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HomeMy WebLinkAboutIntro Only - ELEMENT 7 SAN LUIS OBISPO - PDF APPLICATION FOR SUBMISSION FINALLICENSE APPLICATION COMMERCIAL CANNABIS PROPOSED BY ETHAN PEREZ MANUFACTURING, DISTRIBUTION AND NON- STOREFRONT RETAIL (DELIVERY) LICENSES A-TYPE AND M-TYPE ELEMENT 7 SAN LUIS OBISPO LLC www.element7.co CITY OF SAN LUIS OBISPO WWW.ELEMENT7.CO OUR MISSION Stimulate sound economic development by providing cannabis you can trust OUR VISION A world where cannabis is culturally accepted and legally prescribed to treat humanity’s most destructive medical illnesses OUR PURPOSE To work hand in hand with local governments and be the most taxed, tested, trusted, controlled and compliant cannabis business in California m;u.*&w-ru-r 7 Mr. Michoel Codron Community Development Monoger City of Son Luis Obispo 9,l9 Polm Street Son Luis Obispo, CA 93401 Deor Michoel, I wonted to write to you personolly to offer my thonks for ollowing us to porticipote in the commerciol connobis opplicotion process in the City of Son Luis Obispo. We ore looking to significontly expond our operotions ocross the Stote of Colifornio in 20,l9 and 2020, ond Son Luis Obispo is of the top of our list in terms of priority locotions. lf we ore successful in securing o license, you will hove my full commitment to do oll thot we con to work with the City to ochieve common gools of properly ond purposefully occeleroting development ond commencing operotions. My personol cell phone number is (con be recrched of ony time if you would like to discuss ony ospect of our opplicotion further. Yours sincerely, Roberl'Bobby' DiVito Co-Founder ond Generol Monoger Element Z Son Luis Obispo LLC v I January 26, 2019 Mr. Michael Codron Community Development Manager City of San Luis Obispo 919 Palm Street San Luis Obispo, CA 93401 APPLICATION FOR COMMERCIAL CANNABIS LICENSE Dear Michael, The new cannabis regulations implemented in San Luis Obispo create a tremendous opportunity for emerging and welcomed forms of sustainable economic development to thrive in your City. The key to achieving this growth lies in finding economically strong and sustainable cannabis operators that work as partners with the City to create jobs and develop new forms of commerce while responsibly serving taxed, tested and trusted cannabis to the local community. We look forward to be given the opportunity to prove to you, the City, and the community that we are a strong corporate partner that can accomplish all of these critical objectives. Element 7 is the optimal partner that the City of San Luis Obispo is looking for. Our leadership team has decades of successful business management and retail operations experience that enables us to build a business model, team and set of processes that guide our business operations and focus on overcoming the uncertainty and apprehension that was previously associated with cannabis use and businesses in certain communities. We do this by: 1.Building World Class Operations: We have the best people, products and partners in the industry to ensure that every interaction with our local government partners and end users exceeds our and their expectations. 2.Stimulating Local Economic Development: We have a strong track record of creating local jobs, paying our taxes on time, stimulating economic development and collaborating with other local businesses to grow a larger and healthier business environment. Our Founder started his first business at the age of twenty and scaled that business to over 700 employees in under four years. We are committed to hiring 91% of the staff for Element 7 San Luis Obispo from the local community. In addition, we have identified over a dozen local businesses from the local community that we will work with to build and operate our business (over 80% of the materials and services we use will be sourced locally within the County). 3.Prioritizing Continuous Community Engagement: We listen carefully to our constituents and create meaningful Community Advisory Boards that hold us accountable for the commitments we make to the local communities we serve. We have identified four local charities we would partner with (annual commitment of at least $50,000) and our staff will commit to over 700 hours of community service annually. The four non-profits we have identified for support are Achievement House (adult education for those with intellectual and physical disabilities), RISE sexual abuse and violence), One Cool Earth (school garden programs), and the Janssen Foundation Youth (youth sports). 4.Committing to Business with Purpose: We put purpose before profits. We educate at-risk' youths, provide discounted medicine to patients, support local community initiatives and commit hard budgets to ensure that the community benefits from our business on multiple levels. We have a strong track record of this commitment in the communities we have operated. 5.Focusing on Sustainable Business Growth: We are financed and funded. If we are fortunate enough to secure permits from your City, we have the funds needed to build, operate and scale our business. We pay above the ‘Living Wage’ and give equity in our business to our hardest working and highest performing staff. 6.Financially Committing for the Long Term: We want to be doing business in San Luis Obispo for decades, not years, as evidenced by our commitment to identifying vacant and unused land in San Luis Obispo and then investing funds to build, develop and operate a world-class cannabis operation. We Bring Unrivaled Retail Experience No other cannabis company in North America have the depth or breadth of retail management experience that Element 7 delivers to San Luis Obispo. Our core management team brings decades of experience in successfully building, owning and operating over 1,000 retail stores in North America in the dry cleaning, video and food service industries. Element 7 San Luis Obispo One LLC is a joint venture with two shareholders – American Patriot Brands, Inc. (51%) and Element 7 LLC (49%). American Patriot Brands, Inc. is a vertically integrated cannabis company with operations focused on consolidating a highly fragmented cannabis retail market. Element 7 LLC, is a cannabis licensing company with significant experience in California educating cities on cannabis policy and operating cannabis businesses from cultivation through to retail. Element 7 was formed with a vision of operating in a world where cannabis is culturally accepted and legally prescribed to treat humanity’s most destructive medical illnesses. We know that customer education and community engagement are the foundations on which attitudes will shift with regards to how cannabis is viewed as a natural herbal medical treatment. To achieve this vision, our strategic priority is to change the way we prescribe, adopt and innovatively create cannabis products for a broad range of medical and health issues. We Know that Our People Are Our Greatest Asset Robert Lee (Chairman and CEO), was the former founder of U.S. Dry Cleaning, the largest operator of dry cleaning operations in the United States, and Video City, one of North America’s largest video store companies with over 500 locations in 30 US States. Lee brings over 38 years of retail experience to American Patriot Brands and Element 7. He is the former E&Y Magazine Entrepreneur of the Year. Brian Pallas (Chief Operating Officer), founded and grew a single frozen yoghurt shop into the first publicly traded franchise of its kind with 120 stores in North America. He has 36 years of retail experience, Chairs the Vistage International think tank for CEO’s and will manage all of Element 7’s North American retail operations. Brian Pallas is a resident of Orange County, California, and works closely with the Element 7 LLC Management Team to oversee and implement all retail operations across the State of California. Bernard Rice (Chief Financial Officer), is one of the world’s leading financial technology experts. Rice formerly worked for IBM, heading the company’s Southern Area business which accounted for $3B in business. He went on to become the CFO and General Partner for the IBM Venture Capital Group in 1993 and then Global VP for IBM’s Consumer Division in 1998. Mr. Rice has been a pioneer in innovative software solutions for children and will oversee all financial management, control and taxation matters for Element 7. Chris Polaszek (Chief Legal Officer), is a securities and accounting litigation and transactional matter expert. During his time on Wall Street he worked at Solomon Brothers, and then he served at Capitol Hill in the office of Senator Bob Graham. Polaszek has an almost unmatched experience navigating securities law and will head all aspects of legal management, risk and compliance for Element 7. Robert DiVito, heads the Element 7 brand and business, and is a cannabis expert with experience across all aspects of the industry including cultivation, distribution, brand development and retail operations. He successfully lobbied for the inclusion of the Cannabis Campus Model into the California cannabis legislation passed in 2017 and sits on the board of North America’s largest hemp company. Robert understands what it takes to build a business from nothing - starting a car parking business at only twenty-years old that scaled to over 700 employees in four-years. Robert will be the General Manager of Element 7’s San Luis Obispo operations. Robert is supported by a number of talented staff that each have a different skill-set, diverse learning background and set of experiences in the regulated cannabis market. This team includes Dr. An-Chi Tsou, who was the lead staffer on California’s original medical cannabis laws under the Medical Cannabis Regulation and Safety Act, working with dozens of stakeholders to negotiate cannabis policy. She was later appointed by Governor Brown to work as the senior policy advisor for the Bureau of Medical Cannabis Regulation - now the Bureau of Cannabis Control. Other team members at a management level have significant military, security, police force, liquor licensing, retail, environmental management and cannabis industry experience. In addition, we have a number of highly qualified and experienced individuals that sit on the Element 7 Advisory Board, including: Bob Hoban, the pre-eminent attorney in the North American and global cannabis industry. An-Chi Tsou, who was the lead staffer on California’s original medical cannabis laws under the Medical Cannabis Regulation and Safety Act. Rico Tarver, who plays and active role in implementing Social Equity programs. YuFu Cheng, medical cannabis advocate and China’s Director for Global Warming at the R20 United Nations program. These experienced leaders and dedicated cannabis advocates have committed to forming the Element 7 Advisory Board & Sub-Committee’s with a charter to ensuring that the business is operating in the best interests of its customers, neighborhood and community. We Have Unmatched Experience Across the Industry Element 7 and American Patriot Brand initiatives and experience in cannabis is significant, and includes: Urban Pharms. 280-Acre outdoor farm and greenhouse operation in Oregon, with an associated joint venture processing facility. The Sweet Life Distribution. Cannabis distribution company that serves 427 of Oregon’s 593 licensed dispensaries. Monterey Cannabis Co. Element 7 is a founding partner and investor in this cultivation operation – one of the largest greenhouse cannabis cultivators in the State of California. www.sunsoilwater.com International Hemp Solutions. Element 7 are a partner with International Hemp Solutions (IHS) and BIJA Seed, the largest importer of hemp seed into North America. BIO365, Daily Hemp Co., 247X and SLAY Health. A range of hemp-oil phytocannabinoid rich brands powered by Element 7, sold through mass retail, Amazon, dispensaries and direct mail. www.dailyhempco.com Panaxia. Element 7 has a strategic partnership with Ocean Grown which has the sole rights to Panaxia pharmaceutical-grade cannabis medical products for California. Panaxia is one of the world’s leading pharmaceutical development companies headquartered out of Israel. www.panaxia.co.il Compliance, Security and Understanding Policy are our Foundations As we have built our team at Element 7, we have been mindful of hiring staff and securing advisers that have strong compliance, security and policy backgrounds. We have a team that includes: The Number 1 Cannabis Lawyer globally (Bob Hoban) A former Bureau of Cannabis Control (BCC) staffer who was instrumental in writing the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) Two former Special Forces Soldiers (Green Berets) A former employee of South Carolina’s Police Force Two TILT Certified employees (responsible service of alcohol) A LEED Certified employee Three attorneys, including one who served on Capitol Hill One of the world’s leading experts on climate change, and One of the world’s leading financial technology experts (formerly worked at IBM) We Are Local Element 7 will contribute over $000 per month to local community initiatives in the City of San Luis Obispo and over 91% of our employees will be local City and County residents. In addition, all staff will be required to commit 8 hours each quarter (32 hours annually) to a local charity of their choice. With 22 staff, that’s over 700 hours of community support we will be putting back into impacting the San Luis Obispo community annually. Our Stock Plan is a commitment we make so that key local staff can own a part of the company they work for. Base wages will meet or exceed ‘Living Wages’ in California, allowing our staff to enjoy a quality of life that is rewarding and purposeful. Element 7 is Financed, Funded and Fully Committed We have the required funding to build, scale and operate the business with up to of committed start-up and operations funding. Further capital on-call will be made available as required. With almost 150,000 residents in San Luis Obispo, the cannabis customer base is approximately 25,000 regular consumers which provides a strong, sustainable and profitable business base. We believe the opportunity to expand the business with tourists and visitors is significant. Element 7’s commitment to building and growing a profitable and sustainable business will bring significant annual tax revenue to the City. In addition, we would also generate over twenty (and well-paying) new jobs, additional incremental business income to a number of local businesses and contribute over $1,000 per month to a range of local non- profit entities to drive social change for good. We are confident that our financial projections are both realistic and feasible. We Educate Cities and Communities to Build Confidence and Trust In our business, everything starts with education – from understanding the proper use of the plant to educating groups and individuals about the positive benefits of cannabis when used correctly, and the dangers of substance abuse in any form. Education allows people to build informed opinions which is important in any industry, and particularly true in the cannabis industry where there is so much misinformation. Over the last 4 years we have educated over 100 Cities in California regarding cannabis, many of which have since passed an ordinance that allows them to tightly control how the industry develops in their community. The Cannabis Industry Needs Agile Forward-Thinking Operators Like Element 7 Tomorrow’s cannabis consumer is savvier, smarter and more sophisticated than we have ever seen before. They demand brands that deliver safe and effective experiences, proven healing capabilities, social and legal empowerment, and overall entertainment value on a level that their favorite brands like Apple, Nike or Coca-Cola deliver. Understanding these demands and expectations has been, and will remain, a paramount concern of Element 7 as we continue to create and refine a superior holistic wellness experience. We know that this holistic wellness positioning will resonate with local health-conscious residents looking to lead a healthier, cleaner and better life, and that it aligns with the San Luis Obispo Department of Health which promotes a range of health and wellness initiatives to tackle the biggest local health issues - rising obesity, diabetes, low rates of exercise, inadequate consumption of fruits and vegetables, asthma and mental health issues. Our proposed ‘vertically integrated’ operations, including manufacturing and distribution, allow us to maximize taxes, create jobs and deliver sustainable economic development. This integration further allows us to have a price advantage over local competitors including non-compliant ‘black market’ operators. We are Committed To Partnering with the City To Eradicate the Non-Compliant Cannabis Market Cannabis that is untested, untaxed and unregulated is dangerous for consumers, bad for business and ruinous for the City of San Luis Obispo. Everyone should have the right to experience the benefits and pleasures of this incredible plant, but it needs to be sold by compliant, clean, controlled, taxed, tested and trusted operating partners. We know that the Number 1 reason why customers shop in the black market is price. To help eradicate the non-compliant ‘black market’ from San Luis Obispo, Element 7 will be implementing a unique proposition to its dispensary – a ‘$20.00 Shelf’ which will allow local customers the opportunity to enjoy a mild Element 7 experience, without having to run up an expensive tab. We have evidence there are over 15 cannabis delivery and dispensary businesses offering and advertising cannabis retail services in San Luis Obispo today. Most of these are unlicensed, untaxed, untested and non-compliant. We have the package, team, technology and industry experience to challenge them. We Have Exclusive Product Relationships with Premium Brands We have established a strong array of cannabis industry relationships to bring our premium Element 7 experience to life. These include Wonderbrett - an icon in the LA cannabis scene and a team that have been cultivating premium handcrafted cannabis since 1993 (in 1997 Brett was given a cut of the original OG Kush which catapulted him into the upper echelons of the LA cannabis scene and he has been there ever since). Wonderbrett products are in huge demand at the moment and we will be bringing an exclusive range of these products to the dispensary. Merchandised alongside house brands and products, this product strategy (‘mass everyday’ through to ‘premium niche’) will impact illegal non-compliant black market cannabis trade activity that currently takes place in the City of San Luis Obispo. In this instance, good business strategy is also great for our customers and the San Luis Obispo community. We Have Partnered with UCLA To Create An Industry-First Study Our relationship with UCLA recently expanded to include the Anderson School of Management – UCLA’s graduate business school faculty and program. In a world and cannabis industry first, Element 7 was selected ahead of some of the world’s fastest growing technology, health and media companies to take part in a Retail Cannabis Industry Thesis in 2018/19. Five incredibly talented UCLA students pursuing their MBAs are currently working with Element 7 to research and write their graduate theses on how Element 7 and American Pacific Brands, Inc., are disrupting California’s $20 Billion Dollar Cannabis Retail Industry. With diverse professional backgrounds at companies including Google, Amazon, Hulu, Medtronic, JP Morgan Chase, PWC, Bank of America Merrill Lynch and Buzzfeed, the team is writing the first-ever thesis that UCLA has conducted on a cannabis company. The output of these students and the fresh perspective they bring is going to be a huge part of our strategic roadmap over the next 3-5 years as we continue to consolidate the retail industry in California and strive to become the #1 Cannabis Retailer in California. Our Operations Are Backed by Passion and Purpose Our operational approach in and with the City is to remain laser-focused on being locally relevant to the needs and concerns of the community, residents, and businesses that are located in the San Luis Obispo. We understand and appreciate that these needs and concerns are uniquely different from other areas within California and are strategically addressed in our Business Plan. Element 7 wants to ensure that it pays-it-forward and pays-it-back to the local San Luis Obispo community, and as such, has developed a goodwill outreach program, Element 7 Cares, that promotes education, health, drug rehabilitation and veterans’ affairs. We are committed to a monthly budget of at least $1,000 for community support programs. Element 7’s Local-Private Enterprise Program (LPEP) governs the business and dictates that Head Office support should be provided in the initial planning and building phase of the business with control transitioning over time to allow the local enterprise to have more autonomy on decision making. Key Management executives for the Local Enterprise will be prioritised for hiring from the local job community and talent pool. A pool of equity, proposed to be created and made available for key executives and talent employed at the local business level with the goal of becoming shareholders over time. This is in addition to the 6% of equity being granted to three (3) key Element 7 staff who would work within the business, all of whom currently household income level. We ore Committed lo Science, Reseqrch ond Producl Development Our commitmeni to science exponds beyond Ponoxio ond the UCLA Connobis Reseorch lnitiotive in Los Angeles, which is leoding the industry on phytoconnobinoid reseorch ond public policy chonge. Element 7 is olso working with UCLA Riverside (Dr. Kothryn Ulrich from UCLA's College of Noturol ond AgriculturolSciences) to conduct field reseorch studies on bocterio ond microorgonisms in connobis soil - efforts thot Dr. Ulrich is looking to publish in peer- reviewed journols. h,V We Will Set lhe lnduslry Stondord in Son luis Obispo We ore proud to present our vision for Element 7, confident thot the site we hove selected best meets the needs of the City ond its community, ond specificolly the City's Connobis Municipol Code deoling with public sofety, heolth, comfort ond economic development. We know thot the immersive ond personolized environment delivered oi Element 7 Son Luis Obispo will set new stondords in the connobis industry ond help the City define how connobis bronds ond businesses should operote.ond be governed in 2019 ond beyond, ond we ore excited to portner with the City to ochieve our shored collective ombitions. Kind Regords, Brion Pollos Chief Operoting Officer Americon Pqtriot Bronds, lnc Robert DiVito Co-Founder ond CEO Element 7 LLC / Element 7 Son Luis Obispo LLC