Cannabis And Alcohol Beverage Industries Are On A Collision Course, With Ted Dumbauld (Podcast)

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Includes: ACT, CGC, CURLF, DXBRF, HMLSF, MJ, STZ, TLRY, YOLO
by: The Cannabis Investing Podcast
Summary

Ted Dumbauld is COO of Curio Wellness and founder of SoNo 1420, the world’s first hemp-infused whiskey and gin distillery.

Ted was previously the CEO of Curaleaf and is also a founding partner at Trident Advisors hedge fund.

Ted joined the show to discuss why hands on labor is not ideal for cultivation, declining alcohol sales in states where cannabis is legal, and why consolidation is here to stay.

Listen on the go! Subscribe to The Cannabis Investing Podcast on Libsyn, Spotify, Stitcher or Apple Podcasts.

By Rena Sherbill

Today, I am very happy to be joined by Ted Dumbauld, Chief Operating Officer of Curio Wellness, a vertically integrated cultivator, processor and dispenser of medical cannabis as well as the founder of SoNo 1420, the world’s first hemp-infused whiskey and gin distillery. Ted was previously the CEO of Curaleaf (OTCPK:CURLF) and is also a founding partner at Trident Advisors hedge fund and a former nuclear submarine officer.

Topics covered:

  • 1:23 - Ted's journey from the navy to Wall Street to the cannabis sector. Experience in business turnarounds led him to Curaleaf, which was sold and then went public.
  • 4:30 - How he came to Curio Wellness and why he founded SoNo 1420. Hemp seeds have unique flavor and taste profile - perfect for gin and whiskey.
  • 7:16 - Health benefits of hemp seeds are lost in fermentation and distillation process. Gin is a grain-neutral spirit - in medical cannabis space, benefits come not just from THC or CBD but from terpenes. Terpenes interacting with cannabinoids brings medicinal benefits.
  • 9:38 - Alcoholic beverage and cannabis industry are on collision course. In states where cannabis is legal, alcohol beverage sales tend to decline between 10-20%. Even before Constellation (NYSE:STZ) bought into Canopy Growth (NYSE:CGC), this trend was clear.
  • 10:40 - When hemp was declassified as a schedule one drug with the passage of Farm Bill, there was a lot of excitement regarding manufacture of CBD, but FDA, DEA and the Alcohol Tax Trade Bureau have dampened that excitement. No CBD or THC in hemp-infused spirits as it's not completely legal at the federal level.
  • 13:18 - Manufacturing permits vary from state to state which makes expansion a bit more complicated. But the trend is leaning towards bars having cannabis-infused spirits, since alcohol is still more acceptable and widespread than cannabis.
  • 16:00 - Timeline of deregulation. Ted defaults to Brendan Kennedy from Tilray (NASDAQ:TLRY), who went on record with his projection that the US would deschedule THC by end of 2020. FDA has shown it will take charge where DEA lets go of regulating. Will be a long time before THC space in the US is as common and widespread and as deregulated as alcohol space.
  • 17:40 - Diverse line of medical cannabis products at Curio Wellness. From a chemistry perspective, there are various medicinal benefits from cannabis, and different strains and products are more relevant for various ailments.
  • 19:28 - Voted best flower in Maryland. Curio oversees cultivation process. 56,000 sq foot cultivation facility, director of cultivation comes from the greenhouse - not cannabis - world. Automation systems work better than hands on labor. While more traditional cultivators tout the benefits of hands on labor, Curio has found that it's not only not necessary but can create opportunity for contamination.
  • 20:55 - Recent partnership with Dixie Brands (OTCPK:DXBRF). Decision made to partner with them due to their popularity on the West Coast. Maryland is a fertile opportunity to bring Dixie to the East Coast.
  • 22:00 - Curio Wellness is a pharma first company, as opposed to cannabis first. Curio's scientific advisory board - most of whom are MDs and PhDs with vast experience of developing medical products, not necessarily in cannabis space.
  • 22:56 - Why Curio dropped its lawsuit against Maryland regulators. Wanted to ensure uniform implementation of regulation standards.
  • 24:00 - Evaluating expanding into other states. Dynamic landscape in medical cannabis space right now. Curio is open to various opportunities that this brings. No immediate plans to go public, unless the regulations change down the line.
  • 26:00 - Advice to interested cannabis investors. 5 years ago this was an immature industry - that has dramatically changed. Akin to the early stages of the dot com days - extreme valuations that may not be sustainable. Caveat Emptor. Still lots of volatility in the sector - last month there was another 20% or 30% correction.
  • 28:20 - Consolidation is the present and future of the industry. Cannabis companies need to have a strong balance sheet as it's a very capital-intensive business.

If you have feedback or questions, please email us at Rena+canpod@seekingalpha.com.