Episode Transcript

Trevor:  Kirk, we're back.

Kirk:  Hey, how's it going, Trevor?

Trevor:  Good, so we should go back to the, I'm Trevor Shewfelt, I'm the pharmacist, who are you?

Kirk:  I am Kirk Nyquist. I'm the Registered Nurse. We're Reefer Medness - The Podcast and you brought back an old friend.

Trevor:  Yeah,.

Kirk:  Uh that we had on a few episodes ago

Trevor: Yeah, we've got David Traylor. He's still from Golden Eagle Partners. And because we didn't really, he's a really interesting guy for many, many reasons. And we are too busy talking about other things. I'm just gonna do a really quick blitz through his, we'll call it resume. Just so people get an idea of all the stuff he does, has done. Founder, managing director of Golden Eagle Partners, that's what we've talked about before. First investment banking firm to look at cannabis and psychedelic sectors. Since 2013. Chief business officer for Surna, one of the first public companies in the world in cannabis. He's managing director, senior VP, senior associate at some other investment banks. Looking at life science health care. During his banking stuff he looked after public biotech medical devices. He had 15 years actually in Biotec companies before that. Because everyone's got to have a really interesting thing in the backstory he was actually a professional lacrosse player back in the late 80s and lest you think he's just he's a jock David got, uh degrees in biochemistry, uh, molecular and cellular and developmental biology. Um, and he has an inventor and patents, like inventor on three issued US patents. So he's done a lot, both in biotech and in, we'll call it the investment banking world and a sort of specialized in cannabis and psychedelics for the last 10 plus years. But today we're bringing him in on something called Skunk Works, one of sort of his latest projects. We'll let him explain that. But any other things we need to talk about David on the front end?

Kirk:  Yeah, no, I don't think so, Trevor. I think let's just jump into listening to the conversation. You guys are sort of, again, having a discussion. You go pretty much all over the place. And a lot of the things that he mentioned really came in the last five or 10 minutes of your conversations that I think I want to talk about. But let's go into it and see where it takes you.

Trevor: Hi David, thanks for being on the podcast again and tell us a little bit about Golden Eagle and cannabis and investments going on lately.

David Traylor: Yeah, thanks, Trevor, and thanks everybody for listening. And yeah, we founded a Golden Eagle Partners. We had our 12th anniversary for North American cannabis last December, a couple months ago now. I can't believe how quickly it's going. And then we had our 10th anniversary for international cannabis just last month in January. And our fifth anniversary for psychedelics. And this is all for Golden Eagle Partners. So we're the, it's really one of the first investment banks to do cannabis and work in psychedelics and as you pointed out, yeah, the last few years have not been easy. As a matter of fact, you know, most of our competition in the investment banking side have exited. I think the main guy that we knew who was global head of cannabis at Canaccord is No longer doing cannabis, at least the last time we checked a couple of months ago. Um, certainly Canada, Fitzgerald isn't doing it anymore. And Cowan's out of it mainly because TD bottom out right from Canada and didn't want anything to do with it. Roth capitals out of. It. So, uh, maybe they're smarter than we are.

Trevor: Well, obviously we're biased and so is our audience, but we think cannabis is still an exciting place for people to be involved in, so hopefully you're on the right side and they're on the wrong.

David Traylor: Well, I mean, the one thing, and this gets kind of on the way to, I guess, a good segue onto the Skunk Works is the fact that, you know, there's been very little capital, active capital in the space. A lot of the capital went in to some of these public companies in 2018, 2019, whether in Canada, U.S., wherever, and then, you now, as you know those valuations have stayed pretty low. And as a result, you know, all these funds that put money in haven't been able to exit a lot of their investments. And you really need to exit and have some pretty good returns to be able to raise another fund, right? And so capital has been pretty problematic in cannabis. And I should start off this, by the way, too, Trevor, that being a biochemist, to me, cannabis is the genus, which it is. And so I don't like to refer to marijuana as cannabis and cannabis I don't wanna. To us, cannabis is a genus, so that's the over large category and underneath that we have THC plus or people call that marijuana and THC minus or people call that hemp or something in between where you do certainly have products THC plus and THC minus where you have a D9 product with a CBD product right there for example.

Trevor: Yeah, and we've mentioned before, we really like your nomenclature, the THC plus, THC minus. That's come up more than once. Remember what David Traylor, because it's a nice way to explain it to other people. Like you said, people get hung up on the word marijuana and hemp and THC Plus and THC Minus is straightforward and easy to understand.

David Traylor: Well, yeah, the other thing about if you really get down to this, before I jump into the talking about Skunk Works is the fact, if you look at the scheduling, I mean, that whole thing down here in the U.S. And the scheduling is FUBAR. Is wrong. The reason being is, and we looked at this just in December, so it's pretty up to date in the last month or two. 51% of all the compounds, I think there's 602 compounds and entities, let's put it that way, they're scheduled. And the reason why I call it entities, there's three things that are relevant to this conversation. There's schedule one in the US. One's marijuana, spelled with an H. Another one's marijuana extract, spelled an H, and then the third one is tetrahydrocannabinols. And so frankly, everything else on these lists, scheduled lists, Trevor, are compounds. Marijuana's not a compound, right? So they really should just de-schedule. Marijuana, de-schedule marijuana extracts, and then reschedule tetrahydrocannabinols to schedule three. But I don't hear anybody talking about that. But there is inconsistencies in how they do it. But they're getting back to the capital. I mean, we're looking around, couldn't find capital here. You know, you and I've met in San Diego, but certainly we've been to Europe. We've talked in Davos, Dubai, Berlin, Frankfurt. Certainly in Toronto three times and Graham Cayman, but the thing is trying to find capital has always been really tough last three or four years. And so Matt Doherty and I, who works with me at Golden Eagle Partner, have been reaching out to a lot of these big companies because we know they're looking at the space, whether it's a Nestle or a 3M or a Dow or a PepsiCo, right? Or a L'Oreal or Red Bull, right, it goes across all these spectrums, all these industries. Because they see the opportunity with these natural compounds. And the problem is, Trevor, when we reach out to these companies they're looking at, but they won't admit it publicly, due to a lot of the stigmas and misinformation and everything else. And so we're thinking, well, how do we crack this code? And so last July we came up with an idea. You know, I've read the book and actually the book is here. If anybody ever wants to read it, it's a fabulous book called Skunk Works. And it's about the Lockheed plant in Palmdale, California. You know, they came up with some very innovative airframes. Excuse me, the SR-71, 117 Blackbird. Excuse me, not the 117 Blackbird, the Nighthawk, the stealth fighter. And so Skunk Works has become synonymous with secret innovation. So our thought was, okay, we establish Skunk Works Nature. And we've also been using AI for over three years. So now we are also integrating AI. So Skunk Works Nature AI is this new company. And the idea is to go to these companies and say, hey, you can waste a lot of time and money to try to innovate around these natural compounds or you can come to us. And if we don't have the answer, which we may not, whether that question is too, whether the question is regulatory, scientific biological, maybe chemistry, regulation, government across this whole spectrum, they can come to us. If we don't have the answer, we have this really nice Rolodex we've generated over the last 12 plus years, right? So we can go those people and the idea is that we get paid by these big companies to help them strategize and innovate on these natural compounds, not just cannabinoids, but all kinds of natural compounds.

Trevor: Yeah and you shared a little bit of that to me ahead of time and I mentioned, but I gotta mention again, growing up the SR-71 Blackbird was my favorite plane I ever read about, you know, all titanium outer shell, closer to being a spacecraft than it was an airplane. I think some, back from the 60s, some of the speed and altitude records still haven't been broken but I'm glad you brought up the F-117 because I thought that was a nice segue to what you're doing is so that everyone can picture that the funny looking geometrical stealth fighter with the weird panels, it looks a little bit like a spacecraft. Well, I read, heard recently that the big difference between why it looks all angular and the newer generation, you know, the B-2 bomber and some of the F-35s, which are smooth, is computer power. When the F-117 came out, they couldn't do the math to make all the radar reflection smooth, and now they have strong enough computers to do that, which segues nicely into you guys using AI to get more natural products into these big companies, into, you know, we'll use Red Bull, into a Red Bull product. So I thought that was another good reason why Skunk Works is a cool name that you picked.

David Traylor: Well, thanks. Well, the other thing, just a little anecdote from this book. One thing that's really interesting is the CIA did set up this fake company because we didn't have all the metals needed to make the SR-71. A lot of them were in Russia. So the CIA set up a fake company to get actually. So, the SR 71s are built with some materials, some minerals from Russia if you can believe that. The other thing that's interesting about that is the 117, they got the idea with stealth. There's a Russian scientist who came up with the original idea and wrote a paper on it and nobody really read it and the guys at Lockheed found that paper. So Russia has had a lot quite a lot to do with those two airplanes actually so but yeah I mean getting back to the compounds I mean for example alkaloids are fascinating right I mean if you know of two more compounds other than caffeine and nicotine they've more money for mankind going back ages and you know millennia. Let me know. But nicotine is an alkaloid, caffeine is an alkaloids, cocaine is an alkaloid, and also ibogaine and psilocybin and psilocin are alkaloids. So yeah, you have this, then that's kind of what we're trying to do too, is the fact that what we are saying, you know, you have like gummies. Here's an interesting example where they're starting to put four or five cannabinoids into a into a form factor like a gummy or even some of these beverages. And we don't know what a lot of these molecules do by themselves much less together. And so that's kind of really what we're trying to do with Skunk Works Nature AI is to try to find the science and use biotech and hardcore science and stringent science to really kind of make products that do specific functional things. And that's why you and I continue to talk, Trevor, because that's right up your alley.

Trevor: Absolutely, and again we'll keep. It's not a plug for Red Bull, but you know, if Red Bull wants to sponsor this episode, they can, but that was sort of Red Bull's inception. They went and found Taurine, which is kind of sort of a, what we'll call it, caffeine booster. So you know and they they like Taurines. They like the actual picture of a bull, and that is kind the genesis of where Red Bull came from. So Red Bull using, we'll call it natural products in, is kind of the invention of the whole company. So you would think this, you know, other alkaloids besides caffeine, possibly in a functional product, a health product, should, they shouldn't be the only big company out there interested in doing this kind of thing.

David Traylor: Well, I mean, I've talked to some people, too, that they're looking at a lot of these compounds, too for cosmetics, right? And improvement there. And that's the thing, not to say that we have all the answers, but for example, we know a guy, Guillermo Moreno-Sanz , who's out of Spain, he's an endocannabinoid system expert. You know, there's all kinds of, and that's a crazy thing about it, if you think about it. Like, for example I mentioned alkaloids, there are phenolics, or there's polyphenols, you know, there's cannabinoids certainly. Terpenoids, flavonoids, glycosides, all kinds of different compound classes. And so if you think about the menagerie of natural compounds, we have that have potential, it's gonna take a lot of money, a lot years to weed through some of this, pun intended. But... You know, I think we are potentially on the cusp of some interesting things, like for example, let's take alcohol, right? I mean, a lot of the alcohol companies are freaking out because, you know, alcohol consumption is going down. And I think it might be kind of the genesis like we had with cigarettes, right, in the 50s and 60s when people started realizing that smoking wasn't good for you. And I take people started to realize that there's better alternatives than alcohol.

Trevor: Yeah, absolutely. I'm sure it's similar south of the border, but we get reports here that the kids my generation and younger are, they are literally drinking a whole lot less than my generation did. And some of them are going towards cannabis or other things, but it's just sort of a general thing, a general stigma, a general understanding that, you know, alcohol is not good for you. Let's do something else instead. So yeah, that seems to be a trend.

David Traylor: Well, I mean, another thing to add to that, I'm sure you know what an LD50 is, and I think I brought this up to actually a doctor a while ago, LD50 stands for Lethal Dose 50, which is a way to standardize the potency or lethality of a compound, right, like phosgene or something like that, or chlorine. And, as you know, ethanol does have... As we see a lot, unfortunately, with fraternity hazing incidents, right, that alcohol does have a LD50, but marijuana, oh sorry, THC+, tetrahydrocannabinol, does not. So I think there's a lot of interesting things, and the one thing, too, to bring this up just out of the blue. There's a paper that I pulled up that they did a study of natural compound sources like synthetic compounds that have run through clinical trials. And it's not rocket science, but it was interesting that they did realize that the toxicity profiles and the success of the natural compounds in toxicity tests were much higher success rates than the other compounds, right? Cause they're natural. So natural compounds tend to be safer.

Trevor: My co-host Kirk and I talk about this all the time. He nicely calls me a bit of a patsy for the pharmaceutical industry because of what I do, but all in good fun. But yeah, it is hard to argue that some of these things that, as you've mentioned, have been used for thousands of years, whether or not you think they have beneficial effects, they're definitely less toxic. You know, We have, for some of them thousands of years of anecdotes of people using them and not dying.

David Traylor: So I think, you know, going into this year, well, one interesting anecdote too, we'll see where this goes. I mean, we're still just kind of new and it takes some time to build a business. But, you, know, the interesting thing about this is pretty much everybody we've talked to that is, you now, interested in. Uh, you know, being a part of this, being a consultant where, you know, essentially we call them up and say, Hey, we have these questions. And I should have made this more clear, you know,  Skunk Works Nature, what we'd end up doing is sterilizing the car client's name. So if we were to work with a PepsiCo, you know we're the only ones who are going to know that we're working with PepsiCo. Anybody that's consultant for us it's going to be, you know, it's going to be a client X or whatever. And so we would go ahead and get to say, hey, we have these questions. Can you answer these? And I think we'll see this year should be an interesting year. We'll, we'll figure out whether it's going to say it's a business model that works or not.

Trevor: And I think that's really interesting enough, hopefully prescient, is, you know, the, take a political term, the plausible deniability. You know, there will be big publicly traded companies that, you know, their investors and others, advertisers aren't going to like the fact that, you know maybe PepsiCo was, quote unquote, looking into marijuana. But you know if they weren't because, a arms distanced Skunk Works was looking into it for them, you know, that kind of gives them plausible deniability while they're looking to see if they want to put this into something.

David Traylor: Yeah, well, the other thing that I should add to is that being in these sectors and you understand it too, for so long, you know, that's the one thing about it too is that these compounds are different. I mean, that is one of the problems, you now, that we, and I've heard this before when I talked to one of guys that used to be one of higher ups at Aurora a couple weeks back, and you know they had a lot of these big P&G companies and stuff come to their facility and talk to them and none of them wanted to jump in because You know Oh, it's marijuana, right? But when you get down to it, they're compounds. Now, you know, as we said, scheduling before, like cocaine schedule two, ketamine schedule three. You know, all these things are scheduled differently. And, you know, I think there's a there's a way to find really good medicines and things that are healthy for us and doing good things. And it doesn't have to be scheduled, right. There's a lot of different options, and that's kind of what we're trying to do.

Rene: This seems like as good of a place as any to pause the interview with David Traylor. Trevor will continue his conversation next week and then Trevor and Kirk will go over the entire conversation and analyze that as only they know how. It's Rene here back at the studio. Thank you very much for listening to Reefer Medness, the Podcast. Please make sure to spread the word, let people know, and especially let them know to go to the website, ReferMed.ca. It is an invaluable resource for everything cannabis. Cheers.