Exclusive Interview with Calyx Peak CEO Edward Schmults
The heritage of the Josh D brand, an OG Kush masterminded by Josh Del Rosso, was a big part of what attracted Edward Schmults to Calyx Peak. Now CEO of the company, Schmults is focused on building a strong team and lasting brands. He spoke with New Cannabis Ventures about the multi-state operator’s growing footprint, funding, and brand focus.
Suits and Stoners
Before joining Calyx Peak, Schmults held executive leadership positions at companies like Patagonia and FAO Schwarz. He stepped into his current role about a year ago, and since then, he has seen a wide variety of talented people eager to be a part of the cannabis industry.
When it comes to the Calyx Peak team, Schmults sees “a unique combination of suits and stoners,” people with expertise outside of the cannabis industry and people with deep roots within it. That combination of skill sets is essential to be successful, he says.
Calyx Peak Co-Founders Howard Keum and Michael Bang have strong backgrounds in global equities and equity research. COO Ben Cook, former COO of MedMen and former Chief Supply Chain Officer at Sam’s Club, brings knowledge of scalable processes both within and outside of the cannabis space. Erin Carachilo, VP of Finance at Calyx Peak, previously worked with Schmults as the CFO of FAO Schwarz. Jen McLaughlin, the company’s VP of Merchandising, most recently worked at Talbots. Eubin Kim, VP of Marketing, brings extensive experience from the cannabis and tobacco industries.
Calyx Peak has cultivation, extraction, and distribution sites in California, Nevada, and Ohio. The company’s Josh D brand is in the market in California. Recent approval for the company’s manufacturing license at its Costa Mesa facility means more product types will join Josh D flower in the California market. The company’s flower product is in the Nevada market, while its Josh D and Song brands are both in the Ohio market. Schmults expects the company to be active in the Massachusetts market in about a year.
The company completed the first harvest of medical cannabis in Akron, Ohio, in late January. Calyx Peak received its processing license in the state the same month and expects to have processed products in the Ohio market by November, according to Schmults. Based on the amount of flower sold year-to-date in the state and by Calyx Peak, the company estimates it has a 26 percent market share in Ohio.
Calyx Peak also has applications in a number of other states. As the company grows, it is focused on expanding the presence for its Josh D and Song brands in a high-quality and consistent fashion.
Calyx Peak Brands
Josh Del Rosso is highly regarded for his experience in cultivating OG Kush and its related strains, reflected in the Josh D brand. Under the Calyx Peak umbrella, Josh D is a premium brand meant for connoisseurs.
In the health and wellness market, Calyx Peak offers the brand Song. The company is using data to help inform the formulas and form factors it develops for this segment of its business.
Calyx Peak has both wholesale distribution and a retail strategy. Rather than owning hundreds of stores, the company is strategically selecting stores in key markets across each of its states, according to Schmults.
Partnering with Entrepreneurs
Calyx Peak has built a significant amount of its asset base by partnering with cannabis entrepreneurs. The regulatory environment and competitive nature of the business mean there are many entrepreneurs who need capital. Calyx Peak has made a number of investments, either by partnering with entrepreneurs or buying out their stake, at attractive prices, according to Schmults. The company is consistently looking for investment opportunities to augment its existing operations or to enter into new markets.
Funding Now and in the Future
At the end of 2018, the company had raised $30 million, and, now, it has raised more than $45 million. As the company plans its capital allocation, its strong genetics and strong cultivation capabilities are a priority. Schmults sees the possibility of the plant becoming a commodity, but for the time being, quality cultivation is a significant point of differentiation for Calyx Peak and an important investment.
Going forward, Calyx Peak is exploring a number of different routes for funding. The company continues to look for equity capital, and there is interest in debt players entering the market, according to Schmults. Leadership has had discussions about the public market and potential pathways to an IPO, but that move is not in the immediate future. For now, the company is focused on prudent means of fundraising while driving down the cost of capital.
Building for the Future
Calyx Peak completed its first sales in late 2018, and the company is on track to hit its plan for 2019. Revenue is expected to double in 2020. As Massachusetts operations come online and additional plans in California take off, that 2020 revenue could triple in 2021, according to Schmults. Additionally, he expects to be EBITDA-positive next year.
The company is aggressively pursuing growth while also keeping in mind the importance of generating cash to both fund its operations and to demonstrate to investors the foundation of a long-term business, according to Schmults.
As the company continues to grow, it is focused on building strong brands, recruiting talent, maintaining ethical corporate governance, engaging with its local communities, and creating a positive workplace culture that helps employees do the best work possible.
Photos credit: Alexander Rauber, Calyx Peak Companies
To learn more, visit the Calyx Peak website. Listen to the entire interview: