By Rob Meagher
John Widmer, one of the founders of Kaleafa Cannabis Company—a growing retailer with locations in the Portland, Oregon metro area and northwest Washington state—saw “can’t miss” investment opportunities twice in his life, but failed to act. He told me that he missed out on the technology renaissance of the early 90s, followed by the internet boom a few years later. John stayed on the sidelines during both and decided that if another
“once in a lifetime” opportunity came along, he wouldn’t go down without swinging.
When his brother Bill approached him in 2015 about taking a shot at the cannabis industry, John was making a great living as a medical supply sales representative. He learned his craft over the previous 20 years in a variety of sales and management positions, after starting out as a UPS truck driver. And his first sales job as a door-to-door uniform salesman in south central Los Angeles prepared him for any future challenges.
It took him all of two seconds to jump in and, together with his wife Julie, the three began their journey in the legal and licensed Cannabis Industry. After opening their first dispensary in 2014, the Kaleafa team closed 2016 with 2 operating dispensaries (1 in OR and 1 in WA) with a projected year-end revenue total exceeding $8.5 million and plans to operate 3 additional store fronts in 2017.
Kaleafa was founded with a combined working capital of $300,000. So around the first year and a half, John continued working his lucrative day job selling orthopedic trauma implants while Bill and Julie ran day-to-day operations. Bill, who worked in real estate for the previous 10 years, was the only salaried employee and was driving between Kaleafa’s first two locations from Seattle 3-4 days week to Portland along I-5, and has been Kaleafa’s the 30,000 foot industry visionary from the outset.
After John asked the team who was going to pay the bills and watch the money, Julie, a mother of three young kids and a wedding planner by profession, took over all of the accounting in June of 2014.
John has been the day-to-day execution guy at Kaleafa, and has always been a competitive, analytical and a market driven guy. Those traits have paid off for Kaleafa from day one.
Kaleafa Best Practices
The company has relied on its customer facing staff (budtenders) to provide feedback to management about what the customers wanted and this approach has been a key part of Kaleafa’s DNA and best practices. The concentrate market has been a major part of their product mix (25%) from the get go (they may eventually produce their own) with flower (70%) and edibles (5%) making up the balance of what is available.
After finally leaving his full-time gig in the middle of 2016, John has taken over all of the buying for the organization with immediate positive results in the form of margins increasing from 20% to upwards of 32-42% since that time. He analyzes every operational decision, from hiring to what makes its way onto the shelves at each dispensary. Kaleafa’s focus and goal is to provide great products at exceptional prices while providing superior customer service to maximize retention.
One hiring best practice is to have potential employees spend time with the existing staff as part of the interview review process to make sure that they fit in with the Kaleafa culture. Additionally, John tends to put himself in the customers shoes and seeks staff feedback to maximize the customer experience. He feels that this approach helped his Oregon shop survive this fall’s rules roll-out debacle that he estimates cost most licensees up to 40% of their revenue since October…conversely Kaleafa limited their revenue shortfall to 20% during the same time period.
His overall theory is to analyze, analyze, and analyze again to avoid making bad product mix, bad pricing and bad customer service decisions.
So what’s next for Kaleafa? In addition to three new stores planned in 2017 (two in OR and one in WA) and potentially adding a production license to create their own line of concentrates, the family team sees the Kaleafa brand expanding across the west, first in CA but eventually in other markets where the trusted expanded family resides. You can be sure that they will move into other markets. After all, John isn’t one to sit around and twittle his thumbs, he would rather swing and miss than not take his best shot at any challenge.
Swing batter, batter!
Cannabis Business Executive Background Information
Company Name: Kaleafa
Year Founded: 2014
Ownership structure/operating entities: WWMP (Oregon) & W& L Holdings (Washington)
Management Team: John and Julie Widmer, Owner/CFO/COO Oregon; Brent Qualls, COO and Owner Washington
Headquarters: Oregon City, OR
Website: www.kaleafa.com
Number of Locations: 3 (5 by end of 2017)
Industry Segment/Category: Retailer
Current Markets/States Served: OR, WA
Current Number of employees: 70
Market Strategy/Goal: Provide great products at exceptional prices while providing superior customer service to maximize retention.
2014 Revenues: $700,000
2015 Revenues: $4.5 Million
2016 Projected Year-End Revenues: $8.5 Million
Product/Revenue Mix: 5% Edibles, 25% Concentrate, 70% Flower
Expansion Plans: Add 2 locations in Oregon and 1 in Washington, then move into California market.
Financing strategy: Originally self-financed then accessed private equity to expand. In the market to access additional capital to finance 2017 expansion plans.