December 12, 2012
Host: Ted Simons
AZ Technology & Innovation: Tallwave
- Jeffrey Pruitt, CEO of local venture accelerator Tallwave, talks about a competition his firm is sponsoring for some of Arizona’s most promising start-up companies.
- Jeffrey Pruitt - CEO, Tallwave
| Keywords: AZ
Ted Simons: In our continuing coverage of Arizona technology and innovation, we look at how Tallwave, a local venture accelerator and management Firm, is sponsoring high tide, A competition involving some Of the state's most promising start-up companies. Joining us for more is Jeffrey Pruitt, CEO of Tallwave. Good to have you hear. Thanks for joining us.
Jeffrey Pruitt: Good evening. Thank you.
Ted Simons: Give me a definition of what Tallwave is.
Jeffrey Pruitt: Tallwave, company that focuses on venture acceleration and venture management of companies, and we use lean business models and lean design thinking principles to get the companies commercialized anywhere from idea stage all of the way through the life cycle of companies to sustainability.
Ted Simons: So it sounds like more than just matching money with ideas.
Jeffrey Pruitt: Yes, definitely.
Ted Simons: Ok. Started by, and this is a while back, with connections to Google, Yahoo, Microsoft, correct?
Jeffrey Pruitt: Right. When I was an Arizona native and one of the companies I was with -- I was on the advisory boards of Google, Yahoo, Microsoft technology councils and meeting some individuals, we started to contemplate good ideas around potentially creating commercialization engine to get companies to the national marketplace.
Ted Simons: Ok. And to do that, it sounds like the focus is through, what, digital media ventures? Digital mostly?
Jeffrey Pruitt: You know, mostly our concepts are around digital and software I.T. Our business accelerator, venture accelerator has practice management areas in product, strategy, marketing, accounting, finance. We can customize the models to a lot of companies to bring them through just commercialization process for companies getting to market through scale and through sustainability.
Ted Simons: It sounds like what I’m hearing there might be separate components. We have accelerator, we have venture management, and we will get to the competition High Tide. Is that accurate?
Jeffrey Pruitt: Yes, exactly. So the accelerator, we got into the business to commercialize companies. And well, a lot of companies will say - are you an incubator, are you an accelerator? And the definitions can get skewed sometimes. Incubators, typically are 501(c)(3)s or Arizona State-based Universities. And they do a lot of great education start-up, they do a lot of mentor ships and provide office space for people to think about their ideas and ideate. As you move past ideation and prototyping, you really get into validation, you get into scale and sustainability. And our accelerator focuses on all of those practice areas. On the venture management side, we will take on the governance of the companies with the founders, executive positions, CFO role and we will work with them, they become a portfolio company. One thing we are not doing is necessarily funding the companies, which is where High Tide comes in.
Ted Simons: Ok.
Jeffrey Pruitt: So if you think about having an accelerator which becomes an engine, and we have 20 people in our organization who are privately held company. And those 20 people focus on the commercialization of these companies, the hightide piece allows us to pull in capital and to move the companies through the process.
Ted Simons: So lets talk about Hightide. It sounds like a competition where all sorts of folks, start-ups are competing for what?
Jeffrey Pruitt: They are competing to get to the first top 20. Hightide started with -- launched October 31st. We are going to go out and try to validate more companies. Part of the reason we're doing that in Arizona, it has a stigma that there is not a lot of great ideas and the truth is there is a lot of great ideas. We don't validate our ideas in Arizona as well as silicon valley.
Ted Simons: Why?
Jeffrey Pruitt: Lack of capital, entrepreneur venture space, potentially lack of an ecosystem where everybody comes together and work on what validation means. Hightide is meant to open up the top of the funnel and get more good ideas in the funnel. We had over 100 applications. December 28th we will pick 20 of those applications and announce it and they get validation services, addressing the market, understanding the competition and looking at is it a feasible business plan. Six of those companies will then sometime in between January 8th and May 2nd, will get another set of dollars to go through our product market fit and go to market strategies work and we elevate the companies at an event May 2nd, which will bring other organizations to try to bring a lot of connectivity around groups like the GPEC Arizona Commerce Authority, other incubators and try to bring all of the companies together with some of the angel groups like Atiff and Desert Angels and promote the company ideas and try to bring that connectivity in the valley together for innovation.
Ted Simons: So when you get down to the final six, these are folks that are -- this is serious business here. These are folks that have a really good shot at some pretty big things.
Jeffrey Pruitt: You know they have a fantastic shot. The idea is, you are eliminating some of the due diligence risk by doing all of this work. I think we will have a great gravitational pull, hopefully get their questions answered that they want and these companies have a grate shot for follow on funding and potentially take them on as venture management too and maybe that will be our next round of venture management.
Ted Simons: It almost sounds like this is a great competition for you to see what is out there.
Jeffrey Pruitt: It gives us a great spotlight on what is out there in the valley. It’s very interesting, and in Arizona, you’ve got a lot of gret entrepreneurs, lot of spirit around that, and so for us it is just a great place to look at.
Ted Simons: Is there any -- I ask this of all -- we do a lot of accelerator and incubator stories here on Arizona Horizon, because it is exciting. It is nice to see these kinds of things growing. But you wonder, once they get the capital and get going, are they going to stay here?
Jeffrey Pruitt: You don't want to force them to stay here. You don't want to limit the competition nationally by forcing someone to stay here by using your dollars to say you have to stay in Arizona. But if we are creating the progress, innovation, and connectivity, people will want to stay here. You need to show them that you have an ability to take a company from an idea, validate that idea, and then know how to commercialize it and get it to sustainability. Companies will want to stay here. You often here that BC’s out of state will pull them into their states. That is not true. If you can get them into a B round, A round, and lead that first institutional round here, they will stay here.
Ted Simons: December 28th, narrows down then and then May 2nd, we find out who the 6 finalists are?
Jeffrey Pruitt: You get the six before then. I think it is two months after December 28th, and then by May 2nd, we will be presenting those six at a nice event.
Ted Simons: These are companies that we may hear about in the years to come.
Jeffrey Pruitt: We hope so.
Ted Simons: Hey, its good to have you here.
Jeffrey Pruitt: Thank you very much.
Colorado River Basin Study
- We’ll take a look at what a new report new says about the Colorado River’s ability to meet Arizona’s growing need for water with Sandra A. Fabritz-Whitney, the Director of Arizona’s Department of Water Resources. The Colorado River Basin Water Supply and Demand Study is being released this week at the Colorado River Water Users Association Annual Conference in Las Vegas.
- Sandra Fabritz-Whitney - Director, Arizona Department of Water Resources
| Keywords: colorado
Ted Simons: The Colorado river provides water to 40 million people in seven western states, including Arizona. But supply is not keeping up with demand, and it will only get worse due to population growth and the effects of Global warming. That, according to a report released today by the U.S. department of interior at a conference of Colorado river water users in Las Vegas. The "Colorado River Basin Water Supply and Demand Survey" defines current and future water needs, and it identifies a wide array of strategies for dealing with projected shortages. For more on the report, I spoke with Sandy Faybritz-Whitney, director of the Arizona Department of Water resources.
Ted Simons: Thank you for joining us tonight on "Arizona Horizon."
Sandy Fabritz-Whitney: Thank you very much for having me tonight.
Ted Simons: This basin study, what exactly was looked at and what exactly was studied?
Sandy Fabritz-Whitney: The study is a collaborative effort between the U.S. bureau of reclamation and the southern basin states, and what we looked at was water supplies and demands on the Colorado river for the next 60 years. We're looking for balances.
Ted Simons: How much of an imbalance is there that you can see and how much of an imbalance do you foresee?
Sandy Fabritz-Whitney: Several scenarios were looked at. We looked at several different options for population growth, demand, how demands were going to be expressed in the future. On average, the imbalance that we found in the future, in 2060, was about 3.2 million acre feet.
Ted Simons: What does that mean in real water?
Sandy Fabritz-Whitney: Acre foot is enough to supply a family of four two or three families of four for a year. One-acre foot could cover that.
Ted Simons: We have the study looking at those sorts of things and focuses on what, utilities, agriculture, urban, the whole nine yards?
Sandy Fabritz-Whitney: Everything. We are looking at municipal and industrial demands, agricultural demands, healthy river, environmental demands, power, recreation, everything that you can imagine we looked at it.
Ted Simons: What about climate change?
Sandy Fabritz-Whitney: Climate change - this is one of the first studies this we included climate change into and it is a factor in the outcome of it. The 3.2 is a result of climate change.
Ted Simons: For the most part do you think or --
Sandy Fabritz-Whitney: No, not entirely. I think it is obviously a combination of efforts. The river -- we knew the river was over-allocated several years ago. Climate change is obviously going to have an impact on that.
Ted Simons: What does this mean as far as water in Arizona is a concerned? Allocation for water in Arizona, and, again, what we are seeing down the line in the future, if nothing much changes?
Sandy Fabritz-Whitney: Well, that is the important thing about this study. If we do nothing, we are looking at significant -- a significant imbalance in the state between what the river can supply to us and what we will have available. The Colorado river is not our only source of water in this state. We have water, depending on where you are in the state, in the Phoenix area, you also get water from Salt and Verde rivers, we have groundwater development throughout the state and other rivers in state that supply water. The Colorado river supplies approximately 40% of our total water use in the state. A lot of that is to agricultural water users. That has been shifting over time historically it was predominantly serving agriculture. But that is slowly shifting over time. So, the impact is again, we would have to rely on other sources. We would have to go to groundwater, which has its own problems and we have addressed that in the past.
Ted Simons: In the past as well, I was reading up on some of these studies, you looked at water banking and coordination of operating Lake Mead and Lake Powell and these sorts of things. How did that work in the past and how do you see it working in the future?
Sandy Fabritz-Whitney: Those are a couple of good examples of things that we have done already. In Arizona, we have a history of finding -- we have problems, we are an arid state, limited resources and supplies. And what we have done, going all the back to salt river project in the early 1900s, you had farmers who put their land up as collateral to build a dam and a whole reclamation system and then you go into the development of the central Arizona project which took over 50 years to get that in place and funded and built. And then you have things like the groundwater, code, 1980 groundwater management act which addressed ground water depletion in the center parts of this state. All of these are similar efforts where we had an extensive planning process that went into it and then that was the solution that came out of it. Now we are on the precipice of another -- we have something in front of us and it is time to do something.
Ted Simons: Do something like what?
Sandy Fabritz-Whitney: Well, an example, there is no single solution. And that is I think important. You are looking at seven different, very different states. You have the country of Mexico involved in this. You have all sorts of different types of water users, from agriculture, municipal, environment. And so we have to look at solutions across the region. We have to look at local solutions and we have to look at regional solutions. Water conservation is one example of something that we can do. But you can't rely solely on water conservation to address this imbalance. We will have to do augmentation projects, whether it be something like the desalination plants – working with New Mexico on doing desal in the Sea of Cortez. And providing -- basically developing new water sources. We have reuse is an option for us. Arizona is one of the very states that leads the nation in the reuse of water. Reclaimed water using it for, you know, non-potable purposes or even some day looking at potable purposes.
Ted Simons: Yeah, perhaps.
Sandy Fabritz-Whitney: Yeah.
Ted Simons: I notice as well water banking in the upper basin is considered something to look at. Is that something that folks in the upper basin are considering?
Sandy Fabritz-Whitney: Well, I think it is an option that has been put on the table. And right now what we have in the report are several very, very diverse options for us to look at. The upper basin hasn't bought into it yet. These are things that we are going to have to look at. We do water banking in Arizona where we store water for the future, and basically what we are storing water for specifically is to protect ourselves against future shortages. I think the big thing for Arizonans to look at out of the study is, you know, what have we already done to protect ourselves against these imbalances? We have done quite a lot -- we have done extensive projects and management in this state to protect Arizonans?
Ted Simons: So with that in mind, last question, as far as a call to action for some of the ideas to be implemented, are these state ideas, federal ideas, combination of both, regional, cooperative? If they are state ideas, are you looking at preemption problems here somewhere down the line?
Sandy Fabritz-Whitney: Well, they are a combination of all of those things. We have to look for local solutions, regional solutions and basin-wide solutions. The call to action really is going back to our roots, and we need to plan, which we have done this, and now we need to invest. Because some of these larger-scale projects, like the CAP, Salt River Project, very large projects. The financing and funding for those things takes a long time. We have an opportunity to maybe look at alternative ways to do funding. Does it have to be all federal funding? No. I think working with the nongovernmental organizations might be another way to help fund some of those things if you can find a benefit, mutual benefit for the environment and water users.
Ted Simons: All right. Very good. Good information. Thank you for joining us.
Sandy Fabritz-Whitney: Thank you so much.
Medical Marijuana update
- Will Humble, Director of the Arizona Department of Health Services, discusses his department's oversight of the State’s medical marijuana program and provides an update on this year’s flu season.
- Will Humble - Director, Arizona Department of Health Services
| Keywords: marijuana
Ted Simons: Arizona's first medical marijuana dispensary opened up for business last week in Glendale. Another dispensary in Tucson opened yesterday. Here to talk about the new dispensaries is Will Humble, director of the Arizona Department of Health services. Good to see you again. Thank you for joining us.
Will Humble: Good evening and thanks.
Ted Simons: So we got a 25 mile zone in Glendale and now in Tucson, as well.
Will Humble: Once a dispensary is up and running, folks that live within 25 miles of that dispensary will no longer be allowed to cultivate marijuana on their own like we have been allowing up to now. The exception is that we will be grandfathering in the cards currently in folks wallets now. When they come up for renewal, we will do the math and see if they are within 25. If they are, we won’t approve the cultivation.
Ted Simons: Next one set to open Cochise county?
Will Humble: Yeah, so one opened yesterday in Tucson, right? And then we approved a dispensary in Cochise county today. They are not ready to open yet. They need a week or so to get their inventory and everything ready to go. Probably Cochise county will be the third dispensary next week I’d say.
Ted Simons: Ok. Let's focus on Glendale. Any problems with their opening?
Will Humble: So far so good. Everything seems to be in compliance. Our team was out there and verified that everything was in order. And by the way, that inspection went very well. They were ready from the get-go. So, that place was -- met all of our expectations and still does.
Ted Simons: And how does the process of buying medical marijuana -- start with this one dispensary, how does it work? Is it like a grocery store? Like a pharmacy where you have to show -- how does that work?
Will Humble: Everyone has an I.D. card. Ted, let's say you have a medical marijuana card. You walk in, you have your card with you, and you meet the person at the door, behind the kiosk or whatever and you hand your card to them and they would go online and verify that that is a real card that it is not a counterfeit card. That inquiry will go to our computer data base and they will verify whether that is your card, whether we issued the card and it is valid. So now they know you are a real patient with a real card. You would have a consultation with somebody – a dispensary agent that talks with you about your medical condition and what you are asking for in terms of quantity, etc., to come up to some sort of a decision about how much to sell you, and then you would pay for the marijuana, you would get the marijuana, and you are free to go. There are some things that happen internally also inside the dispensary if you want to talk about that.
Ted Simons: Yeah. Well I hear that some of the literally labeled, things like Purple Urkle and that sort of business. Do you sit there and point it out, examine the goods? How do you choose what you want to purchase?
Will Humble: The patient gets to choose, right? Our role is to make sure that they do not buy more than 2.5 ounce every two weeks, because that’s the statutory language that was used by the voters. The folks can only buy 2.5 ounces every two weeks, that is the maximum from a dispensary. So, when they made that sale we talked about, the dispensary agent goes into the computer and records how much they sold to you as the patient, and that goes into our data base. Then we have a global data base that will cover statewide just to make sure that someone is not dispensary hopping to try to get over the 2.5 ounce every two week limit.
Ted Simons: So recording that data is required?
Will Humble: Yes absolutely.
Ted Simons: Now apparently the Glendale operation is cash only. Is that required?
Will Humble: No, that is not required. They could take cash, credit cards, etc. What we do require is that the dispensary keep meticulous records about every sale, how much they sold, what the revenue was. Because remember, each of the dispensaries need to be nonprofit, that was in the the voter-approved language. These are not supposed to be profit facilities. And so we require them to keep good financial records as well as inventory and everything else. And we are going to be auditing that with some professional accountants that we hire to make sure that the books are straight and are not using the shell game.
Ted Simons: It sounds from reports as though an ounce of pot at this particular dispensary goes to $55 to $60 at this dispensary. Is that a set price or is it an open market out there?
Will Humble: I don’t know about that. I just honestly don't know how much the stuff costs. It is an open market.
Ted Simons: It is an open market?
Will Humble: Yes. We do not and will not be regulating the prices at the dispensaries. And so here in the valley, probably there is going 40 or so dispensaries. And there is going to be upward of 70, 80, maybe even $90 statewide. So there will be some competition. Folks can go from place to place and shop for price and eventually there will be advertising price. I am not sure.
Ted Simons: And it sounds like the Glendale dispensary sells things like brownies and candies with marijuana in there, is that allowed? Is that okay?
Will Humble: I don't believe that dispensary is doing that.
Ted Simons: But can a dispensary do that?
Will Humble: A dispensary can, but it is not as simple as that. Because now you are moving from just marijuana to food. And so if a dispensary wants to do that, they can. But they need to get a restaurant license from us as well.
Ted Simons: Oh, ok.
Will Humble: Making sure that the food -- not just the fact that there is marijuana in it, but is that brownie being made under sanitary conditions in the first place, are they baking it to the right temperature and all those kinds of things. So they can, but it is another level of regulation that would be required before they could do that.
Ted Simons: A couple of more questions on this regarding what these dispensaries are required to do. They have to be open a certain amount of time.
Will Humble: Yes, one of the regulations that we put in our rule was that dispensaries need to be open at least 30 hours per week and have enough inventory to sell to people. So, it doesn't mean everyone has to get 2.5 ounces if that is what they want, but they need to be available, open for regular business and be able to sell to customers that come, you know, through the door, at least 30 hours a week. But what we didn't want to have was shell dispensaries that were going to be there and not be in operation. If you are going to be a dispensary, actually be one. Have enough inventory, get your act together so you can have enough inventory for the folks that walk through.
Ted Simons: And if you don’t have it? If everyone walks in buying 2.5 ounces and you are out of it quickly, that becomes a problem?
Will Humble: That is a problem. So one of the things I think you will see, at least initially, is most of the dispensaries when they get up and running, will be selling small quantities at first because the supply chain is not there yet, their cultivation facility might not be fully operational or because of them are simply getting from care givers at this point still.
Ted Simons: So last question on this - Sun City operation is in the courts right now, not the Glendale operation, that’s open for business.
Will Humble: Right.
Ted Simons: But the Sun City is a different one. What is the latest?
Will Humble: That is a zoning case,where Maricopa county was unwilling to sign a zoning paper requirement that we require to process the application. So the applicant sued us, that went to Superior Court. The judge ruled in favor of the plaintiff, in other words, the dispensary applicant won in Superior Court. And tomorrow at 11 o’clock, there is a hearing where I think Montgomery and Horne are appealing that ruling and asking for an injunction because they want to go to appellate court. We will see tomorrow whether the judge grants that.
Ted Simons: And again, that is a county situation, as opposed to the Glendale operation, which is a city dispensary?
Will Humble: Right.
Ted Simons: Okay. We have about a minute left here. It is flu season, isn't it? Flu season yet?
Will Humble: Yes, the number of cases doubled in the last week. So, when we see that happening, it usually means that it is really starting to circulate in the community and the real take-home message for folks is go get your vaccine before you -- before Christmas comes, go and get that at your local pharmacy. It’s real easy to do. And you will be glad you did so that you are not sick on Christmas day.
Ted Simons: What are forecasts showing as far as flu season?
Will Humble: A good match between the circulating strains and the vaccines. That is the main thing we look for at this time of the year to make sure that the shot you get is exactly what is circulating in the community. And it is. That is good news. When you get the shot, it gives you full protection.
Ted Simons: All right, good to see you again. Thank you for joining us.
Will Humble: Take care, thanks.