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

technology and business to face tomorrow's greatest threats. The Brown University Executive Master in Cybersecurity Strategy is the best security. Now over to the First Word Breaking news desk for today's afternoon call. Here's Bill Maloney. Good afternoon, Charlie. Turn around for US stocks today for a second day after a week open. Dall is currently hired by twenty six points. Says he's as he's a higher by three and as that gains eleven. At one point, the DAW is down

eighties six points to small cap six. Hunter is hired by a point, and the US ten yeel falls to one point eight one percent. Six out of ten sp sectors are lower, led by losses and energy, Utilities and technology, healthcare and consumer discretionary lead down, transports drop nineteen, as a biotex rise forty four, and the vix is lower by two percent down. Leaders to the upside included DuPont, J and J and Caterpillar, while x On Mobile and

Chevron led to the down side. Look for Brockcalm treport after the bell Live from the First Breaking News Desk on Bill Maloney. Charlie, all right, thank you, Bill, and here live breaking news over your Bloomberg type squawksqu a w K on your terminal. I'm Charlie Pellot. That's a Bloomberg business flash. Ju're listening to taking Stock with pim Box and Jathlene Hayes on Bloomberg Radio. Some big forces have come together to lay the groundwork for the growth

of a very interesting company. One part of it, you could say, is the all the cutbacks in retail bankruptcy is a very rapidly disrupted and changing space. Another part of it is half the states the United States allowing some kind of legalized marijuana now, and with all that marijuana production, where are you going to warehouse it? Where are you going to put it? Enter Calex Development. Don Sandoval joins me, now she's a CEO ce O O

of Klex. She's here in our New York studio to talk to us about the real estate side of this business. Don welcome, Thank you. Kathleen's a pleasure to be here. So, first of all, Calix Calex Development, what do you do? So? Calex is in the midst of building a national portfolio of cannabis properties. We are the only cannabis reat currently and we have a six property portfolio concentrated out west. We have three properties in Colorado, one in Washington, and

one in Oregon. We're in the midst of closing on our six property in Phoenix, Arizona in about two weeks time. And you've just launched your second private round of funding. Uh, so you're getting a lot of support in an industry that is maybe exploding is too strong of a word, but boy, it's growing fast. No, Kathleen, I would not

say exploding is uh is too aggressive a term. I mean the fact of the matter is, UH, compound growth rates at a sales level are north of thirty over the last three years and expected to only accelerate from here on out. And what Calix is trying to do is really partner with some of the most established, well financed, well backed companies in the business right now. We provide not only space, but on a select basis, we provide tenant improvement funding so that operators may build out their

space in a fashion that's more appropriate for them. Who is your typical client, Who is your typical customer? Who are you doing business? But give us an example. Sure, our typical tenant is in a established brand in the cannabis industry. They can produce products for both medical or recreational markets, or they can be a grow operation. So, for example, in the Colorado market, both Medicine Man Technologies

and Dixie Brands are two of our tenants. How if you had not made this this switch in your career, you might be on the show right now talking about the bond market and where it's heading next. Because you were before you left Wall Street, you were a managing director and fixed income at BNP Para bah Uh. Following more than fourteen years a b of A and Goldman Sacks. You began your career at Solomon Brothers. Back what drew you to marijuana, Well, this is the big change for

you to be the CE of calyx Well Kathleen. It's about six years ago that I began investing in the cannabis space, and at that time it was still very early in terms of a number of companies just getting started. It was taking a lot of single name or single operator risk, and as I progressed in that in that program, the we came to know Kalix. I came to know Kalix Development. And what originally attracted me so much to the Calyx strategy was the fact that it was a

scalable business. Real estate is a scalable business, and it's also a diverse business that can be well diversified. So if you look at the Kalix portfolio, not only does it have diversification across multiple states, but it has diversification across type of operator. So we have both UH product

manufacturers as well as cultivators among our tenants. And so from an investment perspective, it's that type of diversification across geography, across UH tenants, across types of businesses that provides a good risk buffer. On top of that, the Kalix strategy is a kurd by bricks and mortar assets. So even if the cannabis experiment were to be rolled back across the country. The reality is that these properties can be repositioned into other uses, and so for our investors, we

believe there's great downside protection in this. Who is your typical investor in our first friends and family round of funding, which we closed back in November, Uh, it's really the high net worth individual family offices. And in the current round of funding, which we've just launched a couple of weeks ago. Uh, it's We're still primarily an individual investment. The industry and the market is not really poised yet, given that cannabis is still illegal out of federal level

for institutional investors, that's a big complication. In about thirty seconds, explain why this this federal government position on marijuana still be an illegal drug. Why that matters so much? Well, it matters, uh for a number of reasons. Number one, at least as it relates to real estate. You cannot hold a traditional mortgage on a property, and how's what is deemed an illegal business. Uh. It's also problematic from

a banking perspective. Federally chartered banks cannot bank the industry, so there's a lot of risk around the handling of the cash in the industry you have. You stick got half of the states in this country that maybe passing laws to legalize marijuana. Looks like you've got huge growth prospects at Klex Development thanks to Don Sandoval. Breaking news on your Bloomberg. US House Speaker Paul Ryan says he will vote for Donald Trump. I'm Katheen Hayes. This is

taking stock on Bloomberg Radio Bloomberg. Taking Stock is brought to you by National Realty Returns on cash in rented real estate. Find them at n r I, a dot net