Updated: Mar 5
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In November 2022, Higher Learning LV interviewed Jesse Redmond, Founder and Managing Partner at Higher Calling, LLC, a financial consulting service "for investors seeking informed opinions on cannabis investments" based in Santa Barbara, California.
He has 25 years of professional experience in investing and cannabis. Redmond was an early employee at Fisher Investments and has focused most of his career on managing hedge fund portfolios. He is a host at video podcast Seeking Alpha where he interviews CEOs of leading public companies.
Image courtesy Jesse Redmond
He co-founded two hedge funds and has allocated more than $1 billion to "alternative strategies and conducted more than 1,000 due diligence visits around the world." For three years, he operated a leading California dispensary. "Through these experiences, I offer a unique perspective on how to make money investing in cannabis," states Redmond. He writes about cannabis stocks at Green Giants.
Today, Redmond serves as a Managing Director at Water Tower Research, where he serves as Head of Cannabis. He hosts regular Twitter Spaces interviews with influential C-suite executives from across the American cannabis industry.
Other popular articles in the Higher Learning LV Interview series include:
Higher Learning LV: "Thank you for taking the time to talk to us, Jesse. What attracted you to the cannabis industry? Why have you decided to immerse yourself in a business segment that is so beleaguered by controversy, opposition, and legal roadblocks?"
Jesse Redmond: "Initially, I saw it as an opportunity to help people. My dad has had Chronic Regional Pain Syndrome since I was in high school and has not worked since his mid-40s. He went the traditional pain management path using opiates, but ended up with more pain and a compromised lifestyle. In 2016, he began seeing a cannabis doctor. After a regiment of tinctures and concentrates, I saw his whole life begin to improve. Seeing this change inspired me to want to help others.
"I never imagined the [cannabis] investment path would be this difficult. But I'm used to challenges and have a longer-term perspective."
"As a first step, I started and operated a California collective for three years. In 2020, I began blending 20 years of investing and three years of cannabis experience. Candidly, I never imagined the investment path would be this difficult. But I'm used to challenges and have a long-term perspective."
Image courtesy Jesse Redmond
HLLV: "Many thought leaders contend that the burgeoning cannabis industry will never reach its full potential until IRS code 280E is no longer an issue and the industry has full access to robust merchant banking services. What is your opinion of this situation?"
JR: "I see cannabis as a state-led growth story with a series of hard-to-time political catalysts: SAFE Banking, descheduling/rescheduling, 280E removal, decriminalization/legalization, and uplisting somewhere along the way. Currently, we have just 21 adult-use states and most existing markets are not fully built out.
"We have had zero progress on the political side, so most of the upside is in front of us.
"280E is the most important from an operating perspective, as businesses become instantly more profitable. Absent this change, it is getting more difficult to find profitability without scale and extreme financial discipline."
"280E is the most important from an operating perspective, as businesses become instantly more profitable. Absent this change, it is getting more difficult to find profitability without scale and extreme financial discipline. Being taxed on gross profits, rather than net, hurts everyone, but impacts smaller and less profitable operators the most. This is one of the reasons scale is so important right now.
"SAFE is less important from a profitability perspective, but is critical for bringing new investors to the space. I am continually surprised by how many investors are interested in cannabis but are not able to invest.
"This could be for compliance reasons, their broker does not allow access to the names, or they cannot custody U.S. cannabis stocks. SAFE Banking will make businesses more secure, lower lending rates, and allow credit cards and improve operations. But the potential to bring in new investors is the biggest impact."
HLLV: "As founder and managing partner of Higher Calling LLC, what is your goal with this consulting service?"
JR: "My goal is simple: To help people find the best cannabis investments. Best is subjective and varies depending on one's size, risk tolerance, and investment objectives. In some cases, I help clients build custom portfolios of cannabis stocks. This tends to make sense for larger and more sophisticated investors. Other times an ETF or a venture capital fund may make more sense. My first step is listening and identifying what would be most helpful.
"I may be the only person that has allocated over $1 billion to hedge fund strategies and sold more than $1 million in cannabis. I feel these experiences provide me with a unique perspective on how to make money."
"I may be the only person who has allocated over $1 billion to hedge fund strategies and sold more than $1 million in cannabis. I feel that these experiences have provided me with a unique perspective on how to make money investing in cannabis."
HLLV: "You formerly operated a retail dispensary. What is your opinion of the role of budtenders and their education level?"
JR: "Budtenders and delivery drivers are critical. I personally signed up the first 1,000 patients for our collective and went to great lengths to understand their goals with cannabis and help them find the best solution for their particular problems or needs. As we grew, I continued to push a patient-first mindset. This, coupled with education, was one of the reasons we received 98% five-star reviews on Weedmaps.
Image courtesy Jesse Redmond
"Today, I continued to go back to the stores with the most knowledgeable and helpful staff. Santa Barbara has three dispensaries and Graham Farrar introduced me to a super-helpful budtender at The Farmacy. He talked about terpenes and why sativa, indica, and hybrid classifications are not always accurate. This level of sophistication and care makes me continue to prefer this store over the others in the area."
HLLV: "In 2018, you wrote on LinkedIn, 'I'm leaving the hedge fund industry to pursue what feels like a higher calling—improving people's lives with cannabis.' Four years later, has your outlook changed? What have you learned since immersing yourself in the cannabis industry full time?"
"Running the dispensary was a cleansing experience, where the focus went from how to make money with hedge funds to how to help people with cannabis."
JR: "The motivation remains the same, but the means of accomplishing the goal have evolved. Running the dispensary was a cleansing experience, where the focus went from how to make money with hedge funds to how to help people with cannabis. From a mindset perspective, it was a transformational change. Today, I blend these two perspectives by trying to make money in a business that helps people and changes lives.
"Throughout this process, I have found that everything in cannabis takes longer than expected and is more difficult. Whether you are opening a store, launching a brand, or rolling out a new state—always give yourself more time and money than initially anticipated."
HLLV: "There's been plenty of talk about movement at the federal level with respect to cannabis regulatory oversight and legalization, with a focus on social equity and merchant banking services. None of us has a crystal ball, but what do you predict for the future? Will 2023 bring good or bad news to the cannabis industry?"
JR: "My best guess—always knowing I may be wrong—is that cannabis is rescheduled before the 2024 presidential election. Biden waited until the midterms to bring it up and may wait until the presidential election to implement the change. It's easy political capital. If this results in descheduling or rescheduling to schedule three or lower and 280E is removed, stock uplisting should be possible.
"While I would love to see it passed, I am investing in businesses that can survive with or without SAFE. I don't have an edge in predicting political outcomes."
"SAFE feels like a coin flip. We've all heard 'soon' and 'closer than we've ever been,' but no one really knows. While I would love to see it passed, I am investing in businesses that can survive with or without SAFE. I don't have an edge in predicting political outcomes, so I try to minimize their input in my decision-making process."
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