Good afternoon Vermont I call this meeting of the advisory this meeting is being recorded and or transcribed. Well it's order on Tomalasko I'll now take roll for our subcommittee members beginning with Mark Gorman, Dan Smith, here, Jen Flanigan, Siobhan Patel, I think he's in the room, Stephanie Smith, you're able to meet over there, Chris Wall, President, and from the cannabis board Chairman Pepper, I'll just, yeah I'll review who's in the room here, if you don't mind, so it's James Pepper, Chair, Kyle Harris, Member of the Canada's Control Board, Julie Holverd, Member, we have Brynn Hare, our Executive Director, Nellie Marvel, and then we have three members of the public. Perfect. So thank you everyone for your attendance, green to you all, thank you for making the effort and having the interest to attend this subcommittee meeting, this is our first subcommittee meeting, I wanted to do brief, I wanted to emphasize brief because we have a much to do and discuss, intros for the members on the subcommittee performing on with our agenda, I'll be speaking very quickly just because of time constraints, again on Tomalasko I'm General Counsel for the National Association of Cannabis Businesses of the NCP, National Trade Organization that specializes in creating standards and best practices for the cannabis industry, the goal is to legitimize and elevate the growth that's growing cannabis marketplace and part of our function at the NACB to consult with state legislators and regulators as we're doing in this engagement, my background now is the 20 plus year attorney, specializing in business commercial litigation, I've been in the cannabis phase for seven or eight years starting with partnership disputes with cannabis that grew to compliance, employment real estate issues, any issues that a good startup has served on panels for the Arizona State Bar where I'm based and then that led to panels throughout the country on issues like 280 licensing, social equity, so my privilege to help coordinate these various subcommittee meetings and create good policy for the state of Vermont, so before getting into the introductions for very knowledgeable and accomplished advisory committee members I wanted to introduce Mark Gorman and then go on to Dan Smith and Jen Flanagan who will be leading this subcommittee. Mark? Thanks Tom, I'm Mark Gorman, I'm the NACB for about a year and a half prior to that and I'm the executive vice president and chief government person for NACB. Before that I spent about 20 years in another highly regulated industry, the distilled spirits industry and surprisingly spent about 60% of the last years tracking cannabis and you know the market, what was going on in the market and legalization and so forth, so I've been working on this now for close to 10 years and we got all that background with distilled spirits as well which I think will come in handy sometimes with our discussions. Thanks Mark and I'm sorry I was remiss, part of the role called Jeff Gallegos for the NACB this year as well, Jeff do you want to give a brief instruction? My name is Jeff Gallegos, I'm the re-court attorney for NACB, I live in Los Angeles, California. My background is as a musician and I've been around cannabis for a long time so I'm happy to be here. Thank you. Thank you Jeff another lawyer, Dan Smith. Hey everyone, my name is Dan Smith, I am vice president at BS Strategies which is a cannabis policy and public affairs consulting firm. We are partnering with our sister organization, the Tante Cedarburg Law Firm, are one of the consultants for the state of Vermont right here and while NACB is kind of running the the advisory committee subgroups that brought us on to help with this one so you'll be seeing a lot of our faces over the next few weeks. So my background is I do a lot of state level policy around the country for various clients all cannabis related. Before I've been with BS Strategies for approaching three years now before that I was in the Massachusetts, I worked for the senator in the Massachusetts legislature where I was the lead staffer for the adult youth field that moved through there and signed into law in 2017. So there's a couple more folks from my team on the call, one of which I was also in the legislature with back at that time so I'll let them introduce themselves starting with Jen Flanigan. Good afternoon, my name is Jen Flanigan, I am the director of regulatory policy at the BS Cedarburg, the law firm side of the Cedarburg. Prior to this I was a commissioner on the Kansas control commission, I was appointed in 2017 by Governor Baker to be the public health appointee on the commission. Immediately before that I served as a state senator for nine years in the Massachusetts state senate focusing on public health mental health substance use disorder in the life and immediately before that I served for four years in the House of Representatives so I just ended my 25 year career in state government really seeing both sides of legalized cannabis passing the law and creating the law but then implementing it through the regulatory process so I'm happy to be here with my colleague. Thank you Jen and then Jen Andrew, let me ask Andrew, Andrew's you'll be hearing a lot from Andrew today I'll let him introduce himself now but yeah Andrew take the light. Thank you Jen, thank you Tom. So my name is Andrew, I'm the director of economic research at the Cedarburg Law Firm and I'm also a partner at the BS Strategies. My background is in economic analysis and details regulatory policy analysis where over the last eight plus years I've been kind of leading from the space in economic and market analysis for cannabis businesses across the country and across the world and I put together the, what you guys will think, quite detailed market analysis for Vermont. Thank you Andrew. And now to get into introductions for our advisory subcommittee members on this subcommittee Shavon Patel, do you want to say hello and give a brief introduction? Sure. Hi everyone, I've spent the last decade in Vermont entrepreneurial and business community and across regulatory policy in a number of industries but like Mark I spent 10 years in alcohol policy, specifically Vermont alcohol policy so you know I've been on the Vermont side for a long time and I agree with Mark that there should be a lot of parallels. Thank you Simona and Stephanie Smith? Yep, Stephanie Smith with the Vermont Agency of Agriculture. I managed to have program for the agency and have experience in land use planning and environmental permitting. And definitely not Lee. Chris Walsh, do you want to say hello in the intro? Yes, hi Chris Walsh here, similar to Mark and Shavon. I have a 19 year experience with one regulatory market in Vermont, alcohol. I moved up here from Manhattan 2003 purchased Nectars, went from Nectars to co-creating a gross store on Pine Street. I am co-founder of a Vermont organic CBD brand called Upstate Elevator Supply. I am an escapee from one of the MSOs. I ran the IAMFIS asset in branded Vermont for two years as president. I spent a year in Jamaica growing cannabis and hemp in conjunction with the University of West Indies Medical School doing cannabinoid interping research. My day job right now is agricultural technology and I'm also heading up operations for Ben Cohen's new social equity cannabis brand called Ben's Best. Great, thank you Chris. Chairman Pepper, I understand we have two or three other members of the public in the room with you. I wanted to make sure that everyone knows that written public comments can be submitted electronically via the web form on the CCP website and have been since May 2021 and I wanted to ensure everyone that your comments have been received with you and considered by each and every subcommittee member and we appreciate your input. There will be time for public comments and questions toward the end of the hour as there will be with each subcommittee meeting that we have going forward and in addition the cannabis control board will be hosting dedicated meetings for public comments both at a Friday board meeting via the public link or at the CCP's public comment evenings that will also be posted on the website. So your voice will be heard and considered and it's important part of the process but we do have pressing deadlines particularly with this subcommittee and there upon us it's critical we have constructive communication between the board members to meet those deadlines so I don't want the hour to be dominated by public comments. Again you will have an opportunity at the end of each meeting and there are other avenues to address and be heard. So moving forward Dan you know we're all anxious to see and hear the market analysis a lot of the work that's going to be done and accomplished within this subcommittee with these quick deadlines coming up a lot of the other subcommittees are kind of relying on that as well so I will let you take control. Sounds good thanks Tom yeah and just I'll just give us kind of a quick overview of what we were thinking here and kind of our plan because I think it will be a little bit different from some of the other subcommittees so as Tom mentioned there's very quick deadlines for many of these subcommittees but in particular the first deadline coming up kind of overall for the Cannabis Control Board is that by the end of this month for October 1 they're supposed to submit a report to the legislature on license fees so obviously to know what we should recommend for license fees we need to know what type of licenses they're going to be and kind of as the market so a lot of that flows into this subcommittee and so in a very short amount of time we were going to try to put together some recommendation to the board so the board can make a recommendation to the legislature so unlike probably some of the other sub committee meetings today's meeting will probably be less discussion back and forth and more presentation from Andrew I think you all received his the supply and demand model that he put together that I think we're going to try to use to inform some of these decisions I'm seeing some head nods did that not go out to everyone? Superbond you did not get it? Chris did you get it? Yeah. Okay give me one second I'll send it over to you right now to make sure you get it but you will see momentarily that it's a pretty big and complex model so Andrew's going to just kind of walk through some of the assumptions that were made in it and you can kind of see what what it looks like we anticipate the Vermont market could look like so that's going to eat up a bulk of today's meeting I believe the next meeting scheduled for Monday which we will kind of have more open discussion on questions about that you have from from that thoughts about how you want to see the market look things along those lines all of these is building up and then we'll have twice a week meetings we'll have meeting next Monday and next Thursday a meeting the following Monday kind of all building up towards trying to make some recommendations on fees so you probably need to have those by the meeting on August I mean September 23rd so that only gives us you know about two weeks to get to try to get some estimates on what we want so it's going to be a lot of work pretty quickly because we'd like to try to stay on stay on track for that so we'll send out agendas for these upcoming meetings but just wanted to highlight that today's meeting will be kind of this presentation the model Monday's meeting will be more discussion about thoughts and initial thoughts but we're very quickly going to have to turn into covering different license types and tiers which I think Thursday the 16th might be a good day for we also need to address some local fees which we can start talking about on the 16th and finish up on the 20th and then by the 23rd I think our goal would be to have some written recommendations pulled from your thoughts and opinions pulled from what we think is supported by the model and that we can discuss and hopefully get them approved and send up to the board so during this whole process we'll continue to try to send you some information I think we're planning on sending you kind of a survey of fees from other states so we can see where the model would compare to to other states and kind of some analysis of like here's how many licenses there are in other states and how that would compare to Vermont's population things along those lines but again next Monday if there's anything that you think will be helpful for us to try to share with you let us know we'll try to provide it because I think we're trying to work closely together here to get a very tight deadline so it's going to be a lot of a lot of moving parts in the next couple weeks so that's kind of the overall goal and timeline I know that wasn't particularly like to think and level that with days because a lot of it's going to flow depending on how hard especially to go next Monday and Thursday but I just wanted to give you a head up of how we envision that once we get through that October 1 report deadline there's probably less you know last time it's still be very quick timeline but less time consuming so we can probably start focusing on a little more taking a little bit more time with some of these questions but trying to get those recommendations as quickly as possible so that's all I have I will send out that model now but I think I'll turn it over to Andrew to start his presentation so sorry the body will see the presentation before you get it but you'll have that model in a matter of minutes so I'm Andrew do you want to do want to take it away thanks and appreciate it and I'm going to do a screen share as it's going to be easier for everyone to see what I'm doing and where I'm at with the model as you will see there's many tabs easy to get lost although there are isn't adjustable in depth that should help guide you through it so you just share screen and then I'm going to ask for confirmation that someone can actually see this on the team on team yes in this yes excellent thank you so this is a detailed supply and demand model so first and most importantly this being a model it incorporates data from the state data from you know other states and then many many different assumptions as it pertains to cultivation capacity you know yield output per page per consumer demand of all sorts of different assumptions and all of these assumptions work together to provide a projection for what we think the Vermont market will look like the model is hyperadjustable so any changes to these assumptions will change the output currently have in there some of what we look at as you know time and place assumptions for a variety of different factors but all of these things are subject to change particularly as it pertains to you know when we look at individual town markets and advocating some of those within there right now and I can show you guys that in a bit some of those assumptions we need to be expanded as well so this model includes about 20 or so different tabs with a primary market analysis model tab here is this kind of pink or addition color so each of these this is an adjustable index lets you know what's in each of these different sections and you can click on any one of these and be navigated directly to the page so if you ever get lost you can't find your way back on the upper left-hand corner is a little index but you can click that automatically brings you back to the index to find what you need to be so first let me get to you the primary market analysis model tab and I'll actually talk about what these within this from from the index so this is our primary market analysis model you know this brings us directly to this big big model which which contains the vast majority of our assumptions some things where attention is needed I think some of these things in yellow additional tweaks may occur as we go over this further but essentially what this model does is it still demand and supply so it is not just Vermont but any adult cannabis market your demand is going to be composed of both medical demand and adult use so when we're looking at the total model we look at the existing medical patients how much they are purchasing and how that affects things so we've got data here on medical cannabis patients how much they purchase the category breakdown and a lot of this comes from the data I came from the existing medical cannabis dispensaries and operators in the state of Vermont furthermore we've got you know projections things like that based on the existing patient data changes in 2018 and trends there if you're ever wondering on where most of the data comes from you can find a lot of that other data have a Vermont medical cannabis patient registration you can see all of the data that underlies it as well as where those projections come from and how they're derived let's go back for a second then we have the Vermont adult use market within the adult use market there's about four different components of demand the first thing Vermont resident cannabis consumers the second being your first degree of border consumers and those are going to be people that are kind of really directly along the border and then you have your second degree of border consumers those which are usually typically further than a half an hour but less than an hour and a half you know no more than an hour and a half from from the state further than that we have tourist consumers so these are individuals who are coming to Vermont for tourism but happen to be cannabis consumers and are likely to purchase cannabis when they are in the state on the tourist side of things there's an entire series of the tourism model that back into this as well as a number of complex data points and assumptions which give us give us that information about what kind of consuming tourists may look like we have you know changes in reserve prices the amount that we're estimating that tourists purchase per day and I have this all follows through this market is the way this analysis works is we look at all of these different consumers and then from there we look at what percentage are likely to purchase from the state of Vermont so all of this gets turned into Vermont cannabis equivalent because we have data from the National Survey on Drug Use and Health based on intra-past month cannabis use group with things so that's for instance how many consumers are FDA consumers or every other day consumers or only a handful of days among consumers and that when projected on to a price per ounce gives us an estimate of total monthly expenditures you then take these monthly expenditures put that through an analysis of what percentage of the market is being spent a different sort of category and we get total expenditures and then when we combine that with additional demand per month we get initial unit prices and total demand in volume as well so we have these numbers and we're looking at okay what percentage of demand from resident consumers or border consumers or for it are going to be captured by the regulated market and this will change over time as the market develops a lot of these assumptions come from data from Massachusetts as well as Colorado or again some others we're Washington where we actually have some initial research that looked at what proportion of the market is purchasing from regulated storefront when we're dealing with border consumers there's actually two different levels here because we first need to take off obviously you know consumers in Massachusetts aren't likely to travel to Vermont for the sole purpose of buying cannabis as they have cannabis access in their own backyard similar to those in Maine in which it's faster to drive the Portland and it would be dragged in Vermont by cannabis within that in the border consumers we have what percentage of border consumers we even consider purchasing and then from that we have market capture amongst those consumers who would purchase now there's another level of granularity this which gets us here because we're also dealing with seasonal changes over time right on the tourism side of things we have some data that looks at how tourism expenditures by bump have essentially changed over time based upon non-vermint restaurant transactions so we're looking at that we can incorporate it okay what percentage of non-vermint days are spent on each month and as you can see there's you know because Vermont has such a high tourism drop from its mountains of the east uses we have a higher amount of January February falling into the spring and then rising during the summer when hiking is great falling a little bit in September then peaking again in October when the fall colors are are brilliant in Vermont falling again into November and then rising as it's easy to pick up in December and then fall following for January again so this comes into place as we are looking at some of the tourism numbers but what's fascinating in that cannabis also seasonal dynamics that occur beyond just those normal tourism as we tend to see higher purchases during the summer and in all sorts of different states so I have a adjustment here that we can overlay or non-seasonal tourism and I'll show you for a second what this looks like so on the graph side we have a look here at composition of Vermont medical and civil use cannabis and how that changes over time and if you can see here there's kind of current normalized trends about how that occurs and when those peak and this data is taken predominantly from other states so you know there's a few different states that we're looking at established trends in Washington Oregon and Colorado for those states that have had many years of cannabis sales and we can look at over time with a number of theory uh complex uh equations and analyses to look at year over year what the seasonal trends look like obviously 2020 being the COVID pandemic has has changed things quite a bit from its normal trends so for these purposes we're looking at Colorado, Washington and Oregon some of the states have a long enough period of time that we actually have trend analysis in Nevada because tourism overtakes so much of normal uh normal activities it's not really as analogous to utilize for Vermont so here we're looking at the seasonal trends averages uh above or below averages from these three states over these three years and we utilize this to be able to apply a seasonal trend to overlay onto our analysis there's a toggle button so we can turn this off and we did that you could see for instance here uh while tourism maintains uh its data uh here on the adult consumers were no longer overlaying the potential so i'm going to turn it back on for a second so that we can really appreciate the differences that are for at the uh the month by month level when it comes to those seasonal overlays we then have all of these consumers and these consumers demand and then uh those that are captured by the regulated market to come from these assumptions then flow into our total adult use demand and total expenditures based on the our assumptions here so that's just on this first side and then these factors involve medical edibility uh and then we get into cultivation so on the cultivation side um this market includes both an indoor and outdoor slash greenhouse uh cultivation schedule option uh because this analysis being looked at from the state level while they have control over a number of different factors they don't have control over everything and so when we are looking into this you know we say okay how many cultivators are we starting with now this number could be higher or lower but it could be unlimited and and i think that's likely what's going to be the fact in vermont but for the sake of this model i think it's important it's important for us to put in okay what number if we don't have a limit on licensing how many cultivators we actually got to think uh are going to come in register build out um and operate in the state of vermont so you put this number in here and this all pulls into this sort of model which is quite complex but utilizes a number of different factors so the most important thing here is trying to identify what the square feet of flowering canopy space is right we can increase the number of cultivators and as long as we increase we keep less the number of square feet of flowering canopy won't actually change the total output uh in the state of vermont it will change some of the frequency of harvest but essentially our canopy for cultivators goes down as the number of cultivators goes up uh given uh changes in square feet of flowering canopy space so if for instance we have 400,000 square feet of canopy we have about 2000 square feet of flowering canopy per cultivator now again that's flowering uh canopy space so that is how much uh plants in flower underlight do you have uh in your facility um this is this is for indoor again we also have an outdoor model as well which again uses flowering canopy it has to be a little bit different because it's you know the uh the growth the they might be further apart um and so there's a number of averages that are pulled into there so because uh the state of vermont has control over licensing you know let's say for instance they start licensing in january of 2022 and again all of this is adjustable let's say they they license for 18 months um uh on an average about 11 months uh over that period of time and maybe after that period of time they realized you know we had enough people coming in maybe you know our licenses just strictly we don't want to deal with the over supply issues or things like that close licensing um what this model allows us to project is okay if someone gets their license like they in uh june of 2022 they're not the earliest they're not the latest the bucks all the footwork they get it in june 2022 let's say it takes a month from the start to finalize things through the end of finalize things what the state does not necessarily know is how long is it going to take them to build out their facility and to actually cultivate cannabis and start putting cannabis plants in the ground so this model uh for both indoor and outdoor includes a degree of randomization with a series of complex random dumper generators which allow us to continually look at how long it's going to take any different people to build out and utilize it to averages and Massachusetts and others and discussions with consultants we have a normal range of four to 12 months with a look with a outlier range of two to four months or 12 to 18 months with an average of eight months uh from the start to finalize things through the date in which plants are in the ground and then utilizing the data from Massachusetts we have what percentage fall in different outliers about two thirds in the normal range and one third at the low outlier sorry and one sixth at the low outlier and one sixth at the high outlier range so with this allows us to do that is if we look at over time when this different licensing will occur and as we can see here is a color-coded thing that when you start putting clones in the ground and when you're when you're harvesting this model because each of these are going to be small these look at these as each individual growth facility assuming that each growth facility turns over ever 128 days i.e. what's done with this harvest it puts clones in the ground in that same room we have a situation in which a cultivation facility has a bedroom and a harvest room and it's rotating on a more frequent basis which is absolutely fine but for simplicity purposes this model looks at each of these small growers that's kind of utilizing one room for for both vegetation and a harvest and with in each of this because there's a random number of generator these numbers change every time you press F9 every time you redo things so the numbers when you look at it may be different every time you open up the document as it pertains to the supply and that really takes into the case that there's a certain degree that we don't under we don't know exactly when that supply is going to come online how many of these growers are going to build quickly or slowly that all of this is factored in so this exists both for our cultivation side then on each of these facilities we have the yield this comes from some of the existing medical operators how much is flour how much is trim both in wet weight if you're doing live resin as well as dry flour and dry trim what does that get allocated for testing what fail testing was possibly able to be remediated in terms to concentrate and what gets pulled what if the harvest gets pulled for extraction this is similar sort of thing occurs for the greenhouse cultivation so for the greenhouse rather than a certain number of months we have a start date on the low and high end because of obviously if you're growing outdoors it's a limited harvest season to utilize in the state of Vermont and so here we have a frequency of cultivation every year every three inches 55 days with hard of a thing then eating the plants in the ground to eat to occur during that period of time also the number of days here differs a little bit given that this is going to be an outdoor model as well as some of the yield which flows in this is similar to what we see for the indoor that we have combined and then we get into extraction we look at you know how much extraction capacity if you need in order to meet all of the the kind of demand in the state then suppose we're going to give over some of this for brevity purposes then looking at what the extraction yield efficiency is what percentage let's say you put a pound of you know 453.5 19 grams you know pound into your extraction machine how many grams you get out so this is their yield efficiency of the oil and then as well we have the amount of oil that you think go for testing and the percentage of batches that sell that thing then from the production of all of this oil we get into the question of when have this product produced we have lost we transferred this oil into the products themselves let's say you know you're filling your big pens or you're you're producing edible products a flower loss from filling pre-rolls loss from packaging the product some package some product break some packaging is not a far the labeling is wrong that will have lost as well as well as again additional testing on supply chain for edible products and helpful products in order to determine how many products we can produce we look at the amount of oil that was produced and and put in estimates for TAC extraction potency so this you know let's say you put in a pound of cannabis you get a certain amount of grams of oil and then the question is what percentage GAC is that oil because what we need to target is average size for these different sorts of products and the amount of PUC that each of these which then allows us to know how much oil needs to go into them accounting for loss that occurs when creating the product loss first packaging of that from here we're looking at okay in order to get this this allocation correct how do we want to allocate filter and flower between pre-rolls and kind of a flower or bustel as well as our oil which we concentrate on edible products and optical products all of this got to the place because Vermont is likely given its potency restrictions for manufactured cannabis products likely going to balance some of that with CBD in order to meet the regulatory requirements we also have in here CBD required for products and how much CBD isolate might be required given the quantity of products we're producing and the amount of CBD that would be required in that utilizing the data and benchmark that others to try to understand how much CBD biomass is required for one kilogram of CBD isolate this looks at about 50 grams of of cannabis of hemp's biomass that it produces about one kilogram of CBD oil and then about two between two and two and a half kilograms of CBD oil i.e. this is great one kilogram of BGI so this gives us all of our estimates here also the model is we've got a number of different tests and you can look at things from an annual perspective as well then we get into some specific medical patient retail sales in specific places this utilizes the model here that allows you to select any individual town and as well as what other towns that is taken in on you know this portion of the model once i've worked with the cannabis control board to help us figure out any specific localities that we want to identify we'll end up running some little bit more complex geographic information to the model to identify the exact towns that are let's say within a five ten or fifty mile radius or whatever we want to determine as well as proportions of those towns which are in that radius and this will all get adjusted as well so these numbers particularly you know should not be looked at as final given that you know additional insights will be delivered as we identify which of these localities we need to put some more thought on for local fees and you know local tax burden this includes this both for medical as well as for adult use then we get into supply and demand so this is you know some of the real juices the model you go back to the index for a second i can just go directly here to supply and demand you know how much what is our supply of cannabis flowers and as i mentioned you know this changes over time every time we hit f9 here we can see that these numbers change because the frequency of harvest and when people are cropping out is going to differ uh based upon kind of the random nature of the amount of time it takes of us from their final license until they are ready to put plants in the ground and then once those plants are ready when they're ready for harvesting uh they were looking at demand as well early on in the market because uh you know the first cultivators that are going to get online are not going to be able to serve the full medical and adult use demand we will have under supply and then over time as more of those facilities build out as our first cultivators are getting their second and third harvest or later on our second and third you know are later on cultivators are getting their first harvest this increases as well and over time you could see of what percentage of the Vermont medical and adult use market being capable of served with the inventory that's reduced given those different uh supply numbers and there's over time you can see um you know we start to get into the ranges of over supply now with all of this it's important to sort of percent uh you know what we're projecting if you want to target it's going to be left up to this you know board is regulated to determine but this probably you know giving us some thoughts uh we can for instance change this but let's say if we're going to do uh 300,000 uh square feet and let's you know see what happens if we change all of that now obviously this changes the whole market now in this case canopy per square foot of cultivator is 1,500 square feet of flowering canopy and if we go back in here we can see that um you know we're much closer to these to just about reading demand in some places slightly over in some places slightly less and in this instance you know for these certain months we may not actually have let's say enough topicals or enough concentrate for edible products to beat the market and as such um you know sales would be less than what total demand would uh would allow for so I'm likely want to be somewhere in between I'll set this for instance to uh read that 350,000 square feet just for illustrations purposes and again we can see how this model then adjusts once again um then we look at okay how much it sold and this is going to be based upon uh just what medical is able to sell and in this model we're assuming that all supply goes to medical first and staffs on medical demand and any uh lack of uh supply that can't be met falls essentially on the adult use side um and then we've got both competitive combined medical and adult use product sales and then taxes that flow from that as well and then we break it down on a sort of front perspective as well on the graph side of things we can see here we've got uh Vermont medical and both these consumers as I showed you before um consumers in the top 10 market uh based upon some of these adjustable assumptions uh projected Vermont medical sales for product type rejected for Vermont sorry Vermont adult use sales by product that and as you can see here as we press f9 particularly you know if we are close to the bound of not having enough supply um here early on when we definitely don't have enough supply this is going to be this randomly changes because the amount of cultivation that we have online to meet this demand is going to be different right and then in some of the latter months you can see little periods of time in which this changes because there might not be enough supply to actually meet demand here again we can see the product production from new adult use cultivators so how much gas and flour free roll composites and others uh grams this this is grams of flour and then units of other manufacturing products here and then we can see it's a fine demand graph and you can you know by hitting f9 repeatedly and the reason I didn't kind of uh start a confidence interval on this is because all of this model is relying on existing assumptions so this would be you know a confidence interval given the assumptions we have which I don't want people to uh essentially false confidence do because our assumptions um may change over time so here we can see you know we're likely getting uh somewhere around supply and demand parity uh in the summer of the 2023 we've been depending on the month um kind of a sliver of supply but above what uh demand is so and this of course we can adjust over time uh maybe you know we restrict cultivators uh cannabis you know we get a little bit more stringent uh the regulatory gets a little more stringent on uh people that are more canopy than they're actually cultivated or selling um and you know use of mechanisms to to bring this closer to parity but again we don't want to have under supply issues within individual substitutes of the listed market this then shows the balance between indoor and outdoors we see uh there are spikes uh seasonally in the fall as the outdoor harvest comes online if for instance outdoor cultivation was significantly larger let's say we were dealing with you know 100,000 square feet which is the justice which would basically be that each outdoor cultivator now is a 2,000 rather than 800 square feet of flowering cannabis you can see here that the spikes would become a lot sharper and this could uh throw the balance um of supply and demand easily uh out of alignment and I think that there's good information that we can learn from Oregon in this instance and balancing between indoor and outdoor cultivation the risk seasonally of having a large portion of production occur outdoors and what that does in a market that has a history of really good cannabis cultivation but also a relatively small amount of demand to absorb that ongoing ongoing production that we spike in uh in the fall um so yeah this is a abbreviated version of looking at the cannabis model um there's a lot of other goodies in here feel free to look through some of these other things uh all most of the data uh comes from the state itself i'm looking at population projections at the localized level and then utilizing national survey on drug use and health data uh i can pull that from see where that is uh from the national survey on drug use and health which is a federal government survey data that looks at cannabis use rates at a regional level uh across the country so this lets us know how many border consumers there are how many consumers there are at the different regional levels and then county levels in the state of Vermont great does anyone uh you know i'm not sure how i hope this question sort of ended here um but uh model includes quite a number of different assumptions all of these are pretty hyper adjustable and we can utilize to identify how many square feet of cannabis we may need how much extraction capacity we may need and as such the licenses uh that that are going to to start what their initial cultivation allocation may be thanks Andrew yeah i see that uh you might have a question i just um just to try to translate this into kind of what our our uh goal is here um obviously this is a quite powerful tool that we put together where you can kind of play around with it and see what total capacity is needed how different you know outdoor cultivation will will uh impact it um what i think uh our goal as a subcommittee here is to take this information uh at least for the first part of the subcommittee is to take this information and try to make a best uh estimate on uh what licenses are needed how to structure those licenses uh in order so that we can try to calculate what license fees are needed we have a couple of uh directives from the legislature in the in the um in the statute the first being um that they would like it possible for the fees to cover the full operations of the board um that's going to be uh a little bit difficult but we would like to estimate what what those fees would need to be in order to cover those costs um the second they've also asked for um to keep like to try to incorporate small cultivators and social equity licenses and to keep those fees low which which adds to some degree of difficulty so we'll talk all about this a little bit more on monday but just wanted to start by presenting the model so that you could play around with it uh today and over the weekend we can have a more informed discussion on monday about where where i'd really like to see this go um and how you'd like to shut this shape this market and um we can talk about how you know it's worked in other states or what we're thinking um and how we did it with what the legislature is asking but um so hope that makes sense uh so vaughn do you want to ask your uh your question uh thanks Dan and you're actually already getting it at the at least right now those are the one question we want to ask andrew um andrew thank you that was a great walkthrough um every model has assumptions and some assumptions matter more than others um in any given model and clearly so much in the model we went through is driven by the assumptions around square p of canopy growth and so really the the larger question i have is how do we uh almost model out that assumption to get to a reality check of what do we have to expect in terms of demand not demand of consumers purchasing but demand of potential agencies right we've had listening sessions with tons of people who are potential growers and and how do we start to level set and and reality check um you know it's great for us to say hey we want to target 400,000 graffiti video canopy growth but the real question is uh what are we actually going to see in the market for people who want to grow and and so you know how do we take that to a different level precision and get a sense of whether uh we can use that to help level set the rest of us yeah absolutely so this is going to be a difficult um thing to do and i think that there's about there's a few different ways we can look at it the first is to look at other states and try to identify um how much demand for uh to be essentially a candidate cultivation entrepreneur uh there was in these different states um and which states to use as those assumptions obviously the market in a place like Massachusetts the potential in a place like Massachusetts and the regulations in a place like Massachusetts are going to be very different than in a place like Vermont and as such the amount of uh entrepreneurial demand or the demand to be an entrepreneur for cultivation is going to be different in Massachusetts than it would be in Vermont in Vermont uh you know i think you're going to be looking at you know a combination of a small you know from an entrepreneurial perspective a small market a market that is heavily emphasizing local cultivators and smaller businesses um and a market that uh is many seen as remote and but also a market that doesn't limit licenses because limiting licenses is i think one of those things that actually spur the different additional entrepreneurial demand a demand to be an entrepreneur because those licenses then hold a significant amount of intrinsic value that can then be sold afterwards so one of the states that this might be uh worthwhile to look at is actually very much across the country in Alaska. Alaska is a relatively small market without a limit on the number of cultivations like this that heavily emphasizes and prioritizes local residents so we can look at a state like that with some population adjustments also a relatively small state to try to see okay how much demand was there to be a cultivation entrepreneur uh similar dynamic most of the cultivations is going to be indoor obviously even colder uh in Alaska but uh surprisingly uh the weather in anchorage in the southern part of that is just similarly such a point uh that it is in Vermont um and so you again have seasonal outdoor that has a pretty short cultivation season there so that's one way to look at how much entrepreneurial demand do things that there's going to be. Another route would be to structure the application process in such a way that we can try to identify the amount or quantify the amount of interest that would basically be we put out uh intent to apply so a number of different states particularly those that have done limited licenses have done that so they've got a two-stage application process in which you submit your intent to apply just may just require you putting forward your team maybe putting forward a local area or a property that you intend to cultivate in and maybe a small amount of initial fees if then we would allow these regulatory agencies try to identify with that initial interest and then based upon projections for how much supply needed to meet and exceed demand to proportion those additional cultivators as they're starting cultivation how to put uh or or flatten the square feet so i hope that helps to answer the question. Thanks Andrew and um you can elaborate that I just wanted to make sure we had some time for anyone in the room there Chairman Pepper who might have a question for public comment. Yeah I think I just went around and talked to everyone I think we have one public comment which could probably give us just a few minutes for that. Do you want to go ahead? Sure. Let's sit here. Oh hello everybody uh Jeffrey Pizzatullo from the Vermont Coral Royce Association. We are a member also of the Vermont cannabis equity coalition. Thank you for your time it's been very informative I'll be brief. I would like for you guys to consider if we're making assumptions about canopy size to build around this model and perform analyses we would like as a coalition for you guys to consider production caps at market rollout keep in mind we already have an in-state actor that is flaunting a nearly 100 thousand square foot indoor facility and that would have an impact on a lot of these projections and analyses that we're making. So I'll be brief urging production caps for the first couple years keeping in mind that things can change maybe we make adjustments after that but it's important to transition our legacy growers as much as possible through unlimited and rolling licenses and perhaps not regulating market access but market production. Thank you. Thank you very much. Thank you. I do want to add that this model on the supply side does not include the existing quantity of supply produced by the medical cannabis cultivator. As I was able to obtain some of that data but not enough in a way that would allow me to anonymize it so that it's not potentially identifiable to the system. So that is one of those things that you know we're able to get that data from the state itself with all of the operators that exist would be a significant benefit to add to understanding what our total both medical and adult use output supply is in the state of Vermont. Thank you Andrew. Chairman Pepper any other public comments? I don't think I don't think we have any other takers for public comments. Okay thank you Dan did you have some wrap-up as we're just about out of time but need to start. Yeah I can wrap up for yeah I can wrap up in a couple minutes. I started to wrap up just a moment ago but we wanted to kind of frame it this way because we thought this model was important to get to all the subcommittee members so they could look at it to see the functions that we're making or which assumptions you think should be adjusted before we started opening it up to like a full conversation in a collaborative process. So that's probably what we're going to that's what we intend to start on on Monday so a little bit of a gentle set doubt but there'll be time to ask any follow-up questions of Andrew about the model or about anything else you talked about and then start a discussion of how subcommittee members kind of in this market going forward. Again for at least for these first couple weeks we are focused and somewhat constrained by the need to get the statutory statutory required report on pieces back to the legislature based on kind of the parameters that are set in that legislation. So that's lower fees for social equity like there's a drive to have as many small cultivators included as possible and a goal of trying to have these cover cover operations. So you know one of the alternatives here might be to present multiple recommendations where one would be high fees that cover operational costs but you know because of all the problems aren't actually an ideal policy solution and then we can try to come up with you know the recommendations that seem to be more in line with what Vermont wants and how to have a robust market that includes small growers and social equity growers. So that's the discussion that will kick off on Monday. I hope you all had enough had a got enough from that model and understood what was going on because I know Andrew did a great job presenting it. There's a lot of information in there so we tried to present it as quickly as possible but hopefully you got the got the gist. So that's all. I see there is one more question from Tim Westle but then then I think we're ready to I'm ready to wrap up. Tim. Hi yes thank you I'm just here to remind you that I think under fees you are supposed to be discussing local fees as well as part of your charge from the legislature. Right that was that will probably be I think the first Monday meeting will kind of be general state level fees you know but at some point because we don't have a long runway here we'll probably start talking about local fees and trying to project local fees which add so many other levels of so many other variables and other levels of difficulty probably starting will be from today. If it all goes to plan maybe it's not a it will be the following Monday but we will we will discuss it. In fact we will naturally be discussing that in two minutes the next subcommittee meeting under compliance but I wanted to thank Andrew, Dan and every participant to the gene. Make a motion to adjourn by about second and a third we can adjourn and we will another subcommittee meeting and I think it's two o'clock on Monday and Penelope sends out the invite so I'll move to adjourn this meeting for market structure licensing fees and taxes. We have a second here Stephanie. Great thank you Stephanie. You're welcome. Thanks for your money everyone. Thank you.


Live from London, England. Extracting the signal from the noise. It's theCUBE, covering Discover 2015. Brought to you by Hewlett Packard Enterprise. Now your host, Dave Vellante. Welcome back to London, everybody. This is Dave Vellante. We're here in the Excel Event Centers. This huge location, 13,000 of HP Enterprise, Hewlett Packard Enterprise, it's biggest customers. This is theCUBE, we go out to the events. We extract the signal from the noise. Mike O'Neill and Don Jones are here. They're both vice presidents of Strategic Alliances at HPE. Mike is responsible for SIs. Don is really the ISV piece. Gentlemen, welcome to theCUBE. Good to see you again. Good to see you. All right, so, Mike, let's start with you. We're talking a little bit off camera about what is an SI, right? It's not the little guys in the channel that want to become SIs. We're talking about the big, world-class global SIs, right? Yeah, yeah, yeah. We have a set of top-tier system integrators composed of advisory firms, global system integrators, indie-based system integrators, and that collection today we see as criticals. We've talked about the transformation areas that you continue to hear about. As we look at those platforms, those enablement platforms, the outcomes they're driving are fundamentally vertically or industry-focused, and we need and rely upon our system integrators to close that mile, align with their practices, and deliver on those transformation areas. All right, so we're talking about a dozen multi-billion-dollar global companies with huge presence in various industries, world-class capabilities. Don, on the ISV side, HP, you know, Classic has always had an affinity with ISVs. I mean, HP Oracle was famous in the 90s. HPE now, what do you see happening in the ISV world? What does this HP enterprise mean to the ISV world? Yeah, it's been an amazing ride. If you think about it, HP's always had partnering in our DNA. We recently broke out both the ISVs and the ISVs from the business units themselves and created one consolidated team to focus on this effort under John Hinshaw's customer success organization. So when I think about the ISV space, really there's kind of two types. There's the mega ISVs, so Microsoft, SAP, VMware, and Citrix, and then a whole portfolio of incubation partners. So the likes of Google or Amazon or Hortonworks or Docker, we've really got to spend much more time and pay more attention to to understand how that's going to impact the broad HPE ecosystem from HP itself to our channel partners going forward. And what about, you know, this whole sacification of applications? How is that affecting partnerships? Is that a play for you or is that? Yeah, it's both a play and a partnering model, right? If you think about what a lot of these ISVs are doing, it's adopting very much a hybrid approach to how they're thinking about IT in general. So when we think about those specifications of solutions, some of those are going to be done on premises in a managed cloud, in a virtual private cloud, or in a public cloud. We've got to map all of those to the right place. And there's a huge intersection point between the SI work and the ISV work, because quite often the solutions that the ISVs do with HP land through the SI channel is to go to market. Okay, so let's talk about that intersection. So Mike, traditionally the big integrators, and it's still today, they go after what's hot, right? Whether it was BPO, ERP, what's hot today, and what's the intersection with the ISV community? Big data, is it digitization? It's really digital transformation. It's really a driver for most all we're doing. You have digital transformation, you got SAP work, but still as we go into HANA and we go into S4, you see the whole second generation of that large SAP opportunity. So in both cases, well aligned, we were talking about the hybrid cloud and the movement to the hybrid cloud, and its piece in that digital transformation. We've got a very large SAP partnership that we manage that intersects very well with the practices, the SAP practices across the system integrator community. One of the things you, Dave, you were asking about SAS, and we'll talk about it, but we launched a new partner program here today, and one of the elements of that partner program is specifically here in Europe. We launched an ISV service provider linkage, and the idea behind that is this program's enabling ISVs as they take traditional on-premise apps and look for SAS based solutions to intersect and align with service providers that utilize and are building up businesses around that particular application, application, or market. And so this brokering, this marriage piece seems to be catching on very quickly for us to enable our partner community to move in that SAS direction, supported by us, both on the service provider side and what is the ISV side. And what's HP's play there? I mean, it's great that you're doing that, but how do you profit from that? Selling infrastructure? Well, services, there's services, there's infrastructure for the SPs, and they're still supporting, as we see this hybrid cloud, there's still a presence for those applications on-premise or in the data center. So you see SAS as an opportunity, not as vaporizing your business. No, and the ISV is looking at us, and how can we better leverage enterprise services at enterprise services and technology services as an asset inside of HP to take those SAS solutions to the market and drive deployment, integration, and ultimately, consolidation would make sense. And then, we're talking about, like I said, a dozen SIs or so, many more ISVs, obviously, and you guys can get pretty specialized with your ISV community. I mean, whether it's legal compliance and governance and really healthcare. Can you talk about how you segment the ISV community, or are you really going after the horizontal guys? No, no, it's actually pretty straightforward. So when we think about it, there are ISVs who have broad implications across all our business units, from HP software to enterprise services to enterprise group. Those are the ones that we pull out and manage at a global level. Again, with the four magas, Microsoft, SAP, VMware, and Citrix, a big portfolio of partners behind that, called incubation partners. But if you were, say, Siemens doing PLM, they're very applicable to really only one business unit at HP that's enterprise services where they're doing horizontal kind of work. That relationship is still managed by enterprise services and not part of our team. What it does let us do, though, is make some pretty specific bets. We used to historically take SaaS solutions as an example and peanut butter them across the SIs and say, we hope somebody catches this and runs with it. Now, Mike and I can collaborate, so we're going to make a bet with Wipro in this space with this ISV solution. So it's something we can do now that we really didn't have the ability to think through and map out what that play would look like. So let me understand that. So you're finding that certain SIs have an affinity for certain capabilities that you can marry with the ISV to provide infrastructure for, because you're a horizontal infrastructure player. Am I getting that right? Yeah, well, we are, we're a horizontal infrastructure play, but what, a couple of things. We just saw, again, kind of this is the first event where HPE is out as a public company. And what we spoke about, what we've done with alliances, we've been able to, as Don spoke about, where we sit within the organization, HP organization, we sit right up in the, below the EC level, you see the MEG staff level. And the thinking behind that is, as I talked about, it enables us to be able to drive and complete solutions, both from a workload and delivery perspective. But further to that, we were organized BU to BU for just about every service and every support piece fryer. EG did their piece, ES did their piece, software did their piece. Now our charter, Don and I's Charter is HP, broadly HPE. So we're responsible for the services piece, the software piece, and the infrastructure piece as well. So as we think about these solution sets, we can marry them together, because we have single conversation from the company to be able to figure out how we enable, if it's a, you know, if we talk the same scenario, we're talking about move to SAS, we talk from a services perspective, we talk from an infrastructure perspective, or it's delivering solutions, infrastructure, software, and services. So it's a change in the way we've gone about partnering that we're bullish on, I think it gets us right in the wheelhouse of what we keep talking about, responsiveness, simplicity, and speed. And the change is, there's an organizational change, so you've got senior level attention now, and the leverage between ISV and SI, is the two big vectors. Yeah, yeah, we've, in the past, we've been able to enable initiatives. We really see an opportunity as we continue to evolve this partnering model to go from initiatives to practices to actually businesses we're building with partners. You know, the scale of the herd around the Microsoft announcement today, that's really the type of alliances and partnerships and businesses we can believe we can build in market. So that's the big news today, let's talk about that. I mean, it sort of trickled up before the show, obviously, but we had Satya coming in, he took time off from his board meeting to beam in, right? So how did that deal come about, was it sort of enabled by HP's announcement that you're sort of exiting the public cloud, that sort of clear the path? Let me talk about that a little bit. Yeah, so basically three things happened all at the same time, really. We started doing a lot of work with them closely on cloud productivity and mobility. So Office 365 and Windows 10, what we're doing in that space. And the more that we talk with them, the more we realize our visions for hybrid cloud are ultimately super aligned. They certainly view infrastructure as the edge of their public cloud. And we view it the same way. So that is point one. Point two, Microsoft is a huge customer of HP's. The vast majority of Azure is powered by HP infrastructure, I'm not sure if you're aware of that or not. So there was a natural synergy there. And then finally, when we step back and look at what partner we could do the most with from a breadth perspective, it wound up being pretty clearly Microsoft. That announcement today, if you noticed, included HP software assets on Azure, enterprise services, delivery assets who can go to integration and system configuration for Azure, as well as the infrastructure side with the CS250. So it really was a draw from the complete buffet table that is HP Enterprise. Right, so yes, I was aware, actually, I didn't, somebody whispered to me sort of the rough size of the business, which is enormous. So it's not a Barney deal. It's like, okay, we're going to do a deal, but you got to buy some of our hardware. You guys are already doing some substantial business and not just sort of one-offs, really powering a lot of the Azure infrastructure. Is that right? So that's exciting. This is, Don can speak to as well. This is a progression of announcements with Microsoft as well. As what Antonio and Satya alluded to, the Office 365, the Windows 10 announcement, this is kind of the third in the progression. And we continue to see success in market, working with Satya and the team and how we can evolve this business with Microsoft. Yeah, we did the O365 deal with them. It was code named Golden Spike, oddly enough. And we are launching the first customer, the UK Ministry of Defense. So that customer needed a very unique set of requirements, as you can imagine, right, UKMOD. And Mike Stone said, what I need is like five nines. Microsoft only provides three nines through the vanilla delivery service. He needed some extra security features. So the partnership was just beautiful. So out of that deal with the Ministry of Defense, we wound up putting an Azure footprint and HP's data center in the UK. To my knowledge, we're the only company outside of Microsoft itself running a pure version of Azure in our data center. So let's talk about Hewlett Packard Enterprise.  It's been coming for a while. We've obviously known about it, but now it's here. How has the discussion changed from a partner standpoint? Mike, maybe we can start with you. Yeah, well, as I spoke to a few minutes ago, Dave, we're advantaged by the fact that our charter along, so as HP Enterprise was formed, the charter for our businesses and our responsibility changed from business unit orientation to full Hewlett Packard Enterprise. So in working with partners, it's significantly enabled us to be able to have a full scale discussion. We disadvantaged ourselves having a software discussion, services discussion, infrastructure discussion with partners in the past. Being able to bring that together, it aligns with the transformation area discussion, that transformation areas and enablement platform that includes all of them. So us being able to represent that whole platform, we've been able to advance initiative and business discussions significantly quicker from a system integrator perspective than we did before. And I think the same as... And I would think that the end to end strategy from sort of printers all the way through probably didn't resonate much with the SI's. I mean, they're looking for hardcore capabilities. Is that fair to say? It didn't manage print services from time to time, but not, but it really wasn't to your point. It wasn't the core of what we're driving. So the focus message presumably resonates with them. Now, what about the ISVs? Same as true. If you think about even Microsoft managing HP, right? There was a totally separate team that managed our PC OEM attached business that managed what we're doing with cloud and enterprise and that side of the house. So it was a very natural separation segmentation for the likes of Microsoft or an SAP. So it's worked well for those guys. Okay, and then of course the other thing I have been talking about all day is the balance sheet. There's no debt on the balance sheet now. It's the HPE balance sheet anyway. So what does that mean to you all? I guess you're not into M&A, but you know, I guess you are in the sense that you find opportunities and you can feed them to the M&A team. What is the whole new structure of the balance sheet mean if anything, to the ISVs and to the ISVs and to your businesses in general? Yeah, from my perspective, I don't think our partners per se, they're looking for us to determine through part, inorganic or organic, figure out how to fill the holes and make sure that we can deliver and we've talked about a partner ecosystem. I think what they're looking for us to deliver on versus the balance sheet expectation and opportunity is really the promises around predictability, speed and focus. And in order for us to deliver on it and our piece of the business, we've got to be responsive, we've got to be easy to work with, we've got to continue to be innovative, we've got to continue to be collaborative and predictable. And these are fundamentals that now that we have really pervade over the whole domain, we can drive and set the bar for. Yeah, so I guess I'm asking, are you guys at the top of the funnel for deal flow? Do you get a lot of, hey, HP should think about buying this company or maybe you should. If you think about, if you think about build, partner or buy, we're certainly in the partner part of that. We do work closely with HP Ventures on where they see opportunities that should be going one way or the other. And should we be looking at a similar asset that we can partner on as opposed to an equity? We called on Hortonworks before, you've obviously got a board seat on Hortonworks, you've made a $50 million investment in the company. So things like that, obviously. Yeah, same sort of, yeah. Yeah, yeah, we don't want to exclude any, right? No, no, it's all public stuff. No, no, we don't exclude any of the players in the cloud area, Hortonworks and others. Yeah, others, yeah. All right, good gentlemen, we're out of time, but so thanks very much for coming by the Cube. Thank you, God, Dave, always a pleasure. Appreciate it. Appreciate it. All right, keep right there, buddy. We'll be back from HPE Discover in London. This is the Cube, right back. Thank you.


Next question is from our hanks one. What are your go to exercises for working the serratus? Oh, yeah, one of the most Neglected muscles, I guess of the upper body in terms of training and strengthening, you know, it's funny in the 70s Arnold popularized serratus training quite a bit He talks about a time one of the one of the very few contests He lost as a bodybuilder. He lost one contest I remember which one it was if it was a mr. Universe to frank zane And frank zane for those people who don't know who he is was this bodybuilder who was Much smaller. So Arnold was the mass monster of his day.  He was chiseled and lean And one thing that zane had over over arnold and why arnold lost was zane had this amazing Chiseled body in this incredible serratus muscle. The serratus muscle almost looks like abs that come up the sides of your body Kills, I think I call them the gills. Yeah, up underneath the the armpit area, right? And arnold looked and broke that down and it's like i'll never lose like that You know because of that again and started doing all these serratus exercise In fact, if you go to if you're if you have is uh, arnold schwarzenegger encyclopedia bodybuilding one of my favorite Old-school bodybuilding books He writes about exercises specifically for the serratus. I don't remember what he recommends in there What does he record? He doesn't he does a cable He does this right over crunch. Yeah, which kind of hits the serratus, but it's not really a direct exercise I'm a side plank guy with this dude because I can take a side plank and get other benefits out of it too Like posture wise I think I could take somebody in a side plank you get some of those benefits plus two when we're talking about a muscle That's really really small like that that most people aren't even lean enough to see it Yeah, it's kind of tough to put a lot of energy. I've never tried to isolate Well, here's why it's important. I have I when I was competing I was That's why honestly, that's the only time that I though I wanted to look good Yeah, and I also know that I'm gonna get down to 3% and it's going to be really shown otherwise It's one of those muscles that you could probably directly train it all day long and not even tell a difference No, but now here's what's important about it It's extremely important for shoulder stability because it attaches to the scapula the shoulder blade And it stabilizes it and here's how you know when someone has a serratus problem You watch them do a push-up and their shoulder blades wing out you've seen that yeah Where they get that the shoulder blade sticks out and it wings anytime they push against something That's because their serratus is not stabilizing their shoulder. This is why I think the side plank is so beautiful for side plank and help I like The dead stop push-ups where your arms stay your arms stay straight out and what you're doing is you're letting the shoulder blades come back And then yes, the scapular push-up. Thank you. That's the name I was looking for. Yeah, that's a great exercise Yeah, I look that's good to train just you know overall like getting kind of better connected to your Scapula that's hard for some people. Yeah, it is and you can do them up against the wall to start right So start up against the wall and practice that that scapular spread that kind of works the serratus You know I tell you should make a note so Danny does that because that's I don't I know We've never taught that on the youtube channel now. Here's a point Here's an important point around this Joe Defranco did this post about this This one of the things I love about Joe is you could tell he's trained a lot of people Because he just the way he communicates things and he's like, you know As lifters were always focused on Bringing the shoulder blades back scapular retraction scapular retraction scapular retraction We never strengthen Scapular protraction and part of the reason why we don't do that is people are walking around with protracted shoulder You know shoulder blades all the time they were trying to correct that issue But we're not working the muscles that protract the shoulders which can cause an imbalance And so he talks about those scapular push-ups Plus must have real functional lifts are with in that rounded position where you're hugging something in front of you So to that point this is where I remember when I changed the way I did a seated row So for many years I taught a seated row with clients because because so many people aren't a very protracted forward shoulder position To sit upright and stay retracted the entire movement and never let the shoulder But you want to feel your serratus actually roll the shoulders Roll the shoulders and flare the lats And control it from there and then pull them all the way back in going to see a row And you will feel that big time in there now a great way to connect to your serratus Because a lot of people have no idea what that muscle does or what it feels like Practice a a front lat spread. This is a bodybuilding Pose in bodybuilding bodybuilding. There's specific poses that you have to do The front lat spread for the listeners who don't know what I'm talking about. It's the one where the bodybuilder Sexy though they have their hands on their waist And they bring their they bring their chest up in their lats their wings come out If you can practice that pose and connect to your scapula your shoulder blades to spread them out What you're activating is your serratus and if you include that in the seated row move Which is what I'm talking about you will work it you'll work it and you'll feel that which is kind of What I do like that's how I train seated row now because I just make sure to incorporate it there I wouldn't really target full range of motion. Yeah, you're gonna it's going to get strong And and definitely would be defined if I were to lean out you would see a lot of people's shoulder problems have Are not due to the the the shoulder joint the individual shoulder joint itself or the humerus the arm Goes into the socket a lot of people shoulder joint shoulder problems come from The other aspects of the shoulder joint like the scapula the shoulder blade and if your shoulder blade isn't Yeah, I love doing this to to to clients. It's hard to explain over the podcast But I would have a client come in and I'd have them roll their shoulders as hard as they could So they were kind of spreading their scapula and they'd say now let's keep your shoulders rolled as far as you possibly can Now let's see how straight you can get your arm up above your head stops And you can't it stops right there because any further I need to be able to bring my shoulder blade back And it was my way of communicating to them how important it was to get that shoulder position Yeah to get that mobility and the strength and the shoulder blades So I definitely think for those of you listening who've been working out for a long time I think it's a good idea. You don't have to do go crazy, but do some of these These these scapular push-ups you should have control of it. Yes That the the takeaway is that you should have control of that muscle.


Hi, I'm Stu Miniman here at theCUBE Studio in Palo Alto in the center of Silicon Valley. Happy to welcome back, first of all, a many-time guest of theCUBE, Kevin Deerling with Mellanox, and also someone that I've known for many years, but the first time we've actually gotten him under the lights in front of the cameras. Marty Lanz with Hewlett Packard Enterprise. We're going to talk a lot about networking today, and not just networking, but you know, storage networking. So, you know, kind of one of the dark corners of the IT world that, you know, there's those of us that have known each other for decades, it seems, and, but you know, pretty critical to a lot of what goes on in the environment. Kevin, you know, let's start with you. You know, we've caught up with Mellanox a bunch. Obviously, we do a lot of video with HPE. We'll be at the Discover show, you know, in Europe coming on soon, but you know, why'd you bring Marty, you know, along to talk about some of this stuff? Yeah, so HPE's been a long-time partner of Mellanox. We're really not necessarily known as a storage networking company, but in fact, we're in a ton of storage platforms with our InfiniBand. So we have super high quality reliability. We're built into the major storage platforms in the world and enterprise appliances. And now with this new work that we're doing with Marty's team and HPE, we're really building what we consider to be the first Ethernet storage fabric that will scale out what we've done in other worlds with dedicated storage platforms.  Yeah, you bet, Stu. So I'm responsible for storage networking or the connectivity for storage, as well as our interoperability. So if you think about it, it's a very broad kind of category from a role perspective. You know, we have a lot of challenges with all the new types of storage technologies today.  Pretty much everything, everything you just mentioned, right? So we carry traditionally all the traditional storage connectivity products, all of fiber channels, switches, adapters, optics, cables, pretty much the whole ecosystem. Okay, and so we're talking about, you know, ethernet storage fabrics. So Kevin, why don't you set it up for us as to, you know, what that term means?  A lot of times run by storage people or storage networking people, kind of underneath that umbrella, you know, what's happening with ethernet side. Yeah, I think what you look at the traditional SAN network, it was fiber channel and the metrics that people evaluate that on are performance and reliability and intelligence, storage intelligence. Today, when you look at that on all those metrics, ethernet actually wins. So we can give three times the performance for one third the price. Everything is built in in terms of all of the new protocols like NVME over fabrics, which is a new one that's coming, obviously ice guzzy. And taking some of the things that we do in terms of intelligence like RDMA, which is Rocky over ethernet, that's what really enables NVME over fabrics. You know, we have that end to end supply of switches, adapters and cables and working with HPE, we can bring all of the benefits of the platform that they have and all of the software to that world. And suddenly you've got something that's unmatched with ethernet and that's the ethernet storage fabric.  So, you know, but fiber channel, it's dead, right? Isn't that what this means? Why don't you help us a little bit with the nuance of what you're seeing, what customers are you asking? And of course there are certain administrators that are like, I know it, I love it, I'm going to keep buying it for years, so. Yeah, well, you know, I guess fiber channel is still alive. It's doing very well. I think from a primary storage perspective, I mean, that's where fiber channel is used, right? When you, today's storage though, I mean, there's a lot of different technologies and I like to look at this in a couple of ways. One, you look at the evolution of media, right? You're going from disk, like we went from tape to disk and now we're going from disk to flash, right? And flash to NVMe. And now we have things like performance and latency requirements that weren't there before. And the bottleneck has moved, you know, from the storage array to the network. So having, you know, that's having a network that creates, you know, great latency is really the issue at state. We have latency roadmaps, we don't have performance roadmaps, right? From a storage perspective. So that's the big one. Kevin, I'm sure you want to comment on some of the latency piece, that's Melanox's legacies. Yeah, so, you know, with some of the things we're doing now, NVMe over fabrics, we're adding 10 microseconds of latency. So you've got an NVMe flash drive when it was spinning rust and it took 10 milliseconds. Who cared what the network added? Today you really care. We're down to the tens of microseconds to access an NVMe flash drive. When you move it out of the box, now you need to network it. And that's what we really do, is allow you to access NVMe over fabrics and iSCSI and ICER and things like that in a remote box and you're adding less than 10 microseconds of latency. It's incredible. Yeah, it's just right Marty, I think back even 10 years ago, there was a lot of times, okay, do I want to fit in a band? Do I want ethernet? Do I want a fiber channel? And there were more political implications than there were technical architectural implications. You know, I said five years ago, the storage protocol wars are dead. That being said, it doesn't mean that we're still sorting those out. What do you hear from customers? Any more nuance you want to give on kind of that piece is to, architecturally right. I mean, ethernet can do it all today, right? Sure, yeah. Yeah, it does. So, I mean, I think those challenges are still there, right? You still have that, you mentioned political and I think that's something that's still going to be there for quite some time. The nice thing we did with Melanox and what we did in our own technology for storage connectivity, we innovated in an area that I think really hasn't been innovated. That was rich for, we're ripe for innovation. So, creating an environment that gives the storage network administrator, the same capabilities of what you get in Firework Channel, we can do on an ethernet network today. And Marty, one of the things, when we get partnership announcement like this, bring us inside, talk to us about what engineering is being done. How is this more than just sticking a lovely new logo on it? What development, what's HPE been bringing to this offering? So, we did, first when we started, before we get to the ethernet side, we built something called SmartSend. It's automation orchestration for Firework Channel networks. And that was a big success. And what we did after that was we looked at from the ethernet perspective, we said, why can't we do it there?  You know, automate and orchestrate all the ethernet capabilities to behave much like a Firework Channel network. So, this is a four to five year development cycle that we're in terms of developing these products and sitting down with Melanox. So, this is not just a marketing relationship. There is a lot of engineering development work that we've done with Melanox to storage optimize their products, to make them specifically designed to handle storage traffic. Yeah, Kevin, it's interesting. I think back to, let's say there's the big other ethernet company, when they got into Firework Channel, they learned a lot from the storage side that they drove into some of their ethernet products. So, you kind of see learning going back and forth, and it's a small industry we have here. A lot of those, what did HPE bring to the table? And more importantly, what's the latest as to what makes the ethernet storage fabrics? You know, what's going to move the needle on some of that storage adoption? Yeah, I think the key thing is, as Marty said, if you look at it, you've got to be able to be familiar with all of the same things. You need to provide the same level of protection. So, whether you're using data center bridging, to have a lossless network, we have zero packet loss switches, which means that our switches don't drop packets under the cases where you've actually oversubscribed a network. We can actually push back, we can use PFC, we can use ESCN, all of that, and on top of that, what's happened is the look and feel to be able to manage things just like its fiber channel. So, all that intelligence that HPE's invested in so much for over the years is now being brought to bear on ethernet. One of the big things we see is in the cloud, people have already moved to a converged network, where you're seeing compute and networking and storage all on the same fabric. And really that's ethernet. And so, what we're doing now is bringing all of those capabilities to the enterprise. So, we think that 15, 20 years ago, there was really no choice. Fiber channel was absolutely the right choice. Now, we're really trying to make it as easy as possible to make that enterprise transformation to be cloud-like. Yeah, it's funny. I mean, Marty, you and I worked for EMC back when that storage network was being designed. Architecturally, I mean, those of us that have been in networking since before Fiber channel, we would have loved to do it with ethernet, but there were limitations, you know, with CPU, the network itself, it would have been nice, but now, you know, fast forward, it was like flash had been around for a long time before, oh wait, now it's ready for enterprise. Now it feels like ethernet has gone through a lot of that journey. You're welcome to comment on that, but the question I want to have from the storage side, we're going through so many changes. HPE has a very large portfolio, number of acquisitions as well as many things that HPE is doing. We talked about NVMe, NVMe over fabric, we talked about hyper-converge, talked about scale-out NAS. Networking is not trivial when it comes to building out distributed architectures, and of course, storage has very particular requirements when it comes to the network. So what are you hearing from your customers from the storage side of the business? How does HPE pull those pieces together and how does this ethernet storage fabric fit into it? Yeah, and I mentioned it earlier, right? We talked about the primary array being Fiber channel, right?   And all these different storage technologies are representing almost 80% of all the data that's out there. Most of that data, or all that data, if you want to think about it, is connected by ethernet. Now what's interesting is, from our perspective, is that we have a purview of all that capability. I see that challenge that customers are having, and the problem is that these customers are finding is, they go through the first layer of challenges, which is any storage capabilities they need in these technologies, in these storage technologies, and then they get to the next layer that says, oh, by the way, the network isn't that great. And so this is where we saw an opportunity to create something that created the same category of capabilities as you got in your primary to the rest of the storage technologies they're already using ethernet. It's a great opportunity to provide another, a dedicated network that does connectivity for all those other types of storage devices, including primary. Yeah, is there anything along kind of the management of these type of environments? How similar, how much retraining do you need to do with your customers? Or probably going to manage both for a while. Yeah, from a usability perspective, it's quite easy. I think what customers are going to find we use Fiverr channel as the lowest common denominator in terms of everything has to meet, the ethernet network has to meet those kind of requirements. So what we did, we replicated that capability throughout the rest. With our automation orchestration capabilities, it gives us the feature from a customer perspective is really a hands off kind of solution. It's really nice. Yeah, the other piece is, Kevin, maybe, how's the application portfolio changing? You mentioned a little bit some of those really specific latencies that we have. What are you seeing from customers from the application portfolio? David Floyer from Wikibon's been talking for a long time. HPC is going to become mainstream in the enterprise, which seems to kind of pull all of these pieces together. That's Melanox's heritage. We came from the InfiniBand world with HPC. We're really good at building giant supercomputers. And the cloud looks very much like that. And when you talk about things like big data and Hadoop and Spark, all of these activities for analytics, all these workloads. So it's not just the traditional enterprise database workloads that need the performance, but all of these new data intensive. And Marty really talked about the two different elements. One was the faster media. And the second was just the breadth of the offering. So it's not just primary block storage anymore. You're talking about object storage and file storage and hyper-converged systems. We're seeing all of that come into play here with the M-Series switches that we're introducing with HPE. What's happening now is you've got a virtualized, containerized world that's using massive amounts of data on super fast storage media. And it needs the network to support that. All of the accelerations that we've built into our adapters, all of the smarts that we're building into the switches and taking all of this management framework and automation that HPE is delivering. We've got a really nice solution together. Excellent. Well, one of the things I love when we talk networking here is, yeah, the containerized world. We're going to talk serverless. Some of this stuff, just trying to explain it in a way that people can understand. Marty, I heard an M-Series, they're probably boxes. There's actually like, you know, physical that the people buy. Of course, the software and all, you know, everything critically important. But walk us through a little bit the product line, you know, what sets it apart from what you've done before and what makes up the product line there. Yeah, a lot of compliments to Melanox and the way they designed the products. I mean, we have first and foremost, they have a smaller product that we're working with from an ASIC perspective. It's a 2100 series. It's nice because it's a half-width box, right? So it allows you to get full redundancy on a single, one-you tray, if you want to think about it that way. From a real estate perspective, it's really nice and it's extremely powerful. So with that solution, you have the power and I guess the cost savings being able to do what, you know, many different networks can do it like three times the cost in a very, like a very small form factor, right? And that's very nice. And with the software that we do, you know, we talked about what kind of automation we have. It's all the basic stuff that you'd imagine, like the discovery, the diagnostics, all the things that are manual in an Ethernet world, we provide automated in a storage environment. Yeah, and what about kind of some of the speeds and feeds? You know, we've got so many different flavors of Ethernet now. I remember it took like a decade for 10G to go from standards to most customers doing now. It wasn't just 40 and 100, but we've got 25 and 50 in there. So all of them, are there interoperability concerns? Any kind of things that you want to say, hey, yes, this or, you know, not ready for that? Yeah, well, I'll say that the market has, you know, diverged on many different speeds and feeds, right? So we do support all of them in the technology, even from a storage perspective, right? Some of our platforms support 25 gig, some will support 40 gig. So with the solution, we can do, you know, we can do one, we can do 10, 25, 40, 50, 100. What's nice is it gives you the, regardless of what technology you're using, you have the capability to use the technology. Yeah. Kevin, I want to give you the opportunity. What are you hearing from the customers these days as, you know, what are the pain points? You know, you talk, it used to be, right, some of those speeds and feeds, you know, okay, wait around, when can I do the upgrade? It's something that's a massive, you know, thing that we have to undertake from the backbone all the way through. So are we moving faster or customers? You know, I know we all talk it's agility and speed, but you know, how about the network? Is it keeping up? Yeah, I think we are keeping up. I mean, the thing we hear from customers is about efficiency of using their platform. So whether it's the server or the storage and the network, they don't want to be in the way. So you don't want to have stranded assets with an NVMe drive stuck inside of a server that's around a 10% and you've got another unit that's at 100% and needs more. And really that's what this disaggregation and software-defined storage is all about, is taking advantage and getting the most out of the infrastructure that you've invested in. One NVMe drive can saturate a 25-gig link. So we have people that are saying, give me more bandwidth, give me more bandwidth. So we can saturate with 24 drives, you know, 600-gig links. The bandwidth is incredible and we're able to deliver that with zero-packet loss technologies. So really that's what people are asking for. There's more and more data being generated and processed and analyzed to do efficient business models, new business models. And they don't want to worry about the network. They want it to configure itself automatically and just work and not be the bottleneck. And we can do that. Yeah, Marty, can you up-level for us a little bit here? You know, when I think about HP, some of those, you know, it comes pre-configured. I know it, that's what I've known HPE for. It was, of course, HP for most of my career. But, you know, even back to some of the earliest jobs, it's like, well, RAC comes fully configured, everything's in it. So when I look at this announcement HPE server, storage, network, some of the pieces, what's important about this? How does this fit into the overall picture? Yeah, I mean, customers are used to having that service level from us, right? Delivering those kind of solutions. And this is no different. I mean, we saw a lot of challenges with all these different types of networks or the network being the challenge with these new types of storage technologies. So having these solutions brought to you in a way that we've done with the primary storage array, I think is going to make customers pretty happy about it. Yeah, all right. Kevin, I want to give you the final word. You know, what should we look for in this announcement? Any last things that we haven't covered and what should we look for through the rest of 2017? I think as Morty said, this is the beginning. We have a strong relationship with HPE on the adapter side, on the cables, on the switches, also on this energy platform that we've done the switch for that as well. So 25, 50, 100 gig is here today. You know, it's shipping. We're really seeing, we say 25 is the new 10 because this faster storage needs faster networks and we're here to deliver, I think. Pay attention, we're going to do some new things. There's lots of innovation coming. All right. Kevin Deerling, Marty Lantz. Thanks so much for bringing us the updates and thank you for watching theCUBE. I'm Stu Miniman.