Interview with Anthony Scaramucci
On September 17, Anthony Scaramucci spoke at Kahner Global's 5th Annual Cannabis Private Investment Summit in New York. The event hosted more than 180 industry leaders and investors for a day of education, networking, and collaborations.
1. Why are you excited about keynoting the 5th annual Cannabis Private Investment Summit?
I’ve been an investor my whole life. I spent 30 years on Wall Street (less my 11-day stint in the White House). I’m always looking for pockets of growth where there are exponential opportunities. So, in the mid 80s, that was Microsoft and then by the time you got to the mid to late 90s, it was the internet. In the mid 2000’s it was Internet 2.0. But today in 2019 and 2020, the fastest most exponentially growing area is cannabis.
2. What will be the key takeaway from your keynote at the event?
I’m coming to present a realistic 5 – 10-year outlook on the space, why there will be a ton of capital thrown at the space and why I think it’s a big growth opportunity. I’m going to try to address all of that in the time I have on stage.
3. What is your overall approach to investing and how does your approach change, or does it, when it comes to cannabis?
I think anytime you’re in an emerging area or a new business, or in the case of cannabis, because it’s a form of a drug, there will be fairly significant governmental regulation. But the demand for the product is overwhelming; and I’m not necessarily talking about recreational demand, I’m more talking about medicinal demand. If you think about what’s gone on as a result of the opioid crisis, the cannabis space and CBD is going to be one of the antidotes. So therefore, you’re going to have to accept some of the vagaries of regulation and some of the vagaries of waiting for government to appropriately regulate and make the markets free, if you will. But if you’re a long-term investor you can see the growth opportunities and therefore you would be excited about all of this.
4. Which cannabis companies are you currently invested in?
We don’t have any yet. I’m close to Columbia Care and I know the Acreage guys well.
5. Do you use cannabis or has it impacted your family or friends in some way that makes you personally passionate about the industry?
For me, I would much rather see it regulated and I would much rather see the dosing and the…I sort of feel it’s like the spirits business. People are going to use it whether you want them to or not. I would rather have it regulated and have the units of drug delivery measured. Just imagine what the alcohol space would be like today if we were in the Wild West of the prohibition era. To me, I’m not one of these sanctimonious moralists, I would rather have the stuff be regulated, taxed, the government makes revenue off of it, but it’s also providing some kind of clarity and uniform standard to quality.
6. You mentioned in an interview last year (Nov. 2018) that you think Trump will legalize cannabis at the Federal level in his last two years he’s in office. Has anything changed since you said that or do you still think Trump will change his stance on legalization and make it happen?
If he gets re-elected, and again, I want to be objective, I tried to be in order of his as long as I could but now it’s gone into full blown crazy land, but if he does get re-elected, I do think there will be a movement to national legalization. Let me put it this way; sometime between 2020 and 2024, whoever the next president is or if the current president gets re-elected, I think there will be national legalization. The horse is already out of the barn. It’s too late, too many states have legalized it with great success. We’re learning that it can be a replacement for pain management where opioids where the drugs of choice. You might be able to use this instead and that’s another big positive.
7. When you were comms director, you must have been part of or exposed to conversations around the passing of the Farm Bill, what was that like?
No. Unfortunately I wasn’t there long enough for that.
8. Do you view CBD and cannabis as part of the same industry or do you view them as separate?
I can understand why people do see them as part of the same industry but I see them as separate. There are just so many varieties of uses for CBD. I find that CBD is more medicinal. I’m not saying that cannabis doesn’t help with glaucoma, pain management or anti-nausea and things like that, but it seems like, with the oils and different delivery mechanisms of CBD, it just seems like it has more versatility to it.
9. How does the current administration’s stance and regulatory environment impact your investment strategy?
I think it requires people to have a long-term investment strategy. You almost have to think about CBD and cannabis investing like a private equity person. You need to have that 3-7-10-year hold in the space. And then obviously you’ll have some regulatory volatility and some uncertainty as this thing manifests itself but I predict it will manifest itself very positively.
10. Do you have perspective on investing in ancillary vs. plant-touching businesses or are you looking at all opportunities in the space?
We’re probably going to be in the plant-touching, pharma side of the business.
11. There are considerable tax and economic benefits of cannabis, at a time when we’re heading towards recession, will that factor in on current administration’s POV and action?
Yes. The thing I would say, and this is probably good for cannabis, the administration is frying so many kettles of fish away from the cannabis industry that the natural forces that are happening at the state level are probably going to sweep in the changes that the industry would want. If you are a bull on the industry and you’re supportive, you want wider legalization and less regulation, and I think the good news is that it’s not really on the front burner for the administration so I think the administration will lean on and pick off some of the best practices from the states.
12. In terms of the upcoming election year, will cannabis be a major agenda item? Where do you think candidates will come down on the issue?
I don’t, and obviously the president has already made some public statements related to cannabis that are mostly benign, and I would expect, although I haven’t looked through these platforms, that the left is probably right where the industry wants them to be. There are a lot of Christian conservatives and evangelicals that are not in support. The former Attorney General, Jeff Sessions, was not for it at all. More practical republicans and more practical conservatives recognize that it’s going to happen with or without them so why not move towards taxing and regulation that could be beneficial to governmental revenues.
13. How important are social justice reform and equity initiatives to you when investing or advising others to invest in cannabis?
I think that’s getting more emphasis and more attention these days. That sort of decision process has already been taken out of the hands of a traditional investor like me because if you look through the higher profile, best capitalized companies they all have a social impact, social investing agenda to them. So, to me, if I’m making an investment in the space, that’s like an ancillary benefit pick up that I’m going to pick up some of that in my portfolio as well.
14. There are crazy valuations of some of these big companies in cannabis, what’s your take on that?
Patterns in history don’t repeat themselves but they rhyme. Anytime you’re in a low interest rate environment like this, and you’re seeking growth, whether it was the internet at the turn of the century or cannabis today, you’re going to have very high valuations, but I do think some of those valuations will be justified. Let me give you an example. There was a very high valuation in Amazon, and then Amazon went through a rough patch, but man if you held onto Amazon through that rough patch, they were ultimately a survivor and have transformed all retail globally. So I think there will be a handful of people in the cannabis space that will be long-term survivors and so you’re going to be able to pick up the growth,maybe there will be a correction and you’re going to have to seed through that, but it will be worth it.
15. You have included cannabis as a discussion topic for your 10th annual SALT conference. What do you hope to accomplish there?
Well, the big agenda for the SALT conference from an editorial perspective is to find things that our community and investors and friends that come to the event need to learn more about. Last year I added cannabis and crypto to that because I felt those were areas that more traditional hedge fund managers probably are not as up to speed on as they would need to be.
The Cannabis Private Investment Summit showcases the best and brightest cannabis entrepreneurs and is the premiere summit for institutional investors, family offices, and ultra high net worth investors. For additional information, please visit www.cannabrunch.net or email us at info@kahnerglobal.com.
To sign up for Kahner Global’s next Cannabis Private Investment Summit to be held on November 5th in San Francisco, click here.
