Cannabis: The Next Trillion Dollar Market? (w/ Todd Harrison)



As founding partner and CIO of CB1 Capital Management, Todd Harrison is uniquely positioned to talk about the frontier market of cannabis investing. In this wide-ranging interview with Tony Greer, the editor of the Morning Navigator Newsletter, Harrison does a deep dive into the cannabis space. He talks about the efficacy of cannabis for medicinal purposes, as well as for health and wellness. Harrison also discusses the parallels to the “Dotcom” free-for-all and warns that while some companies will become the “FANG” stocks of the space, as with early internet investing, many companies will cease to exist. Filmed on June 13, 2019 in New York.

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Cannabis: The Next Trillion Dollar Market? (w/ Todd Harrison)
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Transcript:
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TONY GREER: I would love to know if you think that’s the strategy. But most importantly, I am obsessed
with your process of following the science. And it’s been very good to me in following the sector. I would
love to know what is on your mind lately in the science narrative.
TODD HARRISON: In terms of the science, which I agree, informs our decisions, and we look at the
cannabis landscape really and say okay, well, there’s the CPG story, and everybody seems to be starting
to understand that more. That’s beverages, nutraceutical, cosmetics and vanity, pet supplements, there’s a
lot of they’re there on the consumer side with a more traditional CPG model. And I think more people are
starting to understand that this isn’t about smoking cannabis, but about eating it and drinking it and rubbing
it on and taking bubble baths in it. There’s a lot of form factors that aren’t going to provide that
cardiovascular, those cardiovascular concerns that come along with smoking.
That is starting to get unpacked right now on Wall Street. We’re looking really through that. And what’s
going to take a bit longer from a tail standpoint is really that clinical evidence. As this moves from drugs
from state dispensaries to medicine prescribed by doctors covered by insurance, that takes time because of
clinical trials. There’s over 100 clinical trials right now. So, we saw GW last summer get the first FDA
approved plant based medicine for childhood onset epilepsy. We think that that’s the tip of the iceberg in
terms of indications, and whether that is brain cancer or autism, or traumatic brain injury or Alzheimer’s,
we think all of that is on the horizon, obviously, as you can tell by the narrative. Doctors want proof,
obviously, before they get involved. So, this has to go through that Western medicine protocol.
TONY GREER: Is GW Pharmaceuticals, last earnings report, pretty good evidence that Epidiolex is
working, doctors are approving it, they’re spreading the science? That was a pretty barn burner report.
TODD HARRISON: We think so. But also, remember that there was a lot of pent up demand going into
that. So, I think that some of that is going to play out. But we will get Epidiolex and we say this is terrific
and only 4% of treatment for childhood onset epilepsy is front door for cannabis. So, the way they found
this was really because nothing else was working for these parents for their children. 300 seizures a day in
some cases, now disappearing or being occasional. And as we talked to these parents, and they explain
how this isn’t just for the child, but for the whole family when you have a child who’s that ill, the whole
family’s just absorbed with that and consumed by that.
So, it’s really people talk about this as a discretionary advice. We had these conversations like this is impact
investing. We think that chasm between perception of reality has to close. The endocannabinoid system, it
helps to regulate neuro transmissions a big deal, was first discovered in the early ’90s, call it ’91-’92.

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