Over the past 12 months, shares of the Horizons Marijuana Life Sciences ETF (HMLSF -0.66%) have shot up over 100%. Meanwhile, pick-and-shovel play GrowGeneration (GRWG -6.53%) returned 1,370% to investors and Illinois-based pure-play stock, Green Thumb Industries (GTBIF -2.52%), rode increased demand in its home state to over 300% gains in its share price. It doesn't take much research to figure out that cannabis is booming -- no matter the fact that the drug is not yet legal at the federal level.
In a period of rapid change, it's difficult to know exactly what's ahead for the industry and its players. Dr. Chanda Macias is a medical cannabis advocate, researcher, and dispensary owner. The cannabis pro joined Olivia Zitkus and Corinne Cardina on a March 19 episode of Fool Live to talk about the future of cannabis, investing strategies, and her highest hopes for the sector.
Corinne Cardina: Welcome to Fool Live. I hope everyone is having a great Friday. I am Corinne Cardina, Bureau Chief of Healthcare and Cannabis. I am joined by Editor Analyst, Olivia Zitkus. How are you today, Olivia?
Olivia Zitkus: I'm doing well, Corinne. How are you?
Cardina: I'm good. So we are just waiting on our guest. When she joins, we have some exciting stuff to talk about. Medical marijuana today, everyone. So, get excited. Let me make sure that we can find her. I'm also at my sister-in-law's house and she has two very loud Wiener dogs. Hopefully, they do not erupt in barking today. Here we go. Hi, Dr. Chanda. How are you? There you go.
Dr. Chanda Macias: Here I am. [laughs] I'm doing well. How are you?
Cardina: We are so good. We are so excited to welcome you to Fool Live on this beautiful Friday today.
Macias: I am so grateful to be here and to be of help with some insight on the marijuana industry.
Cardina: That's right. I'm Corinne. It's so great to meet you. This is Olivia. I don't know where she is here.
Zitkus: Hi. [laughs] I'm somewhere. I'm Olivia. [laughs]
Cardina: We are on the Healthcare and Cannabis Bureau on fool.com. We cover the medical industry, the recreational industry, all sorts of stock names in that space. We're super excited to hear from you today and I will introduce you for our audience. Dr. Chanda Macias is a nationally recognized leader in the medical Cannabis and hemp industry. She works as a Research Scientist at Colgate-Palmolive where her innovations resulted in several patents and brands worth billions of dollars. She is CEO and Chairwoman of the Board of Managers at Women Grow. She is National Cannabis Roundtable's First Vice Chairwoman, and Dr. Chanda is also the owner and General Manager of the National Holistic Healing Center, medical marijuana dispensary here in DC. That was actually the second dispensary in the country to be opened by a woman. We are so excited to have you here today. I'm going to put your website in the chat for anybody who would like to learn more there. But let's start abruptly and talk about the medical marijuana landscape. How did you get into this kind of sector? How did you go from Colgate-Palmolive to marijuana? I'm so curious to hear about that.
Macias: Well, let me back up a little because I know you're like, well, how can my toothpaste industry go into marijuana, but that's really not the case. As a cell biologist undergrad, I studied the BRCA1 breast cancer gene in women. I'm a strong women proponent. I always focused on healthcare. I did that for my undergraduate research and then I pivoted my graduate research into prostate cancer, especially metastases to bone. So with the models I had developed in undergrad and my graduate work, it focused on natural medicines helping cancer patients. I asked my advisor at the time, "Is this something we can study, and using medical Cannabis in the industry?" He was like, "No." This is years and years ago. This is decades ago, and he was just like, "Do you want to go to prison?" I said, "No." [laughs] "I just want to help." With that, I just [inaudible] my careers in the healthcare. I was in oral care, launched two billion-dollar brands with Colgate-Palmolive. Then from there, I was fast-tracked into my MBA to go onto leadership. I decided after acquiring the MBA and seen legalization happen from state to state that I needed to go back to my first calling, which is healthcare. Then from there, I decided to apply to get a medical Cannabis license. First in the East Coast Washington, DC. First African-American woman with the medical Cannabis license. Now I'm not only just retailing or dispensing the medicine, I'm growing it and processing it with my licenses in multiple states now. I'm still taking care of my four children as I drag them along.
Cardina: Am I frozen?
Zitkus: I don't think you're frozen, Corinne.
Cardina: Oh, no.
Zitkus: I think Dr. Chanda might be frozen.
Cardina: There you are, Dr. Chanda. We got frozen for about one second. I heard four children and my eyes popped out of my head.
Macias: [laughs] Four children and most of them are grown. I still have one at home. Well, women have definitely shown through the test of time, our ability to multi-task, run businesses, and serve as CEOs on our company. I'm really happy to share that narrative with all the aspiring women out there that are looking to get into not just Cannabis, but into C-level positions where I know that we will dominate and kick butt.
Cardina: I love it. Let's tell our audience a little bit more about the medical marijuana landscape. What would you say are some of the biggest opportunities and the biggest barriers to growth in this space?
Macias: That's very interesting. Corinne, based upon New Frontier Data, in 2025, the Cannabis industry is going to be a $41.5 billion industry. When you asked that question, my first response would be, this is a call to action for those that want to enter in the industry as a small business. If you're interested in working in the cannabis space, right now, growth in the job market is up 161%. I think it's a great opportunity to also think about investments as well. Those are three areas where people can actually participate today.
Cardina: That's amazing. Oh, gosh. The dogs have started. Oh, no. Someone must be walking by. Sorry about that, y'all. Let's talk about barriers to growth. Of course, you're focused on the policy side with your involvement with the National Cannabis Roundtable. We've seen lots of legislation, either state-by-state. Some legislation has made a little bit of momentum federally and then maybe not so much thinking about banking, deregulation. What are some of the policies that you think, if we can tackle these reforms, would really pave the way for the medical marijuana market to take off?
Macias: Well, what's very interesting is that we're still in prohibition federally. With that, we need to take our steps and the first step with the National Cannabis Roundtable is having a strong voice for decriminalization. We have to make sure patients are protected. In other words, what we've seen, Corinne, in the past is that a patient, when they have this cannabis or possessed it, they could have actually went to prison for it. We saw that in the African American community pretty rampantly. But now, it's time for us to protect our patients and give them legal access to that. The first thing is to decriminalizing it so patients don't have to worry that in fact, it is a criminal charge if they possess it. The states have really taken a proactive approach with protecting patients, which I adore. Now, federally, we need to lead the way. But also with that, I think about banking issues. What a lot of people don't know is that we can't use traditional banks in this space because it's still federally illegal. So for us, we're a cash-only business, which means that someone like me has to carry hundreds of thousands of dollars to pay my taxes, which is just unbelievable at this day and age with the sophistication of the United States. It's time for us to change some of these thoughts like safe banking. Now the bill was reintroduced yesterday, matter of fact, and what the bill will actually do for us or just on the common knowledge is that it will allow patients to pay for medications with their debit cards or their credit cards. It will allow me as a small business or, I should say, multiple businesses in this sector to be able to actually apply for traditional loans. If you think about my profile as an African American woman, there's less than 4% of African Americans that are in ownership in cannabis today. One of those limitations, in fact, is because we don't have access to capital. But with the SAFE Banking Act, we'll be able to apply for loans and go to traditional banking means. This is so important for our narrative, to move SAFE Banking to the forefront. Then after that, we definitely have so many different policies. We think about social justice reform and also the 280e taxation. So there are more things we can talk about. But yeah, there's a lot of steps to get to legalization, in other words.
Cardina: Definitely. I have one more question and then I'm going to kick it over to Olivia for a few. Why should investors who are already interested in the healthcare space, traditional pharmaceuticals, innovative biotech companies, medical devices, healthcare technology. If you're invested in that space, why might you want to consider investing in the cannabis sector, particularly in the medical marijuana space?
Macias: Corinne, this is such a good question. I think sometimes when we're caught up in our day-to-day lives, we don't see the bigger picture. For myself, I've seen how we have focused in the cannabis space on medicines that are for different elements and conditions. For me, that is the healthcare narrative I started from the inception. Also we think about metered-dose inhalers and we think about affordable healthcare. If you take those three ideas that I've put in your mind and you put in the broader sense of what healthcare can look like today. The first healthcare provider that decides to insure medical cannabis is going to be explosive. When I say explosive, I mean a mass exodus from their traditional providers to go to this one company or multiple companies that will subsidize their medicine, and it will actually trend in the most positive way. A lot of people don't know how many patients are really using medical cannabis. I will say this, if you look at polling from state-to-state with over 75% of support for cannabis usage, whether medical or recreational, you'll start to get an idea of how many people are really interested in using cannabis as the healthcare solution.
Zitkus: Fantastic. Thank you. Hi, Dr. Chanda. I'm happy to be with you.
Macias: Hi. Thank you for having me.
Zitkus: Of course. I'm going to take it to the benefits of medical marijuana, you led in with the perfect little segue there, and talk about why cannabis is still classed by the way that it is in our legal system. My first question is, when you're telling people about the medical benefits of cannabis, what evidence do you site?
Macias: What's so interesting, Olivia, as a lot of people may or may not know, is that it's very restrictive to do research with cannabis in the United States. So most places that are conducting this research are outside of the U.S. like Israel, for example. I've been working with different companies. One is Ilera Therapeutics that has been operating in Pennsylvania, as well in Australia, they exchange on Australian exchange to have these clinical trials conducted. These are medicines that help people and patients for autism pain relief. When you think about why is that significant, well, GW Pharmaceuticals (GWPH) just had a M&A with Jazz Pharmaceuticals (JAZZ -0.93%) for over a billion dollars. Again, I'm triggering the audience out here. This is a real industry with real impact. When you think about cannabinoid medicine and how it's advanced over the last three to five years, what everyone will know is that its trajectory is going to be unbelievable. So for our scientists out there, our business investors that are considering to really look into cannabis, I think this is the time to take action and take it fast.
Zitkus: Awesome. Given all those things that you said about the medical benefits, do you have any big ideas or big picture reasons why you think marijuana is still labeled a Schedule 1 drug in the United States, given evidence of its ability to treat severe disease?
Macias: I do. Olivia, when I say that there is anecdotal research, just focusing and being in the industry for the last 10 years and working with thousands of patients, I've seen how it works within them. I can't claim it as research as you know, we discussed previously. But also what's important here is that the patients are directing that narrative, that they want to see this happen. So why isn't it happening as fast? Because it's very complicated. It's complicated because there is not only social justice reform, social equity issues involved, but also this is what prohibition looks like. This has happened with the alcohol industries, many other industries where we have to now piecemeal legalization so that it can open it up. So we have to remain patient, continue to educate our legislators on the benefits, not only healthwise, but economically, that's happening. When I say economically, Olivia, what I mean is that a lot of programs are expanding their medical and adult used programs to help with deficits in their budget today, especially by the results of COVID-19.
Zitkus: That's really sweeping the country perhaps faster in 2021 than we have seen it before. It's pretty amazing. My next question has to do with comparing the medical market for cannabis to the recreational market and the differences between those two. What do you think cannabis investors, especially new cannabis investors should know about the differences between the medical market and the recreational market?
Macias: Olivia, what's very interesting about this, and this is my philosophy and a lot of people support me in this narrative which is, medical cannabis is medicine. Whether it is in a medical state or a recreational, and let me correct that, it's called an adult-use environment, recreational to me, there's no such thing, all of it is medical. When I think about that and the differences in the programs, what comes to mind again is the patient. In the medical program, the patient has HIPAA, which means they have protections on using the medication under the guidance of their physicians, and their physicians have given them permission. So if it's decriminalized or criminalized in that area, they have state protections working with their physicians. Now, in an adult-use market, they are not required to have a medical physician to actually recommend the medicine to them. They're taking it on without those protections, but they might not want to share those, that information about who they are and what their element and condition they're treating for different reasons, and they're with their physician. For example, if you live in Washington DC and you work for the federal government, you might not want that public record. Again, I go back to looking at the different programs from a healthcare perspective, about what's best for the patient. Some patients really need that guidance with their physicians and some of them can't have that guidance with their physician. But either way, cannabis is definitely classified as medicine.
Zitkus: Love it. Fantastic advice. I want to turn to the supply chain in cannabis and operations a little bit. You're a pro at this, you have an MBA alongside a PhD, which I think is just awesome. So I want to talk to you a little bit about opening a dispensary on the ground, and why the supply chain is so important, and how it's different for the cannabis industry. Because many cannabis companies can't operate exactly the way that other companies in fully legal industries can. My question is, what should investors know about the supply chain in the cannabis industry? How it's different from other industries? What sets it apart?
Macias: That's a very interesting and complicated question, all in one. Yes, my MBA is in Supply Chain Management, which means for me, we make sure each patient has a continuous supply of medication that they can use to treat their ailment and condition. Now, it's very interesting if we break this up, but the issue is infrastructure. Basically, from state to state, we have different regulations on how we can supply the medicine, and when I say that is that if you're in Washington, D.C. or in my vertical operation, West Virginia, Louisiana, et cetera, we can only grow in those states. There's no interstate commerce and we have to adhere to the regulations of that state. You do not have this one centralized supply chain all over the nation, you have to make sure to segment it and follow the rules and regulations for the different states. In doing so, you also have to address the issues of that particular region. So for me, it's important that when I develop as a cultivator, I'm growing strains that are specific for different conditions that are prevalent in those communities. When I manufacture my medicine, I'm making sure that I'm manufacturing medicine for the patients that need it in that community. As you can imagine in my West Virginia operation, the opioid epidemic is alarming, and so for that, we're using cannabis as a therapeutic way to help people off of opioids as an exit strategy. In Louisiana, we have more cancer patients. Again, we're developing these supply chains based upon actual data that the patients in the communities have to the Department of Health, and then making sure we can continuously supply them based on the regulations of the state. This is not the same as the pharmaceutical world. They can manufacture in New Jersey and they can disperse throughout the nation and have one centralized mechanism with different distribution channels to do so. We can't do that here, we're severely restricted. But what we're seeing is the underlying theme, Olivia, is that legalization will happen and it will be piecemeal to what's happening, and then we'll see that breakthrough one day, and this will all be a thing of the past.
Zitkus: But for now, it's a bit of a dance, it sounds like.
Macias: It's a big dance. [laughs]
Zitkus: I've got one more question for you, Dr. Chanda, and then I'm going to toss it back to Corinne. This touches back on something you had mentioned earlier which is taxes. My question is how do taxes factor into the market for cannabis? Do you think that higher taxes on cannabis will stymie the industry at all as it tries to take market share from the black market? That's a big concern but we've got a lot of states looking to cannabis to generate tax revenue. That's a question on a lot of minds in 2021, I think.
Macias: Definitely. What's interesting, Olivia, about the taxation issue is that because we saw the impacts of COVID-19 and more programs continue to expand to generate revenue or tax dollars for their different states that we know that there's different taxing tiers. That's why it's important that we're present when this legislation is being formed to make sure we're having our voice heard in affordable healthcare for all patients since it's not subsidized by insurance. Now, I can talk about taxation or the 280E as well. Not only we're addressing taxes from the patient level, but from the business perspective with the 280E which is basically stating that we're a legal business, and we're going to be taxed in a different structure, that has severe consequences especially on small businesses that came out before to function in that arena. What that means in a nut shell is that there is cost of goods sold and there's business expenses that you can write off typically. In the cannabis industry, your business expenses, you cannot write off. So you still are taxed at the higher level, at the illegal tax rate, and you're expected to survive in this industry. Again, it goes back to see why women and minorities are being left behind in this industry is because they just don't have the resources to actively participate.
Cardina: That is a great lead in to my questions. I want to talk a little bit about Women Grow and what your purpose is with this group, and a follow up to that, what has it been like for you as you build your career in this space and what changes would you make to make it a more inclusive environment for women, people of color, and other underrepresented groups?
Macias: Thank you for that, Corinne. Corinne, it was very interesting. Back in 2014, 50 women came together and formed this group called Women Grow. They functioned within the nation and helped women and pivot their voices in the cannabis industry to make sure we weren't an industry we were left behind in. So with that, I remember when I started my journey in cannabis, I didn't really have the insight knowledge on how to operate. I know all principles but there are some things that are specific in business that was not available to me. When you think about ERP software, when you think about patient relations, things that we're being done in California that we just didn't have access to. I went to my local Women Grow chapter in Washington D.C. at the time and I had a list of questions on how to get into the industry, how to navigate this, how to do the community involvement, all these great things and literally, they broke everything down for me in these informational sessions that they offered during their networking events. It was so imperative and, I'm going to say, impactful to my projectory as a woman in the industry where when it was the time to give back, I went right back into the organization and said, ''I'm going to make sure that women all over the nation have this platform to learn and to get involved in the industry.'' Right now, we're going through a significant rebranding and rebuilding we're excited about so we can have a stronger reach across the nation in empowering women. But that's how I became involved because it truly helped me at the time, just owning a retail operation but also help pivot me into now owning cultivation, processing, retail in multiple states. If I think about that, that diversity inclusion is so important because I love working with women that have minds, and we are different from our male counterparts but we are definitely the nurturers for patients. We're definitely the catalyst in improvement. These are the things that we can offer, and our intelligence and knowledge, to the cannabis industry, especially why it continues to emerge? Corinne, just to answer the second part of your question, which is diversity inclusion, what that looks for me, I thought it was important though, still staying on this platform of how cannabis can do good in the community after it has impacted negatively in some communities. So with my license in Louisiana, we partnered with Southern University, a historically black college and university to be able to have, of course, a profit sharing model but also to educate future generations of young talented students to learn about the industry and enter in careers in the industry. That way, we're making sure it's an inclusive involvement of all communities. I will continue to stay on these different platforms to make sure that my voice is heard locally, as well in the national level, to make sure these different communities are included in the narrative.
Cardina: Absolutely. You can't talk about the marijuana industry without acknowledging the history and the contexts, policing and mass incarceration, that's really important so I'm glad we touched on that. My last question is about investing because at The Motley Fool, we are investors. I would love to hear one piece of advice that you might give generally, it could be about trends, to any investors thinking about putting their money into marijuana, cannabis, pot stocks, whatever you want to call them. What might you say to investors?
Macias: I'm going to have say the same thing that I say to everyone, "You have to do your research." Cannabis is definitely a lucrative industry, but it can be volatile at different times. But my thing is that if you understand the business model that the different companies have engaged in and also know the rate of returns that they have, whether they're public or private, I think you can make an informed decision. But you definitely need to do your research and be careful you understand social equity, social justice reform, or social corporate responsibility when it comes to the cannabis industry to make sure that you're working with companies that reflect that narrative. It has definitely impacted a lot of MSOs, and they're adapting to the new way of cannabis doing good in our communities and not hurting patients anymore. So do your research, jump in if we need our investors. I'm constantly looking for investors myself. If there's any questions, feel free to reach me at doctorchanda.com, which is D-O-C-T-O-R Chanda, C-H-A-N-D-A, .com. I'm here to help out in any way necessary.
Cardina: Thank you so much. That is all for our time today, Fools. Thank you so much, Dr. Chanda, for all your time and insights today. Fools, follow her website, it is in the chat up at the top. So scroll up and you can get in contact and keep up with all the awesome things she's doing. Happy Friday, Fools. Fool on.
Macias: Happy Friday.
Zitkus: Thanks, everybody.