This is Jesse Pujji and today we are breaking down the emerging industry of cannabis. After spending decades as an illegal drug, US states have begun to make regulatory changes and build legalized marijuana marketplaces. To help me break down this market, I am joined by Jeff Hoffman of Marathon Partners Equity Management. Jeff is co-portfolio manager of a fund, which invests in US public cannabis companies. We discuss exactly what those regulatory changes look like, the difference between federal and state laws, and companies across the value chain that are showing up in public markets. I hope you enjoy this breakdown.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   This episode is brought to you by Tegus. With Tegus, you can learn everything you’d want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 20,000 calls on Coinbase, Hinge Health, Farfetch, or almost any company of interest. All you have to do is log in. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial. -----   This episode is brought to you by MITIMCo. As the endowment office of MIT, MITIMCo searches for investment firms that are focused on achieving exceptional long-term investment returns. MITIMCo's goal is to create long-term relationships. They will partner with firms as early as Day 1 and do not ask for general partner economics in return. Visit MITIMCo’s website to learn more about their unconventional emerging manager approach, including examples of managers they have backed. While they only partner with a handful of new firms each year, they have also created and published resources for the broader universe of emerging managers to benefit from, making them even more unusual in the LP world. Visit www.mitimco.org to learn more. -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss Show Notes [00:03:40] - [First question] - What is cannabis and the current size of the industry today [00:05:44] - Differentiating between THC and CBD  [00:06:46] - Whether or not the whole market is growing writ large [00:08:08] - The history of cannabis, the changing legal landscape, and key players today [00:10:51] - What the argument was for making cannabis a schedule 1 narcotic [00:11:48] - Is cannabis addictive, objectively speaking? [00:13:27] - The differing levels of when cannabis is or isn’t legal  [00:14:05] - Overview of the value chain involved in getting cannabis to a dispensary [00:15:18] - What an MSO is, how their operations work, and the marketplace today [00:20:31] - Regulatory catalysts that would allow this market to thrive [00:23:19] - The income statement of an MSO, their expenses, and how they differ from traditional businesses [00:26:44] - Different business models for MSOs depending on their geography  [00:29:31] - How the economics of MSOs compare to mom and pop shops  [00:31:30] - Normalizing margins and incentives to compete on price or participate in discount wars [00:33:48] - D2C, mobile-first, and delivery trends influencing distribution [00:35:53] - Whether or not cannabis is considered perishable  [00:36:43] - How the finance industry is evolving around cannabis  [00:38:44] - The role COVID played in helping the cannabis industry grow [00:41:03] - Will cannabis see a pullback in public interest as the world returns to normal [00:42:25] - Form factors to consider as the industry shifts from medical to mature mark