Governor's Race To Determine Future of Cannabis In Kansas

Photo from wikipedia commons

By Michael Hooper

Advocates for the legalization of medical cannabis in Kansas may want to vote for a Democrat or an Independent in the governor's race on Nov. 6.

Sen. Laura Kelly, the Democrat party nomination for governor, has supported efforts to legalize medical cannabis in Kansas. Kelly supports the Kansas Safe Access Act, a comprehensive medical legislation vetted by the Foundation of Cannabis Unified Standards (FOCUS) in Denver, and also approved by the Kansas Health Institute for meeting its 2015 health impact assessment requirements.

Independent candidate for governor Greg Orman has said he supports legalization of medical cannabis.

Jeff Caldwell, Libertarian Party candidate for governor, supports full legalization of medical and recreational cannabis. He also supports pardoning nonviolent cannabis users.

Republican Kris Kobach has publicly opposed legalization of cannabis. A June 29, 2018, report by Jonathan Shorman in The Wichita Eagle said Kobach opposed legalization of recreational marijuana and is highly skeptical of medical marijuana.

About 76% of Kansans support legalization of medical cannabis, according to a Spring 2017 survey of Kansans by the Docking Institute of Public Affairs at Fort Hays State University.

Kelly Rippel, a member of the Industrial Hemp Research Advisory Committee for the Department of Agriculture in Kansas, said in the 1970s his father Gary Rippel participated in a hemp eradication study. Researchers saw the effects of using 2,4-D to destroy hemp. This had consequences to the environment, including the loss of bobwhite quail habitat. The hemp growing near corn and bean crops had provided habitat for birds. What is so disturbing about policy in the 1970s was the willingness to destroy hemp even though it was known to have no THC.

Today, Rippel said, there is a growing number of Kansas farmers who want to grow hemp for industrial uses. Both state and federal governments need to make some changes to allow the hemp market to develop and grow. Hemp can be used to make clothing, building materials, rope and many other products. Henry Ford once made a car body out of hemp.

CBD, the nonpsychoactive ingredient in cannabis, is now legal in Kansas as a result of legislation signed by Gov. Colyer on May 14, 2018. 

Several states around Kansas already have chosen to legalize medical cannabis.

Oklahoma recently approved medical marijuana. For more than five years, Colorado has been making hundreds of millions of dollars in tax revenue from the sale of recreational and medical marijuana.

Thirty-one states have laws supporting the use of medical cannabis. Recreational use of cannabis is legal in nine states.

Laura Kelly, the state senator from Topeka, supports changing sentencing guidelines for cannabis use. She said the state's jails are full of nonviolent first-time offenders who probably just needed treatment, the Eagle reported.

Missouri is set to vote on whether to legalize cannabis on Nov. 6. There are three initiatives on the ballot, all three would legalize growing, manufacturing, selling and consuming cannabis for medicinal use. If that happens, Kansas will be surrounded by three states where medical cannabis is legal. The fourth state, Nebraska, decriminalized marijuana possession many years ago.

Kansas is likely to be among the last states to legalize cannabis. However, a new governor who supports legalization would make a huge difference in the next legislative session.

Kansas would create thousands of jobs if it legalizes cannabis and gives more support to the hemp industry. Kansas climate is ideal for growing hemp and cannabis. Plus, the state of Kansas could use the tax revenue from the sale of cannabis. 

If voters choose the Independent or the Libertarian candidates, they will split the vote and possibly hand the election to Kris Kobach.

A vote for Laura Kelly will achieve two things. One she will support legalization of medical marijuana. She already has previously demonstrated support for the Kansas Safe Access Act. Plus, a vote for her will likely prevent a Kobach outcome. Election of Kobach would be worse than electing Sam Brownback.

Emerson: The Greatest Liberal In American History

By Michael Hooper

Ralph Waldo Emerson is perhaps the greatest liberal in early American history.

In the 1830s, Emerson wrote letters and gave speeches against the movement of Cherokee Indians from their lands in Georgia, Alabama, Tennessee and North Carolina.

Emerson was an activist against slavery for many years, long before the Civil War. Emerson was part of a group of people from Massachusetts who sought to make Kansas a free state. In 1857, Emerson gave a speech to raise funds at a Kansas Relief Meeting in Cambridge, Mass. 

Emerson supported women authors and educators like Margaret Fuller. Emerson, perhaps more than any other thinker, influenced religion, poetry and literature and scholarship in America.

I have been reading "Emerson: The Mind On Fire" by Robert D. Richardson Jr." I also pulled out copies of his essays.

Emerson devoted his life to studying the Classics and modern thought in philosophy, religion and literature. He was obsessed with connecting to Nature, the divine, the universe, the eternal. He loved biography. He mastered the art of writing of an Essay and delivering a Speech. He craved knowledge from all cultures including the Persians, the French and the English. He learned languages so he could read books in their original texts. 

Emerson believed there was here in America a voice of its own, separate from Europe, a dynamic place of achievable greatness. Oliver Wendell Holmes was inspired from hearing Emerson's speech, The American Scholar, in 1837.

Emerson studied the common sense Scottish philosophers and Plato, Shakespeare, Goethe and many religious texts. In religion he sought to strip away third parties between man and God and to promote a direct personal link with Nature. Indeed he believed all of humanity is in your soul, the answers to living are already inside of you, the knowledge to achieve a better life is there if we can only listen to it and extract it and apply it to our daily lives.

He invited many people to come to his home in Concord and share ideas for days, sometimes weeks.

I'm impressed with his handling of Jones Very, a zealous poet who had a Dante like religious experience with God and hell. Emerson saw in him some talent to express these joys he had experienced and helped publish a book of his poetry.

Emerson was part of a group of authors, educators and religious people who discussed and promoted Transcendentalism. The Transcendental Club's ideas were  published in The Dial.

Emerson led the literary salon of Concord and New England. Authors like Henry David Thoreau, Nathaniel Hawthorne, Caroline Sturgis, and so many others communicated with him often and sometimes lived with him.

The daily walks to Walden Pond would have been a joy to participate with Ralph Waldo Emerson. He knew the name of every plant and tree, he can recognize a bird with its sound, he cherished the sunlight in the trees. He built a large garden of fruit trees.

Emerson teaches us to connect with nature. Go to the forest and listen to the sounds of nature, and so many things disappear, the politics of the day, The Madness of the crowds, all disappear. And we are left with the Majesty of nature. And somehow in that cool repose, nature lifts us up, calms and inspires us.

Emerson had his share of struggles and tragedies. The loss of his son caused a deep sense of grief that never went away. He said that grief did not make him wiser or closer to nature.

But oh he was a wise man for sure. He had great capacity for joy.

Emerson said "it is better that Joy should be spread over all the day in the form of strength, than that it should be concentrated into ecstasies full of danger and followed by reactions."

Emerson is the ultimate rational mind, the stoic with an inner burning fire, held in reserve, ready to accomplish multiple things in one day. He wrote over 120 journals. He indexed his journals so he could find material for his essays and lectures and sermons.

Emerson is sublime. His wording is beautiful. He writes as if he is talking to the gods. The words are part of the divine, part of humanity and philosophy and the universe. He is the ultimate transcendentalist because his ideas are always rising to the highest of levels, influencing for good, transcending mediocrity to greatness.

He lived a transcendental life because he was focused on the divine and looking for good in all people and all things.

In some ways it did not matter what he read because he was able to dig into the material and create new material in his own brain. I think the way he read was like a highly-skilled athlete or gymnast, somebody who is hyper alert to understand and analyze the words of the book.

Ralph Waldo Emerson is a hyper conscious individual who is connected to the universe grounded in the Earth. He saw injustice and was willing to speak out against it. He was widely respected in his day, so when he spoke out against slavery in Cambridge on Aug. 1, 1844, people listened. His Emancipation Address was a fiery emotional speech that called for the abolition of slavery. He had always opposed slavery but now he was ready to work actively and openly against slavery, wrote Richardson in The Mind on Fire.

Emerson spoke in favor of raising funds to help Kansas become a free state. He spoke in 1857 at the Kansas Relief Meeting in Cambridge, Mass. He said, "In these calamities under which they suffer, and the worse which threaten them, the people of Kansas ask for bread, clothes, arms and men, to save them alive, and enable them to stand against these enemies of the human race. They have a right to be helped, for they have helped themselves. This aid must be sent, and this is not to be doled out as an ordinary charity; but bestowed up to the magnitude of the want, and, as has been elsewhere said, “on the scale of a national action.” I think we are to give largely, lavishly, to these men. And we must prepare to do it. We must learn to do with less, live in a smaller tenement, sell our apple-trees, our acres, our pleasant houses. I know people who are making haste to reduce their expenses and pay their debts, not with a view to new accumulations, but in preparation to save and earn for the benefit of the Kansas emigrants."

Emerson was truly a man ahead of his times. There are descendants of Emerson living today. Kansas and America and the world are the beneficiaries of this great man.

Runza Looks To Expand Into Northeast Kansas

By Michael Hooper

Nebraska restauranteur Runza is looking to expand outside of Nebraska.

Based in Lincoln, Neb., Runza is looking for franchisees in Iowa, Colorado and Kansas, including northeast Kansas towns of Sabetha, Seneca, Hiawatha and Belleville, Kan.

Runza currently has 84 locations, most of these are in Nebraska. Runza's locations outside Nebraska are Council Bluffs, Iowa, Clarinda, Iowa, Lawrence, Kansas, and Loveland, Colorado.

Runza is known for its German sandwich, with ground beef seasoned with a secret blend of spices and mixed with cabbage and onions. All wrapped up in fresh-baked bread. Runza also makes great hamburgers and onion rings.

It's interesting that Runza is marketing on its website for franchisees in the smaller towns like Sabetha. Many of their Nebraska locations are in small towns with less than 10,000 people. They believe there are enough economics in Northeast Kansas to make it work. There is a Runza in my hometown of Clarinda Iowa, a town of 5,385 people.

In Sabetha, there are just a handful of options: Sonic, Pizza Hut, Subway and Casey's and the El Canelo Mexican Restaurant.

The franchise fee for a Runza is $25,000 which is reasonable considering Sonic is $45,000.

Runza locates in 2500- to 3600-square-foot places, 

Runza requires a 5-percent monthly royalty fee paid to Runza National exclusive of sales tax. Runza also requires 1% of your gross sales to go to a long-term Improvement fund to update your restaurant. And 1% of gross sales will go to advertising production fun for the development and execution of advertising and public relations campaigns.

In addition, you must spend 4% of gross sales for marketing in your local market. so all of that is 11% of gross sales which is a lot. The margins in restaurants vary. It really depends on volume, if you get a lot of volume everyday you can make some good sales numbers and pay the bills and have a margin of 15% or even 20%.

I like the Sabetha market because there's a lot of activity going on around here, at the intersection of Highway 36 and Highway 75.

Sabetha employers include Wenger Manufacturing, Mac Equipment, ADM, Buchheit Logistics.

I believe a Runza would do very well in Sabetha for several reasons. It's close to Nebraska, people in those parts are familiar with Runza. A lot of commuters work in the local Industries. Unemployment is low. There are jobs and there is discretionary income for going out to eat at the local restaurants.

Terry Krepel and David Tangeman contributed information for this article.

How To Save $100,000

By Michael Hooper

Today millions of people around the world are suffering from too much debt and no liquidity, no cash, no reserves.

But with perseverance and dedication it is quite possible to pay down debt and save $100,000. This goal requires a lifestyle change. A hatred of debt and a love of savings. A desire to work overtime, or take a second job, to earn more money to pay off debt and save money. A willingness to do without, to sacrifice now, so you will have it easier financially in the future.

There comes a time in everybody's life when they face choices -- tough decisions, a crossroads, a line in the sand. It is at these crossroads we must decide how we want to live. I once came to the crossroads when I carefully examined my credit card bill and realized I was paying $44 per month in interest. This was $44 going to the bankers on a $2,000 debt. A light bulb came on, I decided I'm not going to take this anymore and I sent $200 per month to the credit card, and paid off the debt in 11 months. I vowed then never again to work for the bankers. They are going to work for me. How do we make the bankers work for us? Save money and earn interest on our savings accounts. Indeed, open multiple accounts, checking accounts, savings accounts, brokerage accounts, individual retirement accounts and participate in the 401(k) at work.

The checking account is a temporary holding place for money, it will never grow, somehow all the money in the checking account is spent. So when pay day comes around quickly move money out of the checking account into these other accounts. 

Downsize to upsize. Develop good habits that produce health, wellness and savings, a way to live below your means, the ability to save 10% or even 20% or 30% of your take-home pay.

Here are 10 steps to save $100,000.

1 Take a hard look at your budget and find a way to cut your expenses so you are living within your means, your take-home pay. If your take-home pay is $2000 per month, find a way to live and operate with $1800.

2. Open up a savings account and deposit money into this account every payday. Pay yourself first. Even if it is just $50, this is your personal private paycheck.

3. Open up a brokerage account at Charles Schwab or Ameritrade. This brokerage account will be a tool to achieve  retirement. Save money every month into this account. When you have $1,000, purchase shares in a Standard Poor's 500 Index Fund or ETF, a popular ETF is SPDR S&P 500 ETF Trust (SPY). The S&P 500 index funds and ETFs have low expense ratios and are easily purchased or sold with lots of liquidity. The S&P500 is the standard by which large cap mutual fund managers are measured, but most cannot beat the index. So why not invest in the index?

4. Participate in your company 401K. If the company has a match of 5% of your pay then you should put in 5% of your pay. Because this is a double your money program. You can't beat free money. Put all 100% of your contributions into your 401k into the S&P 500 Index. Its returns average about 10% per year. 10% is a fair return, Using the rule of 72, 72 / 10 equals 7.2 years to double your money.

5. Acquire quality things at fair prices. Don't buy frivolously, never borrow to buy anything, don't binge shop.

6.Don't gamble your money away. Don't waste money on lottery tickets and gambling machines, I never won. Chances are you won't either. I know people who spent hundreds of dollars per month on gambling and could have easily turned that into tens of thousands or even hundreds of thousands of dollars over time if they would have put the money into the stock market at the same regularity they put money into gambling devices and lottos.

7. Live a lifestyle that produces wealth. Live frugally, watch expenses and save money every day.

8. Race to pay off debt. Send extra payments to credit cards to quickly pay them off and never use them again unless you pay them off at the end of every month, to avoid interest and penalties. After all credit card debt is paid off, then send extra payments to your mortgage on your house. Pay off your house quickly, you'd be surprised at how much a little every month will add up to a lot over several years and cut down your term of your loan substantially. We paid off a 15 year loan in eight years by sending extra payments every month.

9. When you finish a series of debt payments, send the amount of the monthly debt payment to your brokerage account. Build up your brokerage account into a substantial amount of investments.

10. Follow these guidelines every day for one year and you should have an increase in your net worth. Do this for many years and you will have $100,000 or more. 

Why I'm overweight Berkshire Hathaway and the S & P 500.

Why I'm overweight Berkshire Hathaway and the S & P 500.

                                Michael & Heather Hooper at the Getty Center, Los Angeles.

By Michael Hooper

About two-thirds of my Investment Portfolio are two Equity positions. One-third is in iShares S&P 500 Index ETF (IVV), a core S & P 500 ETF. The other third is in Berkshire Hathaway, a stock I began buying 21 years ago. 

In the early 1990s a friend of mine named Leroy Fletcher told me his investment strategy, his 401k was all invested in an S&P 500 index fund. He also had a brokerage account where he traded stocks to some degree of success but always depended on the S & P 500 to create enough wealth to retire on, which he did successfully and has continued to live an amazing life. 

The S & P 500 is the standard by which all big cap mutual funds are measured, but most money managers cannot beat the index. So why not just own the index? So far this year the S&P 500 is up around 7% through August 23rd 2018. Meanwhile the performance of Emerging Markets and international Investments have lagged behind the performance of the S & P 500. Earnings growth is higher here in America than overseas, largely because of a growing economy that Trump inherited from President Obama. We've seen the longest bull market in history. Trump's tax cuts for corporations are also driving stock prices higher.

It's a good time to be overweight US stocks because economic indicators are bullish. Unemployment is low, consumer spending is strong, retailers did well over the summer. People are buying houses and spending money at Home Depot.

I like Berkshire Hathaway because of its tremendous collection of great businesses, like BNSF Railway, Precision Castparts, Geico and BH Energy Group. The 100 companies owed by Berkshire Hathaway generate tremendous amounts of cash every month. Warren Buffett has excellent managers who are leaders in their fields.

Berkshire Hathaway is prepared to buy back shares of its stock. The company in July 2018 changed its policy for its buyback program, now it's more liberal, managers are not restricted to buying only at 1.2 times book value but may buy at higher levels. Now the policy allows management to buyback stock when they believe it is trading below intrinsic value conservatively estimated.

I had seen Berkshire Hathaway stock price fall to 1.35 x book value over the summer when the B shares were trading at 187 per share. Then Berkshire Hathaway made an announcement about his buyback policy and the stock jumped 5%. Now the stock is trading somewhere around 206 per share and the stock is trading at 1.42 times book value. 

It's hard to compare Berkshire Hathaway to any other company because it's so unique, however General Electric is a conglomerate with Industrials.

I remember when General Electric was trading at 3.01 times book value. I knew eventually GE's market value would fall because there was no reason to be valued at such a premium when it's having some problems.

Even though GE stock price has fallen dramatically to about $12.50 per share, the stock is still trading at a premium to Berkshire Hathaway relative to the measure of price-to-book ratio. GE's Price to Book ratio is 1.965 compared to Berkshire's 1.42 price to book ratio.

Berkshire Hathaway has traded at 1.5 times book value in the past and I suspect it will again when people realize it's still cheap compared to its peers.

I like the fact that Warren Buffett has been hoarding cash over the past couple of years while stocks have been at relatively high prices based on PE ratios.

Perhaps Buffett is getting prepared for the next downturn, whether he's around or not. With over $100 billion in cash, there is a lot of capital available to be deployed when the time is right. Warren Buffett is best in a downturn, just look at how he performed during the economic crisis of 2008 2009 when he bought BNSF Railway and made a bunch of deals with loans with high interest rates to Major Banks like Goldman Sachs. Let's face it Buffett made a killing on the stock market crash, investing at the bottom and watching valuations double and triple over the next nine years. His returns have been outstanding.

The last stock market crash was one of the greatest money-making opportunities of my lifetime. Buffett has seen plenty of opportunity with the cheap stocks of the 1970s when he was buying some stocks at three times earnings. he bought BNSF Railway at 18 times earnings in 2010 but saw a long Horizon of earnings, making an all-in bet on the US economy at the time. The railroads have rebounded and are chugging along hauling goods before the US tariffs are enacted. In the last quarter BNSF hauled tons of steel. Manufacturers need the steel because consumers are demanding these products but eventually things will slow down someday. The Tariffs proposed by Trump will probably be a factor in the next recession. 

It's hard to say when the next recession will happen but I predict that stock indexes could possibly be the same today as they are a year from now. Sometimes policies take six months to take effect but already we're seeing some reduction in sales of products that would normally go to Europeans but because prices will be higher under the tariffs foreign customers are balking at buying US boats for example.

So when there's another downturn -- and believe me there will be another recession -- I couldn't think of a better company than Berkshire Hathaway to have in my portfolio, a company with expertise in how to profit from downturns. 

I sold most of my Bitcoin and all of my ethereum. I diversified my profits into gold, cannabis stocks and house improvements with a trip to California to celebrate 25 years of marriage with my wife Heather. Sometimes, it is best to take a profit and diversify the gains.

Lee Enterprises To Manage Warren Buffett's Newspapers

By Michael Hooper

An agreement between BH Media Group and Lee Enterprises Incorporated will give the two corporations control over most of the daily newspapers in Nebraska.

The Lincoln Journal Star, owned by Lee Enterprises, is a longtime rival to the Omaha World-Herald. However, both newspapers will be under management by Lee Enterprises through a new contract with Berkshire Hathaway's BH Media Group effective July 2, 2018.  Berkshire Hathaway is paying Lee Enterprises $5 million per year to manage BH Media Group newspapers.

Some Nebraska properties owned by BH Media Group include the Grand Island Independent, the Kearney Hub and the North Platte Telegraph.

An Omaha World-Herald story of the departing of Terry Kroeger, chairman and CEO of BH Media Group, signals a new path as Buffett favors the alliance with Lee Enterprises for management of the media properties.

During a conference call, Mary Junck, executive chairman of Lee Enterprises, said the alliance with Berkshire Hathaway is an attractive strategic alliance that will improve cash flow and debt reduction. She said Lee will manage the BH Media properties "the same way we manage our own."

Kevin Mowbray, Lee president and CEO, said Lee will work with BH Media Group publishers to develop a plan to improve revenue and reduce costs.

He said there was no plans for immediate changes.

I would expect over time Lee Enterprises to encourage management to reduce cost. Perhaps layout and design of newspapers in Nebraska will be conducted in one central location. Printing process can be consolidated in one central location. 

Newspapers are struggling, they have been losing to Google and Facebook for years. 

An article published by the Pew Research Center says; The estimated total U.S. daily newspaper circulation (print and digital combined) in 2017 was 31 million for weekday and 34 million for Sunday, down 11% and 10%, respectively, from the previous year. Declines were highest in print circulation: Weekday print circulation decreased 11% and Sunday circulation decreased 10%. 

Warren Buffett has an expertise in handling the demise of an industry. Berkshire Hathaway itself was in the dying textiles industry in America in the 70s and 80s. He eventually shut down the textile mills. And focused on acquiring quality businesses. He tried to buy the Omaha World-Herald in the 1970s, but it wasn't for sale. He found the Buffalo News.

It's interesting to note the Buffalo News is not part of this BH Media alliance with Lee Enterprises.

I think Buffett is looking for a way to improve efficiencies in a newspaper industry that is losing traditional subscribers.

My colleague Terry Krepel had this to say, I believe all Lee papers in Nebraska — Columbus, Fremont, Beatrice — are already printed at the Journal-Star plant. The World-Herald will likely keep its own plant, but there’s not a lot else that can be done there either, unless Lee does something like having its paper in Sioux City printed in Omaha (not outside the realm of possibility, given that the Wichita paper is now printed at the Kansas City Star). Otherwise, it appears that Nebraska is the only area where BH and Lee operations have any sort of significant overlap.

The more likely source of cost savings will be in creating design and layout hubs. Lee is already heavily into that, BH not so much as far as I can tell. I was surprised that the Independent and the Kearney Hub apparently do not do much in the way of consolidation — the Hub has its own copy editors and still runs its own printing plant. I suspect the Lee deal will hasten the shifting of Hub printing to GI and a creation of a design hub that probably at the start will include the BH papers in GI, Kearney, North Platte and (maybe) Scottsbluff (perhaps all shifted to Omaha) and then ultimately folded into the Lee design hub system. The Scottsbluff paper might see some consolidation with the Lee paper in Casper, Wyo.

Lee got itself in trouble by selling off its TV stations to focus on newspapers, then paying top dollar for the Pulitzer papers just before the industry tanked. Lee filed bankruptcy in 2011, after which BH bought a piece of the company and helped it refinance its debt from buying Pulitzer. Lee’s been basically on the sidelines the past few years focused on trying to shore up its operations while BH and GateHouse were snapping up most of the papers that came up for sale. The management deal is probably a precursor to a full merger between Lee and BH down the road.

Warren E. Buffett, chairman and CEO of Berkshire Hathaway, said: “I love our newspapers and am passionate about the vital role they serve in our communities. Although the challenges in publishing are clear, I believe we can benefit by joining efforts. Lee Enterprises’ growth in digital market share and revenue has outpaced the industry. Lee also has led the industry in overall innovation and performance, all while faithfully fulfilling its public trust as an indispensable source for local news, information and advertising. Our missions and goals match exactly, our markets are similar, and we both have excellent managers. Operating together will strengthen both of us, and Lee is logical to lead the process.”

The author Michael Hooper owns shares of Berkshire Hathaway

The Six Stages Of Knowledge: From Nothing To Nothing

1. I don't know. This is the stage at which we accept that we know nothing.

2. The light bulb goes off. This is the stage of enlightenment.

3. This knowledge is exciting and valuable, I want to share it with all my friends. This is the stage at which very little is known but many people are quite evangelical about their newfound insight. Some reporters spend their entire lives at this stage covering the surface of things.

4. I have doubts about my knowledge. This is the stage at which we question what we know and begin to have doubts.

5. This area of knowledge is extremely complex with multiple angles and dimensions. This is where the scholar spends much of his life deep in the trenches trying to figure things out. The scholar may write several books trying to put clarity to the subject.

6. I don't know. This is when we worked our entire lives trying to figure things out and we give up.

--Michael Hooper