is this where the “down arrow” is?
Yes, the down arrow opens the flyout menu.
Notice, that there is no “insert quote” available - it is grey. This document is a formatted note.
Development would have to weight in on if HTML formats will be supported for this command.
However, you can still easily copy and paste since you already have text selected. You can ever drag and drop text to the Annotation file, including in the inspector.