In search of the Holy Grail: Chalice Farms

I learned something new today from William Simpson III, the CEO and owner of the Chalice Farms brand. Chalice Farms, LLC is a vertically integrated producer, processor and retailer based in Portland, OR and currently serving patients and now recreational users as of Oct. 1.

He selected his company’s name because of the trilogy of definitions that make up the Chalice Farms brand, where ‘chalice’ denotes the ”cup of life.” In Latin chalice means pistil, which is the reproductive part of the flower, and in Rastafarian, it is a smoking apparatus … or so he says!

Either way, with the advent of recreational sales beginning in Oregon last week, the last 15 years of William Simpson’s life have positioned his integrated operation well to be a major player in a State with visions of growing into a national brand.

Our story really begins in a time decades past with a confident young man filled with unlimited enthusiasm, curiosity and a drive for excellence who lived in many places before settling in Oregon.

Recruited to play college football, he turned down a scholarship and parlayed his outgoing nature into a job selling bandwidth for Eschelon Telecom (a communications company) when fortunes were being made during the advent of the Internet age. He quickly had success and joined their Chairman’s Cup team, making as much as $43k a month at one point. As the slowdown hit, he moved from one hot industry to another — mortgage lending — and continued to make a great living. He moved onto commercial lending, and then venture capital funding start-ups.

One of Simpson’s interests, horticulture, is where he found that he had a proverbial “green thumb.” It led to a collaboration with a horticultural professor and he eventually opened a hydroponic retail store before beginning a grow room building operation that would forever change his life.

It was in 2002 when his grandmother was diagnosed with terminal cancer that William observed first-hand the benefits of cannabis in the management of her pain and loss of appetite. That experience solidified his view as to the need for readily available medical-grade cannabis for people who were suffering from various diseases and conditions. In 2005, with the appropriate authorization, he built a laboratory-like grow in his basement and began selling equipment to others for the same purpose.

As medical marijuana took off in Oregon, Simpson’s business grew (he designed and installed numerous grows in the Pacific Northwest) and The Green Future Garden Hydroponics LLC was incorporated in March of 2009, which included a consulting element (they were one of the earliest consultants in the cannabis space) that increased the entity’s margins as well as their expertise based upon experience in building-out dozens of state-of-the-art grow facilities.

And as a result of all of that combined field experience, Chalice documented and developed standardized operating procedures (SOPs) while working with over 1,000 grows over the next five years. They also began working with CO2 extraction and included a futures agreement into his build-out contracts that gave his company an option to sell excess inventory produced by the grows they consulted with, which would come in handy as first medical and then recreational cannabis was legalized in Oregon.

It was a month after Oregon House Bill 3460 was signed into law in October of 2013, that Simpson received a license to open-up one of Portland’s first medical marijuana retail locations, the Powell House Cannabis Club, his Medical beta store for raising additional funding.

Powell House is sophisticated yet earthy, with a real Oregon feel, complete with aesthetically pleasing use of indigenous woods to create an environment mirroring the state’s beauty. This first store’s waiting room was intended to mirror what would become the Chalice Farm brand formally launched the following year.

He also met his angel investor (who bought a minority stake in the company for $10 million), in Illinois where his company consulted on a 100,000 square foot cultivation facility. The equity capital raised has been used to increase the company’s industry footprint by building the four existing retail locations as well as a 24,000 square-foot HQ facility, complete with a processing plant and commercial kitchen, near the Portland airport. Mirroring the natural environment of the new “Chalice Farms” stores, he expects the facility to attract a tourist base to experience what he called the “Willy Wonka cannabis factory.”

His management team, mostly comprised of the folks Simpson wants to work with (mostly friends, family and folks with strong skill sets to grow to his vision), treats the business like any great microbrew, (they can never run out of product) with carefully grown, dried, cured and packaged and marketed product using a dedicated in-house team and lab-testing to maintain consistency and quality day in and day out. They are also working with with a high-end glass shop, Mary Jane’s House of Glass, to anchor with their retail stores and meet customer needs.

Plans call for marketing the Chalice Farms brand of edibles and infused products as well as expanding into Washington state with its line of Cartridges and Vape Pens (the packaging aspects), and other states across the U.S.

Even though the industry may be years away from the end of federal prohibition and interstate commerce, Simpson is gearing Chalice Farms to be ready for the day that interstate and, potentially, a global export business becomes a reality.

Unique in the Cannabis Industry, Chalice’s fully-integrated business model provides lower production costs, standardization, quality-control and distribution, which also leverages the affordability of labor in Oregon giving Chalice Farms a very competitive market advantage.

In fact, it seems that Chalice products have already found favor with consumers having captured the coveted DOPE Magazine People’s Choice Award and a handful of other awards at that annual event, as well as capturing two first places in the annual Oregon Medical Marijuana Cup.

Simpson has assembled a plan, a team and a solid, well-capitalized operation that will someday become his Holy Grail. Not bad for a guy who left school after two years to seek his fortune — you have chosen well young man!

Background Information

Company Name: Chalice Farms

Year Founded: 2014

Ownership structure/operating entities: C Corp

Management Team: William Simpson, President/Founder; Brent Russell, Managing Partner/VP; Mike Genovese, Managing Partner/VP; Erin Hills, VP of Operations

Headquarters: 13315 NE Airport Way, Portland, Oregon, 97230

Website: www.chalicefarms.com

Industry Segment/Category: Producer, Processor, Retailer

Current Markets/States Served: Oregon

Current Number of employees: 34

Market Strategy/Goal: Fully Integrated National Cannabis Firm

2014 Revenues: Gross $1 million plus

2015 Projected Revenues: $7-8 Million

Product Mix: Flower, Extracts, Edibles, Tinctures, Sodas, etc.

Expansion Plans: Grow to up to ten (10) locations in state and expand into Washington and California with an eye on lucrative Florida market as well. Plans on developing line of edibles and private label brand of vape pens.

Financing strategy: They were fully capitalized through an angel investor ($10 million)