Marijuana regulatory logjam is ‘driving the industry nuts’: High Tide CEO

High Tide CEO Raj Grover and Flora Growth CEO Luis Merchan join Yahoo Finance Live to discuss marijuana legalization, adoption, and the next steps for the cannabis industry.

Video Transcript

BRAD SMITH: Welcome back to “Yahoo Finance Live,” everyone. Today is 4/20. And for that, we’re continuing our discussion around the cannabis business. And what is the delta between last year’s 4/20– 4/20/21, if you will– and now 4/20/22? Joining us here for that conversation, we’ve got Raj Grover, who is the High Tide CEO, and Luis Merchan, who is the Flora Growth CEO. Great to have both of you here with us today.

Raj, I’d love to begin with you. Of course, so much of this conversation hinges around legalization. And as we’ve seen some of that logjam, if you will, in Washington, DC, and some of it not even getting to the logjam point of the conversation, where do you expect there to be further movement that allows for the industry to move forward?

RAJ GROVER: Brad, first of all, happy 4/20 to you and all the viewers. And totally agreed with you. This logjam is absolutely driving the industry nuts. The Congress can’t get aligned, the House and the Senate. It’s– they both want to do it, but they can’t get aligned on the issue.

And I’m a realist, you know? And if you ask my opinion on it, I still think that we’re a bit of ways away from full federal legalization. Now, do I think that Safe Banking will pass much prior to that?

I think so. I think that might happen this year itself, and that would be a nice boost for the industry in general. We know that is a requirement. It’s very, very important.

But if you ask me, I personally think that we’re still two to three years away, potentially two to three years away, until something amazing happens for federal legalization. But the good news for companies like ourselves– and I’ve said it many times before– we are not dependent on US federal legalization. We are well on our way because we’re diversified enough.

But when the US market opens up federally, it will be an exponential THC growth opportunity for companies like ourselves, for High Tide, and for others.

BRAD SMITH: And Luis, what about you? Optimistic, pragmatist? How are you looking at what, quite frankly, is still going to come down to, if we’re talking about two to three years away, a potential general election that this will once again be debated between parties on?

LUIS MERCHAN: Yes, Brad. I would agree with Raj’s sentiments and comments. I think it’s important for cannabis companies today to have a diversified strategy and a global strategy. If companies in the cannabis space are focused on one specific geographic region, and that specific region being the United States, they’re going to find it very difficult to operate and realize meaningful economic benefits for themselves and for their shareholders. So I think it’s very important that companies do have a diversified strategy.

From a regulatory framework over the last year though, we have seen some meaningful changes in the regulatory environment on an international scale. We have seen meaningful changes in Panama, in Mexico, in Colombia, as well as Malta. And, of course, the third largest economy in the world in Germany moving towards a full recreational framework. So those changes clearly are opening the pathways for trade internationally, but there’s still some work to do in the United States.

BRAD SMITH: Raj, as the CEO of a publicly traded cannabis company, at the end of the day, what has operating this environment been like for you, from your perspective?

RAJ GROVER: So look, the cannabis industry, in my perspective, is– it continues to grow very rapidly. And everywhere I look, I actually see a lot of opportunity, but I can’t say the same thing about all cannabis stocks. They’ve performed exceedingly below my expectations and, I think, everyone else’s expectations.

But I do believe that change is the only thing that’s permanent. It will happen. Things will start trending in the right direction, except especially for companies like High Tide, like ourselves, that are executing on our business plan quarter after quarter. Things will improve, and the stock price will catch up. So I am confident that it’ll happen, but I’m unsure about the timeline.

BRAD SMITH: Luis, we’ve seen within the White House a chip summit. We’ve also seen a cybersecurity summit. If we were to see eventually– and, of course, those are very high priority issues right now, we do know, supply chain summits either– as well. But if we were to see a cannabis summit within the White House, and publicly traded companies like yourselves were invited, what would you say if you had the ear of the president?

LUIS MERCHAN: I mean, I think it’s very important for the government– and I think Congress realizes the meaningful potential benefits of the cannabis industry in terms of not only well-being and improving the lifestyle of consumers and patients, both in the United States and abroad, but meaningful tax revenue benefits, social issues that need to be brought to the forefront to bring access to an industry that is actually growing exponentially but has been hampered by the lack of a solid regulatory framework.

So I think that is something that you need to bring to the table. And hopefully, we’ll be able to have one of those summits soon so we can influence Congress decisions on these regulatory matters.

BRAD SMITH: All right. It would be lit, for sure. Raj Grover, High Tide CEO, and Luis Merchan, who is the Flora Growth CEO, joining us here this afternoon. We appreciate the time, for sure.

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