How Ayr Wellness' Jonathan Sandelman is Growing a Powerhouse Cannabis Company

Hello and welcome everybody to the latest installment of the Cannabisness Key. I am your host, Jason Klein. I am a partner with Ramone Law in the cannabis and hemp practice group. Uh, very pleased to bring you a fantastic conversation today with CEO of Aire Wellness, Jonathan Sandelman. Um, this is going to be our fireside chat format. Uh, and, um, we're going to be, we're going to be talking about all things, uh, with growth of Air Wellness, uh, the cannabis industry, uh, generally, uh, and, uh, to hear a little bit more about Jonathan's, uh, history, experience, uh, in the industry, uh, his lessons learned through, uh, uh, these few years working in the industry now. So, uh, we're going to jump into that in just a minute. Uh, for those of you who are new to our webinars, new to Zoom, I just want to sort of navigate you around the platform here so you know how this thing works. We're going to spend an hour talking to John today, and this is going to be an opportunity for you who are watching live to ask John some questions. The way you do that is to use that chat feature or the Q&A feature, either one. I'll be monitoring your typed questions as you put them in, and then I'll be lobbing them over to John. So, you know, I want to hear from you about what, about what you want to hear about from John, and feel free to just sort of throw those in as we go. The earlier in the conversation, the better, better, so that we can get them, you know, make sure we have time to get them all lined up. And, you know, feel free to sort of share your thoughts as well. If you use the chat, everybody in the audience will see it. If you use the Q&A, I think only I, me and John, as the hosts will see it. So please go ahead and use that liberally. Please also keep in mind, you know, a little disclaimer here. I am a lawyer, John's an executive of a publicly traded company. This is an informational webinar. We're not giving legal advice. We are, you know, all the caveats apply. Uh, this is just an educational conversation that we're having together, uh, to give you some insights about, uh, John's views of the industry. Uh, so if you need specific legal advice, you have specific questions, I'd encourage you to have a private conversation with your attorney. If you're looking for counsel, uh, particularly cannabis counsel, uh, cannabis-related deals, uh, reach out to me. Uh, we've got a great team over here at Ramone. I personally do a lot of work on the East Coast and the Mid-Atlantic in particular, but our team at Ramone does work all over the country, cross-border transactions. We've got a great non-cannabis team as well, more than 150 attorneys at this point and about 40, I believe 45 offices around the United States and around the country, excuse me, around the world. So, you know, Ramone's got a lot to offer. We have really competitive rates and a lot of fantastic attorneys.

Over here.

So give us a call if you're looking for legal counsel. One more piece of housekeeping here. Our next webinar is going to be on— let me get the date here— it is September 24th. That's a Friday, as per usual, noon Eastern time, 1 hour. We're going to be talking to Joe Caltabiano, who's a co-founder of Cresco, no longer with Cresco, but was the co-founder at one point with Cresco, which Cresco is one of the largest North American vertically integrated companies out there. Joe has moved on and he's newly founded a company called Choice Consolidation Corp, which is still working in the industry and still doing some interesting things. So Joe's got a lot of great insights into rolling out new brands and new markets and You know, his experiences will be, will be really interesting. So join us for that one. Sign up through Cannabis Business Executive or through Ramon's website. If you're online with us today, you'll be getting more information about that. And if you need to join the mailing list, just send me an email and we'll make sure that you get all of our announcements. Okay. So that's about all the housekeeping. And you know, now we're going to jump right in with John. So John, John, as you are probably aware, CEO of Air Wellness. John's got about— I don't know, John, you could tell us— more than 3 decades of history on Wall Street, and now at this point about 4 years since you founded Air Wellness. And it is quickly becoming an absolute powerhouse in the industry, from an expansion model and focusing on cultivation in some key markets around the country. So John and Air Wellness just put out a blockbuster Q2 2021 report that we're gonna be getting into. Before he began Air Wellness, John, as I mentioned, was on Wall Street for more than 3 decades. He was the president of Bank of America Securities for a while back in early 2000s, I believe, John. Uh, and also founded and served as a CEO of a multi-billion dollar asset management, uh, company called Sandelman Partners. So I think that's where we should start, John. Welcome to the webinar series, uh, first and foremost. And let's just jump right in. I want to, I'm really curious to hear about your life before cannabis and, uh, Wall Street. It's sort of how you got there, what attracted you to Wall Street, uh, and, um, you know, where your, uh, how that trajectory took you there and then eventually took you into cannabis.

Well, thank you very much for having me, Jason. I appreciate the time we're gonna spend today and getting to share the Aire Wellness story, which is absolutely my most favorite thing to be able to talk about the company and our management team and our teammates. How did I get to Wall Street? Well, funny enough, I'm not sure many people here can relate to that, but at 13, I came into some bar mitzvah money and I started trading. And my parents would, you know, when I come home for dinner, they'd say, well, where were you all day? And I would quickly skip out of school and sit at the local Merrill Lynch office watching the tape go by and talking to older guys who were hanging out there, mostly retired. And I was 13, 14 years old and they were like, what is this kid here? And just educating myself. I was just fascinated with finance. I was fascinated with corporations. I was fascinated with markets. I pride myself on being a mathematician. So quickly I could start reading the tape. As the tape moved, I could see price action. And through that price action, I could start in my own mind predicting directions of stock. But I don't often talk about that when I'm talking about air wellness, but that led me to law school. And frankly, I went to law school, no insult intended here, Jason, because I just felt I needed another 3 years of maturity before I actually went to work. I then graduated law school and I thought, well, I could use another 2 years. I was going to get my LLM in taxation because I was also fascinated with tax. Again, to me, it's a math equation. And so I decided, well, no, you need to go start working. So I interviewed all over the street and I decided to go to Salomon Brothers in 1985. And I was in the training class. And I decided coming out of the class, I wanted to be in the arbitrage businesses. So I started in convertible arbitrage and then derivatives and then global derivatives. Then I ran all of that. And then I became in charge of all equity risk and proprietary trading for equities at Salomon Brothers. And I stayed there for 11 years. And I was offered an opportunity by Travelers, which is then headed by Sandy Weill and Jamie Dimon, who's the current CEO, you might know, of JPMorgan, to leave and be backed by Travelers Capital, start my own fund. Instead, I decided to do a deal with Nations Bank, which became Bank of America. I created a financial products business and we split economics for the entire time I was there. So it was a very interesting relationship. We had 7 years in our group with no negative months, 36% returns, and had the highest ROE in the bank. Eventually at the end, they asked me to be the president of the securities company. I did that for a while. Wasn't exactly what I wanted to do in life. I'm more of an investor and a business builder, but the lessons I learned from having that job about how corporate culture functions, how corporate infrastructure functions, about regulatory matters because we were regulated by 5 different regulators and compliance and human resources. So it was an invaluable lesson for what I'm applying those lessons to today, to AIR, and we'll talk about that. Then I left there to, as you mentioned, to start Sandelman Partners. It was a multi-billion-dollar hedge fund, multi-strategy hedge fund. And then in '09 and '10, at the end of '09 and the beginning of '10, I closed it to start my own family office, which means essentially a group of us manage my family's money. And that also has a very wide mandate. Now, one thing I have to tell you that I learned, it took me 30 years to learn this because I'm a slow learner, that when I stay in my core competency, I tend to win. And when I stray, I always lose. So the question is, how did I get to cannabis? Well, in '17, someone I often talk to about idea generation said, hey, John, I have this industry that's growing at a very rapid rate. That's highly fragmented, that has limited access to capital. So of course, Jason, that's what we look for every single day because we can provide that capital. And I asked, what is it? And they said cannabis. And I said, 30 years later, that's not my core competency. What edge would I bring to that? That's not something I'm an expert at. But I hung up the phone and I started to do the math because math I do do, relative value I do do. And I started to look at the states where marijuana was legal and where beer was sold and liquor was sold. And I started to see a paradigm shift in the consumer appetite and taste. And where cannabis was legal, I started to know that a negative— I noticed a negative trend line on alcohol, and the reverse was true for cannabis. So I said, well, there's something here. I like paradigm shifts. It's getting close to my competency but not quite there. Then I looked at the total legal market for stock market capitalization in the world, which was the Canadian market at that time. And frankly, it was $40 billion. So I said, wow, that's interesting. Let's look at the total market cap of alcohol in the United States. And that was north of $500 billion. And I said, now we're getting closer to my core competency because on a relative value, 40 billion in a relatively small country, right? 38 million people, and the US market with that paradigm shift. Now, I wouldn't make a bet that, okay, Canada's market cap should grow and US come down, or the US continue to grow and the Canadian market capitalization grow faster, but I don't have to make that decision. But then I started to look at the assets in the US because I was only going to be focused on the US. And I saw how inexpensive on a multiple basis they were trading back at '17. So, I say to myself, I never say it's too good to be true. Let's just dive right in. Let's do the work and find out what is compressing those multiples. And frankly, it was Jeff Sessions' threat, the Attorney General at the time. He was threatening to put people away. If you touch the plant in the US. I did more work to find out if he actually had the ability to do that. It turns out he did. It was all bark, no bite, because there was an amendment to the budget amendment, which was the Rohrabacher Amendment, that specifically said he can't use his budget to do what he says he's trying to do. Then I said to myself, wow, there's a regulatory misperception arbitrage. Now the word arbitrage got there. That's my core competency. So you see, I'm trying to rationalize to make an investment in cannabis because it has to be my core competency. But everything was lining up on a relative basis to make the investment. Lastly, the way I thought the best way to take advantage of this, because investors were scared, of Sessions threats. And they were worried about touching the plant in the US, particularly the Canadian investors at that time. So I used a SPAC. I was the first one to use that vehicle to make the investment. Now, one last point, why did I choose that? When I issued the SPAC, and it took me a long time to market this because people were fearful and I understand why, When you issue a SPAC, investors invest, their money is put into treasuries for 18 months. There's nothing illegal about investing in treasuries. And I said to myself and to the investors, if that perception changes over 18 months, or your mandate, which prohibits you from investing, plant touching in the US, changes every 18 months, You're getting 2%. You're getting paid for a call option that one of the largest markets in the world becomes accessible to you. And if I buy my assets the way this SPAC works, you get to vote on it. And if at that time nothing changes, because I'm going to be EBITDA and cash flow positive day one, because I'm a finance guy, I understand The value of being EBITDA and cash flow, because that gives me maximum optionality. If it doesn't change and I announce the qualifying transaction, the stock will probably be up, you sell it. If the perception about investing in the US becomes easier, then you'll be in it, but it doesn't cost you anything. And personally, the way I set up my portfolios to invest, It's all about free optionality. Again, the way I structured free lottery tickets, being paid that 2% to the investors, hoping something does change or that I do good deals. I did 5 assets into a single SPAC. That had never been done before. Most people, almost everyone does one. And I know why, because it's difficult. And that SPAC, when it de-SPAC'd, became Air Wellness.

Right. Well, there's a lot to unpack in there, Jonathan, and thanks for that background. I mean, the SPAC conversation itself, we could spend an hour here talking about those decisions and the de-SPAC'ing process and how that really became a very popular vehicle. After you showed the viability, sort of showed the industry the path for doing that, and still is popular. And for good reason, like you mentioned, you know, it's sort of, it was a new and innovative way of running these transactions when you started doing it, but now it's been proven out to be an effective model for the industry. So, There's so much to ask here, and I'm already getting questions in the Q&A, and I want to make sure that everybody has an opportunity to ask these questions and we get to all these topics. So unfortunately, we can't talk too long about that SPAC or de-SPACing process for you, but let's just jump right into some of those lessons from the early 2000s and perhaps some similarities that you may be seeing today. Do you think that valuations are viable in the market right now? Do you think that we are starting to come up on a bubble, come up on some sort of correction, a major correction on the Street and broadly with public equities, something akin to what we saw in the late 2008, 2009?

There's a tension going on. So, I think the obvious answer would say, look, the economy is heating up, inflation is for sure heating up, interest rates should go up, and that's not good for the equity markets. But on the other hand, we have the Delta virus, And that may do the Fed's work by cooling off consumer demand. We're already starting to see that. The airlines are starting to see that. So we may not get the interest rate hike I would have thought we would be getting in the fall. Because of Delta. Now, it's horrible to say something as devastating as Delta is good news for the market, but it may mean that the easy money that has existed, the easy cost of money that has driven asset values, it may last longer than we might have thought just a few months ago when things had really quieted down with the virus. So I do think there is this tension right now. I, I'm praying that more people take vaccine and, and, and the virus again subsides. I think the future is, with so much money being pumped into the system and, and these big spends that are coming out of Washington, it will create inflation. In that environment, and I really don't want to give people advice because I don't think that's what you brought me on to give financial advice, but I would say in that environment, companies like ours offer really, really good value. And so what I traditionally would do when it becomes— the market becomes somewhat of uncertain, I would sell higher multiple stocks and reinvest my money in lower multiple stocks, but not low multiple stocks that are not growing because those are just bad companies. They're cheap for a reason. When you think about cheapness, you got to look why it's cheap because all things that are cheap are not going to get to fair value. They should be cheap. When I think about AIR, I think about the discount we trade to the average multiple, and I think about the kind of returns we're producing. And that's the kind— I would look, whether it's AIR or another security, I would look for a company that's outperforming on operations, that trades at a discount to a market multiple. That would be my advice, but I'm not here to give financial advice. I'm here to talk about AIR.

And we're gonna— let's jump into AIR because this definitely dovetails. I'll say it for you, you know, when we're talking about looking at those companies that actually have a viable adjusted EBITDA and, you know, demonstrate some some real fundamentals, you know, unlike a lot of competitors. This Q2 report that I referenced earlier, and everybody can go take a look at it, it demonstrates a huge amount of growth year over year and quarter over quarter here. And, you know, there's some really impressive acquisitions in here, some new markets and some expansions and big expansions, particularly particularly in Florida. So I wanna talk about a couple different things related to that Q2 report. And I think we're gonna spend a little bit of time here, but let's start with generally how you manage a company that is on a growth trajectory like this and how you maintain a cohesive culture among new acquisitions? You know, how do you identify acquisitions that will fit in, and then how do you ensure that they do fit in post-transaction?

There, as you said to me, there's a lot to unpack there. So I'm going to start with my favorite subject, my two favorite subjects. The hidden asset on our balance sheet is our culture. Everything we do stems from that. Now, what do I mean our culture? I talk on more podcasts than I've ever had before, and the single thing I talk about that I'm the proudest of is the people. And the culture. So for 30 years, I have a simple philosophy. It's all about talent, and talent is for free. I've never paid my talented people. They've earned it, and they earn it in a way that I could never compensate them for. It's the pride of being a part of a culture of excellence. Same playbook I've done for 30 years, just a different box in my mind. So what is the culture? It's a culture of mutual respect. It's a culture of talent. It's working together, sharing ideas. What I learned in law school, and I'm sure you did too, the first time in contracts when my professor in a room of 300 people said, Mr. Sandelman, stand up. And he said, it's actually property, I'm sorry. Explain to me Lawrence v. Fox. Luckily, I actually did my homework that day because I rarely did homework. And he expected me for the next hour and 20 minutes to do the Socratic method back and forth, where he asked me and I was going to answer. You know what I learned from that, Jason? That sitting in a library by myself, I could never get to a certain intellectual level. I didn't have the discipline as a person. I didn't have the ability. I always had ADD. So just sitting there was difficult. But with another talented person pushing me respectfully, I was the smartest I'd ever been. First day of law school. That's what we do at AIR. All the management, and this is only about the people and the management, all sit in their lane. When I start a company, I say, where do I want to go? What talent do I need? What lanes do they have to occupy and try to find the best in class in each one. And I'm super disciplined about everyone staying in their lane, playing to their genius, and not ask them to do anything more than that. But then the conversation in the management meeting is the Socratic method. We all push each other. Respectfully to get to the high place. Now, I'm a strong vision and strategy guy. I know where I want to take this company. I not only want this to be the best company in the cannabis business for people to come and work at, I want it to be amongst the best companies. Because if you create the best work environment, The best talent will want to come, and talent's free. It's all about the talent. And so my personal goal is today we have over 1,700 people because the vision is so strong here. To answer your question, my strategy: 1,700 people, 1,700 pairs of oars, all rowing in the same direction. That's how we win.

It's the Field of Dreams model. You build it and the right people will be attracted to it. So, you know, talking about what that direction is, and, and you had mentioned sort of growing, obviously AIR has focused, uh, has made it its sort of core competency to become the best cultivator and to grow the best quality cannabis in each of the places where it holds that vertical license. So can you just talk for a moment about why growing, why cultivation, why cultivation of the plant is, you think, a winning model for a vertically integrated business? And this is as opposed, of course, to you know, other strategies which may focus on, you know, a dispensary experience, for example, or a particular brand, for example. Certainly you guys do that, but the focus, as I understand it, over at Air Wellness is on growing the best plant possible.

So you're right, you know, sometimes in this industry we all have tunnel vision, right? It's just about cannabis, but I like to appropriate, not invent, from CPJ, traditional CPJ. It's so well perfected there. Why do I have to invent it when it already exists? And some of the best brands have just done a brilliant job about with that. So let's think about normal CPJ and then you'll get to our strategy. Can you tell me a name of a great sustainable brand? That doesn't focus on the product in their box. It's all about quality and consistency. So look, I don't want you to say it's our way or the highway. There is many ways to be successful and strategies, and I respect that. And a lot of people in this business focus on their box and their branding, the box. The brand. I personally am focused on what's in the box because I don't know about you, about you, Jason, but I just have to tell you the truth about me. I don't buy Nike because the box is orange. Do you? I don't buy Apple because the box is white. I buy it because I think it's the best technology. I buy it because I think it's the best phone. Right. So it has to be, when we think about it at Aer, it has to be all about the plant. And so our stated goal has always been to be the largest scale producer of high quality flour in the United States. Now that's a big goal. And you can't start that goal today. You had to have that goal, that goal from the beginning. And so I've always collected cultivators. I've created an artist community like the old artist community where— great, I look at cultivators as artists— where they come in and you— they gave them canvas and they gave them paint and created this, uh, this community where ideas were shared. That's what we do at AIR. The cultivators all share their IP because they all approach the plan slightly different, but we have brilliant results. So it's not about the box. CBG talks about the excellent quality of what's in their box. They deliver consistently. For us, it's all about the plant, and you got to be the best large-scale cultivator. I think underestimating the consumer is a good short-term strategy, but if you want to be amongst the winners, the consumer is smart and they know the difference between great quality and average quality. And while they might buy Jason the Box once, they won't buy it twice when they have an opportunity to buy something of superior quality.

Absolutely. So the, so the, so the, the idea here with your expansion model, Jonathan, um, in putting together sort of that discussion we had a few minutes ago about attracting talent, particularly cultivation talent, One of the things I like to say is that I've met all 1,000 of the top 5 growers in the world because every time I talk to a new grower, they tell me all the awards they've won, how they're the best in the business, how they're the best in their market, how they grow the best product. And it's hard for me to distinguish, you know, as somebody who is not in their facility, you know, and isn't comparing operational level, it's hard to tell who's for real and who's a joker. So how do you guys go about evaluating cultivation talent and when you're particularly looking at a potential acquisition?

So if you met a chef and he said, my food's the best food, come to my restaurant, how would you evaluate if he was a good Chef, you'd probably taste his food. Would you take it on his word or would you sample it? If I said I'm a wine grower and I grow the best wine in Napa Valley, would you take my word for it or would you have a glass of wine with me and decide for yourself? So we don't take anything at face value. We do a tremendous amount of due diligence in our acquisitions and our hiring. Because we do so much due diligence on the M&A side, we've never had to retrade a deal because we don't make mistakes. We don't say later on, well, we should have done more work and now we want a discount. That's our reputation. That's why people sell their companies to us because our handshake, like on Wall Street, is gold. On Wall Street, if you don't settle the next day, Do you think anyone trades with you again? There's no contracts. So it's your reputation, it's your word, it— you sample it, it's due diligence. And so we can tell, and so can you, whether that claim that that grower is making is legitimate or not. Now, we recently bought this company Tahoe Hydro in Nevada. Now, we love their product. It'll help our wholesale business, it'll help our retail business. But you know what? It's going to help the whole company because they're fantastic cultivators. So the price that I paid is a super fair price, but the leverage I'm going to be able to get from that talent throughout the whole company makes it a spectacular deal for me. I have a very simple formula for a perfect deal. I get a great asset and I get more talent, more partners. That is the perfect deal because I'm a lover of talent.

That's a great approach. I want to talk a little bit about Florida where you've really expanded as well and sort of in the most serious way, including really wide and broad cultivation operation. And this is actually a question in our chat box. If anybody else has questions, now would be a good time to put them in as we got about 15-20 minutes left in this conversation. The question is about the challenges in Florida in particular with the humidity and the approach to sort of choosing greenhouse, outdoor, and various cultivation methods. Can you just speak to how you deal with the sort of growing cannabis basically in the tropics in Florida?

So it's challenging. We all find it challenging. Just by way of background on Liberty, before we bought Liberty, I'd been talking to Liberty for 2 years and it never quite lined up our stock prices. If theirs was cheaper, ours was cheaper, much cheaper. And if theirs was rich, ours didn't. But finally, both stocks lined up, so a deal was possible. Wasn't possible for 2 years. But in that period of time, so you understand my M&A strategy, it's about a relationship. I never want to be in an auction, right? Because I want to buy and do deals at fair prices for our shareholders. And if you think about a deal, every deal has 3 considerations: stock, cash, and notes. When the sellers decide who to sell their company, many of these companies are family-owned, right? It's an entrepreneur who started this, built it up. It's predominantly owned by a single family. They understand they're going to have to take stock for a substantial portion of this sale price. And so reputations do matter. My background does matter because when you take our stock, I feel a fiduciary duty. I feel like I'm managing your family's money. They understand that, and that's why they choose AIR, and that's why we're able to do great deals. Florida, 2-year conversation on Liberty. When it finally lined up, we made the call. They said, "Time is right." Stock looked cheap. We went, did our due diligence, and the cultivation was in a very difficult Stay. Now, simply because assets look cheap, we talked about this earlier, doesn't mean they're going to get, you know, be repriced, revalued. Doesn't necessarily mean. And if the problem is such that it'll make it come to full value is not something you have this skill set to fix, you can't do the acquisition. But in this case, it was a cultivation issue. And because of what we talked before, because we have a deep bench of cultivators, this played right into our core competency. So what do I mean? They were failing at 25% on testing. The yields were terrible. The place looked like a mess. Okay. We knew we had the talent to come in there. Liberty, when we bought it, was number 7 in sales in the state and number 4 in store count. Today, because of the team that's in place in Florida and the help from the management team here with me in Florida now— sorry, about to say New York— in Florida now because we all moved. Um, we were able to fix that. And so the store count number went from 4 to number 2 in the state in 5 months, and the sales went from 7 to 2 to 3. And the simple fix was fix the cultivation, bring down the failure in the testing, Increase productivity by 50%. And instead of having flour 2 days a week in the stores— because think about it, you're a patient, Jason, you're driving, you need your medicine. Liberty 2 days a week, competitor 7 days a week. Last week it was Monday and Tuesday at Liberty, but the week before it was Thursday and Friday. Can't depend on that. Why turn into that parking lot when you can easily go to a competitor? Where you know they'll have exactly what you need. We now have flower 7 days a week. We had 2 strains when we bought it. We now have 12 going to 15. Florida is a very difficult place to grow. We happen to have one of the greatest growers in the state who turned this around.

Yeah, and that's been a, it's been a really impressive growth trajectory as you sort of polish that gem, continue to polish that gem in Florida. It sounds like, and I know you're doing this call from Florida now, and the head office is moving. Is that official at this point? Is the home office officially been moved at this point?

Yes, it is.

That's great. It really demonstrates a huge commitment to the state and to the continued growth.

Jesse, you may have heard me say this. I don't know if you listen to our quarterly calls or other conversations I have had. When I bought this asset, and this is one I personally was very, very focused on, and part of the reason why I moved and then the team said, we're coming with you. Is to be close to it. What I said, that Liberty in a year or so in the future will be worth, if it was an independent company, more than the total capitalization of Aire today. And I believe that to be true. Liberty budgeted for 42 stores by the end of the year. We're at 40 now. The fastest grower in the state, and we should be at 50 by the end of the year.

That's great. That's really great. So let's, while we've got about 15 minutes or so left here, let's just sort of look to the future. And one of the questions that has come up in our, in our Q&A box here is about the SAFE Banking Act and federal legislation. So, you know, how is AIR Wellness sort of navigating, you know, its interests in Washington? What do you see sort of level of AIR's involvement in lobbying and government relations? And are you optimistic about positive changes in you know, in Washington with regard to federal legislation on cannabis?

So we don't lobby in Washington at all. I often hear other CEOs of major MSOs who have very, very strong views on the timing of this legislation. I'm not sure I have as strong views because comes down to politics and I'm not a good handicapper of politics. I think it's quite unpredictable and who knows what happens to the House in midterms and what that'll mean. And so I don't focus on that every day because we have banks that bank us, we have great risk management, great operational management, And frankly, the best part of the legislation that I, that I focus on is more of the social equity, social justice parts, that this, this once in a lifetime opportunity should be shared by all. And it shouldn't be shared by a handful of people. So I think If you ask us what we feel strongly about at AIR, it's those issues. Having said that, what I say to my team in our strategy meetings, I don't want to be the person 5 years from now that didn't make this a great company. And build out its footprint? Who wants to be the person that says, I was there at the moment, I should have, would have, could have built and bought more? So you see us moving. We waited 13 months after we de-SPAC'd. We had a view that the market would get rationalized. We were EBITDA and cash flow positive, as I mentioned. Others weren't. The market forgot that it doesn't move from the left quadrant to the right without corrections. It corrected, and then it became an air opportunity to move rapidly. And you've seen us from that point on build our disciplined footprint. Now, for me, the buffet is open. Buying multiples in this industry with this growth rate of 5 or 6 times, I think, is a once in a lifetime. And when I look at premium liquor to compare the relative values, because you know that's what I did my whole life, right? Premium liquor that grows 5 to 8% a year trades at a 25 to 30 multiple. I do believe, as I said earlier, there is a paradigm shift in consumer taste and choice. Buying today at these multiples when that event that you described happens, will happen, because the growth rate and the appetite is bigger here. And when that wall of money is permitted to invest, the pipe in this industry is tight. My personal belief, and I'm the largest shareholder in this company, these multiples will overshoot because the money is all going to come in at the same time because these asset managers recognize what is going on in this industry and where the shift has happened in terms of the consumer choice and appetite. And so there'll be overshoot and then it'll pull back and it'll correct, but it's going to sell. So I've heard other CEOs say, and probably describing our strategy, "Wow, they're paying expensive prices." How can 5 and 6 multiple compared to what? Is that rich? It seems ludicrous to me. And so the buffet is still open. The prices are still very, very inexpensive. For these growth rates. And AIRE is going to stay on its disciplined strategy and continue buying and building our footprint.

I love the way you're thinking about this and talking about it. It's the same idea that I had when I first started looking at this industry about 10 years ago, when the DC medical marijuana program was beginning in 2010, 2011. And absolutely could see the writing on the wall as far as cannabis being a complement or even replacement to alcohol. And I couldn't agree with you more as far as the untapped growth that's still there, the regulatory and legal changes that are to come, and that wall of money, which will eventually line up with, you know, whether it's alcohol and beverages, tobacco, or some other similar type industry, you know, will eventually equalize. You know, this industry will eventually equalize over there. And we still got a long way to go. So you've still got your plate and you're going back to the buffet. You've got cash on hand, you've got a lot going on at the company, and there are more acquisitions to be had. And Obviously, when we talk about forward-looking statements, it's very hard to predict the future here, but could you just sort of give me or give us, the audience, some hints about what marketplaces you're looking at as far as new states? Is California on your agenda? Are you looking up in the Northeast? You know, what programs and opportunities look tasty to you right now?

Our approach has always been very similar to the one that we used on Wall Street. At the end of the year, we look at our revenue and where we made the bulk of our money. And we— it always turned out, and this is true in many businesses, that 80% of our earnings came from 20% of our clients. And then there was always a debate, why do we do business with anyone else? And of course, next year we did the exact same thing again, never really made the changes. So when I entered the business, I looked at the map of the US and I don't necessarily have to have the biggest footprint. Our team is driven to have the best business, drive the best value for our shareholders. And so what do we mean by that? So you look at this, you look at the map and you say, does that 80/20 rule apply? And it seems to me that 12 to 15 states could represent 80% of the consumer wallet. So why not leave the other 35%, the other 35 states to represent 20% to others and have the most— the highest returning business in the industry. So that's our strategy. I don't typically check off boxes of states because I'm super careful as a public CEO to make forward statements. But Jason, I bet you if you and I were having a conversation and I said to you, what states do you think we're missing? You'd probably, because it's such an obvious next move for us, these next states, you could probably guess. California. Fascinating. It's been difficult because the well-developed black market, You can have a black market store next to a legitimate store with the same brands at 25% less because they don't charge taxes. So it's been difficult. And again, because of our culture is a culture of honesty, integrity, transparency, there's a lot of people who are successful out there who just don't fit our paradigm for culture. Um, But I would say recently there are certain groups that do. And how could you not be in the fifth largest GDP in the world where the trends in this industry start?

Absolutely. It is. It's an industry trendsetter out there in California, and it's a particularly challenging marketplace for anybody. It's sort of some, some great success stories and some horror stories as well. So it's certainly a place to pay attention to, to watch closely, but also to be very careful with. So that will be, I'm sure, on everybody's radar as we continue to watch AIR grow. I'm sure there will be more growth coming up in future quarters as you continue this this path here. As we wrap up here, Jonathan, and I think we've got, you know, just in the last couple of minutes here, I wanted to give you an opportunity to direct people here on the audience to any— to a website or social media if you've got a pitch that you want to make, or, you know, any other last comments, final comments before we close up.

So I'm now on Twitter. And so you can find me there. And our website is well developed and, and quite good. So I invite you to take a look at that. I think I'd like to wrap up with this very common thing that we've been talking about today. AIR is growing, and AIR loves talent. And air is going to be, and it is, and continue to be a great place to work. So if you're interested in this industry and you're the type of person that wants to pursue their genius and find their passion, this is where you have to come.

I think that's a great message. We've certainly got people online right now who are watching who are interested and talented. I'm going to go ahead and assume all of my audience is well talented. And if you're watching this, I'd encourage you, you know, whether you're watching it live or recorded afterwards, I'd encourage you to go check out the Air Wellness website. There's sure an investor relations tab there and you can see recent quarter reports and all sorts of investor materials and learn more about AIR and what they're doing. Go check out Jonathan's Twitter and follow the most recent latest updates there and reach out to Jonathan on Twitter. Is that the best way to actually get in touch with you, Jonathan?

Yeah, that's a great place. Excellent.

Great.

Thank you.

So if you want to follow up with him or with Air and chat with them about something that they're doing, just go ahead and reach out to them on Twitter or contact them on the website. If you'd like to reach out and contact me, my email is jason.klein@rimonlaw.com. Law.com. Go ahead and send me an email and we'll make sure that you can get on the mailing list for more conversations like this. Jonathan, I'd love to have you back next year to talk.

I have to wait 12 months? I thought we had something going here, Jason.

All right, fair enough. Whenever you're ready to come back, I will be sure to have you. You invite me over. It's been great. I really, it really, it's wonderful to hear your unvarnished opinion on the growth of this business. It's really impressive to see where you've come, and it's really great, you know, from my, from as somebody who's been working in the professional service sector in this industry for 10 years, I love to see talent, you know, real talent, proven talent in other sectors, in traditional finance, for example, come in and ply their trade with us because that's how we grow. That's how the industry grows. It's better for everybody when there are Air Wellnesses and Jonathan Sandelmans of the world in cannabis. Uh, so, uh, you know, this has been a really great conversation. Thanks for sharing so much with me and my audience. Um, we hope you can join us too, uh, again sometime and, uh, certainly tune in as we, as we continue this webinar series. We're going to do it monthly basis, uh, as we've been doing for over 5 years now. Uh, and, uh, we're going to continue to talk to some of the most interesting people in cannabis. So thank you again, Jonathan. We really appreciate it. Um, thank you to everybody who joined. Uh, please look for a link to watch this again, uh, on the Ramon website, on the Cannabis Business Executive website, and on YouTube. Uh, we'll make sure everybody has that link and we'll be back with you again next month, September 24th with Joe Caltabiano. So, uh, Jonathan, thank you so much. Really appreciate it. Have a wonderful day, everybody.

Bye-bye.