Episode 53 – Ryan Hurley (Arizona Cannabis)

This podcast audio has been transcribed by an automatic transcriber.

Fred Rocafort  0:07 

Global law and global business go hand in hand, but never seem to keep pace with each other. The importance on the global stage of developing and developed nations waxes and wanes, while consumption and interconnectedness steadily increase all the while laws and regulations change incessantly requiring businesses to stay nimble. But how do we make sense of it all? Welcome to Global Law and Business hosted by Harris Sliwoski’s International Business attorneys. I’m Fred Rocafort.

 

Jonathan Bench  0:37 

And I’m Jonathan Bench. Every week, we take a targeted look at legal and economic developments in locales around the world as we try to decipher global trends in law and business with the help of international experts. We cover continents, countries, regimes, governance, finance, legal developments, and whatever is trending on Twitter. We cover the important, the seemingly unimportant, the relatively simple and the complex.

 

Fred Rocafort  1:02 

We hope you enjoy today’s podcast. Please connect with us on social media to comment and suggest future topics and guests.

 

Ryan Hurley is general counsel at Copperstate Farms, the largest medical cannabis grower in the southwest. Prior to joining Copperstate Ryan was a partner at Rose Law Group in Scottsdale Arizona, where he led the firm’s marijuana practice group. He has a background in land use and zoning law, environmental and water issues, renewable energy and a wide variety of regulatory compliance and administrative law issues. Ryan Welcome to Harris Sliwoski Global lawn business.

 

Ryan Hurley  1:53 

Thank you. Thanks for having me. I’m glad to be here.

 

Fred Rocafort  1:55 

This is a very exciting time when it comes to cannabis law, both here in the US and internationally. There are legalization initiatives underway in states across the nation and in many, many countries, most notably for us, Mexico. And Arizona is in the thick of things. This is in large part due to the approval last November of Proposition 207, which legalized recreational cannabis in the state. So let’s kick things off by asking you to give us an overview of what is happening in Arizona with regard to cannabis. What should we be looking out for at this stage?

 

Ryan Hurley  2:35 

Sure, so you know, we’ve had medical marijuana in Arizona for a little over 10 years now, dispensaries for about eight of those years. And just recently back in November, the Arizona voters voted for proposition 207 to allow adult use or recreational cannabis here in Arizona. And we have gone pretty quickly to a dolt use regulated, licensed selling environments, the department health services was excellent at processing the applications and generating the first batch of rules. And so in mid February, a good number of the existing medical marijuana licenses were approved to switch over to adult use. And we were all really excited about that. And we’re cranking away we’re doing great business, our business in our stores is tripled pretty much instantaneously. And that’s, you know, still in a COVID world. So lots of exciting things going on in Arizona and lots of growth to be had.

 

Fred Rocafort  3:33 

Ryan, we try to find out as much as we can about our guests before we record the podcast. And thanks to that research, we learned that you played a prominent role in that earlier effort to legalize medical cannabis in Arizona. I think that makes you someone who is well placed to reflect on just how much has changed in the last decade or so when it comes to cannabis. If you don’t mind, could you take us back in time to 2010 and tell us about the challenges that legalization initiatives were facing back then, and how it looks now from your perspective? What are your overall thoughts on the world have changed that has taken place?

 

Ryan Hurley  4:15 

Man, it’s like an entirely different universe. In just a short amount of time going back 10 years ago, our medical marijuana law passed by a very narrow margin was three or 4000 votes. And it was vehemently opposed by our governor and everybody at the legislature and you know, believe it or not, it was actually the third time that Arizona and passed some version of the medical marijuana law. But every time prior the the legislature had a war the governor and stymied the program, and that one of those original attempts did directly lead to a change in the Arizona constitution called the Voter Protection Act. That said if if the voters pass something by initiative, the legislature can just come in and undo it. And so thanks to that Voter Protection Act, this this law that was, you know, extremely imposed and passed very narrowly, we were able to implement it, but it wasn’t without fights. I mean, our governor sued us and federal courts and we had to sue the Department of Health Services to move forward. It was really a battle. And it was about two years between when the law passed to when the first dispensary opened. And you know, back then I was the only only attorney in the state really, certainly the only attorney and a firm that was that was willing to touch it. And you know, now I’m now I get to be on podcasts from other firms. So that’s, that’s definitely a big difference. You know, and also just the the level of acceptance. Anecdotally, my parents were very concerned with the direction my career was taking and, and now my mom is a medical marijuana patient that she uses a one to one CBD THC tincture and helps her sleep without pain. And man, she’s my biggest apostle now and proselytizer for medical marijuana. So I think that the notion that marijuana is too dangerous, the reefer madness stuff is finally finally dying out. I mean, it’s, it’s still has some, some strongholds throughout the country. But that’s the biggest difference. And now, along with that, we’re seeing the large amounts of money coming into the space. I mean, when when we first got started getting going my clients, they were, they were putting their own money in there for their parents money, their friends money, there was no you know, large scale capital in the space, it was very difficult to get things going, it was a little bit of a wild west, you just kind of kind of made it up as you went along and tried your best. And here we are 10 years later, and we’ve got multibillion dollar publicly traded companies and podcasts with awesome law firms.

 

Fred Rocafort  6:48 

Yeah, it’s interesting, when we look at some of the things that are happening elsewhere in the world, it’s sometimes a bit frustrating to see that some of those debates that we have already had here in the United States, or as you pointed out, we have almost completely left behind are still very much alive in other countries. And on the one hand, of course, it’s understandable, right? That there’s going to be different speeds at which countries move, but at the same time, I sometimes cannot help but feel a level of frustration. And then you almost want to scream and say, Look, we’ve been through this already. You know, once you adopt this proposed legislation, or take whatever steps are being discussed 10 years from now, you’re gonna look back and you’re gonna say, Wow, it’s fine. We were worrying too much about about things that we didn’t have to worry about. And we now have all these economic opportunities that have been created. Right. So there’s a little bit of that sense of, do we really have to replay history?

 

Ryan Hurley  7:51 

Yeah, it still boggles my mind how some people are holding on to this reefer madness stuff, you know, people in like the governor of South Dakota, trying to prevent the implementation of both medical marijuana and recreational, which was passed by their voters in the same election. She’s trying to stop this program from moving forward saying it’s too dangerous. And then this morning on NPR, I hear the story about liver disease spiking 30 to 50% in women, because of increased alcohol consumption. And, and yet we have, you know, we celebrate alcohol consumption every single day in this country. We don’t we don’t just tolerate it, we celebrate it. And so, you know, that cognitive dissonance still, I it’s still hard for me to understand, but, but thankfully, that those folks are dying out and they’re being proven wrong, and whether they admit it or not, they’re a dying breed.

 

Fred Rocafort  8:42 

So let’s turn out to do your own career. As we mentioned in the introduction, you our general counsel at the Copperstate Farms, the largest medical cannabis grower in the southwest, please tell us more about Copperstate.

 

Ryan Hurley  8:56 

Yeah, so Copperstate is a vertically integrated cannabis company here in Arizona. We manage for vertically integrated licenses. And so we have four retail stores in the Greater Phoenix area. Those operate under the sole flower brand name. And then we have a large scale production and manufacturing facility about three hours from Phoenix and a town called Snowflake Arizona. We converted an existing tomato and cucumber greenhouse that had been in bankruptcy. We purchased it out of bankruptcy and converted it to grow cannabis and now we’re one of the largest throwers in the country, certainly, I think the largest in the southwest. We employ about 400 people in this small town of snowflake Arizona. We’re a great partner and they’re a great partner to us and we produce products up there are animal brand good things coming. We have a line of cartridges under the copperstate brand name, we’re getting ready to launch a concentrate brand called array. So we do a little bit of everything wholesale retail, cultivation, manufacturing, and We’re really focused here on the Arizona maket.

 

Fred Rocafort  10:03 

It’s interesting, you mentioned tomatoes and cucumbers, and as it turns out, we’re doing some work at the moment. Not not related to cannabis, obviously, but we’re working on trade matters that have some relevance to those industries and others, tomato, cucumbers, and other other products. And you hear a lot of complaints from these from these industries about the unfair competition that they face from other countries. And going to this idea of cognitive dissonance that you brought up, right, it makes you It makes you wonder, Well, some of the states where there are strong agricultural industries, you know, there there’s a mixed record, right. Some of them are open to cannabis, some are not. But it does make you wonder, right, if faced with these factors faced with these kinds of challenges, you wonder, why wouldn’t they open the door in some of these states to cannabis, knowing that it is an industry that is growing, that is creating new opportunities, that could not only replace some of these more traditional agricultural products, but could in fact, bring farmer promising opportunities to the people of the states?

 

Ryan Hurley  11:14 

Yeah, for sure. In particularly in these small towns, I mean, we were a perfect example of it. Snowflake Arizona is a relatively small town in rural Arizona, and had relied on tomato and cucumber facility, and then a paper mill, and a couple other manufacturing things. And they all went under. And so this town lost, I think, you know, a couple 1000 jobs in the span of a decade or less, other than Walmart, we’re now the biggest employer up there, and we start everybody at $15 an hour with full benefits. And, you know, it’s really revitalized some of the economic structure of the town. You’re absolutely right. To deny the rural America and agricultural industry of this opportunity is damn near criminal on itself.

 

Fred Rocafort  12:00 

That’s actually a great way of putting it in just the other day I was reading about what’s happening in Morocco, where they’re beginning to consider legalization of medical cannabis. And as it turns out, the party in government in Morocco, which is actually an Islamist party, they’re they’re a religious party, but their leadership has has nonetheless, supported medical cannabis legalization. And when you think about it, it’s actually not that odd, right? I mean, you’re you’re creating opportunities for, for farmers, you’re providing sufferers of certain conditions with access to products that can help alleviate their pain. It’s actually, at least at first glance, right. It seems that if you’re looking at it from a moral issue, makes you wonder what is relatively speaking, the more moral choice, right?

 

Ryan Hurley  12:48 

Yeah, for sure. Absolutely. You know, when I, when I first kind of got into this, I knew it was risky. And, you know, there were people at the State Bar Association suggesting I shouldn’t be disbarred. But you know, part of the reason that I was so passionate about it is because I met people and I looked them in the eyes. And they told me that if they didn’t have access to cannabis, they would kill themselves, because they were suffering from Ms or Parkinson’s or some other ailments from which they got relief with medical cannabis. And, you know, that, to me was a human rights issue. And so part of the reason I got involved and so you’re you’re absolutely right, depriving them of that is immoral.

 

Fred Rocafort  13:25 

So turning away from cannabis a little bit, I suspect, because I think ultimately, we’ll be circling back to it after this this question, but I noticed in your LinkedIn profile that in addition to your cannabis work, you also, and the direct quote is Soller, water, and environmental issues are always at the top of my mind as well. And when we introduced you at the beginning of the podcast, we also talked about some of these other areas of the law on which you you focus what I’d like to hear more about that and sure enough, what what are the linkages of any between your work on those issues, your interest on those issues, and then cannabis? Sure. So

 

Ryan Hurley  14:04 

Yeah, I was an environmental science major and undergraduate at the University of Arizona, Bachelor of Science from the School of Agriculture there, started my career doing about 50% land use and zoning work and then 50% of water law. And, you know, in Arizona water law, water rights, water availability, it’s our life. You know, it’s a we live in a very dry state, we get a very little amount of rain, we have very few natural waterways. And the vast majority of our water comes from the Colorado River, which gets pumped uphill, and as a complex regulatory structure associated with it. So I did a fair amount of that work. And then after the real estate crash, I was able to pivot a little bit to the solar energy space. And I help clients like Solar City, establish their the regulatory authority to operate in Arizona and to put rooftop solar panel And also worked with utility scale solar companies. And I did that up until the medical marijuana law passed. And a combination of factors gave me that opportunity. And I decided to add more in that direction. But, you know, they all do kind of relate, we’ve got the sun, the water, and now the plants. And so I’m always looking for ways to make Copperstate more sustainable. But just growing in a greenhouse in Arizona, as opposed to growing indoors with the mass of the air conditioning bill down in Phoenix is sustainable from the get go are much more sustainable from the get go. So I get to use some of the some of what I learned in the in the previous worlds in cannabis, for sure. And I think going forward, you know, even more, so I’ll be able to leverage that stuff and try to get some folks converted over to renewable energy and recycling water and minimizing our impact on the environment.

 

Fred Rocafort  15:53 

That’s fascinating. I want to ask you before we sort of move away from cannabis more more definitely. What are your thoughts, if any, on what’s happening down in Mexico, when of course, I think initially, even after there’s hopefully full legalization there, it’ll be a while before the the cross border. synergies can be fully exploited, right, given our own import and export laws. But looking ahead, you know, maybe maybe looking at let’s say, a five year window, when perhaps some of some of our own laws here will will start becoming more and more reasonable and better reflecting certain realities. Do you see potential for for cooperation between cannabis businesses in Arizona and Mexico? Do you see it perhaps as a possible threat to the Arizona industry? I mean, we know that some people go down to Mexico to go to the dentist and they go there to, you know, receive medical care and buy certain things. Could we perhaps see a little bit of that happening with cannabis?

 

Ryan Hurley  16:55 

Yeah, I think it’s possible. I mean, it’s, it’s funny, one of the founders of our company made his first business success growing tomatoes in Mexico after NAFTA. And before that, most tomatoes were grown in greenhouses here in the United States. After the laws enabled it, he realized they can squeeze the margins a little bit more in Mexico. And when you’re growing identical tomatoes, you know, a half a cent on on a package of tomatoes, it really makes a big difference. And so he was able to make that a success. And, you know, it put a lot of greenhouses out of business here in this country. But now we’re putting cannabis in them. So but I do think that is a long term, something we’ve got to keep our eye on. They have excellent agriculture in Mexico. They’ve got Greenland, Great Sun, and if they’re able to import, yeah, it’ll be a challenge for our business specifically. And I think it’ll be a great opportunity for Mexico. It’s absolutely something we should keep our eye on. I mean, we saw a lot of businesses in Canada start to export to various countries that were interested in medical cannabis programs, but didn’t want to go so far as to allow people to grow their own r&d or to allow growth within their country. So I think Mexico moving forward is what the fourth country in the world that will fully legalize the cannabis industry is absolutely fantastic for them. Absolutely. I feel like Mexico has a great opportunity here, potentially, to export to other countries. We’ve seen that happen in Canada, where Canadian companies were able to ship cannabis to other countries on a medical program. And I think if, if the US doesn’t follow suit soon, then we’re gonna lose out. So hopefully being between Canada and Mexico to fully legalized countries in the globe that the US will learn its lesson and move forward.

 

Fred Rocafort  18:43 

So turning back to Arizona, our firm Harris Sliwoski recently opened the Phoenix office and this is due in no small part to proposition 207. And the changing landscape in the state when it when it comes to cannabis are our cannabis practices is really one of our most most active and most essential, at the same time. It would not be accurate to say that was all that drew the firm to to Arizona. So could you perhaps help explain to our listeners, what other opportunities exist in Arizona young cannabis? We’re just talking a few minutes ago about Mexico and putting aside the potential for cross border cannabis trade. Clearly, there is a lot happening already between the two nations. So we’d love to hear your thoughts about the economic climate down in the Grand Canyon state.

 

Ryan Hurley  19:35 

Absolutely. I think Arizona is really well positioned to compete in the economy in the next couple of decades. You know, we’ve got relatively low cost of living, we’ve got lots of sunshine, a great climate. People love to come here to play and now people are more and more coming here to live. It’s a reasonably easy place to live. Like I said, it’s not super expensive. It’s easy to get around. You do have to have a car unless you want to move in, in downtown Phoenix, and stay in that area. But it’s a pretty easy good place to live. We have, you know, beautiful, beautiful natural features within the short drive of the Phoenix area. And being on the border of Mexico has a lot of advantages, not the least of which is there’s a beautiful beach about four hours south of Phoenix called the Puerto penasco or Rocky Point that is just one of the best places on earth. As far as I’m concerned. It’s, it’s absolutely amazing. So I think Arizona as well well positioned, we have a reasonably low tax burden, reasonably low regulation. And sometimes a functional government, with our current legislature is a bit of a problem. But I think that a lot of businesses are looking in Arizona, a lot of businesses are choosing to come here. And I think that the only thing Well, one of the biggest things we could improve that would make us even more competitive with would be to focus on our public education system a little bit more. And that’s frequently cited as one of the reasons people pass over Arizona. But we just passed an initiative not that long ago to provide some more dollars to the schools. So hopefully that’ll address that concern. I think Arizona is primed to be a competitor in the in the next next decade or two.

 

Fred Rocafort  21:20 

Following up on that, I think over the past, I guess the past year, you could say but more recently, I would say in the last few months there, there has been all this talk about people leaving California people moving to Texas, people moving to Florida, Arizona, again sort of falls into that equation as well. Even you know, we had a guest on recently from from Eastern Washington talking about how people are moving through Eastern Washington from Western Washington and other other places along the west coast. But let me ask you, how do people in Arizona See this? Because you do hear a little bit? I mean, certainly when in places like Texas, there are some voices sort of expressing their view of things. Right. We there’s a lot of focus naturally on on the people that are moving. But there there’s also that other side of it. The people that are essentially receiving this this inflow, how are how are people in in a place like Arizona, that is essentially a net recipient of new inhabitants? How are people they’re looking in general at this? I mean, it’s it’s something that people look at as an opportunity as a way to really take the state to the next level in terms of growing and becoming a more important more nationally relevant state? Or do you sense that there is some concern about how these new arrivals might might change the character of the state in a way that the people who are already there might not appreciate?

 

Ryan Hurley  22:56 

Well, that’s kind of a loaded question, I suppose. But, you know, Arizona, in general, I think is pretty welcoming, and pretty friendly. It’s, it’s always been a sort of immigration or transient type state, you know, most people that moved here did so in the 70s and 80s. And before that, it was a it’s a pretty small town, and you don’t run into too many people that are actually from here, and certainly far fewer whose parents are still our premier. So you know, by that nature, we’re always pretty welcoming for from for new folks. But we are starting to see the impacts on our on our air quality or traffic, our housing costs, particular the housing costs, I think, are a concern for a lot of people we grew out to not up here in Phoenix, for better for worse, and if you want to live in the central Phoenix area, not have to take a freeway to work, buying houses is really, really expensive. And so I think that we’ve got some challenges there with affordable housing. I think some of the folks that are sort of diehard right wing republicans are a little concerned and how the state is changing. geopolitically. You know, we’re we’ve gotten two democratic senators for the first time in my life that I can remember, and we’re pretty evenly split on Congress. And, you know, the the cities, Flagstaff, Phoenix and Tucson are all more democratic hotbeds than they are Republicans. So I think there is some, some fear about that. But frankly, I believe it’s moving the state in the right direction. And we’re really microcosm of what the country really looks like, in general. We’re kind of split down the middle. So I think it’s a it’s a good thing. NET immigration Arizona has always been Arizona’s number one economic driver has been growth and it still is. So I think we we just need to find a way to manage that on the housing and the traffic and the air quality front.

 

Fred Rocafort  24:52 

Well, thank you for fielding that question. And before we let you go, I’d love to hear if you have any recommendations for us. Anything you you’ve read or seen or listened to recently that you’d like to pass along?

 

Ryan Hurley  25:06 

Yeah, you’d like to watch some of the animated cartoon series on TV just for fun. And I, I went back and started watching King of the Hill again, and it really still stands up again, I think gives us an interesting insight as to where the country was 15 1015 years ago, and compared to where it is now. So if you’re inclined to do such things, go check that out. holographic universe is a great book, if you ever want to get a little metaphysical sometime that book really opened my eyes a lot made me think so there’s there’s a couple of different bookend recommendations on the spectrum. They’re fantastic.

 

Fred Rocafort  25:43 

Thank you for that. My recommendation this week is an article that is titled The Fall of Hong Kong, China’s strategic plan to conquer Hong Kong and purge it of its people. And this, at least where I read it was on the website of the Middle East Media Research Institute or memory. And it was written by a Chinese journalist who explains how what we are seeing now in Hong Kong, far from being a response to the to the recent protests in the city, it’s actually part of a of a longer term plan on the part of China to assimilate the city. So I think this is a facet of what’s happening in Hong Kong that doesn’t get as much coverage in the media. And in fact, I think that for people who haven’t lived in Hong Kong and haven’t seen the ways in which these efforts manifest themselves it might be it might might not be easy to to pick up on the fact that it’s happening. But this is a great introduction to that phenomenon. So again, the fall of Hong Kong, China’s strategic plan to conquer Hong Kong and purge it of its people. And as always, we will be providing a link on the blog posts when we publish the podcast. And with that, Ryan, I’d like to thank you once again for for coming on the show. Really enjoyed our conversation.

 

Ryan Hurley  27:09 

Thank you so much for having me. I enjoyed it as well and anytime.

 

Jonathan Bench  27:15 

We hope you enjoyed this week’s episode, we look forward to connecting with you on social media to continue discussing developments in global law and business. This podcast was produced by Harris Sliwoski with executive producer Madeline Williams music composed by Stephen Schmid. Tune in next week for another episode. We’ll see you then.

 

Transcribed by https://otter.ai