It has been a couple of years since CBE visited with William Simpson, CEO of Golden Leaf Holdings. In October 2015, I wrote a piece titled, “In Search of the Holy Grail: Chalice Farms”that outlined his vision for Chalice Farms, one of the first vertically integrated licensees in Oregon and he shared his vision for the company and how and why he entered the industry.

As a cannabis old-timer, but still a relatively young man, Simpson started in the industry with a consultancy practice where he developed standardized operating procedures (SOPs) while working with over 1,000 grows before starting Chalice Farms. He and his consultancy 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. This prescient approach came in handy when he launched and built Chalice Farms and then again when his company was purchased by Golden Leaf Holdings Ltd (GL), a Canadian cannabis oil solutions company, with Simpson being named the CEO of the publicly listed company (cse:GLH) (cse:GLH.CN) (cnsx:GLH) (otcqb:GLDFF) in July of 2017.

Golden Leaf has been on an acquisition and consolidation tear since Simpson joined the company last year. In his new role as CEO of GL, Simpson issued a letter to shareholders outlining its mission.

“Golden Leaf’s mission remains to become the leading consolidator of high value cannabis brands and retail dispensaries, building a dominant consumer and lifestyle product company addressing rapid growth markets.”

In line with those plans Golden Leaf has been busy since July as evidenced by the following announcements:

Sept. 25, 2017 Golden Leaf Announces Sale of Aurora Property and Repayment of Debentures

Oct 19, 2017: Golden Leaf Secures City Licenses to Sell Cannabis in Additional Nevada Jurisdictions

Nov. 27, 2017: Golden Leaf Secures Cultivation License From Health Canada For State-of-the-Art Ontario Grow Facility

Dec. 14, 2017: Golden Leaf Holdings Opens New Chalice Farms Dispensary in Downtown Portland, Oregon

Jan. 2, 2018: Golden Leaf Announces Closing of Acquisition of Medical Marijuana Group Consulting Ltd.

Jan.16, 2018: Golden Leaf Holdings Appoints Craig Eastwood as Chief Financial Officer

March 8, 2018: Golden Announces New Line of Cannabis Infused Fruit Chews

March 27, 2018: Golden Leaf Holdings Signs Letter of Intent with BlackShire Capital to Launch Chalice Farms Franchise Model

April 24, 2017: Golden Leaf Holdings Signs Letter of Intent to Acquire California Cannabis Operation

May1, 2017: Golden Leaf Holdings Opens New Chalice Farms Dispensary in Happy Valley, Oregon

In January, Golden Leaf hired Craig Eastwood as CFO. Eastwood brings sorely needed public company experience to GL, and almost three decades of progressive financial leadership, which includes public company experience, to Golden Leaf Holdings. Most recently, Mr. Eastwood served as CFO at Powin Energy Corporation. Prior to that, Eastwood was the corporate controller at Erickson, a leading specialty aviation company. He has also held senior financial leadership positions with ESCO, Daimler Trucks, and Pharmaceutical Product Development.

With many of the Canadian companies like Canopy Growth, Tilray, Aurora and MedReleaf (Aurora recently announced that it would acquire MedReleaf) aggressively investing into the industry worldwide, and US companies preparing for their piece of the worldwide pie, CBE wanted to hear from Simpson, 10 months into his new position, about how GL is stacking-up in the race to capture consumer dollars and ultimately market share in the US, Canada and abroad.

CBE: William, great to circle back with you! I am tired just from reviewing all of the moves that have been made since you took over the helm at GL. Why did you agree to the GL acquisition in the first place? It seems to me as an outsider that this was more of a reverse merger than an acquisition.

Simpson: Chalice agreed to sell to GLH as we were looking for a vehicle to take our success and proven brand strategy of Chalice to other major markets. We were already contemplating another large Private Placement or an IPO to accomplish this and the Golden Leaf acquisition of Chalice accomplished that. It was a true acquisition, however the management of the GLH did, in short, order become the entire Chalice team.

CBE: Can you give CBE’s readers a summary of the challenges and opportunities that were in front of you before the merger and since you have taken the lead. Also tell our readers about the differences between running a private company like Chalice Farms and a public one.

Simpson: The challenge that Chalice was facing pre-merger was the immediate need for growth capital. The industry is expanding at an expedited rate and we didn’t want to miss the wave. Since I have stepped in as CEO the challenges have been different. We needed to take the entire company and rebuild it. GLH didn’t have a good track record when we took over as management. We have taken the company down to its foundation and built it back up with a huge momentum and a lot of opportunity in front of us. We are taking our proven, vertically integrated model and expanding it into other markets now both in the United States and internationally.

CBE: It seems that you have moved quickly to shore up the balance sheet, to make strategic acquisitions in the US and Canada, and to build out the Chalice Farm brand and launch new products. Will GL consolidate its brands under one flagship name?

Simpson: We do have a great portfolio of brands and do expect to expand upon that through accretive acquisitions. We are still working on the entire overarching flagship name. A lot of shareholders would like it to all be Chalice.

CBE: How are you incorporating all of the cultures that come with GL’s M&A activities and the corresponding head counts?

Simpson: We have a very well thought out strategic plan. We have our purpose, values and initiatives. If our M & A targets don’t fit into these parameters, then they are not a part of our strategy. Utilizing this thought process, the culture remains what we have always been striving for.

CBE: In addition to the acquisitions in California and Nevada, two recent announcements, the first about your product launches and the second announcing the Chalice Farms franchise model caught my attention. How do these two announcements fit into GL’s long-term strategic growth plan. (Please include up to date progress on each)

Simpson: Our model is to build an entirely vertical model into all the markets we are in. Launching the California acquisition will allow us cultivation, extraction, edible manufacturing, and retail. The Nevada acquisition would expand upon our cultivation in that high-demand and high-growth market and would provide us with a very well-known brand. Launching the franchising model fits perfectly into the vertically integrated goal as we will be able to open more Chalice Farms stores at an expedited rate. This will allow for a much larger internally owned distribution channel for all the products we manufacture. As far as updates, we are looking to move to a definitive agreement for California in the coming weeks. Nevada is in the due diligence process. Franchising is towards the end of due diligence and is moving towards definitive agreements and board approval.

CBE: I noticed a big write off in the latest quarterly report.Tell us about the BMF agreement and how its progressing/winding down, looks like you took a big hit from that transaction in 2017?

Simpson: It was the only prudent thing to do for our shareholders. We are not seeing any real monetary value from that acquisition as the state regulations still have not changed for out-of-state ownership.

CBE: Do you still any plans to establish a vertically integrated footprint in Washington?

Simpson: Washington isn’t high up on our priority list. We are really looking for high return on our investment dollars to build shareholder value. This is why we are pushing so hard to get into the California, Nevada and Canadian Markets.

CBE: What’s next for Willie Simpson and GL?

Simpson: We are building a brand that will be known internationally. When people talk about cannabis in 10 years our brands will be a part of that conversation and one of the household names they know and trust, think Starbucks. As for me personally, this is my life and legacy. I will always be involved in this company and its mission in one way shape or form. Right now the need is to be CEO of GLH and I think it’s important to note I’m also one of the largest shareholders (at the moment, the largest). This is a great position to be in as I’m more in line with my shareholder base than just about any executive out there in this industry.

CBE: Is there anything else you would like to add for CBE’s inquisitive readers?

Simpson: This has always been a lot larger for me than money. If it was just about monetary gain I would have bowed out a while ago. The next big win for our company and myself is to make the original and new shareholders more than whole. It means more to me that their belief in this company is rewarded. Knowing I can come in and turn this lack luster history into and giant success story and legacy is truly soul food that keeps me fired up every day!!

Cannabis Business Executive Background Information

Company Name: Golden Leaf Holdings Ltd.

Year Founded: 2011

Ownership structure/operating entities: Golden Leaf Holdings—Chalice Farms, Golden, Medical Marijuana Group

Owner/CEO E-mail address/Contact Information: William Simpson, CEO, [email protected]

Management Team: William Simpson, Chief Executive Officer, Mike Genovese, Chief Operating Officer, Craig Eastwood, Chief Financial Officer

Headquarters: Toronto, ON / Portland, OR

Website: www.goldenleafholdings.com

Number of Locations: 7 (8thon it’s way) retail locations for Chalice Farms, 1 Left Coast Dispensary

Number of Licenses by State: 10 Licenses in Oregon, 2 in Nevada, 1 in Canada (one more on it’s way with the sales license). We are hoping to add 5 in California with the acquisition as well as 1 more in Nevada with that acquisition.

Industry Segment/Category: Producer, Processor, Retailer

Current Markets/States Served: Portland, OR, Nevada, Canada

Current Number of employees: 185

Market Strategy/Goal: Expand Chalice Farms vertically integrated operating model focused on cannabis oil and edible brands to new markets

2015 Revenues: $9.93 million

2016 Revenues: $7.66 million

Fiscal Year 2017 Revenues: $11.5 Million

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