Growing up in a haredi (ultra-Orthodox) community outside Tel Aviv, David Palatnik’s parents hoped he would one day become a rabbi. As a youngster, he attended one yeshiva, then another.
“By the time you go to the third one, you’re like, I think I want to do something else with my life,” says Palatnik, 29, one of 10 children born to a Jewish father originally from Brazil and a mother who grew up in Macomb, Ill., before converting to Judaism and moving to Israel, where the couple met through a matchmaker.
That “something else” for Palatnik turned out to be owning, along with his wife, Dafna Revah, the largest privately held CBD and kratom chain in the country, called CBD Kratom. It has 15 locations in the St. Louis area, including the first CBD store in a shopping mall (Leaf & Co. in the Galleria). The couple also own 20 CBD Kratom stores in Chicago, Dallas and Houston.
CBD stands for cannabidiol, one of compounds found in Cannabis sativa plants. Kratom is a powder made from the leaves of a tree native to Southeast Asia.
CBD products, which by federal law must contain less than 0.3 percent THC – the substance in cannabis that gets people high – have been credited with helping users alleviate everything from chronic pain to seizures to sleeplessness. These supplements come in several forms, including CBD-infused edibles, body lotions and tinctures, as well as relaxation and anti-seizure treats for pets.
Kratom also is used for pain relief, as well as to help with withdrawal from opiates, such as prescription narcotics or heroin, and for mild stimulation. It is far more controversial than CBD; the Food and Drug Administration has raised serious concerns about its toxicity and possible death from its use.
Palatnik and Revah say they welcome more safety regulations on kratom but maintain that when used correctly, it can be highly beneficial for many ailments.
The couple, who live in Olivette with their nearly 2-year-old son, are scouting locations along the East Coast, where they plan to open more CBD Kratom stores.
“Whenever people ask how we got into this business, I always say it was mostly luck that we found these products,” says Revah, 27. “But we stay in the business because we believe they are helping so many people and, in doing so, helping to repair the world. So many people who were not able to find pain relief with other products are able to find relief here, with the products we carry.”
A match made Next Dor
In the summer of 2012, Revah was invited by her friend Sydney to attend Shabbat dinner at Next Dor, a Jewish center for young adults to meet, network and hang out. It’s located next door to Central Reform Congregation in the Central West End.
Revah was in St. Louis that summer doing an internship with the American Red Cross. She grew up Jewish in Oklahoma but was attending college in New York at Columbia University and the Jewish Theological Seminary.
Palatnik, who was new to St. Louis, had been invited by his friend Josh to the Shabbat dinner at Next Dor. When Revah and Sydney arrived, Palatnik and Josh were deep in conversation. Sydney, interested in talking to Josh, asked Revah to distract Palatnik. Revah gladly obliged.
“It didn’t work out for (Sydney and Josh), but it certainly worked out for us,” Palatnik says.
After serving three years in the Israel Defense Forces’ canine unit, he came to St. Louis because his older brother was here. In 2013, Palatnik opened the first Mr. Nice Guy head shop in the Delmar Loop. Among the products the store carries are artisan glass pipes, vapes, hookahs, electronic cigarettes and rolling papers. During the three years that followed, he opened up five more Mr. Nice Guy shops in the St. Louis area and Metro East.
Why a head shop?
“I always believed in retail stores,” says Palatnik, a bear of a guy with an easy smile and friendly manner. “In my previous job (in the HVAC industry), I would go to San Francisco and Chicago and see smoke shops there. They were stylish and clean, not dingy or sketchy looking like the ones in St. Louis. That’s where I got the idea to open a smoke shop business where customers would want to shop because it was nice and clean.”
Palatnik says he was introduced to CBD and kratom products in late 2014 when customers came in asking about them.
“Back then, the only place you could buy them were smoke shops,” he says.
As he learned more about these products, he realized they often attracted a different clientele than those who frequented his head shops. He explains:
“Some people were maybe not so comfortable buying those products in a smoke shop with a picture hanging of …”
“Bob Marley,” Revah chimes in, without missing a beat.
“Nothing against Bob Marley,” says Palatnik, laughing. “It’s just not the same.”
All in the family
In 2016, Palatnik and Revah got married at Central Reform Congregation with Rabbi Randy Fleisher officiating. That same year, the two opened their first CBD Kratom store in the Bucktown neighborhood of Chicago. It was the first shop of its kind in the country, they say.
“To try a new concept like this, we felt it made sense to do it in a bigger market,” Revah says.
Later that year, they opened a second store in Chicago, and in 2017, the first of their St. Louis locations opened in the Tower Grove neighborhood.
Today, their stores employ more than 250 people, all of whom receive health insurance and retirement benefits, they say. Several are relatives. Palatnik’s older brother is the company’s product developer, his sister is the human resource manager and a younger brother designs the shops.
Revah’s parents, too, work for the business, having left Edmund, Okla., to retire in St. Louis. Her mother, a lawyer who grew up in Olivette, helps to oversee day-to-day operations, while her father, a native of Israel who owned a car repair business in Edmund, is the company’s main driver.
“My sister helps out, too, sometimes tagging along with my dad,” Revah says. “And my brother is a little genius. He built us a computer system to track employee benefits and customer relations services.”
Putting customers first
CBD products have become widespread. You can find them at gasoline stations, chains such as Walmart and T.J. Maxx, and at Dierbergs Markets, among other places.
What separates those outlets from CBD Kratom, its owners say, is the customer service their stores offer. Employees must complete a four-week training course to learn about each product and their benefits. Considering CBD Kratom carries more than350 CBD products and 51strains of kratom, a lot of educating goes on.
“I went to Walgreens and started asking one of the clerks about their CBD products,” Palatnik says. “The guy looked at me and said, ‘We don’t sell CBD products.’ I told him I know you do. So I wandered around. It took me 10 minutes to find them.
“My point is that you can come into any one of our stores with zero knowledge of CBD, and our employees will walk you through it and make sure you get the correct product.”
Revah stresses the importance of quality control; some vendors’ labels can be misleading or inaccurate as to how much CBD a product contains, she says. To guard against deception, she says, all CBD Kratom stores test their products to monitor CBD levels and buy only from growers in Oregon and Colorado with whom they have established, trusted relationships.
“We make it a point to get to know our growers and see their operations first-hand,” she says.
Palatnik says, “We will not carry a new brand of CBD or kratom without knowing exactly where it came from and first testing it.”
Their stores offer a rewards program to customers in which every dollar spent earns points that can be redeemed for products.
“We as a company believe that if you do things right, customers will appreciate that and stay loyal to you,” says Palatnik, adding that his employees do not offer medical advice but rather answer questions and inform customers about a product’s use and benefits. “We have customers who have been with us since Day 1 and never left our business.”
Still, not everyone is onboard when it comes to CBD and kratom. Recently, Kirkwood pushed back when Palatnik and Revah petitioned to open a store there. Of particular concern were the effects of kratom, which the U.S. Drug Enforcement Administration has listed as addictive and has been attributed to three deaths in the St. Louis area.
Some Kirkwood council members also were uneasy about the proposed store’s proximity to a school.
“There have been instances where people used substances like heroin and fentanyl mixed with large amounts of kratom and died,” Revah says.
Last month, the Missouri House passed the Kratom Consumer Protection Act, which would require “sellers of kratom products to ensure that their products are not adulterated with dangerous substances.” The bill also would outline labeling requirements and ban the sale of kratom to people under 18, a restriction, Revah says, already in place at CBD Kratom stores. The bill is pending in the Senate.
“If a town doesn’t necessarily want us there, we are not in the business of fighting to be there,” Palatnik says.
Competition from legalized marijuana
In Olivette, Palatnik and Revah lease their store from Greg Yawitz, owner of Keat Properties LLC, and president of the board of Jewish Federation of St. Louis. Yawitz says he was approached by four people trying to get their medical marijuana licenses and open a dispensary. Each wanted to lease a former dry cleaning location in a building owned by Keat Properties at Price Road and Olive Boulevard.
“I was introduced to David as part of a Federation mentorship program we were both participating in,” Yawitz says. “He explained he was the CBD Kratom guy and was interested in the location. So I did a little research and found out they were a young, successful couple living in Olivette. Really nice people.
“I was thinking about this only to open my front door one day and see David and his wife walking their son in a stroller down the street. I got a warm feeling about them, so I called the lawyers and bankers, and they assured me everything was legal.”
The Olivette location is pretty typical of most CBD Kratom stores. It’s airy and bright, with floor-to-ceiling glass cabinets displaying a myriad of products locked inside. Employee Devon Smith stands ready to answer questions from curious customers, one of whom asks for a suggestion to help her sleep. After pointing out several options, the customer decides on edible mints, each containing 10 milligrams of CBD. The cost is $36 for a container of 40, which is considerably more than nonprescription sleep aids such as melatonin, which costs about $10 for 200 10-milligram tablets.
That’s another thing about CBD: It’s not cheap. Those in the industry explain that quality seeds and proper cultivation can be extremely costly, as are the processes involved in CBD extraction, because they require a controlled environment and highly specialized equipment. Expenses also are incurred from extensive lab testing and distribution.
New York-based investment bank Cowen & Co estimated 2018 sales of CBD consumer products from $600 million to $2 billion and projected growth to $16 billion in retail sales by 2025.
A report in May from Boulder-based cannabis researchers BDS Analytics and Arcview Market Research projects that the market for CBD sales in the United States will surpass $20 billion by 2024.
Neither Palatnik nor Revah worry about sales of CBD and kratom declining as more states legalize marijuana.
“We have shops in Illinois (where recreational marijuana became legal in January) down the street from dispensaries, and we haven’t seen a decrease in business,” says Revah, adding that CBD caters to a different population than marijuana.
“Many people are only interested in the healing aspects of CBD and kratom and not the THC component found in marijuana,” she says.
That said, she and Palatnik support laws legalizing marijuana and have personally invested in the business.
“We feel CBD and medical marijuana complement one another more than they are in competition,” Revah says.
And while she and her husband won’t divulge company profits, they did say it was in excess of $10 million last year.
Nevertheless, Palatnik says, “though I know my parents in Israel are proud of us, they still would have liked me to become a rabbi.”