But that’s the month of August. Am I hearing you say you moved him fast to late September in
Eric Boone
Seattle? No, no, that are the hamfest that I’m referring to is actually the hemp Fest in Portugal, the hemp Fest in Lisbon. Oh can be the first over a European hemp fest. Hemp fest, sadly, will the Seattle hemp fest we are fresh off of receiving a generous grant from the county is shuttered venue. But we don’t have that we don’t have the runway to do a proper infest for 2022. We do however, have every intention of being back into Park in 2023. But just from you know, I was you we feel like we’re sort of out of the woods. And I think for the most part we are but I mean, I went to a you know, a fairly small event in Portugal, where everyone was still being you know, kind of responsible. And you know, despite having four vaccines shots, I still ended up getting it like my whole family did. So we still have to be a little bit careful. But I think by this time next year hamfest traditional time is always the third weekend of August and we will definitely be there for 2023
Harry Brelsford
Sir, I will too. Hey, Eric, I gotta run. We’ll talk to you next quarter. Hang in there, man.
Eric Boone
Thank you, Harry. Always a pleasure.
