XZIBIT: Welcome to another episode of the Lasagna Ganja Podcast. I’m X to the Z, XZIBIT.

Tammy: And I’m Tammy, a.k.a. The Cannabis Cutie.

XZIBIT: Where cannabis meets culture and vice versa.

So first things first! I am excited to have one of my heroes in cannabis here with us today. Mr. Elliot Lewis, owner and co-founder of Catalyst Cannabis.

Now, Elliot is one of our more outspoken individuals in cannabis. He stands on his principles, and I admire that about him.

Elliot: Glad to be on here. I’m humbled by the kind words.

XZIBIT: Now we’re talking to a very wide audience. Some of them are in the industry, some of them are not. But I see your passion about cannabis and business and that’s something that you don’t see from every operator.

So give us a little background on how you got into cannabis and how you got into Catalyst.

Elliot: In the mid 90s, I went to California right when Proposition 215 came out. I was a small-time hustler, flippin’ BC packs with the little lighters. Got away from it for a decade.

Started growing in 2013 with some guys. When they brought dispensaries to Long Beach, I wanted to get one. So we ended up being pretty successful in Long Beach.

We started off as Connected Cannabis Co. because we were new in the game. Then we had an amicable split in 2020. So Catalyst was born in 2020. It’s about 3 years old.

XZIBIT: Very cool. How many stores do you have now?

Elliot: Right now we have twenty-one open.

XZIBIT: So with Catalyst, what is your mission statement? I know your mission statement says, “Weed for the people.” Give us a little background on that.

Elliot: Yeah, weed for the people is a hashtag, but I always say it means a hell of a lot more than that.

Any time we come into a community, we want to give back to that community and uplift lives. I think it’s super important to keep the patients and your workforce first.

But what I see and what I’m really blessed for is I’ve never had to take a salary today.

You know, you have twenty-eight guys working 10 to 12 hour days, all underpaid, because that’s the game. They suffer because we’ve chosen cannabis and the government policy is just so bad.

And we’re fighting, not just for our own crew, but to get the prices down for the patients, too.

And whenever we go to a city, we’re going to do something. Whether it be with vets, city cleanup, backpacks, that’s all real shit that we’re doing.

We just did an expungement fair and got a lot of stuff off people’s records. So for me, at the end of the day, I love the hustle.

But for me, the platform is really to try to affect change. And that’s what Catalyst means. It means change.

XZIBIT: Did you use outside money or did you do this from the ground up?

Elliot: One of the reasons we have a chip on our shoulder is we never had the ‘fuck you’ money. I was flipping houses from ‘08 to ‘13, so I had some guys that had a little bit of money. We hustled it together.

But one of the things I’m really proud of is that we built this shit.

No exaggeration, probably ten cents on the dollar. And I’d say that today we are probably the second biggest retailer in California.

And I think that is what makes us unique. We’ve always really suffered and kept it really lean.

I’d say another thing that is unique about us is that over half of the executives at HQ came in as bud tenders or receptionists and worked their way up the ladder.

And those people are much more valuable than most of the chad-fucks you get from Urban Outfitters. Nothing against them!

XZIBIT: I’m pretty sure Urban Outfitters is never gonna give us anything!

Tammy: Yeah!

Elliot: I’m not trying to put anyone on blast! But these good companies come over, and cannabis is a unique thing and its own sport, which is kind of cool. But they don’t know what they’re doing.

And if you’ve worked in a cannabis store, you just know a lot more and interface with some of our purchasing teams better.

XZIBIT: You know, I always tell people that everybody thinks that they can come into cannabis and be successful. Especially a lot of people from my industry, which is music.

But cannabis is different from alcohol, clothing, and any of those traditional markets that musicians transition into.

Cannabis had to work for a specific purpose and a specific feeling for the user. And it can’t be a brand name that is going to get someone to go in and see the plant.

First off, you can’t own the plant. You can own the marketing behind your processes, but not the plant. And I think that’s what other people fail to realize.

Elliot: Unlike a lot of influencers, you’re actually in the game, interfacing, and that’s why you’re still around. Whereas a lot of these other celebrities just thought that they could slap their name on something and not be a part of the hustle.

And the other big misconception is that cannabis is just shitting money. It’s not.

We move a shit load of money for the amount we make because most of it is going out to the government or to stay compliant.

Frankly, if I tried to get into the business today without the seven years of experience, I couldn’t even jump in.

XZIBIT: And you can’t throw money at it. You have to be really in tune with your operations. I consider myself an operator. I’m not a mascot. I’m not an ambassador.

I get up at the crack of dawn. I’m not above moving pallets or doing spreadsheets. I’m not above taking calls or talking to vendors. I’m very hands-on with the brands and I know you are, too.

There is a known thing about you. You don’t back down. There’s a lot of stuff going on with you, and I don’t know how much of it you want to get into, but this is a free platform.

Elliot: Well I’m an open book. We got hit yesterday. Free speech ain’t free, but it’s hard. They put the heat on you. We just got a 25 day suspension on the bar, Glass House. Some really bullshit, totally trumped up charges.

I never planned to be a political person, but ever since I’ve gotten into weed, I’m in these local political battles.

You realize that cannabis is just what the government can grab onto now and try to make money out of it. The power struggles are fucked up.

XZIBIT: Let me give some background. So Catalyst stores have really had a lot of community outreach. So in Long Beach, there is a street they opened a store on and they really put their money where their mouth is.

They ended up buying other businesses on the street. One of them happened to be a bar. They started revitalizing the street and started doing community events, like concerts.

And so I showed up and said “two dollar beers at Anna’s” (Elliot’s wife, owner of their bar) and for some reason, that became an issue.

Now the city has been attacking Catalyst. It’s really disheartening that they don’t see the upside of Elliot and Catalyst refurbishing this block that otherwise would’ve been rundown.

Elliot: Every city loves us except my hometown. But they were looking at a study to reduce the cannabis tax, and so I already knew they were going to come back and say they didn’t have the money. Which is the big fucking lie.

So naturally I pulled the salaries of police and fire, and I found that they had fifty-seven million in overtime. And I published that.

And ever since I published that, it’s been a problem. I’ve said a lot of things over the years, but this one meant I was fucking with their money.

Before we even opened up the bar, we had an email that they were going to come in and do a hit job. The night of the grand opening, when you were there, they had three hundred undercover cops just looking for shit.

Tammy: Well, you made a great point when you said you never wanted to get into politics when you got into weed. This industry is not medicinally controversial. In fact, a lot of doctors will tell you there is a usage here.

It is a political issue. So whenever we hear people say ‘keep politics out of my cannabis,’ it is literally a political act sparking that joint.

So if they can’t beat you because you are playing by the books, they will figure out how to use their power to play dirty and get you.

Which is a big part of the story that unfolded in California after Prop 215. They lost at the ballot, so what did the California State Legislature do? They teamed up with the Federal government to go after patients.

And then when Obama got into office, he said ‘let’s go after the dispensaries.’ So it’s just a big mess. This is a big political issue.

Elliot: There’s no reason that anyone has given me that weed is bad. You get a politician in a private room, he’ll agree with you. But then he goes along with his caucus because he wants to be a part of the machine.

Even taking it to the Federal government, I don’t think anyone who is a reasonably minded person really believes cannabis should be a Schedule I drug. But we can’t even get banking. So at the end of the day, who’s pushing back on that? Probably Big Pharma.

At the California state level, a lot of people don’t realize that SCIU has got the earmark on the money and they are never giving it up. So the state budget is three hundred billion. Well, they only get a billion from cannabis.

The tax money is destroying people’s lives because, at the end of the day, yes we’re suffering as a workforce, but the patients are dealing with the most regressive tax there is. I don’t blame people for shopping on the black market.

Tammy: Legacy! Legacy market. Black market is typically a negative thing, but the legacy is a different market.

The legacy market is why we still have a cannabis industry.

Elliot: Alright, yeah, legacy. But all the homies I went to school with in Long Beach still have the same plug they had in high school. They’ll tell me my shit is too expensive, and I’m like, ‘trust me, that plug is probably making better margins than me!’

XZIBIT: For people who don’t understand when we talk about taxes and how aggressive the tax policy is, give them a brief overview of what that’s like.

Elliot: Well not counting all the compliance bullshit that comes through the vine, depending on the city, it’s like 30% to 35%. If you get into the costs with compliance and distribution, this year we probably paid 40 to 50 million dollars just off the top.

Tammy: So for people listening, there are multiple taxes you have to pay.

Just on the consumer side, it’s about thirty-three percent. You’ve got local tax, state tax, excise tax. If you’re not a medical patient, there’s another tax.

So you get a break if you have a license, which I recommend getting one if you can.

I believe the cultivation tax has been removed in California, right?

Elliot: In June, at the state level, it was removed, but some municipalities are still charging it.

Tammy: Ah, right. Because you have state level but each local place has its own cannabis governing body.

So when you want to apply for a license, you have to apply locally and you have to apply at the state level. Those are two different processes with two different applications, and they don’t really communicate with each other until the end.

It’s such a shit show. And this idea that there is so much money in cannabis is because before legalization, you didn’t have overhead, you didn’t have to pay security, and you didn’t have to be compliant. You didn’t have to pay payroll and insurance.

There are so many different things you have to pay for now.

You used to have a chop house and everything went down right there and everybody got their cut. Now it’s so expensive and there’s no tax deductions.

Businesses get deductions. In cannabis, you get nothing because it's a Schedule I product.

People are literally drowning in paying.

Elliot: I’ll say it real clearly right now. I don’t pay 1080E out of me. I want to take it to the Supreme Court. Fuck you. It’s unconstitutional.

Come get me. I ain’t fucking paying. This Supreme Court is more States’ Rights.

Tammy: We had the Raich case that came in the past. We thought it was a States’ Rights case but nothing ended up happening.

My fear with this Supreme Court is that it all goes away. Before Reagan got into office, there were medical programs based on compassionate use that were passed by the Republican Party.

Newt Gingrich was part of the people passing the legislation that allowed for these programs to exist. Then Reagan got into office and it didn’t align. The programs just disappeared overnight.

So with this Court, I’m not so confident.

Elliot: Well look, Reagan’s War on Drugs was terrible. With Nixon, they did a study on cannabis in that era and the conclusion they came to was that it’s fine.

Tammy: Yeah, the Shafer Commission. That was Nixon.

Elliot: But they just wanted to search colored people and hippies because they had weed and were anti-war.

They used cannabis as a way to search people and to get into their lives.

XZIBIT: Isn’t it interesting that they say ‘War on Drugs’ but they call the current thing ‘opioid crisis.’

Tammy: Well that’s how we got the opioid crisis. We were hyper focused on going after this plant while an entire pill crisis was happening.

Half the kids were taking speed but the government was going after the reefer. They completely missed it.

Elliot: What I fear is that this all gets super centralized and I think Big Pharma is a driving force of why cannabis is getting pushed at the Federal level.

Tammy: Well it’s not just Big Pharma. It’s Big Alcohol, it’s Big Tobacco. There’s a lot of them.

They especially don’t want college students switching from alcohol to cannabis because the underage drinking population is a very big chunk of profits.

And the thing about cannabis is that, under Nixon, it was supposed to be temporarily on Schedule One until scientists could figure out where to put it. They didn’t use any scientific data to determine its location. They went directly to law enforcement.

So law enforcement and cannabis do not mix at all. So that leads me to my next question.

I saw that you’re suing Glass House Farms, which is the ‘cop brand.’

What I know is that you are alleging that they are operating in the black market with their ‘middy mids.’

And Glass House is not a friend to the cannabis industry. How can you arrest people and ruin their lives and then sell cannabis to people?

But, you’re suing Glass House Farms?

Elliot: Yeah. We had a long debate on it internally. When we saw their earnings, I thought this is fucking bullshit.’

So we were definitely concerned that they were crossing the legal boundary. I think people fall into this trap of inaction. Inaction is an action, right? So we felt we had to do something.

So my take is that we’re not suing for money. We’re suing for unfair business practices.

And the idea that a cop, who put people in jail for a fraction of weed, is now going out there and selling weed out the back door…

Tammy: I feel like there are other ways to help right the wrong that you did. Maybe help get people out of jail. I’m talking about Glass House.

My question is, as well, do you really think that the police are going to hold one of their own accountable?

Elliot: We’ll see what happens. So they sued me back for defamation thinking that would make me shut up. But that just made me talk louder.

The hope is that we elevate it enough. The thing about the political people is that if someone becomes politically inconvenient, they don’t give a fuck about him.

So if enough attention is put to the story, at some point it’s going to have to be addressed.

So, realistically, Glass House added a million feet of canopy. We did the CDFT math and we think they would be 45% of the market share.

And my guess is that there’s 4% or 5% that’s going out the backdoor. So that means he’s backdooring a ton.

Tammy: So how much canopy does Glass House have?

Elliot: Right now, a million feet. And they're going to add another million.

Tammy: So for the listeners, canopy means the square footage that they are actually growing cannabis plants on.

So the building can be bigger, but the area plants are being grown on is called canopy.

Elliot: So they have a 6 million foot facility. They have a million turned on. They’re turning another million on.

Then this Glass House dude posed on the front of a magazine, and this is where I think I crossed the Rubicon, and he was ‘the face of compliance.’

And I’m like, come on, just fucking stop. And the other people that are out there backdooring, I’m friendly with them all. They’re doing it to keep their lights on, I get it.

But I don’t know where the line is, but they crossed it.

I think we generally have people’s support. You can tell who’s flipping Glass House weed, right?

Tammy: Are there any implications for the industry at-large? Do you think this could be one of those moments where the government just tries to go after them all?

Elliot: Well I am super concerned about that. As I said before, taking off was actually the easy part. How it lands is going to be interesting.

The only way to make it work is to cap the taxes at 3% or 4% and you would triple the market overnight. And the guy that is dumping 20% to 30% on the back, he wouldn’t have to do it.

The black market would shrink. Then eventually the path forward is the legal market.

But what’s completely absent from this defamation case is that his math is substantially wrong.

And there are a few people who aren’t happy. Like, unhappy unhappy. Like, I have some security outside.

XZIBIT: Now you’re in a position where you’ve pissed in people’s cornflakes, and for good reason.

Elliot: Yeah, we are definitely fucking with people’s money.

XZIBIT: Do you feel like it could interfere with your business?

Elliot: Well that’s the debate. Sometimes I gotta pull myself back because I can’t be talking too much shit. So you have to walk that line.

I don’t want to ever let my own personal beliefs get in the way of the business because I have workers and shareholders. I have to balance all that.

That’s a great question. I don’t know the answer to it. At the end of the day, the ‘weed for the people’ hill is how we got to where we are, so fuck it. I’m going to die on that hill.

XZIBIT: All bullshit aside, I’ve seen the people that work with you and for you. And you’re the leader. You’re like Superman in the Justice League.

I think we need voices like yours in this industry. People who ‘overstand’ what growers and retailers are going through.

Elliot: It would be nice to get a few more people being voices. The government has a lot of arrows. A lot of things they can do to you.

But right now I think there is going to be a big capitulation. A lot of people are getting knocked out.

And by the end of the year, with a couple more excise payments, the market is going to look a lot different.

All the big MSOs fucking left.

Tammy: Yeah. They saw it was a pit.

XZIBIT: Yo, Elliot, we appreciate you, man. I’m definitely going to come do your podcast as well.

I want to ask you one more thing. So you wear many hats and have a lot of different things going on. I can see how in-depth you are in the trench with Catalyst and all the things you are doing.

Do you still find joy in growing?

Elliot: Yeah. I was never the guy going in and touching the plant. But opening the door, the whole process, seeing the customer happy. Nothing makes me feel better.

Some nights it gets heavy. You have to smoke a little extra weed. But at the end of the day, I love it.

What better time to be alive and growing weed in California? Because despite all the fuck-ups by the government, I believe this is going to be the best weed market in the game one day.

XZIBIT: To quote Kendrick Lamar: the women, weed, and weather, right here in California.

Tammy: I heard that as ‘women weed,’ which is the weed we like. Boy weed gets killed after we get its seed.

Elliot: Oh shit, that was deep right there.

XZIBIT: Wooo! Lightsaber! I got to get a sound effect board!

Elliot, thank you for coming on the Lasagna Ganja Podcast. We call it that because there are layers to what we do. Good luck with Catalyst.