TREEHOUSE CBD: CEO Kevin Mechigian knows about margins and sales tactics. Mechigian spent nearly 20 years as president of the family business, Bob Saks Automotive, before the recession and automakers brand realignment put them out of business. A serial entrepreneur now, he couldn't resist the "green rush" of cannabis. But slinging weed wasn't in his interests, so instead he settled on selling cannabidiol, the second most active ingredient behind THC. CBD is said to offer many of the benefits of THC — pain relief, relaxation, etc. — but without the psychochoactive effects.
Your dad founded Bob Saks car dealers — talk to me about that.
My dad founded it in 1969. I started selling cars when I was 16 and began working my way up the family business right out of college in 1988. We had eight franchises at the peak. I took over for my father around 2004-2005. Then in 2008-2009 when the Great Recession hit, everything changed. We had just built a brand-new building in Lyon Township, and then General Motors went bankrupt and Chrysler went bankrupt. GM canceled the Pontiac brand, so we lost our franchise, which was 70 percent of our business. We sold our Farmington Hills (Buick) franchises to build out the big dealership and were a year into the build when everything went haywire.
How did you go from selling cars to selling CBD?
It's a funny thing, huh. A few years ago the "green rush" started and everyone was just running at it. I was already running a few other companies, like a property management company and an auto finance and warranty firm, so I am always open to looking at new opportunities. I have two sons, who are now in their 20s but always played travel hockey and are into snowboarding, wake boarding and the more extreme sports. They are always breaking bones. Through that I saw a lot of their friends and teammates get hooked on opioids. So we all started looking for natural healing and found CBD. But we had mixed results and the consistency seemed impossible to predict. So, we thought we could do better.
How so?
Our products are tested. We're licensed and insured. This isn't the CBD you buy at the gas station or video stores. If you buy a 1,000 MG tincture, the consistency and strength will be the same every time. We have a really good product. Our sleep gummies are second to none. They are our one of our top sellers. We have pain balms that we engineered with (former Detroit Red Wings player) Joe Kocur. His hands are pretty beat up from punching helmets. If we can help his hand pain, I think that says something about our products.
Your products are noticeably more expensive than some other products. Why?
A lot of times people put the cheapest things they can find on the shelf, not what delivers results. People would come into a dispensary and maybe see a tincture that is 2,500 milligrams but then buy only a 500 milligrams tincture because it's cheaper. We use 500 milligrams for pets. It's just not strong enough for most humans. Retailers would just put inexpensive products out there that wouldn't be effective. We figured you needed a higher dosage to work and that requires more raw product and is more expensive. So we had to figure out a way to make that more cost effective, so we offer higher dosages but in smaller portions. That way it's more cost effective for consumers but the product actually works. I want my products to work for as many people as possible.
It's a pretty competitive market. How do you stand out, especially if consumers can get CBD at the gas station?
It's lucrative or I wouldn't be in the business. Luckily, a lot of what we do is B2B business. (Popular cannabis retailer) Greenhouse of Walled Lake is one of our distributors. We have retailers in Michigan, Florida, Ohio and Kentucky. We're in a lot of salons and some vitamin shops as well as several marijuana shops. There's not a better salesman than the staff at a dispensary that learns all the complexities of CBD. Other than that, the only retail we have is our website, which does well.
What's the future hold for Treehouse?
We continue to expand our product base into new chemistries. We also white label for other businesses. We grow and make the product for them, so they can start their own brand. We're a one-stop shop for labeling, bottling and creating an entirely unique product line. It's easier for us to get them through all the holes we already stepped in. So I expect that side of the business to really do well moving forward.
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