---Content behind pay portal----
“Look at this,” Simpson said, motioning around the company’s headquarters, which take up a good chunk of a business park out on Northeast Airport Way. “We have 163 employees in Oregon. We support Oregon farms. We create jobs for Oregon. I’m a proud Oregonian. I take that personally.”
It’s a point of some sensitivity as more Oregon cannabis companies, looking for the capitalization needed to survive a sector overcrowded throughout the supply chain, https://www.bizjournals.com/portland/news/2018/07/16/canadian-company-spends-millions-acquiring-oregon.html turn to the Canadian public markets
Simpson was ahead of the curve there, https://www.bizjournals.com/portland/news/2017/03/23/a-big-pot-deal-golden-leaf-holdings-says-its.html striking a deal to sell his company Chalice Farms— with cultivation and processing facilities and four retail outlets — to Golden Leaf Holdings in March 2017.
The deal, though, brought more baggage than riches, Simpson said, and the year-plus since hasn’t been easy. There have been massive losses and http://thecse.com/en/listings/diversified-industries/golden-leaf-holdings-ltd" the company’s stock is wallowing in the teens — in cents, not dollars.
But Simpson is confident that the company is now positioned to succeed, cleaned up and with the right strategy in place: vertically integrated operations in Oregon, California, Nevada and Canada, coupled with a novel plan to franchise Chalice Farms outlets everywhere pot is and becomes legal.
“We’re super-penalized and undervalued right now thanks to the old regime,” Simpson said. “It’s going to take multiple quarters to prove what our true value is. But in a year or two or three, it’s going to be a very different story.”
Put in charge
Though it wasn’t his plan, he said, within weeks of the Golden-Chalice deal closing, Simpson became the CEO. (One of the first things he did was announce that the company’s manufacturing, operations, sales, marketing and finance functions would be at the Chalice Farms headquarters in Portland. Sorry, Canada.)
The reason the new board put him in charge, Simpson said: “It turned out that Golden needed to buy our company to stay afloat. They needed the new story, the Chalice pieces, to go out and raise funds.”
Facing a cash crunch, Simpson, 38, took on that task, raising more than $33.5 million.
“Now we’re in a really good cash position,” he said.
Despite losing $56.1 million on revenue of $11.5 million in 2017, the company reported it had more than $20 million on hand as of the end of April.
“We’re in a really good position to do the things we want to do,” Simpson said.
One ambition is to continue to expand its sleek, Apple-store-like retail fleet, which now numbers seven.
Simpson thinks Oregon’s market is overpopulated with retailers, believing the current 500-plus shops will dwindle to 250 or so. But he wants a bigger share, and he’s not the only one.
“Chalice, along with Nectar and you can throw in La Mota there, feel like they can succeed where others aren’t as they develop supply chains and lower their cost structure,” said Beau Whitney, who worked for Golden Leaf before the Chalice deal and is now a senior economist at New Frontier Data, a cannabis industry analytics and consulting firm based in Washington, D.C.
Whitney believes superior supply-chain management, scale and branding will define who wins and loses, both locally and nationally.
“Supply-chain management is huge,” Simpson agreed. To make the point, he highlight the company’s new cannabis-infused fruit chews under the company's Golden label. They’re vegan and “wholesome,” Simpson said, and a 10-pack goes for $14 at retail.
The company is making about 9,000 a day in Portland, but has held off on pursuing new accounts because Simpson wants to be sure to be able to supply the current clients.
“If you go to market with something and people love it — and they love this product — and they want more, if you can’t fulfill behind it, that’s a big problem,” he said.
As part of a ramp-up, the company is about to open a big new CO2 extraction operation at its Portland headquarters, an investment of more than $2 million that will give Golden Leaf the ability to meet 20 percent of the demand for cannabis oil in Oregon, Simpson said.
“We’re perfecting the model here in a very competitive, consolidating market,” Simpson said. “That gives us a big advantage in California and Nevada.”
Ray Kroc-like
Meanwhile, there are the franchises. Or the idea of franchises, as none yet exist.
The concept was announced in March, and media around the nation found it irresistible. “Canada's Golden Leaf Wants to Carpet the U.S. With Pot Retail Stores,” Bloomberg said, adding that the company was aiming to become “the Starbucks or McDonald’s of weed.”
And that pretty much is the idea.
“We built a franchise offering just like any traditional franchise,” Simpson said. “It’s just that it’s Chalice Farms and it happens to be cannabis.”
The plan is a $50,000 fee for a franchise, and 5 percent of gross revenues.
“The amount of capital that I can raise isn’t going to grow the amount of stores that we want to see Chalice Farms grow,” Simpson said. “The natural evolution for us to expand our brand throughout the United States and internationally is a franchise.”
Other companies have expansion plans, but nobody has struck the franchise chord like Golden Leaf with Chalice Farms.
Brandon Rexroad, founder of Shango Premium Cannabis, said his company is pursuing a different model as it aims to expand. It has a trio of stores in Oregon and is looking forward to growing in California, Michigan, New Jersey and Florida, but is aiming to do so by owning stores, or doing licensing deals for the stores that the parent company, Rexroad Marquis Corp., doesn’t own.
“An issue is if you ever try to roll that up for an exit, there’s a lot more due diligence dealing with the franchises,” he said. “That becomes a big, complicating expense.”
But as Rexroad added, Golden Leaf has an advantage, already being public.
Still, Simpson said not to expect franchises to pop up into Subway-like ubiquity soon.
“We’ve gotten probably 100 inquiries, and we’re doing due diligence,” he said. “We’re going to play it close to the vest early, looking for pilot partners to really get the model in place.”
As for the first location for this not-Canadian company's franchises? They could be in Canada, where BlackShire Capital, which has signed a letter of intent with Golden Leaf to back the venture, is based.
Name: Golden Leaf Holdings
What it is: Cannabis company with production, processing and retail operations
CEO: William Simpson
Headquarters: Portland
Employees: 163
Revenue: $11.5 million in 2017
Submitted July 21, 2018 at 11:59AM by NineteenEighty9 https://ift.tt/2O7BwDp
No comments:
Post a Comment