Costa Mesa-based Gold Flora is aiming to become one of the biggest cannabis suppliers in California.
“All we do is cannabis, seed to sale,” founder and Chief Executive Laurie Holcomb told the Business Journal. “We plant the seed, grow the flower and sell it.”
Gold Flora is expanding into the heart of Silicon Valley after acquiring San Jose-based Airfield Supply Co., which it called California’s largest single-site dispensary.
The combined company now has 360 employees, with plans to expand to 500 by the end of the year. Â
With this acquisition and its expansion plans, Gold Flora anticipates an annual retail revenue rate at or about $150 million, making it one of California’s largest retail operators. Â
Originally founded in 2010 to serve the medical market, Airfield regularly sees well over 1,300 customers a day.
“We know that Gold Flora is perfectly positioned to dominate the market and move the cannabis industry forward,” said Airfield Supply’s founder and CEO Marc Matulich, who will stay on in his role.
Real Estate Background
After California voters in 2016 approved the legalization of cannabis, Holcomb began Gold Flora. She is the majority owner with some outside investors who she declined to identify. The total amount of funding she has raised also hasn’t been disclosed.
“I started off with a vision,” she said. “Our first raise was $10 million. We have high-net-worth individuals and some private equity groups as investors.”
Holcomb has an extensive background in business, especially real estate.
She was the executive vice president for business development and sales at Matchmaker.com, which sold to Lycos in 1999 for about $44.5 million. She was the CEO of AYG Wireless, which she sold to Hewlett Packard in 2001.
Her past experience also includes CEO and chairman at Orange County’s Checkmate Staffing, which had sales around $300 million.
Since she founded Blackstar Financial in 2005, she’s purchased over 1,000 distressed homes from Fannie Mae and Freddie Mac. Her résumé also includes executive vice president at Newport Beach-based MasterCraft Homes, a land acquisition and finance company.
Sputtering Industry
Cannabis-related companies based in Orange County have seen mixed results in recent years.
Kushco Holdings, which was once headquartered in Santa Ana and had a market cap approaching $400 million by selling cannabis-related products, last year was acquired by Greenlane Holdings Inc. (Nasdaq: GNLN), a penny stock valued around $53 million.
Terra Tech Corp., a cannabis grower that once reported annual sales approaching $40 million, departed Irvine in 2020 to merge with a Phoenix firm.
Irvine-based WM Technology Inc. (Nasdaq: MAPS), parent company of software co. WeedMaps, the biggest U.S. online provider of cannabis dispensary locations, has seen its shares fall nearly 80% since it went public last year to a market cap around $365 million.
The Global Cannabis Stock index has fallen in half in the past year, according to the website New Cannabis Ventures.
“Cannabis is challenging,” Holcomb said.
“A lot of people think of it as the modern-day version of gold mining.”
The biggest challenge is that it’s still illegal under federal law, which means banks are prohibited from the industry. Right now, Holcomb said Gold Flora is in a pilot program with a bank and is hopeful more banks will come around.
Meanwhile, savvy real estate investors have been able to collect higher rents and charge more on mortgages to cannabis companies, Holcomb said.
Once cannabis becomes legal on a federal level, Holcomb believes there “will be a fundamental shift in how people view cannabis, and more money will come into this industry.”
Hockey Stick Growth
Still, recent revenue growth has been “like a hockey stick,” Holcomb said.
Gold Flora’s customers include many seniors looking for CBD line of products that help them sleep, and which are stronger than ones sold in regular retail stores.
“A lot of people who said they’d never do marijuana are amazed,” she said.
Gold Flora owns and operates cannabis companies and retail dispensaries throughout the state—including King’s Crew dispensary in Long Beach and the Higher Level dispensary chain serving Hollister and Seaside.
Gold Flora is working to get approvals for Costa Mesa’s first dispensary, which could open by April.
“We like Costa Mesa,” she said. “There are a lot of tourists at the beach.”
Her firm has leased a 201,000-square-foot facility in Desert Hot Springs from Innovative Industrial Properties Inc. (NYSE: IIPR), which calls itself “the pioneering real estate investment trust for the regulated cannabis industry.”
Innovative, with a $4.9 billion market cap, has 73 properties with 6.8 million rentable square feet in 18 states. It forecast sales in the regulated cannabis industry will reach $45.9 billion by 2025.
“Gold Flora is led by a seasoned management team with a track record of success in the regulated cannabis industry and developing and leading the execution of company strategy,” Innovative said on its website.
Silicon Valley Cannabis
The Airfield Supply acquisition also provides access to Mountain View delivery licenses and brands with names like Aviation Cannabis and Jetfuel Cannabis.
“They sit on the retail side primarily,” Holcomb said. “They’re one of the state’s largest in terms of sheer gross revenue. They’re very efficient, which brings us a better way of doing business.”
Los Angeles-based private equity firm Hyperion Capital Inc. acted as financial adviser to Gold Flora while Merritt Advisory advised Airfield Supply.Â