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Kalyx's Sandoval on Real Estate for Cannabis Operations (Audio) · Bloomberg Intelligence

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  Speaker 1: Box and Jathlene Hayes on Bloomberg Radio. Some big forces
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  Speaker 1: have come together to lay the groundwork for the growth
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  Speaker 1: of a very interesting company. One part of it, you
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  Speaker 1: could say, is the all the cutbacks in retail bankruptcy
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  Speaker 1: is a very rapidly disrupted and changing space. Another part
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  Speaker 1: of it is half the states the United States allowing
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  Speaker 1: some kind of legalized marijuana now, and with all that
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  Speaker 1: marijuana production, where are you going to warehouse it? Where
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  Speaker 1: are you going to put it? Enter Calex Development. Don
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  Speaker 1: Sandoval joins me, now she's a CEO ce O O
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  Speaker 1: of Klex. She's here in our New York studio to
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  Speaker 1: talk to us about the real estate side of this business.
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  Speaker 1: Don welcome, Thank you. Kathleen's a pleasure to be here. So,
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  Speaker 1: first of all, Calix Calex Development, what do you do? So?
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  Speaker 1: Calex is in the midst of building a national portfolio
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  Speaker 1: of cannabis properties. We are the only cannabis reat currently
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  Speaker 1: and we have a six property portfolio concentrated out west.
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  Speaker 1: We have three properties in Colorado, one in Washington, and
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  Speaker 1: one in Oregon. We're in the midst of closing on
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  Speaker 1: our six property in Phoenix, Arizona in about two weeks time.
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  Speaker 1: And you've just launched your second private round of funding. Uh,
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  Speaker 1: so you're getting a lot of support in an industry
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  Speaker 1: that is maybe exploding is too strong of a word,
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  Speaker 1: but boy, it's growing fast. No, Kathleen, I would not
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  Speaker 1: say exploding is uh is too aggressive a term. I
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  Speaker 1: mean the fact of the matter is, UH, compound growth
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  Speaker 1: rates at a sales level are north of thirty over
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  Speaker 1: the last three years and expected to only accelerate from
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  Speaker 1: here on out. And what Calix is trying to do
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  Speaker 1: is really partner with some of the most established, well financed,
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  Speaker 1: well backed companies in the business right now. We provide
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  Speaker 1: not only space, but on a select basis, we provide
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  Speaker 1: tenant improvement funding so that operators may build out their
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  Speaker 1: space in a fashion that's more appropriate for them. Who
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  Speaker 1: is your typical client, Who is your typical customer? Who
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  Speaker 1: are you doing business? But give us an example. Sure,
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  Speaker 1: our typical tenant is in a established brand in the
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  Speaker 1: cannabis industry. They can produce products for both medical or
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  Speaker 1: recreational markets, or they can be a grow operation. So,
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  Speaker 1: for example, in the Colorado market, both Medicine Man Technologies
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  Speaker 1: and Dixie Brands are two of our tenants. How if
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  Speaker 1: you had not made this this switch in your career,
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  Speaker 1: you might be on the show right now talking about
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  Speaker 1: the bond market and where it's heading next. Because you
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  Speaker 1: were before you left Wall Street, you were a managing
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  Speaker 1: director and fixed income at BNP Para bah Uh. Following
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  Speaker 1: more than fourteen years a b of A and Goldman Sacks.
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  Speaker 1: You began your career at Solomon Brothers. Back what drew
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  Speaker 1: you to marijuana, Well, this is the big change for
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  Speaker 1: you to be the CE of calyx Well Kathleen. It's
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  Speaker 1: about six years ago that I began investing in the
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  Speaker 1: cannabis space, and at that time it was still very
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  Speaker 1: early in terms of a number of companies just getting started.
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  Speaker 1: It was taking a lot of single name or single
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  Speaker 1: operator risk, and as I progressed in that in that program,
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  Speaker 1: the we came to know Kalix. I came to know
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  Speaker 1: Kalix Development. And what originally attracted me so much to
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  Speaker 1: the Calyx strategy was the fact that it was a
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  Speaker 1: scalable business. Real estate is a scalable business, and it's
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  Speaker 1: also a diverse business that can be well diversified. So
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  Speaker 1: if you look at the Kalix portfolio, not only does
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  Speaker 1: it have diversification across multiple states, but it has diversification
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  Speaker 1: across type of operator. So we have both UH product
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  Speaker 1: manufacturers as well as cultivators among our tenants. And so
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  Speaker 1: from an investment perspective, it's that type of diversification across geography,
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  Speaker 1: across UH tenants, across types of businesses that provides a
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  Speaker 1: good risk buffer. On top of that, the Kalix strategy
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  Speaker 1: is a kurd by bricks and mortar assets. So even
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  Speaker 1: if the cannabis experiment were to be rolled back across
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  Speaker 1: the country. The reality is that these properties can be
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  Speaker 1: repositioned into other uses, and so for our investors, we
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  Speaker 1: believe there's great downside protection in this. Who is your
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  Speaker 1: typical investor in our first friends and family round of funding,
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  Speaker 1: which we closed back in November, Uh, it's really the
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  Speaker 1: high net worth individual family offices. And in the current
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  Speaker 1: round of funding, which we've just launched a couple of
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  Speaker 1: weeks ago. Uh, it's We're still primarily an individual investment.
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  Speaker 1: The industry and the market is not really poised yet,
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  Speaker 1: given that cannabis is still illegal out of federal level
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  Speaker 1: for institutional investors, that's a big complication. In about thirty seconds,
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  Speaker 1: explain why this this federal government position on marijuana still
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  Speaker 1: be an illegal drug. Why that matters so much? Well,
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  Speaker 1: it matters, uh for a number of reasons. Number one,
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  Speaker 1: at least as it relates to real estate. You cannot
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  Speaker 1: hold a traditional mortgage on a property, and how's what
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  Speaker 1: is deemed an illegal business. Uh. It's also problematic from
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  Speaker 1: a banking perspective. Federally chartered banks cannot bank the industry,
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  Speaker 1: so there's a lot of risk around the handling of
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  Speaker 1: the cash in the industry you have. You stick got
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  Speaker 1: half of the states in this country that maybe passing
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  Speaker 1: laws to legalize marijuana. Looks like you've got huge growth
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  Speaker 1: prospects at Klex Development thanks to Don Sandoval. Breaking news
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