Where is Tennessee in terms of deregulating cannabis? Do you see progress happening sooner or later?
Josh Joseph: The governor of Tennessee has created what’s called the ‘Cannabis Commission’. That’s usually the first step in having a state dip their toe into at least investigating what a cannabis program would look like.
In terms of progress, I would say that it’s going to probably take every bit of a solid two to three years before we see Tennessee creating and establishing what will certainly be, at first, a medical-only and medical-focused cannabis program.
The way this typically rolls out for states is that first a Cannabis Commission is created; Officials then start taking forward a bunch of due diligence around their state, and they start looking into what other state programs look like – What works and what doesn’t – They’ll then report back, which can take up to a year later.
Unfortunately, Tennessee will be one of the last states to jump into the cannabis space in terms of what I’m seeing and feeling at this point. It probably won’t be until 2025 that there’s a program. Even then, it will still be very basic and limited in nature.
Where do you see the potential market opportunities for cannabis in Tennessee? Is there an opportunity for R&D, cultivation, dispensaries, medical marijuana, and marketing? Is Big Plan Holdings, which you Co-Founded, a proponent of the industry at large?
Josh Joseph: Absolutely. There is a significant amount of opportunity here for a cannabis program across the state.
While BPH is based in Nashville, the balance of the state is rather large. You have Memphis, Knoxville, Chattanooga, Gatlinburg, and several other cities in metropolitan areas where medical cannabis and adult-use cannabis could be extremely helpful in job creation. It would create an economic stimulus into all of these areas.
There are certain areas within Tennessee that don’t need that same type of economic stimulus. Nashville is in a very good fiscal position, but there are other parts of the state that certainly could use that.
It goes up and down the canvas, from cultivation to manufacturing and extraction to retail, which would include the dispensaries, both medical and/or adult-use. In addition to economic growth and job creation, it would create tax revenue, which continually feeds that positive economic cycle.
It’s just really a matter of the state deciding that it’s okay – One of the big pushbacks that we may get here in Tennessee is from the liquor companies. When you take your lens off Tennessee and look at the macro level of the cannabis industry around the country, some of the biggest groups that are opposed are from a lobbying effort and those who have deep pockets and large voices on Capitol Hill, those who may not want the cannabis industry to continue to be promoted and expanded; this includes liquor, tobacco, and big pharma. Those are three-significantly large industries that view cannabis as a real competitor to them.
Tell us about the genesis of Big Plan Holdings (BPH), from the exit of Curaleaf to the founding of BPH and the diversification of the family holding company to music publishing, entertainment, hospitality, and of course, the philanthropic Joseph Family Foundation.
Josh Joseph: We entered the cannabis space in 2014 and received our first licenses in 2015. We were headquartered in Chicago then, and we grew our business from the four of us as co-founders of Grassroots Cannabis to approximately hosting 1,200 employees in 12 states in about five and a half years.
We raised approximately $180 million in private capital during that run, and it provided us with a very good opportunity. We were fortunate to time it appropriately with a successful exit of our company in July of 2020, referring to Curaleaf. They came in as the largest cannabis company in the country and, frankly, the world.
At that moment, and frankly a little bit prior to that, I’d sit around the table with my wife Tara and our daughters Sydni and Sophie, and we pondered, “what does life potentially look like after an exit?” We determined that Nashville was a market in a city, in an area that we loved for several reasons. We had already bought a house there, so why don’t we move down there? From there, we created our family office called Big Plan Holdings, or BPH for short.
BPH jumped into a number of different verticals, where we’re focused on deploying our own capital as well, working alongside a strong investor-based following which I’ve developed over many years, raising money for real estate and cannabis-related opportunities that have continued to follow me into new ventures.
A few of our family tenors over the years included music and philanthropic pushes that were out there alongside real estate and cannabis from my professional career. So, we decided that music publishing would be an area where we can lean into while continuing in real estate and cannabis as our primary focal points.
Music has led us into entertainment at a very high-level. We have been provided opportunities through high-level relationships in the music, entertainment, and film spaces. We’ve been presented situations where we can invest our own capital and investor capital in real estate deals, licensing deals in food and beverage (we recently announced a strategic investment in MAD TASTY, a hemp-infused beverage brand founded by Ryan Tedder, lead singer of OneRepublic and three-time Grammy award-winning songwriter and producer) and hospitality, or licensing deals in cannabis-related opportunities.
We also focus our efforts on The Joseph Family Foundation on the philanthropic side as well.
It’s run as a true family office. We have input from our two daughters who are integral to what we do. My wife and I are working together day in and day out, and we’re very excited about what we’re doing. We have two high-profile developments, bar and restaurants in downtown Nashville in an area called Lower Broadway. Both will be high visibility deals that will open in the Fall of 2023.
What we’ve seen with BPH is this intersection of real estate, cannabis, music, entertainment, and even crossing over into professional sports as well. We have a company that called BPH Legacy Partners, where I have two partners who are former NFL players, Jordan Reed and Dominique Easley.
BPH Legacy Partners is particularly focused on the diversity, equity and inclusion (‘DEI’) components and elements in the cannabis industry to provide a safe space for minorities and women to invest in cannabis and CBD industry opportunities.
Now, there has been a challenge in terms of the prohibitive nature of the cannabis industry, in ensuring equitable access to the marketplace. You’ve been outspoken about the diversity, equity, and inclusion (DEI) oriented steps necessary to be taken in cannabis as the industry liberalizes.
So, the mission of BPH Legacy Partners is to ensure that the cannabis industry is one where everyone has an opportunity to thrive. Why is this so important?
Josh Joseph: BPH Legacy Partners was put in motion last year as an incubator of sorts, one that provides for minorities and women to invest into both plant-touching and non-plant-touching opportunities in cannabis and CBD. We’re talking about a situation in which minorities and women have primarily been left out in a significant manner from the opportunities that have been provided to many of us in the cannabis space.
What will typically happen here that we continue to see is that a state will now include social equity-oriented programs that allow for the second or third round of licenses that a state will issue after they’ve had an existing program up and running for a period of time. There are flaws in those licenses, however; there are flaws in those processes that take place once those licenses are issued.
I’m seeing that right now in Connecticut, for example. There is currently a first round of litigation that’s taking place in the social equity licenses that were just recently issued in Connecticut, and those flaws are going to continue to happen.
Illinois is another example. It took approximately a little over two years until Illinois was going to provide for social equity winners for dispensaries or retail dispensaries in the state. All of a sudden, you had a bunch of litigation and social equity applicants and winners of those licenses who got tied up and the states then couldn’t get out of their own way to provide for minorities and women looking to get into the business.
That continued to help, certainly, the big companies in the process; the big multi-state operating companies (MSOs). So, the longer those situations which I refer to continue to take place, the better off that is for certain folks within the industry.
There are a few different challenges that I see in DEI in cannabis. One is the ability to really understand how to get through an application process, understand all the regulations that a state puts in place (because this is a heavily regulated industry), and when states enact legislation and put it into effect, it’s very challenging for anyone to understand exactly how to fill out the appropriate application and put together the appropriate team.
These are not applications like one would fill out for a part-time job or even a full-time job at Starbucks. You’re talking about cumbersome applications of several hundred pages, and you have to pull together various components to make these applications successful.
It’s an extremely challenging endeavor and a costly endeavor, too. It’s not for the weak of heart when it comes to the checkbook.
Often you need to have a specific piece of real estate attached to your application. And there’s a lack of access to capital in the marketplace still for women and minorities. I’m not talking about every single woman or every single person from what are considered “minority backgrounds”, but in general.
It’s a consistent theme that I see in dealing with a lot of these social equity applicants – They don’t have the capital, they don’t have access to capital, and without the access to capital, without the education, and without the wherewithal to be able to fill out these applications, it’s a real challenge.
I’m currently doing a deal right now in the city of Boston with social equity applicants that have won a license in Massachusetts. They are wonderful candidates for BPH Legacy Partners.
Both applicants had cannabis convictions on their record. BPH is going to step in and provide expertise by taking a couple of board seats. We will provide our experience and expertise while leveraging our relationships in the industry. We’ll provide capital for them to activate their dispensary. If they didn’t otherwise have access to these tools, they couldn’t be in business.
These two gentlemen are an African American and a Caucasian. It’s a beautiful marriage here of seeing full-blown social equity case studies come to fruition. As smart as they are, as hard as they’ve worked the last three or four years to achieve their conditional license from the Cannabis Commission in Massachusetts, they still need money after all this hard work to open their store and fulfill their dream.
BPH Legacy Partners is intently focused on providing folks like I just described the opportunity to either be in a plant-touching situation, which I would characterize this as, where they’re going to be open for business as an adult-use dispensary and they’re going to be selling products to the marketplace while running a retail store. However, we are also here to provide non-plant-touching opportunities such as technology platforms, recruiting companies, security companies, transportation companies which are part of the cannabis industry, even if they’re not necessarily plant-touching. They’re not selling cannabis, but they’re providing ancillary services to the industry.
BPH Legacy Partners is also keen on finding, vetting, and sourcing good, solid opportunities for investors. One of our main goals is to have at least 50% of our investors in each of our deals be from minority communities. They come in and we can provide them with a safe space from an investment opportunity vantage point to place their money and put it to work.
We have some pending applications under BPH Legacy Partners from a social equity standpoint in a few Northeast states at this point. And we’re expecting some wins in the near term.
What in your view are the challenges and what are the opportunities with regards to cannabis and the banking industry at large?
Josh Joseph: The challenges are that we need banking in the industry. End of story. This has gone on for too long and has become a heavily negotiated and divided partisan issue. I don’t really care what side of the aisle anyone sits on, this is industry-specific, and you cannot have an industry of this size and magnitude, with this many jobs, with the amount of growth that we’ve seen in the last several years, and the future growth that’s about to take place in this industry, you can’t have all of that be un-bankable.
You have to have the ability to bank and finance some of what you’re looking to build here from a real estate standpoint, from putting debt in place on your fixtures and equipment and your build-out, to the ability to make your deposits at a normal financial institution.
We’re still treated like old-school drug dealers in so many ways and that’s just not fair. That must change. I’m hopeful it does change, and all of us who’ve been around the industry for several years are all extraordinarily hopeful that that changes very soon because we need to be able to make deposits.
We need to be able to take out loans against real estate or loans against fixtures and equipment or whatever the case might be. Right now, it’s all cash and most people are not able to participate. You’re only able, if you get your company to a certain size and if it’s run efficiently and appropriately. Otherwise, you’re not able to create a successful business.
If banking isn’t regulated, social equity will never take place in this industry – it just won’t.
If you can’t run a store, let along three or four, because you can’t bank or get traditional financing when you need it and you don’t have access to the capital markets, you’re going to get gobbled up and you’re going to have to close. Banking reform plays a very critical piece of what we need to see in the industry.
Then there’s something called 280E, which is part of the IRS tax code. That also has to be modified. There are so many different deductions that you’re not allowed to take when running a cannabis business that in contrast you’re allowed to take when you’re operating a ‘normal qualified business’ as viewed by the federal government.
That’s another big piece that needs to take place that a lot of folks on the outside of the industry don’t necessarily understand.
I would encourage people to continue to make the push for 208E to be modified accordingly and appropriately to allow for these cannabis companies to be profitable and run the right way.
We have to pay taxes, but the federal government still doesn’t allow for cannabis to be legalized, or at least allow for the states to provide banking services and pass what’s known as the SAFE Banking Act, as well as have the IRS adjust and modify 280E.
In my opinion, everyone talks about federal legalization as being so critical, it would be wonderful to see that happen, and it will be wonderful to see that happen when the day finally comes. I’m actually fine if the federal government keeps it at the state levels, but at the state levels, the states still need to be able to provide for SAFE Banking.
They need to decriminalize cannabis as well – It’s still considered to be a Schedule 1 drug, like the hard, hard drugs that are out there. The decriminalization piece, the SAFE Banking piece, and 280E piece, if you want to keep it at the state level, fine, but if you can fix those three things, that’s truly great. That would be a tremendous start towards federal legalization.
You don’t have to jump right into federal legalization, but you need [to take] incremental steps, and the government just seems to be at a standstill.