WEBVTT - Kalyx's Sandoval on Real Estate for Cannabis Operations (Audio)

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<v Speaker 1>around for US stocks today for a second day after

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<v Speaker 1>a week open. Dall is currently hired by twenty six points.

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<v Speaker 1>Says he's as he's a higher by three and as

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<v Speaker 1>that gains eleven. At one point, the DAW is down

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<v Speaker 1>eighties six points to small cap six. Hunter is hired

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<v Speaker 1>by a point, and the US ten yeel falls to

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<v Speaker 1>one point eight one percent. Six out of ten sp

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<v Speaker 1>sectors are lower, led by losses and energy, Utilities and technology,

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<v Speaker 1>healthcare and consumer discretionary lead down, transports drop nineteen, as

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<v Speaker 1>a biotex rise forty four, and the vix is lower

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<v Speaker 1>by two percent down. Leaders to the upside included DuPont,

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<v Speaker 1>J and J and Caterpillar, while x On Mobile and

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<v Speaker 1>Chevron led to the down side. Look for Brockcalm treport

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<v Speaker 1>after the bell Live from the First Breaking News Desk

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<v Speaker 1>on Bill Maloney. Charlie, all right, thank you, Bill, and

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<v Speaker 1>here live breaking news over your Bloomberg type squawksqu a

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<v Speaker 1>w K on your terminal. I'm Charlie Pellot. That's a

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<v Speaker 1>Bloomberg business flash. Ju're listening to taking Stock with pim

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<v Speaker 1>Box and Jathlene Hayes on Bloomberg Radio. Some big forces

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<v Speaker 1>have come together to lay the groundwork for the growth

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<v Speaker 1>of a very interesting company. One part of it, you

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<v Speaker 1>could say, is the all the cutbacks in retail bankruptcy

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<v Speaker 1>is a very rapidly disrupted and changing space. Another part

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<v Speaker 1>of it is half the states the United States allowing

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<v Speaker 1>some kind of legalized marijuana now, and with all that

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<v Speaker 1>marijuana production, where are you going to warehouse it? Where

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<v Speaker 1>are you going to put it? Enter Calex Development. Don

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<v Speaker 1>Sandoval joins me, now she's a CEO ce O O

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<v Speaker 1>of Klex. She's here in our New York studio to

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<v Speaker 1>talk to us about the real estate side of this business.

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<v Speaker 1>Don welcome, Thank you. Kathleen's a pleasure to be here. So,

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<v Speaker 1>first of all, Calix Calex Development, what do you do? So?

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<v Speaker 1>Calex is in the midst of building a national portfolio

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<v Speaker 1>of cannabis properties. We are the only cannabis reat currently

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<v Speaker 1>and we have a six property portfolio concentrated out west.

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<v Speaker 1>We have three properties in Colorado, one in Washington, and

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<v Speaker 1>one in Oregon. We're in the midst of closing on

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<v Speaker 1>our six property in Phoenix, Arizona in about two weeks time.

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<v Speaker 1>And you've just launched your second private round of funding. Uh,

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<v Speaker 1>so you're getting a lot of support in an industry

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<v Speaker 1>that is maybe exploding is too strong of a word,

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<v Speaker 1>but boy, it's growing fast. No, Kathleen, I would not

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<v Speaker 1>say exploding is uh is too aggressive a term. I

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<v Speaker 1>mean the fact of the matter is, UH, compound growth

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<v Speaker 1>rates at a sales level are north of thirty over

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<v Speaker 1>the last three years and expected to only accelerate from

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<v Speaker 1>here on out. And what Calix is trying to do

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<v Speaker 1>is really partner with some of the most established, well financed,

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<v Speaker 1>well backed companies in the business right now. We provide

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<v Speaker 1>not only space, but on a select basis, we provide

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<v Speaker 1>tenant improvement funding so that operators may build out their

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<v Speaker 1>space in a fashion that's more appropriate for them. Who

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<v Speaker 1>is your typical client, Who is your typical customer? Who

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<v Speaker 1>are you doing business? But give us an example. Sure,

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<v Speaker 1>our typical tenant is in a established brand in the

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<v Speaker 1>cannabis industry. They can produce products for both medical or

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<v Speaker 1>recreational markets, or they can be a grow operation. So,

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<v Speaker 1>for example, in the Colorado market, both Medicine Man Technologies

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<v Speaker 1>and Dixie Brands are two of our tenants. How if

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<v Speaker 1>you had not made this this switch in your career,

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<v Speaker 1>you might be on the show right now talking about

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<v Speaker 1>the bond market and where it's heading next. Because you

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<v Speaker 1>were before you left Wall Street, you were a managing

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<v Speaker 1>director and fixed income at BNP Para bah Uh. Following

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<v Speaker 1>more than fourteen years a b of A and Goldman Sacks.

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<v Speaker 1>You began your career at Solomon Brothers. Back what drew

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<v Speaker 1>you to marijuana, Well, this is the big change for

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<v Speaker 1>you to be the CE of calyx Well Kathleen. It's

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<v Speaker 1>about six years ago that I began investing in the

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<v Speaker 1>cannabis space, and at that time it was still very

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<v Speaker 1>early in terms of a number of companies just getting started.

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<v Speaker 1>It was taking a lot of single name or single

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<v Speaker 1>operator risk, and as I progressed in that in that program,

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<v Speaker 1>the we came to know Kalix. I came to know

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<v Speaker 1>Kalix Development. And what originally attracted me so much to

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<v Speaker 1>the Calyx strategy was the fact that it was a

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<v Speaker 1>scalable business. Real estate is a scalable business, and it's

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<v Speaker 1>also a diverse business that can be well diversified. So

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<v Speaker 1>if you look at the Kalix portfolio, not only does

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<v Speaker 1>it have diversification across multiple states, but it has diversification

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<v Speaker 1>across type of operator. So we have both UH product

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<v Speaker 1>manufacturers as well as cultivators among our tenants. And so

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<v Speaker 1>from an investment perspective, it's that type of diversification across geography,

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<v Speaker 1>across UH tenants, across types of businesses that provides a

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<v Speaker 1>good risk buffer. On top of that, the Kalix strategy

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<v Speaker 1>is a kurd by bricks and mortar assets. So even

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<v Speaker 1>if the cannabis experiment were to be rolled back across

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<v Speaker 1>the country. The reality is that these properties can be

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<v Speaker 1>repositioned into other uses, and so for our investors, we

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<v Speaker 1>believe there's great downside protection in this. Who is your

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<v Speaker 1>typical investor in our first friends and family round of funding,

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<v Speaker 1>which we closed back in November, Uh, it's really the

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<v Speaker 1>high net worth individual family offices. And in the current

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<v Speaker 1>round of funding, which we've just launched a couple of

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<v Speaker 1>weeks ago. Uh, it's We're still primarily an individual investment.

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<v Speaker 1>The industry and the market is not really poised yet,

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<v Speaker 1>given that cannabis is still illegal out of federal level

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<v Speaker 1>for institutional investors, that's a big complication. In about thirty seconds,

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<v Speaker 1>explain why this this federal government position on marijuana still

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<v Speaker 1>be an illegal drug. Why that matters so much? Well,

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<v Speaker 1>it matters, uh for a number of reasons. Number one,

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<v Speaker 1>at least as it relates to real estate. You cannot

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<v Speaker 1>hold a traditional mortgage on a property, and how's what

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<v Speaker 1>is deemed an illegal business. Uh. It's also problematic from

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<v Speaker 1>a banking perspective. Federally chartered banks cannot bank the industry,

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<v Speaker 1>so there's a lot of risk around the handling of

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<v Speaker 1>the cash in the industry you have. You stick got

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<v Speaker 1>half of the states in this country that maybe passing

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<v Speaker 1>laws to legalize marijuana. Looks like you've got huge growth

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<v Speaker 1>prospects at Klex Development thanks to Don Sandoval. Breaking news

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<v Speaker 1>on your Bloomberg. US House Speaker Paul Ryan says he

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<v Speaker 1>will vote for Donald Trump. I'm Katheen Hayes. This is

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