POTENT Ep. 3 Pt. I - Government Relations Insider on How the Cannabis Industry Can Work with Political Powers
Illustration by @max_gps
Potent Ep. 3 Pt I Info:
Partners Bryan, Wendy, and Nick talk with political consultant Adam Spiker of Spiker Rendon about how the cannabis industry can best work profitably with the powers that be–city, state and county officials–to navigate regulations and reduce stigma. What have been the effects of Prop 64 in California?
Podcast Transcript:
BRYAN
Hi again, everyone. We're so happy you're here listening to us. This is Brian Bergman again and I just wanted to let you know that one of our great guests once more, has given us way too much information. And so we are going to break this one up into two parts instead of just doing a single one part. So here we go with part one of our LOOK.Legal Potent Podcast with Adam Spiker.
All right, hey everyone, and welcome to our finally, officially and newly named Nolan Heimann's LOOK.Legal Potent Podcast where pot and entertainment intersect and we talk about the issues that are facing that wonderful and interesting new section of industry. Today we're really excited because we've got a really neat guest with us who's really been in the weeds, pun intended, on what it is to work with legal operations and how to get into cities with the regulators and everything else. He's a longstanding political consultant, third generation at that and really is kind of neat to hear about. So I'd love to introduce to you now Adam Spiker from Spiker Rendon Consulting. Adam, it's great to have you on here today.
ADAM SPIKER
Likewise. Thank you for having me Brian, and the lovely intro. Glad to be here.
BRYAN
Yeah. So Adam, when we start here, I mean our listeners by now know us, so we'd love for you to tell us a little bit about the history of Spiker Rendon and where you are and why you're so interesting to the cannabis industry and our listeners.
ADAM SPIKER
Yeah, I'll take a stab at it. So my family's backgrounds in politics, going back, as you said, three generations to my grandfather retiring as the chief legislative analyst in the city of Los Angeles, just a long-term career as a bureaucrat in the city. And when he retired he started a family consulting, lobbying political practice and my father took it over 30 some years ago and aunts and uncles were involved. And I got involved, I think I'm on year 17. And so that's just running the gamut of trying to help in any way, shape or form the private sector, interact with the public sector, whether it be cities, counties, water districts, school districts, you name it. And we've always kind of had a focus in a niche on Southern California and the different entities that entail it, whether it be the individual cities or water districts and so on.
And that kind of roots back to my grandfather and his kind of leadership in LA starting to set up associations of governments for these smaller one-off jurisdictions to work together on broader issues, whether it be with the county or the state of California. When it comes to cannabis, I'd say it was probably eight or so years ago, cities started talking about cannabis in a little bit of a different way and we started catching wind of it as we interacted with these municipal associations and through a lot of convincing, I just saw it as a interesting avenue to explore not being a weed connoisseur by any means or an expert, but understanding where the landscape was going, where there was clearly going to be something happening with the medical law, Prop 64 and I can't remember the other one, were both being bandied about and it was clear that the local governments were going to be the starting point or that kind of the tip of the spear and that kind of just fit into what we've done and what we still do.
And so it's been probably eight years, a lot of the hardest work I've ever done. A lot of the also most rewarding, painful kind of piss-you-off sometimes work, but here we are. So, that's kind of my background.
BRYAN
You guys work in other industries besides just cannabis, don't you?
ADAM SPIKER
A hundred percent. You name it, we've done it. Water technology, advertising, waste hauling technology, basically for whatever reason, there seems to be a need for bridging the gap between government and private sector, whether that's fair or unfair, that's just the reality of our world and we've kind of made a niche trying to create more efficiency from a timing and other practical manners for the private sector. But we still do, we're not just cannabis only. I've been predominantly cannabis, I would say at least six years now because there's just a lot of work to do.
WENDY
So I have a question. Well, it's a two part question, Adam. One, I think for our listeners, some of our listeners are going to be newer to this space because they're coming from my world, which is the immersive and location based entertainment as opposed to the cannabis industry. So could you or Brian explain in a nutshell, Prop 64? Because that's going to come up a lot in this conversation.
BRYAN
Yeah, I was actually about to bring that up, Wendy. That was great. While we are going to talk more about California today, it's true that in a lot of states across the country, local government still has a big say in the regulations. And in California specifically, it's a situation where while you can get a state license for a variety of activities such as consumption lounges and event licenses that we're going to talk about in more detail today, you still have to have local government approval and be in compliance with local government laws. And Prop 64 specifically provided that if a local jurisdiction, like a city or county can expressly regulate or ban - it's one or the other. They can't just sit there and do nothing.
They have to either decide to allow it and provide their own rules and regulations that are not less restrictive than the state or they have to, but they can be more, or they have to go ahead and just say, we're not going to do it at all. And that's actually one of the big things I'm going to talk with Adam about today. But it's the same also for New York and some of the other states. I'm sure Nick can talk a little bit about some other states on the East Coast as well. Some of them it's state-only licensing, but other states it's a big component to play for all local governments. And that's why today is so interesting to hear somebody who really works with local governments on behalf of businesses.
BRYAN
So that plays nicely into my second question for Adam, which is, I know Adam, you said for the last six years you've been focusing more on the cannabis sector, but your firm is so general. What parallels do you see from other industries that you've seen go through this type of process? And then what is unique to the cannabis sector that you find interesting that you face? I think that it's just interesting to me, and I think it might be interesting to some of our listeners.
ADAM SPIKER
There's a few parallels. I think number one, most often the private sector is hiring people like me or our firm or there's plenty of other firms out there, to position themselves for some sort of a contract, which means a competition. And that is clearly a parallel to the cannabis industry, specifically to any sort of retail activity. I think what is different, and there's a number of things, but what sticks out is this is still new for government. Regulating cannabis and the stigmas and all the things attached to it is still new. I mean, you think about it in a layman's sense, how the hell am I going to decide why one cannabis company's better than the other to give out a limited amount of lounge licenses or retail licenses? It's a really tough dilemma for cities, and I think that's why you see a lot of them outsourcing the expertise component of doing merit-based applications and stuff because they don't know it and it's not their fault they don't know it. It's still too new. So I hope that makes sense.
BRYAN
Yeah, it really does, Adam, thank you. And it's interesting because when we have this local component, that's exactly the issue. I mean, when we're talking about California's, for instance, and we're talking about to have a cannabis lounge, you actually have to have a retail license or to do an event, you're only allowed to do them where the local jurisdiction allows it. And really that's kind of limited to fairgrounds and things like that right now. And so in order to really expand on this intersection of location based activities and entertainment out of home entertainment and the ability to have cannabis consumption of some nature in a safe and viable way in California specifically, we need local support. And so I guess a great question to start with is, could you talk more about why cities aren't moving more on cannabis in California? Why is there such a reluctance to deal with this and have more of an excitement for what's clearly a revenue tax and job creator generator? Why is there this reluctance at the local level?
ADAM SPIKER
I think there's three main things that I see that we're now getting close to six years in on Prop 64 passing. And that is after the medical law passed through the legislature. Number one political divide; just within in general, the local body, that they don't get along on anything. And so now you're trying to figure out how to deal with cannabis, which like we talked about before, is new, it's uncomfortable, there's still stigmas about it and they're not going to get on the same page. I think number two is implementation. We've seen a lot of examples of local governments doing a really bad job of implementing cannabis regulation and application and processing and permitting. And so that's very scary for cities to see bad examples and say, I want to do that, because that's when people lose their jobs when it doesn't go well and someone needs to take the blame.
And then the third reason is there's still in any jurisdiction, a percentage of that population that is completely against cannabis, whether it's for moral issues, they think it's a gateway drug, they think it's going to drive down property values, they think it's going to bring crime, things like that. Those are the three biggest reasons still to this day. And it's getting better. It absolutely is getting better, but it's been a really slow burn to get cities and counties to not only open up, but I would say open up in the right way.
I mean, there's not many examples of local government that have treated cannabis like they would other industries where it's like if you want to open a restaurant in say Glendale, you go through a process and you have a compliant property, you meet the standards, the city sets in front of you and you get to open a restaurant. In cannabis, everything's about numbers and caps and these different burdens to climb over and the time constraints. It's unfortunate, but that's kind of the climate it's been in. But I will say it's getting better every day. It's just not where it needs to be.
WENDY
So what are some of the initiatives, Adam, from your perspective, that people are undertaking outside of your sector, which is a more focused lobbying sector, but in general, what are you witnessing happening to try to mitigate those three concerns, if anything? And what opportunity or things should we be doing as people who are interested in promoting the industry and promoting the notion that there is so much positive, as Brian articulated, economic impact, job creation, mitigating fear and things like that. What are you witnessing happening from your vantage point, if anything?
ADAM SPIKER
To me, it's about education. One of the, I think unknowns out there or things that kind of get lost in the shuffle is the voluminous amount of politicians in our state are volunteers. I would venture a guess it's probably over 90% when you get into the local component. And that means they have full-time jobs to support their families, and then they're elected by their local government to also lead that jurisdiction. And they have a mountain of issues to deal with that are broad issues or just refined to their local community. And now you tack cannabis on it. And again, like I said earlier, it's not an easy thing to wrap your arms around. How we're going to do it, how we're going to justify it, how we're going to educate those in our community that are just adamantly against it. So it starts with education and it starts with being transparent.
And it also, I would say going back to those three main reasons, I see why cities and counties don't do it. If you don't understand why they're not doing it, you're going to have a hard time getting them to do it. And so that's kind of the game within the game. Not to put it mildly, but just those are the words I came up with at the time. You have to work to build a comfort level to get them to take the chance on doing this. And the chance is very real because there's always going to be blowback. And there's not a ton of examples of local governments adjudicating cannabis regulation and licensing that went so smoothly that you're just sitting there going, "Gosh, that was perfect." We identified these three companies out of a hundred applicants and they're opening up in four months. So there's just not a silver bullet answer to that, Wendy. But that was kind of my stab at it.
WENDY
So let me ask you a question, and maybe I'm going to use a proverbial expression. Maybe I've been smoking something, but obviously we are focusing on the intersection of the cannabis industry and the entertainment industry because from our vantage point, we don't view cannabis as a commodity, as a weed, as a plant, merely. We view it as a lifestyle. And I'm curious what your thoughts are as to how, if at all, folks from my sector and Nick's sector who are entertainment focused and specifically in my sector, location based. So you're talking about developments that are weed ancillary, they're not necessarily dispensaries or growers, but rather experiences that can be enjoyed adjacent to the cannabis consumption experience. Is there anything that we can do in our industry to help reduce the stigma, to help reduce the fear and to pump up for the local officials, the sense of the economic impact that these types of mixed use developments can have on their community? And maybe your answer is currently no. I'm just interested in your thoughts on that.
ADAM SPIKER
I would never say no because education I think is paramount and presenting the facts and presenting them again and again and again over time to try and work to a comfort level. I mean, there's projects I've worked on for four and a half years working with local governments on cannabis time and time again, taking them on site visits, bringing in experts to educate them on the regulatory. And like I said, it's a slow burn if you want to get the job done. I just don't see a lot of these happening overnight because in the back of my head, I'm sitting there going, we're almost six years in on 64 where they opened the door for the state of California for a local government to say, "We want in on this." And so any government locally that hasn't acted, you have to assume there's very real and meaningful reasons for that.
And so you're not going to overcome that in one meeting, you know what I mean? Or in one presentation. So to me, the answer's never going to be no. You got to have realistic expectations of outcomes. If you want to go meet with, say, the city of Burbank, because you think it'd be a great place to do what you guys do and have a voluminous cannabis opportunity that includes retail and tourism and event-oriented, you're not going to have one meeting with them and they're going to say, "Wendy, gosh, we didn't see this. You're right. We're going to get to work on this immediately." So I think it's almost like, I wouldn't quite say it's like telemarketers where it's dialing for dollars and you just got to spend a lot of time on it, but you have to have a tough skin and realize this is a slow burn and it takes time to move.
Or sometimes I like to use the example of trying to steer the Titanic. It just doesn't happen in one swing. And if people realize that and understand that as they're getting into the industry or getting into advocacy or trying to help, it makes it a lot easier to deal with because you're not setting unrealistic expectations for yourself to try and move policy as it relates to this. You just know it's going to take time. And building coalitions, meeting with community groups, like meeting with law enforcement, you name it. You got to do all those things to try and get to where we want because they're not there for a reason on their own. There's meaningful objections in the way that you got to overcome.
BRYAN
Yeah and that's where people, Adam, are so important to what we're talking about because they're the ones that have the relationships to get you in the door to actually talk about those things. And that's really important. And that's one of the reasons I met Adam early on, and he's been really great about that. So Adam, it's interesting you keep talking about education being so important and everything and how we're fighting against these stigmas and otherwise, if you could maybe talk a little bit about some of the concerns you've repeatedly heard, especially when it comes to a consumption lounge, for instance, about odors or maybe driving under the influence or something like that. Have you seen a lot of these concerns that keep getting repeatedly raised, materialize in the way that cities fear?
ADAM SPIKER
Well, I think to answer your question, no, but I think the bigger answer to that, Brian, is that we all see the articles of a manufacturing blowing up or a robbery, or gosh, there's been murders at dispensaries, things like that. I don't know the statistics, but by and large, they're predominantly at illegal operations, not at the legal ones. The legal ones are forced to be basically protected like Fort Knox with cameras everywhere, security, all these things that they're not the problem.
But I think what happens is you read an article about... What was it? I'm blanking on the city. I think it was Anaheim, was the last time I saw that there was a big manufacturing explosion and fire. It didn't mention in there that it was an illegal business. And so to the layperson, to people that aren't following it like you and I, they conflate legal versus illegal and just lump them into one balloon of, "Shit. Cannabis man, I don't think I can do this. I don't want explosions in my city." They're not taking the time to understand the illegal ones are doing things the wrong way. The legal ones have to jump over so many hurdles and go through so many hoops and so many regulations to do what they do that they are as safe as any business you have in your city.
BRYAN
Yeah. And I mean, they even put an odor control provision and stuff in the regulations so that you don't have it's smelling and neighboring and things of that nature.
ADAM SPIKER
A hundred percent. Real quick, Bryan, you asked about the lounges though. I think the separate answer on retail and lounges is the fear of the street theater of it. So if you, you're the city of LA, it's very easy to stomach with all of their industrial and their infrastructure with DWP and everything, tolerating licensing for manufacturing and cultivation and those things because it's going to go in the industrial, no one's going to see it. They have the odor remediation like you said. But when you start getting to the things that the public will see, lines out the door for a dispensary or for a lounge or maybe a plume of smoke or whatever, it changes the game politically because these politicians think that's where they're going to get the blowback. And that's a big part of the issue. I don't think it's as big an issue as it's perceived to be, but it's a whole different ball game to start bringing in the component of street theater, which is the component of retail sales or consumption lounges, if that makes sense.
BRYAN
Absolutely. And Wendy you look like you're going to ask something before I...
WENDY
Yeah, well I actually, I'm going to say something that's going to sound very Machiavellian and subversive, but I'm going to draw an analogy and I wonder what you guys think of this. When you talk about education, I think a lot of the social movements that have advanced just throughout history have happened at, they've been attacked at different levels. They've been attacked at your level, the governmental level. They've been attacked at the... What I mean by attacked, they've been utilized as means of making progress. They've progressed through overt education and then they've progressed through media and entertainment. So for example, I think the LGBTQ community has benefited greatly from having entertainment content normalize and demystify what previously seemed scary by having shows years ago, The L Word, when Ellen came out and things like that. And I'm wondering again, what can we do within entertainment?
Because it is a lifestyle, I think it's a misunderstood lifestyle. Do you see any value of content creation that could demystify and normalize and make your life easier realizing that there are, I don't admit my age, but I will tell you I am an older woman of a certain socioeconomic status and profession, and I consume, and I think I alone helped demystify some of the fear. And so what, from a content standpoint, irrespective of the weed itself, do you see any opportunity for entertainment and content creators to help?
ADAM SPIKER
It's a good question, Wendy. I think strength in numbers matters. It kind of gets into a popularity contest when it comes to politics and what should or shouldn't be done, because politicians don't want to make the hard decision and jeopardize themselves by and large, they don't want to do it. And so when you think of it that way, if you're bringing entertainment and you're bringing coalitions into a local government saying, "Hey, this is the right thing to do." It gives them the cover to do it. It's really not rocket science, but it really doesn't happen as often as it should. And I'll make the example of Los Angeles when we got into Los Angeles, and people like Brian, Eric Holstrom, Geneman, others created the Southern California Coalition. The goal was just initially to try and get recognition for the cannabis industry so that they didn't have to look over their shoulders anymore for a DEA raid.
That was the initial goal, and it was an uphill slog. And so what did we do? We coalition built. We went to other trade associations, we went to organized labor, we went to ancillary companies that had credibility, and we said, "Would you get involved with us?" And when they said "Yes." And we all went into council offices together, lo and behold, measure M comes out of it unanimously from that city council and onto the ballot in March of '17, and it passes at 80.4% with the voters of LA. So to your question, a hundred percent, the more you make the optics right for politicians to do it, they're more inclined to do it. Because one of the issues out there for these local governments, they're very hindered on where they can get revenue to provide for their communities, whether it be infrastructure or education, other things, they can't just turn on the spigot and say, we're, we need more money.
So cannabis is an excellent opportunity for them. And when I talk to politicians privately about it, they would love it because they need the money, they're starving for the revenue, but they're afraid that it's going to come back and bite them in the butt. So you got to go that route of overwhelming them with support. This is the right thing to do. And when you talk about famous people or entertainment and things, going to a city saying, "Look, we want this. This is the right thing to do, and we got your back." That goes a tremendously long way with government in their decision-making.
NICK
I wanted to ask a quick question. I was in New York over the last couple days and I went into one of these new shops that have popped up, and I'm not exactly sure of the way it's regulated in New York. Exactly. It seems like one day all of a sudden there were stores all over the place. I mean, I know they passed recreational. That said, one thing that sort of shocked me a little bit was they were selling something in there called... And I don't know if I'm going to pronounce it right, Kratom or something, which is basically an herbal opiate. And I asked her about it and she said, "Oh, this is an herbal opiate. It hits the opioid receptors." Did a little bit more research about it and found out that it's something that people are using very heavily. I've been reading a lot about other drugs as well, like ketamine and now mushrooms.
And I wonder if people in the industry are perceiving the fact that these other sort of products seem to be almost latching on to cannabis legalization and deregulation in a way that is actually potentially posing a threat to the industry, which has been trying to get rid of a stigma, and then all of a sudden, I'm not saying anything about the efficacy of ketamine, but it all seems to have sort of happened simultaneously. Any thoughts on that? Just something I've been thinking about over the last couple days that I thought maybe is a little weird in terms of.
ADAM SPIKER
Well yeah, I think it's a fair point. It goes back to some of those objections, right? Okay, if we legalize cannabis, what's next? Are we going to legalize mushrooms? Are we going to legalize heroin? And there's some people that think, "Yes, we should." And just regulate it. Not going to make an opinion one way or the other there. But I think to your point, yeah, I would answer your question and say yes, that your experience, I think is something that, I guess I would say, I can't call it part of the problem, but it also kind of is because there's this belief like, okay, if we move an inch here, if we don't think that any schedule one drug should ever be legalized, we'd better not bend on cannabis or else what's going to come next. It's just going to be a snowball effect, and we're going to hit with all these different drugs being declassified or deregulated. I think that's kind of crazy talk, but it's out there. It's definitely a belief out there with some of the community.
WENDY
So Adam, I'm curious what your thoughts are about the following. So we're an intellectual property and entertainment firm, and so we tend to approach things and we really work hard to help our clients find monetization opportunities, obviously to increase their margins, their revenues and whatnot. Within the cannabis sector, it's been our view that there's opportunity to brand well, and then there's opportunity. And this gets to Nick's point of even the name of the product that he saw. And then there's opportunities to brand in a way that actually hinders progression of the normalization and destigmatization of the industry.
And what I'm wondering is, for those businesses that already have licenses, are doing business, do you feel that if collectively we helped them understand the importance of creating an experience and creating brands that were pro-experience as opposed to just what Nick's talking about? Can we say that officially that really, not only will help increase their margins and their audience and whatnot, but it will help the industry in general? Because if you have a dispensary that feels fun, that feels clean, that feels organized, if you have brands that don't have scary names or old school names that make you feel like it's the ditch weed that you smoked in high school, do you think that's helpful in general to the efforts that you're undertaking?
ADAM SPIKER
Yeah, I think this is another one of those there's really no silver bullet. There's different types of consumers. I know the industry is a little hesitant to relate to alcohol, but I think there's a real parallel to craft beer. There's a real movement with local craft breweries that are small batch, doing very New Age things and inventive things with their beer, and they're catering to their local community and they're doing okay. And then you have Budweiser, Coors that are more big box and just going to be on every shelf and to each your own, right? What are you into? And I think with cannabis, it's kind of similar. You have the big companies that are more broadly out there, and then you have the small companies that are doing really, they're focused on inventive things and doing different science to create new strains and whatnot, and new products that the weed enthusiasts love and crave.
But then you have this new community of folks that are getting more tolerant to cannabis and saying, "Well, gosh, cannabis can help me sleep better. I'm 62 years old, I don't want to take Ambien. I don't want to take other drugs. Maybe I'll try it, but I need a light dose and I just want something that looks like I can be comfortable buying it." I don't think there's enough of that yet. But I can't also say I'm an expert in how to be an operator. It's just my observance of it. I think it's safe to say, to your point, Wendy, probably not enough companies are out there catering to the new consumer that doesn't care about how high the THC potency is on the label.
They just want something's going to make them feel good, or that's going to help them with stomach issues as they're going through issues. I would agree with you in that regard. There's an untapped component to it, but I also think if you just cater to that, then you run the risk of not being cool to the folks that just care about what's new, hip, and exciting and kind of want to be branded in that taking one step over the other escalation of what the coolest new product is with the coolest packaging and the highest THC potency.
BRYAN
So that was part one with Adam Spiker of Spiker Random Consulting. That was just the beginning. We're going to have a part two later where we start to talk about some of the more optimistic ways that we still can work with local governments when they decide to go all in, how citizens initiatives work, and maybe some of the ripple effects of different ways that we can use our industry to work with other businesses and help make local approvals a better reality.